Chapter 212 Oregon Laws 1999
Session Law
AN ACT
HB 2163
Relating to water
development loan program; amending ORS 541.700, 541.720, 541.730, 541.740,
541.765 and 541.770.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 541.700 is amended to read:
541.700. As used in ORS 541.700 to 541.855, unless the context
requires otherwise:
(1) "Commission" means the Water Resources Commission
appointed under ORS 536.022.
(2) "Construction" means the construction, or
improvement or rehabilitation, in whole or in part, of a water development
project, including planning and engineering work, purchasing or refinancing directly related to such construction
or improvement or rehabilitation, or any combination of such construction or
improvement or rehabilitation. As used
in this subsection:
(a) "Purchasing"
means the purchasing of materials, land or existing facilities necessary to
complete a water development project.
(b) "Refinancing"
includes refinancing existing debt of a water developer, as defined in
subsection (7)(f) to (m) and (o) of this section, in order to complete a water
development project or to provide adequate security for a water development loan,
but does not include refinancing existing debt only to reduce interest rates or
costs to the borrower or to pay off existing debt.
(3) "Director" means the Water Resources Director
appointed pursuant to ORS 536.032.
(4) "Federal water development project" means [a project that meets the requirements of the
Watershed Protection and Flood Prevention Act (68 Stat. 666), as amended, or
the Small Reclamation Projects Act of 1956 (70 Stat. 1044), as amended] any water development project that
receives funding from the federal government, or any agency or instrumentality
of the United States.
(5)(a) "Secondary use" means:
(A) Any water-related recreational use.
[(B) Any wildlife or
natural resource conservation use.]
[(C) Municipal and
industrial water uses with a water development project as the source.]
[(D) Water quality
enhancement directly related to the development of a new water development
project.]
[(E)] (B) Any flood control use.
[(F)] (C) Any power generation use.
[(G) Any water supply
system utilized for the purpose of agricultural temperature control.]
[(H) Any water supply system
utilized for the maintenance of livestock.]
[(I)] (D) Any water supply system utilized
as a domestic water system for the benefit of an individual residence related
to the operation of the water development project.
(b) "Secondary use" does not include any use that is
incompatible with a water development project.
(6) "Water development project" means:
(a) An undertaking, in whole or in part, in this state for the
purpose of irrigation, including
structures for the application of water for agricultural harvest activities,
dams, storage reservoirs, wells or well systems, pumping plants, pipelines,
canals, ditches, revetments, water
supply systems used for the purpose of agricultural temperature control and
any other structure, facility and property necessary or convenient for
supplying lands with water for irrigation purposes.
(b) An undertaking, in whole or in part, in this state for the
purpose of drainage, including ditching, tiling, piping, channel improvement,
pumping plants or other agronomically approved methods of land drainage that
will increase soil versatility and productivity.
(c) An undertaking, in whole or in part, in this state for the
purpose of providing water for municipal use, which may include safe drinking
water for communities with population less than 30,000, including dams, storage
reservoirs, wells or well systems, pumping plants, treatment facilities,
pipelines, canals, ditches, revetments and all other structures and facilities
necessary or convenient for supplying water. An undertaking may provide water
to two or more communities with a combined population of more than 30,000. An
undertaking may be part of a project that provides water to a community with a
population of more than 30,000, but loans of moneys from the Water Development
Fund, including moneys in ORS 285B.563 (10) may be made only to communities
served by the project that have a population of less than 30,000.
(d) An undertaking, in whole or in part, in this state for the
purpose of fish protection, including fish screening or by-pass devices,
fishways and all other structures and facilities necessary or convenient for
providing fish protection.
(e) An undertaking, in whole or in part, in this state for the
purpose of [watershed enhancement] enhancing watershed health or improving
fish habitat, including methods and materials to restore, maintain and
enhance the biological, chemical and physical integrity of the riparian zones
and associated uplands of the state's rivers, lakes and estuaries systems and
recommended by the Governor's Watershed Enhancement Board established under ORS
541.360.
(f) Secondary uses in conjunction with projects described in
paragraphs (a) to (e) of this subsection.
