Chapter 201 Oregon Laws 2003

AN ACT

HB 2213

Relating to highway bonds; creating new provisions; amending ORS 286.051, 286.061, 366.542, 367.010, 367.015, 367.020, 367.035, 367.040, 367.050, 367.060, 367.105, 367.555, 367.560, 367.565, 367.595, 367.600, 367.605, 367.615, 367.635, 367.640, 367.645, 367.655, 367.660, 367.705, 367.710, 367.715, 367.745 and 367.750; repealing ORS 367.226, 367.228, 367.230, 367.232, 367.234, 367.236, 367.238, 367.242, 367.258, 367.370, 367.415, 367.430, 367.550 and 367.610; appropriating money; and declaring an emergency.

Be It Enacted by the People of the State of Oregon:

SECTION 1. Sections 2 to 10 of this 2003 Act are added to and made a part of ORS chapter 367.

SECTION 2. As used in sections 2 to 10 of this 2003 Act:

(1) “Federal transportation funds” means funds apportioned or allocated, or anticipated to be apportioned or allocated in the current or a future federal fiscal year, to the state by the United States Department of Transportation for use on a federal-aid highway or highway safety construction project or other federal funds that may be used for a highway improvement project that are available or are anticipated to be available in the current or a future federal fiscal year.

(2) “Grant anticipation revenue bond” means a revenue bond secured based on receipt, or anticipation of receipt in the current or a future federal fiscal year, of federal transportation funds.

(3) “Highway improvement project” means a federal-aid highway or highway safety construction project, a transportation project or another project for which the Department of Transportation may use federal transportation funds.

SECTION 3. The State Treasurer, at the request of the Department of Transportation, may issue grant anticipation revenue bonds for the purposes of:

(1) Financing highway improvement projects including highway improvement projects already under way or scheduled;

(2) Financing the restoration, reconstruction or renovation of highway improvements in Oregon;

(3) Financing transportation projects;

(4) Paying the costs of issuance of the revenue bonds including, but not limited to, the costs and fees of paying agents, trustees and remarketing agents; or

(5) Paying the costs of credit enhancements.

SECTION 4. (1) A grant anticipation revenue bond issued under sections 2 to 10 of this 2003 Act:

(a) Must contain on its face a statement that the ad valorem taxing power of this state or any political subdivision of this state is not pledged to the payment of the principal or the interest on the revenue bond.

(b) May be sold at public competitive bid or at private negotiated sale.

(c) May be sold at the price or prices established by the State Treasurer, upon the advice of the Department of Transportation.

(d) Must mature on or before a date determined by calculation of the expected economic life of the improvements, assets and projects financed with the proceeds of the revenue bonds.

(2) The State Treasurer shall determine, upon the advice of the department and consistent with ORS 288.805 to 288.945, all aspects relating to the sale of revenue bonds under sections 2 to 10 of this 2003 Act that are not otherwise specifically provided, including rate of interest and discount, if any.

SECTION 5. (1) Before grant anticipation revenue bonds are issued under sections 2 to 10 of this 2003 Act, the Department of Transportation shall prepare a revenue declaration authorizing issuance of the revenue bonds. The declaration must be signed by the Director of Transportation, or the director’s designee, and must be approved by the State Treasurer, or the treasurer’s designee.

(2) A declaration under this section may:

(a) Pledge all or a portion of the moneys described in section 7 of this 2003 Act for purposes of the revenue bonds to be issued.

(b) Limit the purposes to which the department may apply the proceeds of the sale.

(c) Make pledges concerning the proceeds of the sale or moneys described in section 7 of this 2003 Act to secure payment of the revenue bonds issued under sections 2 to 10 of this 2003 Act.

(d) Limit or otherwise provide for the issuance of additional revenue bonds, including refunding bonds, under sections 2 to 10 of this 2003 Act, limit or establish terms upon which additional revenue bonds, including refunding bonds, may be issued under sections 2 to 10 of this 2003 Act.

(e) Provide for procedures, if any, by which the terms of contracts with bondholders may be amended or rescinded, for the percentage of the bondholders that must consent to amendment or rescission of the contract and for the manner of bondholder consent to amendment or rescission of the contract.

(f) Establish a trustee and vest the trustee with property, rights, powers or duties in trust, as the State Treasurer determines appropriate.

(g) Provide for other matters affecting issuance of the revenue bonds.

(3) A declaration under this section may establish the same requirements, be subject to the same provisions, create the same obligations and confer the same rights as an indenture under section 6 of this 2003 Act, if so provided in the declaration.

SECTION 6. An indenture under which grant anticipation revenue bonds are issued may provide for:

(1) The pledging of all or a portion of the moneys described in section 7 of this 2003 Act to the payment of the principal, interest, premium, if any, or the bond debt service of revenue bonds issued under sections 2 to 10 of this 2003 Act;

(2) Requirements concerning a particular series of revenue bonds issued under sections 2 to 10 of this 2003 Act;

(3) Requirements concerning moneys described in section 7 of this 2003 Act and payment on outstanding revenue bonds issued under sections 2 to 10 of this 2003 Act;

(4) A contractual undertaking for the benefit of bondholders concerning assessment, levy collection and deposit of moneys described in section 7 of this 2003 Act;

(5) Provisions concerning the registration of revenue bonds or the recording or filing of the indenture;

(6) Provisions relating to a reserve account. Provisions under this subsection may include, but are not limited to, the amount required for an account and provisions for replenishing the account from moneys described in section 7 of this 2003 Act;

(7) Provisions concerning trustees including, but not limited to:

(a) Establishing funds, accounts or moneys described in section 7 of this 2003 Act over which the trustee will be custodian; and

(b) Providing that a trustee will be appointed; or

(8) Establishing the maturation date of the revenue bonds.

