Chapter 286 Oregon Laws 2003

AN ACT

HB 3224

Relating to authority of cities to issue certain bonds; creating new provisions; amending ORS 280.410, 280.415, 280.424, 280.425, 280.430, 280.435, 280.445, 280.482 and 280.485; and repealing ORS 280.417 and 280.442.

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

SECTION 1. ORS 280.410 is amended to read:

280.410. As used in ORS 280.410 to 280.485 unless the context requires otherwise:

(1)(a) “Economic development project” includes any properties, real or personal, used or useful in connection with a revenue producing enterprise.

(b) “Economic development project” also includes multiple unit residential housing development, including low income single room occupancy housing, on land having an assessed valuation of $8 per square foot or more on September 13, 1975, land within a designated urban renewal or redevelopment area formed pursuant to ORS chapter 457, or projects which benefit low or moderate income tenants, or address slum and blight as defined by the 1974 Housing and Community Development Act.

(c) “Economic development project” shall not include any facility or facilities designed primarily for the operation, transmission, sale or distribution of electrical energy.

(2) “Eligible project” means an economic development project found by the city to meet standards adopted pursuant to ORS 280.410 to 280.485.

(3) “City” means any city with a population of [300,000] 70,000 or more.

(4) “Cost” as applied to any project includes:

(a) The cost of construction and reconstruction;

(b) The cost of acquisition of property, including rights in land and other property, both real and personal and improved and unimproved and the cost of site improvements;

(c) The cost of demolishing, removing or relocating any buildings or structures on lands so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved or relocated;

(d) The cost of eligible machinery and equipment and related financing charges;

(e) The cost of engineering and architectural surveys, plans and specifications;

(f) The cost of financing charges and interest prior to and during construction, and if deemed advisable by the city for a period not exceeding one year after completion of construction; and

(g) The cost of consultant and legal services, other expenses necessary or incident to determining the feasibility or practicability of constructing a project, administrative and other expenses necessary or incident to the construction of the project, including, but not limited to, costs of relocation and moving expenses according to a project plan developed by the city, and the financing of the construction of the project thereof, including reimbursement to any state or other governmental agency or any lessee of such project for the expenditures made with the approval of the city that would be costs of the project under ORS 280.410 to 280.485 had they been made directly by the city.

(5) “Low income” means an income not exceeding 80 percent of the prevailing median income, based on family size, within the city.

SECTION 2. ORS 280.415 is amended to read:

280.415. The Legislative Assembly finds that:

(1) Cities with a population of [300,000] 70,000 or more should be granted the powers granted to the state by ORS 285B.320 to 285B.377 in order to reduce substantially within their boundaries the occurrence of economic conditions requiring more expensive remedial action. There exist in Oregon’s larger cities substantial adverse economic conditions requiring immediate remedial action. Such conditions include decreasing opportunities for gainful employment and lack of sites and facilities for orderly and necessary retail, commercial and industrial growth. Amelioration of these conditions is deemed a public purpose and the acquisition of property for such purpose is deemed a public use. To meet the needs of these cities it is necessary to grant them full authority to [issue industrial revenue bonds] undertake and complete development and redevelopment projects, and to assist public and private organizations engaged in such projects, including the issuance of industrial or other nonrecourse revenue bonds. It is the purpose of ORS 280.410 to 280.485 to authorize the exercise of such powers by cities with a population of [300,000] 70,000 in addition to and not in lieu of any other powers such cities may possess.

(2) The lack of residential housing in the core and inner areas of Oregon’s larger cities also is a cause of adverse economic conditions. Development of housing in such areas can be a factor which contributes to orderly economic growth by providing decent housing for workers necessary to attract and promote desirable retail, commercial and industrial growth. Therefore it is also the purpose of ORS 280.410 to 280.485 to permit cities with a population of [300,000] 70,000 or more authority to issue revenue bonds for housing purposes. The Legislative Assembly, in granting this authority, intends to increase Oregon’s available housing stock. In exercising options under that authority, preference should be given by cities to those projects which add housing units through new construction or rehabilitation of nonresidential buildings. For low income single room occupancy housing, however, cities may renovate existing single room housing, convert nonresidential buildings or construct new buildings.

(3) Cities with a population of [100,000] 70,000 or more suffer from a lack of available mortgage financing for the purchase of multiple unit homes in such cities. There is a need for a low-cost mortgage financing for multiple unit home purchasers in order to prevent urban decay and blight and to promote the economic well-being of those cities.

