75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 562
A-Engrossed
House Bill 2105
Ordered by the House May 6
Including House Amendments dated May 6
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of State Treasurer Randall
Edwards for Municipal Debt Advisory Commission)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Authorizes state agencies and public bodies to purchase and
hold bonds issued by state agency or public body, respectively,
without causing automatic cancellation or extinguishment of
bonds.
{ - Authorizes - } { + Provides that + } State Treasurer
{ - to - } { + may + } buy state government bonds as
investment { + without canceling or extinguishing bonds + }.
Authorizes state agencies and public bodies to use bond
proceeds or moneys available for debt service to purchase bonds
of state agency or public body.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to purchase of bonds; creating new provisions; amending
ORS 286A.001, 286A.100, 287A.001 and 456.680; and declaring an
emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Section 2 of this 2009 Act is added to and made
a part of ORS chapter 286A. + }
SECTION 2. { + (1) A related agency, with the approval of the
State Treasurer, or the State Treasurer, on behalf of a related
agency:
(a) May bid for, purchase, hold, cause to be held in trust and
remarket bonds issued by the State Treasurer on behalf of the
related agency.
(b) May not, except as provided in section 6 (2) of this 2009
Act, bid for, purchase, hold, cause to be held in trust and
remarket bonds issued by the State Treasurer on behalf of another
state agency.
(2) Except as otherwise provided in the operative documents,
the purchase or acquisition of bonds under subsection (1) of this
section does not cancel or extinguish the bonds unless the
related agency elects in writing to cancel or extinguish the
bonds.
(3) In addition to other uses authorized by law, a related
agency, or the State Treasurer on behalf of a related agency, may
purchase bonds under subsection (1) of this section using moneys
that are:
(a) Deposited in a fund or account in the State Treasury for
the use of the related agency or held by a trustee of the related
agency; and
(b) Appropriated or otherwise legally available to the related
agency for repayment of the bonds or for payment of the costs of
the related agency to administer the program under which the
bonds were sold, including bond proceeds and reserves established
for the bonds.
(4) Within two business days after using the authority to
purchase bonds under this section, the State Treasurer shall
notify the legislative revenue committees, when the Legislative
Assembly is in regular or special session, or the Legislative
Revenue Officer and the Legislative Fiscal Officer, during the
interim, of:
(a) The amount and status of the bonds purchased by or on
behalf of a related agency under this section; and
(b) The current or anticipated interest rates applicable to the
bonds.
(5) Not later than February 1 of each year, the State Treasurer
shall submit a report to the legislative revenue committees, when
the Legislative Assembly is in regular or special session, or to
the Legislative Revenue Officer and the Legislative Fiscal
Officer, during the interim, describing:
(a) The amount and status of bonds purchased during the
previous year by or on behalf of related agencies under this
section; and
(b) The savings realized or costs incurred by related agencies
from the purchase of bonds under this section. + }
SECTION 3. { + Section 4 of this 2009 Act is added to and made
a part of ORS chapter 287A. + }
SECTION 4. { + (1) Notwithstanding any limitation in a local
charter, a public body may bid for, purchase, hold, cause to be
held in trust and remarket bonds issued by the public body.
(2) Except as otherwise provided in the operative documents,
the purchase or acquisition of bonds under this section does not
cancel or extinguish the bonds unless the public body elects in
writing to cancel or extinguish the bonds. + }
SECTION 5. { + Section 6 of this 2009 Act is added to and made
a part of ORS 293.701 to 293.820. + }
SECTION 6. { + (1) As used in this section:
(a) 'Related agency' has the meaning given that term in ORS
286A.001.
(b) 'State government' has the meaning given that term in ORS
174.111.