SECTION 7. The principal, interest, premium, if any, and the purchase or tender price of the grant anticipation revenue bonds issued under sections 2 to 10 of this 2003 Act are payable solely from the following moneys:

(1) Federal transportation funds.

(2) To the extent affirmatively pledged at the time issuance of revenue bonds is authorized, the following moneys that are lawfully available:

(a) Moneys deposited in the State Highway Fund established under ORS 366.505.

(b) Except as provided in paragraph (c) of this subsection, moneys, once deposited in the State Highway Fund established under ORS 366.505, from the following sources may be affirmatively pledged:

(A) Moneys from the taxes and fees on motor carriers imposed under ORS 825.474 and 825.480.

(B) Moneys from the tax on motor vehicle fuel imposed under ORS 319.020.

(C) Moneys from the tax on fuel used in motor vehicles imposed under ORS 319.530.

(D) Moneys described under ORS 803.090 from the titling of vehicles.

(E) Moneys described under ORS 803.420 from the registration of vehicles.

(F) Moneys described under ORS 807.370 relating to the issuance of driver licenses and driver permits.

(G) Moneys received by the Department of Transportation from taxes, fees or charges imposed after January 1, 2001, or other revenues or moneys received by the department from sources not listed in subparagraphs (A) to (F) of this paragraph that are lawfully available to be pledged under this section.

(c) Moneys described in paragraph (b) of this subsection do not include:

(A) Moneys provided for appropriations to counties under ORS 366.525 to 366.540.

(B) Moneys provided for appropriations to cities under ORS 366.785 to 366.820.

(C) Moneys in the account established under ORS 366.512 for parks and recreation.

SECTION 8. The State Treasurer may issue grant anticipation revenue bonds to refund outstanding grant anticipation revenue bonds or other obligations, the proceeds of which were used to finance highway improvement projects. Refunding and advance refunding bonds authorized in this section are subject to the provisions of sections 2 to 10 of this 2003 Act.

SECTION 9. (1) When grant anticipation revenue bonds have been issued under sections 2 to 10 of this 2003 Act, the Department of Transportation shall collect federal transportation funds and may, as provided by the department when issuance of the revenue bonds was authorized, use the funds:

(a) For deposit into one or more special funds or accounts that may be pledged to secure payment of the revenue bonds.

(b) For payment of the costs of highway improvement projects.

(c) For reimbursement to the department of moneys previously spent on highway improvement projects.

(2) The department may direct the United States government to deposit federal transportation funds directly with a trustee for the holders of the revenue bonds to secure payment of the revenue bonds.

(3) The department shall use the proceeds of a sale of revenue bonds issued under sections 2 to 10 of this 2003 Act to pay:

(a) The costs and expenses incurred in the construction or acquisition of a highway improvement project.

(b) Legal and financial costs and expenses incurred to issue or administer the revenue bonds.

(4) If moneys pledged to secure Highway User Tax Bonds pursuant to ORS 367.605 are also pledged to secure payment of principal, interest, premium, if any, and purchase or tender price of grant anticipation revenue bonds issued under sections 2 to 10 of this 2003 Act, the pledge to secure grant anticipation revenue bonds issued under sections 2 to 10 of this 2003 Act is subordinate and subject to prior use of the moneys to pay Highway User Tax Bonds.

SECTION 10. (1) Grant anticipation revenue bonds issued under sections 2 to 10 of this 2003 Act are not general obligations of the State of Oregon or of an agency, department, board, commission, officer or employee of the State of Oregon.

(2) The revenue bonds are a limited obligation payable solely from federal transportation funds received by the Department of Transportation and, if provided by the department when issuance of the revenue bonds is authorized, other moneys lawfully available for the purpose and affirmatively pledged to the payment of principal, interest, premium, if any, and purchase or tender price of the revenue bonds.

(3) A holder of revenue bonds issued under sections 2 to 10 of this 2003 Act may not compel the payment of federal transportation funds to the Department of Transportation.

SECTION 11. ORS 367.010 is amended to read:

367.010. As used in [ORS 367.010 to 367.067] this chapter:

(1) “Agency” means any department, agency or commission of the State of Oregon.

[(2) “Commission” means the Oregon Transportation Commission.]

[(3) “Department” means the Department of Transportation.]

(2) “Bond” means an evidence of indebtedness including, but not limited to, a bond, a note, an obligation, a loan agreement, a financing lease, a financing agreement or other similar instrument or agreement.

(3) “Bond debt service” means payment of:

(a) Principal, interest, premium, if any, or purchase price of a bond;

(b) Amounts due to a credit enhancement provider authorized by this chapter;

(c) Amounts necessary to fund bond debt service reserves; and

(d) Amounts due under an agreement for exchange of interest rates if designated by the State Treasurer or the Department of Transportation.

(4) “Credit enhancement” means a letter of credit, line of credit, bond insurance policy, standby purchase agreement, surety bond or other device or facility used to enhance the creditworthiness, liquidity or marketability of a bond.