SECTION 3. ORS 280.425 is amended to read:

280.425. In carrying out the provisions of ORS 280.410 to 280.485, a city may:

(1) Acquire by agreement, donation or exercise of eminent domain, construct and hold in whole or in part any lands, buildings, easements, water and air rights, improvements to lands and buildings and capital equipment to be located permanently or used exclusively on such lands or in such buildings, which are deemed necessary in connection with an eligible project to be situated within the city and construct, reconstruct, improve, better and extend such projects, and enter into contracts therefor.

(2) Sell and convey all properties acquired in connection with eligible projects, including without limitation the sale and conveyance thereof subject to any mortgage and the sale and conveyance thereof under an option granted to the lessee of the eligible project, for such price, and at such time as the city may determine. However, no sale or conveyance of such properties shall ever be made in such manner as to impair the rights of interests of the holder, or holders, of any bonds issued under the authority of ORS 280.410 to 280.485.

(3) Make or participate in the making of loans, including mortgage loans, [for multiple unit residential housing, including low income single room occupancy housing, to housing sponsors qualified under standards adopted by the city pursuant to ORS 280.410 to 280.485] to provide for the construction, substantial rehabilitation or permanent financing of [multiple unit residential housing development] eligible projects and undertake commitments to make [those mortgage] such loans. Mortgage loans under this section may include loans for the development of multiple unit residential housing and low income single room occupancy housing to housing sponsors qualified under standards adopted by the city pursuant to ORS 280.410 to 280.485.

(4) For mortgage loans under subsection (3) of this section and ORS 280.430 (5), purchase and sell those mortgage loans at public or private sale; modify or alter such mortgages; foreclose on any such mortgage or security interest or commence any action to protect or enforce any right conferred upon the city by any law, mortgage, security, agreement, contract or other agreement and bid for and purchase property that is subject to such mortgage or security interest at any foreclosure or other sale; acquire or take possession of any such property and complete, administer, pay the principal and interest on any obligations incurred in connection with such property and dispose of such property in such a manner as the city determines necessary to protect its interest under ORS 280.410 to 280.485.

SECTION 4. ORS 280.430 is amended to read:

280.430. In addition to any other powers granted by law or charter, a city may:

(1) Make loans from bond proceeds to finance eligible projects or lease [and] or sublease eligible projects to any person, firm or public or private corporation or federal or state governmental subdivision or agency. Such agreement shall provide that:

(a) The borrower or lessee shall operate, repair and maintain the project which is leased or financed with the loan;

(b) Rents to be charged for the use of the projects shall be fixed, and revised from time to time as necessary, so as to produce income and revenue sufficient to provide for the prompt payment when due of principal of, and interest on, all bonds issued under ORS 280.410 to 280.485;

(c) The loan or lease shall terminate not earlier than the date on which all bonds and all other obligations incurred by the local agency in connection with the project or projects leased or financed by the loan shall be paid in full, including interest, principal and redemption premiums, if any, or adequate funds for such payment [is] are deposited in trust;

(d) The lessee’s obligation to pay rent shall not be subject to cancellation, termination or abatement by the lessee until payment of the bonds or provision for payments is made;

(e) The lessee shall be required to provide adequate insurance in the project and insurance against all liability for injury to persons or property arising from its operation; and

(f) The lessee shall pay all taxes and special assessments levied upon or with respect to the leased premises and payable during the term of the lease, during which term ad valorem taxes shall be assessed in the same amount and to the same extent as though the lessee were the owner of all real and personal property comprising the project;

(2) Acquire, sell and enter into installment sale contracts for eligible projects and land sale contracts for eligible projects;

(3) Pledge and assign to the holders of such bonds or a trustee therefor all or any part of the revenues of one or more eligible projects owned or to be acquired by the city and define and segregate such revenues or provide for the payment thereof to a trustee;

(4) Mortgage or otherwise encumber eligible projects in favor of the holders of such bonds or a trustee therefor. However, in creating any such mortgages or encumbrances the city can not obligate itself except with respect to the project;

(5) Purchase, service, sell and make commitments to purchase, service and sell mortgage loans originated by private lending institutions for residential housing for owner-occupied dwelling units in the form of condominium or cooperative interests in multiple unit housing projects located within the areas specified in ORS 280.410 (1)(b) to persons whose income does not exceed 150 percent of the prevailing median income for families within the city, whether or not the projects are financed in whole or in part pursuant to ORS 280.410 to 280.485. A city shall equitably allocate the origination and servicing of mortgages under this subsection to private lending institutions in accordance with standards adopted by the city;