(2) If the State Treasurer, acting as investment officer, or a
trustee, investing moneys for a related agency, purchases or
acquires bonds issued by state government, the purchase or
acquisition does not cancel or extinguish the bonds. + }
SECTION 7. ORS 286A.001 is amended to read:
286A.001. As used in this chapter:
(1) 'Agreement for exchange of interest rates' means a
contract, or an option or forward commitment to enter into a
contract, for the exchange of interest rates that provides for:
(a) Payments based on levels of or changes in interest rates;
or
(b) Provisions to hedge payment, rate, spread or similar
exposure including, but not limited to, an interest rate floor or
cap or an option, put or call.
(2) 'Bond':
(a) Means a contractual undertaking or instrument of the State
of Oregon to repay borrowed moneys.
(b) Does not mean a financing agreement, as defined in ORS
283.085, if the principal amount of the agreement is $100,000 or
less, or a credit enhancement device.
(3) 'Counterparty' means an entity with whom the State of
Oregon enters into an agreement for exchange of interest rates.
(4) 'Credit enhancement device':
(a) Means a letter of credit, line of credit, standby bond
purchase agreement, bond insurance policy, reserve surety bond or
other device or facility used to enhance the creditworthiness,
liquidity or marketability of bonds or agreements for the
exchange of interest rates; and
(b) Does not mean a bond.
(5) 'Credit enhancement device fee' means a payment required to
be made to the provider of a credit enhancement device securing a
bond or securing an agreement for the exchange of interest rates.
(6) 'General obligation bond' means a bond that constitutes
indebtedness of the state under section 7, Article XI of the
Oregon Constitution, and that is exempt from the $50,000
limitation on indebtedness set forth in that section.
{ + (7) 'Operative document' means a bond declaration, trust
agreement, indenture, security agreement or other document in
which the State of Oregon pledges property as security for an
obligation, as defined in ORS 286A.100. + }
{ - (7) - } { + (8) + } 'Refunding bond' means a bond of
the State of Oregon that is issued to refund another bond,
regardless of whether the refunding is on a current, advance,
forward delivery, synthetic or other basis.
{ - (8) - } { + (9) + } 'Related agency' means the state
agency that requests the State Treasurer to issue bonds pursuant
to ORS 286A.025 or for which the State Treasurer has issued
bonds.
{ - (9) - } { + (10) + } 'Related bond' means a bond for
which the State of Oregon enters into an agreement for exchange
of interest rates.
{ - (10) - } { + (11) + } 'Revenue' means all fees, tolls,
excise taxes, assessments, property taxes and other taxes, rates,
charges, rentals and other income or receipts derived by a state
agency or to which a state agency is entitled.
{ - (11) - } { + (12) + } 'Revenue bond' means a bond of
the State of Oregon that is not a general obligation bond.
{ - (12) - } { + (13) + } 'State agency':
(a) Includes a statewide elected officer, board, commission,
department, division, authority or other entity, without regard
to the designation given to the entity, that is within state
government, as defined in ORS 174.111; and
(b) Does not include:
(A) A statewide elected judge;
(B) The State Treasurer;
(C) A local government, as defined in ORS 174.116;
(D) The Oregon Health and Science University;
(E) A special government body, as defined in ORS 174.117,
except to the extent a special government body must be considered
a state agency in order to achieve the purposes of Article XI-K
of the Oregon Constitution; or
(F) A semi-independent state agency listed in ORS
{ - 182.451, - } 182.454, 377.835 or 674.305, or any other state
agency denominated by statute as a semi-independent state agency.
{ - (13) - } { + (14) + } 'Termination payment' means the
amount payable under an agreement for exchange of interest rates
by one party to another party as a result of the termination, in
whole or part, of the agreement prior to the expiration of the
stated term.
SECTION 8. ORS 286A.100 is amended to read:
286A.100. As used in this section and ORS 286A.102:
(1) 'Obligation' means:
(a) A bond;
(b) An agreement for exchange of interest rates with the State
of Oregon; or
(c) A credit enhancement device given as additional security
for a bond.