[(4)] (5) “Financial institution” means a banking institution, a financial institution or a non-Oregon institution, as those terms are defined in ORS 706.008, and any other institution defined by rule of the Oregon Transportation Commission as a financial institution for purposes of ORS 367.010 to 367.067.

[(5)] (6) “Infrastructure assistance” means any use of moneys in the Oregon Transportation Infrastructure Fund, other than an infrastructure loan, to provide financial assistance for transportation projects. The term includes, but is not limited to, use of moneys in the infrastructure fund to finance leases, fund reserves, make grants, pay issuance costs or provide credit enhancement or other security for bonds[, leases or loans obtained by municipalities] issued by a public entity to finance transportation projects.

[(6)] (7) “Infrastructure bonds” means bonds authorized by ORS [367.226 to 367.242, 367.258, 367.370 to 367.430,] 367.030,367.550 to 367.600 or 367.605 to 367.670 that are issued to fund infrastructure loans [or provide infrastructure assistance] and the proceeds of which are deposited in the infrastructure fund[, or bonds authorized by ORS 367.030].

[(7)] (8) “Infrastructure fund” means the Oregon Transportation Infrastructure Fund.

[(8)] (9) “Infrastructure loan” means a loan of moneys in the [Oregon Transportation Infrastructure Fund] infrastructure fund to finance a transportation project.

[(9)] (10) “Municipality” means a city, county, road district, school district, special district, metropolitan service district, the Port of Portland or an intergovernmental entity organized under ORS 190.010.

[(10)] (11) “Transportation project” means any project or undertaking that facilitates any mode of transportation within this state. The term includes, but is not limited to, a project for highway, transit, rail and aviation capital infrastructure, bicycle and pedestrian paths, bridges and ways, and other [facilities] projects that facilitate the transportation of materials, animals or people.

SECTION 12. ORS 367.015 is amended to read:

367.015. (1) There is established in the State Treasury, separate and distinct from the General Fund, the Oregon Transportation Infrastructure Fund. All moneys in the infrastructure fund are continuously appropriated to the Department of Transportation for the purposes of ORS 367.010 to 367.067.

(2) The [Oregon Transportation] infrastructure fund [shall consist] consists of:

(a) Moneys appropriated to the infrastructure fund by the Legislative Assembly.

(b) Moneys transferred to the infrastructure fund by the department from the State Highway Fund or from other funds available to the Oregon Transportation Commission.

(d) Proceeds of infrastructure bonds.

(e) Proceeds of Highway User Tax Bonds issued under ORS 367.615 and 367.670 for the purpose of providing infrastructure assistance or an infrastructure loan.

(f) Moneys due to a municipality that are withheld pursuant to ORS 367.035 (3) or (5) and, for a loan made with proceeds of Highway User Tax Bonds, moneys due to a municipality that are withheld pursuant to ORS 367.655 (2)(c).

[(e)] (g) Earnings on the infrastructure fund.

[(f)] (h) Moneys paid to the department in connection with infrastructure loans or infrastructure assistance.

[(g)] (i) Any grants or donations made to the State of Oregon for deposit in the infrastructure fund.

(3) A pledge by the department of its revenues or other moneys in the infrastructure fund is valid and binding from the time the pledge is made as provided in ORS 288.594.

[(3)] (4) [Moneys in the Oregon Transportation Infrastructure Fund shall be used] The department shall use moneys in the infrastructure fund solely to:

(a) Provide infrastructure loans and infrastructure assistance;

(b) Pay the [principal of, interest on and redemption premium, if any, on infrastructure bonds, fund reserves for infrastructure bonds, purchase credit enhancements] bond debt service for infrastructure bonds and pay the costs of issuance and other costs related to infrastructure bonds; [and]

(c) Pay the department’s costs of administering the infrastructure fund and providing infrastructure loans and infrastructure assistance, including any costs of monitoring transportation projects and obtaining repayment of infrastructure loans and infrastructure assistance; and

(d) Pay the department’s or another public entity’s costs for transportation projects including, but not limited to, projects funded with the proceeds of Highway User Tax Bonds.

[(4)] (5) The department may establish separate accounts in the infrastructure fund for infrastructure loans, infrastructure assistance, the funding of infrastructure bond reserves, bond debt service payments for infrastructure bonds and related costs, administrative and operating expenses or any other purpose necessary or desirable for carrying out the purposes of ORS 367.010 to 367.067. The commission may adopt rules that govern how the infrastructure fund and its accounts [shall be] are used. The infrastructure fund or any of its accounts may be held by an escrow agent or bond trustee.

[(5)] (6) The department shall administer the infrastructure fund. Moneys in the infrastructure fund, with the approval of the State Treasurer, may be invested as provided by ORS 293.701 to 293.820 and the earnings from such investments [shall] must be credited to the account in the infrastructure fund designated by the department.

SECTION 13. ORS 367.020 is amended to read:

367.020. (1) Moneys in the Oregon Transportation Infrastructure Fund may be used to make infrastructure loans and provide infrastructure assistance to any public or private entity. The Oregon Transportation Commission shall adopt rules that prescribe procedures and standards for making infrastructure loans and providing infrastructure assistance.

(2) Moneys in the [Oregon Transportation] infrastructure fund may be used for any purpose as long as the use is consistent with any restrictions of the Oregon Constitution that may apply to such moneys.