(6) Make all contracts, execute and deliver all instruments, including any loan agreements or notes, and do all things necessary or convenient in the exercise of the powers granted by this section, or in the performance of its covenants or duties, or in order to secure the payment of its bonds, including a contract entered into prior to the construction, acquisition and installation of the eligible project authorizing the borrower or lessee, subject to such terms and conditions as the city shall find necessary or desirable and proper, to provide for the construction, acquisition and installation of the buildings, improvements and equipment to be included in the project by any means available to the borrower or lessee and in the manner determined by the borrower or lessee, and without advertisement for bids as may be required for the construction, acquisition or installation of other public facilities;

(7) Perform any other duties that the city considers necessary in carrying out ORS 280.410 to 280.485, including but not limited to, efforts to minimize the effects of displacement of residents resulting from projects financed under ORS 280.425 (3);

(8) Enter into and perform such contracts and agreements with political subdivisions and state agencies as the respective governing bodies of the same may consider proper and feasible for or concerning the planning, construction, installation, lease, or other acquisition, and the financing of such facilities, which contracts and agreements may establish a board, commission or such other body as may be deemed proper for the supervision and general management of the facilities of the eligible project; and

(9) Accept from any authorized agency of the federal government loans or grants for the planning, construction, acquisition, leasing, or other provision of any eligible project, and enter into agreements with such agency respecting such loans or grants.

SECTION 5. ORS 280.435 is amended to read:

280.435. Except as provided in ORS 280.425 (2), the city shall not have power to operate any eligible project as a business or in any manner whatsoever, and nothing in ORS 280.410 to 280.485 authorizes the city to expend any funds on any eligible project, other than the revenues of such projects, or the proceeds of revenue bonds issued hereunder, or other funds granted to or appropriated by the city for the purposes of an eligible project.

SECTION 6. ORS 280.445 is amended to read:

280.445. In determining whether to issue revenue bonds under ORS 280.410 to 280.485, the governing body of the city shall consider:

(1) The bond market for the types of bonds proposed for issuance.

(2) The terms and conditions of the proposed issue.

(3) Whether the borrower, lessee or purchaser is financially responsible and fully capable and willing to fulfill its obligations under the loan agreement, agreement of lease[,] or contract, including the obligation to pay rent in the amounts and at the times required, the obligation to operate, repair and maintain at its own expense the project financed, leased[,] or sold, and to serve the purposes of ORS 280.410 to 280.485 and such other responsibilities as may be imposed under the loan agreement, lease or contract. In determining financial responsibility of the borrower, lessee or purchaser, consideration shall be given to the borrower’s, lessee’s or purchaser’s ratio of current assets to current liabilities, net worth, earning trends, coverage of all fixed charges, the nature of the industry or business involved, its inherent stability, any guarantee of the obligations by some other financially responsible corporation, firm or person, and other factors determinative of the capability of the borrower, lessee or purchaser, financially and otherwise, to fulfill its obligations consistently with the purposes of ORS 280.410 to 280.485.

(4) Such other relevant factors as the governing body considers necessary to protect the financial integrity of the city.

SECTION 7. ORS 280.485 is amended to read:

280.485. ORS 280.410 to 280.485 is additional, alternative and supplemental authority for cities with a population of [300,000] 70,000 or more and shall not abrogate any power, right or authority otherwise granted by law or charter to such cities.

SECTION 8. ORS 280.424 is amended to read:

280.424. Single room occupancy rental housing financed with bonds authorized by ORS 280.410, 280.415, 280.422 to 280.425[,] and 280.431 [and 280.442] must conform to the requirements of the Federal Mortgage Subsidy Bond Tax Act of 1980.

SECTION 9. ORS 280.482 is amended to read:

280.482. A city shall report to the State Housing Council and the Legislative Assembly, not later than February 1 of each odd-numbered year on the disposition within that city of the proceeds of bonds issued for the purposes of making mortgage loans under ORS 280.425 (3) and ORS 280.430 (5). The report shall, as a minimum, identify the population, income levels and areas served by the housing program, the length of residence in dwellings purchased under the program and the degree to which the city considers the program’s initial objectives have been achieved. The report shall be reviewed by the State Housing Council and the council shall make its comments on the report known to the city and the Legislative Assembly.

SECTION 10. ORS 280.417 and 280.442 are repealed.

SECTION 11. The amendments to ORS 280.410, 280.415, 280.424, 280.425, 280.430, 280.435, 280.445, 280.482 and 280.485 by sections 1 to 9 of this 2003 Act and the repeal of ORS 280.417 and 280.442 by section 10 of this 2003 Act apply to all bonds issued by a city pursuant to ORS 280.410 to 280.485 on or after the effective date of this 2003 Act.

Approved by the Governor June 10, 2003

Filed in the office of Secretary of State June 11, 2003

Effective date January 1, 2004

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