{ - (2) 'Operative document' means a bond declaration, trust
agreement, indenture, security agreement or other document in
which the State of Oregon pledges property as security for an
obligation. - }
{ - (3) - } { + (2) + } 'Pledge' means:
(a) To create a security interest in or a lien on property to
secure payment or performance of an obligation, by mortgaging,
assigning or encumbering property or by creating a security
interest in property by any other manner.
(b) A security interest in or lien on property created under
paragraph (a) of this subsection.
{ - (4) - } { + (3) + } 'Pledgee' means:
(a) A trustee for the holder of an obligation; or
(b) The holder of an obligation if a trustee was not appointed
in the operative document or if the operative document authorizes
the holder of an obligation to foreclose the lien of a pledge and
enforce the remedies consequent to the pledge in lieu of the
trustee.
{ - (5) - } { + (4) + } 'Property' means:
(a) Real or personal property, tangible or intangible, whether
owned when the pledge is made or acquired subsequently to the
time the pledge is made; and
(b) Revenues, contract rights, receivables or securities.
SECTION 9. 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) Means a contractual undertaking or instrument of a public
body to repay borrowed moneys.
(b) Does not mean a credit enhancement device.
(4) 'Capital construction' has the meaning given that term in
ORS 310.140.
(5) 'Capital improvements' has the meaning given that term in
ORS 310.140.
(6) 'Credit enhancement device':
(a) Means a letter of credit, line of credit, standby bond
purchase agreement, bond insurance policy, reserve surety bond or
other device or facility used to enhance the creditworthiness,
liquidity or marketability of bonds or agreements for exchange of
interest rates.
(b) Does not mean a bond.
(7) '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) '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) '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) '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) '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) '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) '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) 'Refunding bond' means an advance refunding bond, a
current refunding bond or a forward current refunding bond.
(15) '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) '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) 'Revenue bond' means a bond that is not a general
obligation bond.
(18) 'Termination payment' means the amount payable under an
agreement for exchange of interest rates by one party to another
party as a result of the termination, in whole or part, of the
agreement prior to the expiration of the stated term.
SECTION 10. ORS 456.680 is amended to read:
456.680. { - The Housing and Community Services Department,
subject to any existing agreements with its bondholders, may
purchase bonds then outstanding out of any funds of the
department available therefor under ORS 456.515 to 456.725. Any
bonds of the department so purchased shall be canceled. The
department may purchase such bonds whether or not such bonds are
redeemable at the time of such purchase. If the bonds are then
redeemable, the department shall purchase such bonds at a
reasonable price not exceeding the redemption price then
applicable plus accrued interest to the date of redemption. - }
{ + Except as otherwise provided in the operative documents, the
Housing and Community Services Department may acquire outstanding
bonds issued on behalf of the department, as provided in section
2 (1) of this 2009 Act, out of moneys described in section 2 (3)
of this 2009 Act or other moneys of the department legally
available for the purpose under ORS 456.515 to 456.725. If the
outstanding bonds are redeemable at the time of acquisition, the
department must pay a reasonable price that does not exceed the
applicable redemption price plus accrued interest to the date of
redemption. + }
SECTION 11. { + (1) Section 2 of this 2009 Act applies to
bonds purchased by a related agency or the State Treasurer:
(a) On or after the effective date of this 2009 Act; and
(b) Before the effective date of this 2009 Act if the related
agency or the State Treasurer purchased the bonds and the related
agency did not elect in writing to cancel or extinguish the
bonds.
(2) Section 4 of this 2009 Act applies to bonds purchased by a
public body:
(a) On or after the effective date of this 2009 Act; and
(b) Before the effective date of this 2009 Act if the public
body acted within its authority to purchase the bonds and did not
elect in writing to cancel or extinguish the bonds.
(3) Section 6 of this 2009 Act applies to bonds purchased by
the State Treasurer or a trustee on or after the effective date
of this 2009 Act. + }
SECTION 12. { + This 2009 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2009 Act takes effect on
its passage. + }
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