SECTION 14. ORS 367.035 is amended to read:

367.035. (1) Notwithstanding any other provision of law or any restriction on indebtedness contained in a charter, a municipality may obtain an infrastructure loan from the Department of Transportation by entering into a loan contract with the department. A municipality that obtains an infrastructure loan may pledge to the repayment of the loan all or any portion of the revenue sources specified in this subsection. A municipality shall repay an infrastructure loan in accordance with the terms of the loan contract and to the extent required by the loan contract from any or all of the following sources:

(a) Revenues of any transportation project, including special assessment revenues;

(b) Moneys withheld under subsection [(4)] (3) or (5) of this section;

[(d) Any combination of paragraphs (a) to (c) of this subsection; or]

[(e)] (d) Any other sources including, but not limited to, an appropriation or allocation to a county under ORS 366.525 to 366.540 or to a city under ORS 366.785 to 366.820.

(2) An infrastructure loan contract with a municipality may provide that a portion of the proceeds of the loan be applied to fund a reserve fund to secure the repayment of the loan or secure the repayment of revenue bonds issued to finance the loan.

(3) An infrastructure loan contract with a city or county may provide that all or a portion of the principal and interest on an infrastructure loan be repaid by withholding all or a portion of an apportionment due to a county under ORS 366.525 to 366.540 or due to a city under ORS 366.785 to 366.820. The department shall immediately transfer funds withheld under this subsection from the State Highway Fund to the Oregon Transportation Infrastructure Fund.

[(3)] (4) A municipality that intends to obtain an infrastructure loan shall adopt an ordinance or resolution authorizing the infrastructure loan [and shall publish notice describing its intention to obtain an infrastructure loan at least once in a newspaper of general circulation within the municipality. A municipality may not enter into an infrastructure loan contract until 14 calendar days after the notice has been published].

[(4)] (5) If a municipality fails to comply with the terms of an infrastructure loan contract, the department may seek any legal or equitable remedy to obtain compliance or payment of damages. If any municipality fails to make an infrastructure loan [payments] payment when due, the State of Oregon shall, at the request of the department, withhold any funds due to the municipality from the state and apply the amounts withheld to pay the [amounts due from] entire amount owed by the municipality under the infrastructure loan contract. [Any amounts] The department shall deposit funds withheld under this subsection [shall be deposited] in the account of the infrastructure fund to which the municipality’s infrastructure loan payments are required to be deposited. The department may waive the right of the State of Oregon to withhold moneys under this subsection only if the department has not pledged the right as security for the repayment of infrastructure bonds.

SECTION 15. ORS 367.040 is amended to read:

367.040. (1) Notwithstanding ORS 283.087 (5), an agency may obtain an infrastructure loan. An agency may agree to pay the infrastructure loan from any or all of the available moneys [that are continuously appropriated to] of the agency and may pledge all or any portion of those moneys to repay the infrastructure loan. An infrastructure loan of an agency [shall] 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 [shall] 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 16. ORS 367.050 is amended to read:

367.050. The Department of Transportation may:

(1) Make all contracts and agreements, execute and deliver all instruments and do all things necessary or convenient to provide financial assistance for transportation projects in accordance with ORS 367.010 to 367.067 or to perform covenants made to secure infrastructure bonds; and

(2) Enter into and perform such contracts and agreements with entities concerning the planning, construction, lease or other acquisition, installation or financing of transportation projects.

SECTION 17. ORS 367.060 is amended to read:

367.060. (1) The Department of Transportation may pledge not more than $10 million to ensure the repayment of loan guarantees or other extensions of credit made to or on behalf of municipalities to finance transportation projects. The lien of a pledge made under this subsection is subordinate to the lien of a pledge securing bonds issued under ORS 367.605 to 367.670.

(2) If, during a fiscal year, the moneys in the Oregon Transportation Infrastructure Fund are insufficient to cover any claims by financial institutions, credit enhancement providers, bondholders or bond trustees that arise from loan guarantees or other extensions of credit made under ORS 367.010 to 367.067, the department shall transfer, as often as necessary or appropriate in that fiscal year, moneys from the State Highway Fund to satisfy such claims. However, the department may not make a transfer of moneys from the State Highway Fund otherwise required by this section [shall not be made] if:

(a) The transfer will reduce the moneys in the State Highway Fund to an amount that is insufficient to pay the principal and interest that will fall due during the fiscal year on outstanding bonds issued under ORS [367.226 to 367.242 and] 367.550 to 367.600; or

(b) The transfer relates to a claim arising out of a transportation project for which moneys in the State Highway Fund may not be used under section 3a, Article IX, Oregon Constitution, and ORS 366.505.

SECTION 18. ORS 367.105 is amended to read:

367.105. (1) [The Department of Transportation may borrow money from the State Treasurer or from any banking institution, and evidence the debt by certificates of indebtedness redeemable and payable out of state highway revenues for any of the following purposes] In addition to the authority for short-term borrowing granted in ORS 288.165, the Department of Transportation, acting through the State Treasurer, may borrow money by entering into a credit agreement, a line of credit or a revolving line of credit, or by issuing a note, a warrant, a short-term promissory note, commercial paper or another similar obligation, for the following purposes:

(a) Providing matching funds as set forth in ORS 366.725.

(b) Providing funds with which to pay when due the [interest and principal, or either,] principal or interest of bonded indebtedness created for highway purposes, the payment of which is necessary to preserve the financial credit of the state.

(d) Providing funds for use by the department during times when expenditures exceed revenues, whether or not the department anticipated that expenditures would exceed revenues.

