72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
Enrolled
House Bill 3224
Sponsored by Representative KRUMMEL
CHAPTER ................
AN ACT
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
Enrolled House Bill 3224 (HB 3224-B) Page 1
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
Enrolled House Bill 3224 (HB 3224-B) Page 2
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:
Enrolled House Bill 3224 (HB 3224-B) Page 3
(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,
Enrolled House Bill 3224 (HB 3224-B) Page 4
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.
Enrolled House Bill 3224 (HB 3224-B) Page 5
(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. + }
----------
Passed by House April 22, 2003
Repassed by House May 15, 2003
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate May 13, 2003
...........................................................
President of Senate
Enrolled House Bill 3224 (HB 3224-B) Page 6
Received by Governor:
......M.,............., 2003
Approved:
......M.,............., 2003
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2003
...........................................................
Secretary of State
Enrolled House Bill 3224 (HB 3224-B) Page 7