(e) Providing funds for the payment of current expenses in anticipation of revenue, grants or other moneys intended for payment of the current expenses.

(f) Providing funds for interim financing of a capital asset or project to be undertaken by the department.

(g) Refunding an outstanding obligation.

(2) [Such certificates of indebtedness] Short-term borrowing under this section may be in such denominations or for such sums as the department [may fix, and may] fixes and may draw interest at a negotiated rate.

(3) The total outstanding indebtedness created by the [issuance of certificates of indebtedness] short-term borrowing under this section [shall] may not exceed [$25] $100 million in [the aggregate] outstanding principal amount.

(4) All [certificates of indebtedness] short-term borrowing issued pursuant to this section shall mature within [one year] three years from the date of issuance.

[(5) Not less than 10 days before the date of maturity of any such certificate of indebtedness the department shall prepare and approve for payment a claim or voucher covering the amount of the certificate, together with such interest as may be due thereon, and shall file the claim or voucher with the Oregon Department of Administrative Services which shall issue a warrant therefor payable out of highway funds to the party entitled thereto. The State Treasurer may, upon the presentation of the warrant, take up the certificate of indebtedness and cancel it, and pay the amount of the warrant out of highway funds. Whenever a certificate of indebtedness is redeemed and paid by the State Treasurer the treasurer shall file it with the Oregon Department of Administrative Services, and the department shall attach the certificate to the original voucher pursuant to which payment of the certificate is made.]

(5) The department shall pay for and secure short-term borrowing under this section with funds from the State Highway Fund or other funds that are legally available to the department for the purposes for which the moneys were borrowed, including moneys received by the department from the United States government.

SECTION 19. ORS 367.555 is amended to read:

367.555. In addition to the authority now vested by any other provision of law [state highway], the Department of Transportation may issue general obligation bonds of the State of Oregon used to provide funds to defray the costs of building and maintaining permanent roads, including the costs of location, relocation, improvement, construction and reconstruction of state highways and bridges [may in the aggregate principal sum not exceed $150 million], in an outstanding principal amount that is subject to the provisions of ORS 286.505 to 286.545.

SECTION 20. ORS 367.560 is amended to read:

367.560. All moneys obtained from the sale of general obligation bonds under ORS 367.550 to 367.600 [shall immediately] must be paid over to the State Treasurer and credited by the State Treasurer to the State Highway Fund. Such moneys [shall] may be used only for the purposes stated in ORS 367.550 to 367.600[.] and, pending the use of such moneys for highway purposes, [they] may be invested as provided by law.

SECTION 21. ORS 367.565 is amended to read:

367.565. [All bonds issued under ORS 367.550 to 367.600 shall be issued] The Department of Transportation shall issue general obligation bonds under ORS 367.550 to 367.600 in accordance with ORS 286.031 to [286.041] 286.066.

SECTION 22. ORS 367.595 is amended to read:

367.595. The Department of Transportation shall compute and determine in January of each year, after the sale of bonds under ORS 367.550 to 367.600, the amount of principal and interest [which] that will fall due during such year on general obligation bonds then outstanding and unpaid and shall maintain or hold in the State Highway Fund sufficient moneys to pay such maturing obligations.

SECTION 23. ORS 367.600 is amended to read:

367.600. [No bonds shall be issued or sold under ORS 367.550 to 367.600 nor indebtedness incurred thereunder, which] The Department of Transportation may not issue or sell general obligation bonds under ORS 367.550 to 367.600 that, singly or in the aggregate with previous debts or liabilities incurred for the building and maintaining of permanent roads, [shall] exceed any limitation provided in the Oregon Constitution at the date of the issuance and sale of such general obligation bonds.

SECTION 24. ORS 367.605 is amended to read:

367.605. [This section establishes the moneys available for use or pledge for purposes of issuing bonds under ORS 367.615 or 367.670. Such moneys are established as provided under the following:]

(1) Moneys deposited in the State Highway Fund established under ORS 366.505 are pledged to payment of Highway User Tax Bonds issued under ORS 367.615 and 367.670.

[(1)] (2) Except as provided in subsection [(2)] (3) of this section, moneys, once deposited in the highway fund [established under ORS 366.505, from all of] from the following sources are subject to the use or pledge described [by] in subsection (1) of this section:

(a) Moneys from the taxes and fees on motor carriers imposed under ORS 825.474 and 825.480.

(b) Moneys from the tax on motor vehicle fuel imposed under ORS 319.020.

(d) Moneys described under ORS 803.090 from the titling of vehicles.

(e) Moneys described under ORS 803.420 from the registration of vehicles.

(f) Moneys described under ORS 807.370 relating to the issuance of driver licenses and driver permits.

(g) Moneys received by the Department of Transportation from taxes, fees or charges imposed after January 1, 2001, or other revenues received by the department from sources not listed in paragraphs (a) to (f) of this subsection that are available for the use or pledge described by this section.

[(h) Any other moneys legally available to the department for the use or pledge described in this section.]

[(2)] (3) Moneys described under subsection [(1)] (2) of this section do not include [any moneys described in the following]:

(a) Moneys provided for appropriations to counties under ORS 366.525 to 366.540.

(b) Moneys provided for appropriations to cities under ORS 366.785 to 366.820.

(4) To the extent affirmatively pledged, moneys from the following sources are subject to the use or pledge described in subsection (1) of this section:

(a) Moneys received by the Department of Transportation from the United States government.

(b) Any other moneys legally available to the department.

[(3)] (5) Notwithstanding ORS 366.507, the lien or charge of any pledge of moneys securing bonds issued under ORS 367.615 or 367.670 [shall be] is superior or prior to any other lien or charge and to any law of the state requiring the department to spend moneys for specified highway purposes.

SECTION 25. ORS 367.615 is amended to read:

367.615. In addition to any authority the Department of Transportation has to issue and sell bonds, the department may issue and sell revenue bonds known as Highway User Tax Bonds as provided in this section: [and other similar obligations, this section establishes continuing authority for the department to issue and sell bonds and other similar obligations in a manner consistent with this section. The following apply to the authority granted by this section:]

[(1) Any reference to bonds issued under this section includes a reference to bonds or other similar obligations.]

[(2) The bonds may be referred to as Highway User Tax Bonds.]

[(3)] (1) Bonds issued under this section do not constitute a debt or general obligation of this state or any political subdivision of this state but are secured and payable from moneys described under ORS 367.605. [and 367.610 and secured solely by moneys described under ORS 367.605. No holder of bonds or other similar obligations] A holder of bonds issued under this section [shall have the right to] may not compel the exercise of the ad valorem taxing power of the state to pay [principal and interest on such bonds or other similar obligations] the bond debt service on the bonds.

[(4)] (2) This state shall provide for the continued assessment, levy, collection and deposit into the highway fund moneys described under ORS 367.605 in amounts sufficient to pay, when due, the annual bond debt service [charges] and other amounts necessary to meet requirements established by indenture under ORS 367.640.

[(5)] (3) This state [shall] may not in any way impair obligations of any agreement between this state and the holders of bonds issued under this section.

[(6)] (4) The authority granted by this section is continuing and the department reserves the right, through and with the prior approval of the State Treasurer, to issue additional bonds under this section subject to the following:

(a) Additional bonds [shall] must be secured equally and ratably by the pledge and appropriation of moneys described under ORS 367.605 [or secured separately by a portion of such moneys subject only to the pledge of a particular portion of such moneys to secure particular bonds issued under this section] unless the department, as permitted by law and the contracts with owners of outstanding Highway User Tax Bonds, issues additional bonds in different series and secures each series by a lien on and pledge of moneys described under ORS 367.605 that is superior to or subordinate to the lien of the pledge securing any other series of Highway User Tax Bonds.

(b) The department may only issue additional bonds [shall only be issued] if sufficient moneys described under ORS 367.605 may be pledged to pay the annual bond debt service for all outstanding bonds issued under this section as well as for the additional bonds.

[(7)] (5) Proceeds from the sale of bonds under this section are declared to be for the purpose of building and maintaining [of] permanent public roads and may be used [as described under any of the following]:

(a) To finance the cost of state highway, county road and city street projects in this state.

(b) To pay the cost of issuing the bonds.

(d) To pay the bond debt service of the bonds.

(e) To pay the costs of the State Treasurer and the department to administer and maintain the bonds and the Highway User Tax Bond program, including the cost of consultants, advisors, attorneys or other professional service providers appointed, retained or approved by the treasurer or the department.

(f) To pay capitalized interest, principal or premium, if any, of the bonds.

(g) For rebates or penalties due to the United States in connection with the bonds.

(6) The department may issue Highway User Tax Bonds as capital appreciation bonds, auction rate bonds, variable rate bonds, deep discount bonds or deferred interest bonds.

(7) The State Treasurer or the Director of Transportation, if so directed by the treasurer, may obtain credit enhancement or an agreement for exchange of interest rates to provide additional security or liquidity for the bonds or to provide funding, in lieu of cash, for all or a portion of a bond debt service reserve account established with respect to the bonds.

SECTION 26. ORS 367.635 is amended to read:

367.635. [This section establishes provisions relating to the sale of bonds under ORS 367.615, as follows:]

(1) [Each bond issued shall] A bond issued under ORS 367.615:

(a) Must contain on its face a statement that the ad valorem taxing power of this state or any political subdivision of this state is not pledged to the payment of the principal or the interest on the bond.

[(2)] (b) [The bonds] May be sold at public competitive bid or at private negotiated sale.

[(3)] (c) [Bonds] May be sold at the price or prices established by the State Treasurer, upon the advice of the Department of Transportation.

[(4)] (d) [No bonds issued shall mature at a time exceeding 30 years from the date of issuance] Must mature on or before a date determined by calculation of the expected economic life of the improvements, assets and projects financed with the proceeds of the bonds. Subject to this [subsection] paragraph, the time bonds mature may be as established by indenture under ORS 367.640.

[(5)] (2) The State Treasurer shall determine, upon the advice of the department and consistent with ORS 288.805 to 288.945, all aspects relating to the sale of bonds under ORS 367.615 that are not otherwise specifically provided, including rate of interest and discount, if any. [Any determination made under this subsection shall be upon the advice of the department and shall be consistent with the provisions of ORS 288.805 to 288.945 relating to issuance of bonds by this state.]

SECTION 27. ORS 367.640 is amended to read:

367.640. An indenture under which bonds described under ORS 367.615 are issued may provide for any or all of the following:

(1) The pledging of moneys or a portion of moneys described under ORS 367.605 to the payment of the [principal, interest or redemption premium, if any,] bond debt service on bonds issued under ORS 367.615.

(2) Requirements concerning particular issues of bonds under ORS 367.615.

(3) Requirements concerning moneys described under ORS 367.605 [and 367.610] and payment on outstanding bonds issued under ORS 367.615.

(4) A contractual undertaking for the benefit of bondholders concerning assessment, levy collection and deposit of moneys described under ORS 367.605.

(5) Provisions concerning the registration of bonds or recording or filing of the indenture.

(6) Provisions relating to a reserve account under ORS 367.645. Provisions under this subsection may include, but are not limited to, the amount required for such account or provisions for replenishing the account from moneys described under ORS 367.605.

(7) Provisions concerning trustees under ORS 367.650[,] including, but not limited to [the following]:

(a) Establishing funds, accounts or moneys described under ORS 367.605 over which the trustee will be custodian.

(b) Providing that a trustee will be appointed.

(8) [Establish] Establishing the maturation date for the bonds, subject to ORS 367.635.

SECTION 28. ORS 367.645 is amended to read:

367.645. The Department of Transportation may establish a separate reserve account to provide additional security for bonds issued under ORS 367.615. The following apply to any account established under this section:

(1) The account may be established as part of the highway fund or separately.

(2) The establishment of an account does not, in itself, limit the payment of bond debt service for bonds issued under ORS 367.615 to moneys in the account. Bond debt service for bonds issued under ORS 367.615 may be paid from any moneys under ORS 367.605 [and 367.610], whether or not an account is established, unless otherwise provided by indenture under ORS 367.640.

(3) The account is subject to any provisions established by indenture under ORS 367.640 concerning the amount of money in the account or the replenishing of moneys if the account is drawn down at any time while bonds are outstanding.

(4) The account is subject to any other provisions concerning the account that are established by indenture under ORS 367.640.

SECTION 29. ORS 367.655 is amended to read:

367.655. (1) Notwithstanding any other provision of law or any provision of charter or local ordinance to the contrary:

(a) The Department of Transportation may loan a portion of proceeds from bonds issued under ORS 367.615 to cities and counties; and

(b) Cities and counties may borrow moneys under this section.

(2) Any loan made under this section is subject to all of the following provisions:

(a) Moneys from the loan may only be used to defray costs of location, relocation, improvements, construction and reconstruction of city and county streets and roads.

(b) The department shall establish rules concerning the making of agreements for the loans. Repayment of principal and interest by any city or county [shall] must be made according to the agreement between the department and the city or county [that is made under the rules].

(c) If a city or county defaults of repayment, the department may withhold any part of the appropriation or allocation to the city under ORS 366.785 to 366.820 or the county under ORS 366.525to 366.540 as provided for in the agreement for repayment made under this section.

SECTION 30. ORS 367.660 is amended to read:

367.660. If moneys under ORS 367.605 are pledged for purposes of bonds by indenture under ORS 367.640, a lien is established upon the moneys. A lien established by this section is subject to all of the following:

(1) The lien [shall be] is a first lien and security interest and prior charge upon the pledged moneys except to the extent provided otherwise by the indenture.

(2) The lien is valid and binding from the time the pledge is made.

(3) The pledged moneys are immediately subject to the lien without physical delivery or further act.

(4) The lien is valid and binding against all parties having claims on the money of any kind including claims under tort or contract.

(5) The lien is valid and binding against all parties irrespective of whether the parties have notice of the lien.

(6) No bond, indenture or any other instrument by which the pledge is made or the lien created must be recorded or filed except as provided by the indenture under ORS 367.640.

SECTION 31. ORS 367.705 is amended to read:

367.705. (1) The Department of Transportation shall make loans to cities and counties from funds available under ORS 367.700 to 367.750 [shall be made available by the Department of Transportation to cities and counties to be advanced to defray costs of location, relocation, improvements, construction and reconstruction of city and county streets and roads and of acquisition, development, maintenance and care of public park and recreation facilities] for the purposes stated in section 3a, Article IX of the Oregon Constitution.

(2) If funds available under ORS 367.700 to 367.750 are not sufficient to fund all projects for which funds are applied by cities and counties, the department shall give priority to projects in cities and counties having the highest rates of unemployment in this state.

SECTION 32. ORS 367.710 is amended to read:

367.710. (1) The Department of Transportation shall cause cities and counties that receive funds under ORS 367.705 to repay bond debt service [repayment of principal and interest by the cities and counties who receive funds under ORS 367.705 shall be made] by withholding from payments due to the city under ORS 366.785 to 366.820 or to the county under ORS 366.525 to 366.540. Funds withheld under this subsection remain in the State Highway Fund available for the purposes authorized by law.

(2) The Department of Transportation shall fix the rate of interest to be charged on any advance made under ORS 367.705.

SECTION 33. ORS 367.715 is amended to read:

367.715. All bonds issued under ORS 367.700 to 367.750 [shall] must be issued in accordance with ORS 286.031 to [286.041] 286.066.

SECTION 34. ORS 367.745 is amended to read:

367.745. The Department of Transportation shall compute and determine in January of each year, after the sale of bonds under ORS [367.550 to 367.600] 367.700 to 367.750, the amount of [principal and interest which] bond debt service that will fall due during such year on bonds then outstanding and unpaid and shall maintain or hold in the State Highway Fund sufficient moneys to pay such maturing obligations.

SECTION 35. ORS 367.750 is amended to read:

367.750. [No bonds shall be issued or sold under ORS 367.700 to 367.750 nor indebtedness incurred thereunder, which] The Department of Transportation may not issue or sell general obligation bonds under ORS 367.700 to 367.750 that, singly or in the aggregate with previous debts or liabilities incurred for the building and maintaining of permanent roads, [shall] exceed any limitation provided in the Oregon Constitution at the date of the issuance and sale of such bonds.

SECTION 36. ORS 286.051 is amended to read:

286.051. (1) At the discretion of the State Treasurer, refunding bonds or advance refunding bonds, as provided for in ORS 288.605 to 288.695, may be issued. The bonds may be refunded either prior to or at their maturity dates. Refunding bonds may be issued in the same manner as other bonds are issued under the terms of ORS 286.010 to 286.078, 287.018, 288.020, 293.701, 351.315, 351.345 to 351.460, 351.545, [367.234, 367.258, 367.370 to 367.430,] 367.555, 367.565, 367.700, 367.715, 391.140, 407.415, 407.515, 456.519, 456.645, 456.650, 456.670, 468.195, 470.220, 530.130, 530.230, 541.780 and 541.785 and sections 2 to 10 of this 2003 Act. Refunding bonds may be issued to refund bonds originally issued or to refund bonds previously issued for refunding purposes.

(2) If the governing body or administrative head of the state agency so elects, and the State Treasurer approves, bonds may be issued with the option upon the part of the state to redeem the bonds, with or without premium, in such order, and at such time or times prior to the final maturity date or dates of the bonds.

(3) If all the bonds being redeemed are not in registered form, at least one notice of the intended redemption of the bonds shall be published in one issue of a newspaper specializing in financial matters published in the city in which the bonds by their terms are made payable, and of at least one such notice in a newspaper of general circulation in Portland, Oregon. Notice shall be published at least 30 days before the redemption date.

SECTION 37. ORS 286.061 is amended to read:

286.061. (1) All bonds issued under ORS 286.010 to 286.078, 287.018, 288.020, 293.701, 351.315, 351.345 to 351.460, 351.545, [367.234, 367.258, 367.370 to 367.430,] 367.555, 367.565, 367.700, 367.715, 407.415, 407.515, 456.519, 468.195, 470.220, 530.130, 530.230, 541.780 and 541.785 shall be direct general obligations of the State of Oregon, in negotiable form, and shall embody an absolute promise to pay the amounts thereof in any coin or currency which, at the time of payment, is legal tender for the payment of public and private debts within the United States of America.

(2) The bonds shall be executed with a facsimile signature of the Governor and Secretary of State and the manual or facsimile signature of the State Treasurer or Deputy State Treasurer in accordance with ORS 288.540. The bonds shall be issued as bearer coupon bonds or in registered form, either as to principal or interest, or both.

(3) Not less than 20 days before the payment of the principal or interest falls due on any of the bonds, the respective program shall prepare and submit to the State Treasurer, for verification, a claim duly approved by the agency for the amount necessary to meet the payment thereof. Upon such verification, the agency shall present the claim in like manner as other claims against the state are presented. The claim shall be paid out of moneys provided by law for its payment.

(4) Notwithstanding any other provision of law, when bonds, obligations or other evidence of indebtedness are sold the proceeds may be used to pay attorney, consultant and other professional fees and other expenses incurred in the preparation, authorization, issuance, sale and delivery of, and in all proceedings relating to such bonds, obligations or other evidence of indebtedness.

(5) The State Treasurer may establish funds and accounts separate and distinct from the General Fund as may be authorized by law or reasonably required to protect the bond proceeds and to arrange for their redemption.

SECTION 38. ORS 366.542 is amended to read:

366.542. (1) Moneys paid to counties under ORS [366.524] 366.525 to 366.540 shall be used only for the purposes stated in sections 3 and 3a, Article IX of the Oregon Constitution, and the statutes enacted pursuant thereto including ORS 366.514.

(2) Counties receiving moneys under ORS [366.524] 366.525 to 366.540 shall report annually to the Legislative Assembly the expenditures of those moneys in each of the following areas:

(a) Administration;

(b) Bicycle paths;

(d) Operations and maintenance;

(e) Other payments;

(f) Payments to other governments; and

(g) Repair and preservation.

(3) The Association of Oregon Counties shall make an annual report to the Legislative Assembly presenting the information required by subsection (2) of this section. The report shall be made to the committees of the Legislative Assembly with primary jurisdiction over transportation matters.

(4) For the purposes of subsection (2) of this section, each county shall account for moneys paid to the county under ORS [366.524] 366.525 to 366.540 separately from any other county moneys.

SECTION 39. ORS 367.226, 367.228, 367.230, 367.232, 367.234, 367.236, 367.238, 367.242, 367.258, 367.370, 367.415, 367.430, 367.550 and 367.610 are repealed.

SECTION 40. ORS 367.010, 367.015, 367.020, 367.025, 367.030, 367.035, 367.040, 367.050, 367.060, 367.066, 367.067, 367.555, 367.560, 367.565, 367.595, 367.600, 367.622, 367.623, 367.700, 367.705, 367.710, 367.715, 367.745 and 367.750 are added to and made a part of ORS chapter 367.

SECTION 41. This 2003 Act being necessary for the immediate preservation of the public peace, health and safety, an emergency is declared to exist, and this 2003 Act takes effect on its passage.

Approved by the Governor June 4, 2003

Filed in the office of Secretary of State June 5, 2003

Effective date June 4, 2003

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