(7) "Water developer" means:
(a) Any individual resident of this state;
(b) Any partnership for profit subject to the provisions of ORS
chapter 67, 68 or 70, whose principal income is from farming in Oregon;
(c) Any corporation for profit subject to the provisions of ORS
chapter 60, whose principal income is from farming in Oregon;
(d) Any nonprofit corporation subject to the provisions of ORS
chapter 65, whose principal income is from farming in Oregon;
(e) Any cooperative subject to the provisions of ORS chapter
62, whose principal income is from farming in Oregon;
(f) Any irrigation district organized under or subject to ORS
chapter 545;
(g) Any water improvement district organized under ORS chapter
552;
(h) Any water control district organized under ORS chapter 553;
(i) Any irrigation or drainage corporation organized under or
subject to ORS chapter 554;
(j) Any drainage district organized under ORS chapter 547 or
subject to all or part of ORS chapter 545;
(k) Any corporation, cooperative, company or other association
formed prior to 1917 for the purpose of distributing water for irrigation
purposes;
(L) Any port district organized under ORS 777.005 to 777.725,
777.915 to 777.953 and 777.990;
(m) Any city or county;
(n) Any organization formed for the purpose of distributing
water for community water supply; or
(o) Any local soil and water conservation district organized
under ORS 568.210 to 568.808 and 568.900 to 568.933.
SECTION 2.
ORS 541.720 is amended to read:
541.720. The Water Resources Commission may approve the
financing for the construction of a water development project described in an
application filed as provided in ORS 541.705 using moneys in the Water
Development Fund, secured by a first,
parity or second lien in the manner provided in ORS 541.740 if, after
investigation the commission finds that:
(1) The proposed water development project is feasible and a
reasonable risk from practical and economic standpoints;
(2) The plan for the construction, operation and maintenance of
the proposed water development project is satisfactory and, if the primary
purposes of the project include irrigation or drainage, the agricultural
potential is confirmed;
(3) The plan for construction and operation will provide
multipurpose facilities, to the extent practicable;
(4) The applicant is a qualified, credit-worthy and responsible
water developer and is willing and able to enter into a contract with the
commission for construction and repayment as provided in ORS 541.730;
(5) Moneys in the Water Development Fund are or will be
available for the construction of the proposed water development project;
(6) There is a need for the proposed water development project,
the proposed project is in the public interest and the applicant's financial
resources are adequate to provide the working capital needed to operate and
maintain the project; and
(7) The construction cost associated with any secondary use
does not exceed the construction cost of the primary use of the water
development project.
SECTION 3.
ORS 541.730 is amended to read:
541.730. If the Water Resources Commission approves the
financing for the construction of a water development project, the commission,
on behalf of the state, and the applicant may enter into a loan contract,
secured by a first, parity or second
lien in the manner provided in ORS 541.740, which shall set forth, among other
matters:
(1) That the commission, on behalf of the state, must approve
the arrangements made by the applicant for the construction, operation and
maintenance of the water development project, using moneys in the Water
Development Fund for the construction.
(2) A plan for repayment by the applicant to the Water
Development Administration and Bond Sinking Fund of moneys borrowed from the
Water Development Fund used for the construction, operation and maintenance of
the water development project and interest on such moneys used at such rate of
interest as the commission determines is necessary to provide adequate funds to
recover administrative expenses incurred under ORS 541.700 to 541.855. The
repayment plan, among other matters:
(a) Shall provide for commencement of repayment by the water
developer of moneys used for construction and interest thereon not later than
two years after the date of the loan contract or at such other time as the
commission may provide;
(b) May provide for reasonable extension of the time for making
any repayment in emergency or hardship circumstances, if approved by the
commission;
(c) Shall provide for such evidence of debt assurance of and
security for repayment by the applicant as are considered necessary or proper
by the commission; and
(d) Shall set forth a schedule of payments and the period of
loan which shall not exceed the usable life of the constructed project, or 30
years from the date of the first payment due under the financial plan,
whichever is less, and shall also set forth the manner of determining when loan
payments are delinquent. The payment schedule shall include repayment of
interest which accrues during any period of delay in repayment authorized by
paragraph (a) of this subsection, and the payment schedule may require payments
of varying amounts for collection of such accrued interest.
(3) Provisions satisfactory to the commission for field
engineering and inspection, the commission to be the final judge of completion
of the contract.
(4) That the liability of the state under the contract is
contingent upon the availability of moneys in the Water Development Fund for
use in the construction, operation and maintenance of the water development
project.
(5) Such further provisions as the commission considers
necessary to insure expenditure of the funds for the purposes set forth in the
approved application.
(6) That the commission may institute an appropriate action or
suit to prevent use of the facilities of a water development project financed
by the Water Development Fund by any person who is delinquent in the repayment
of any moneys due the Water Development Administration and Bond Sinking Fund.
(7) That a loan for a water development project is assignable
or transferable to a third party only with the prior approval of the
commission. The commission may approve a loan assignment or transfer only if
the commission finds that the assignee or transferee qualifies as a water
developer as defined in ORS 541.700 (7) and the assignment or transfer does not
have serious adverse effect upon the family farm unit structure in this state.
SECTION 4.
ORS 541.740 is amended to read:
541.740. (1)(a) When a loan is made to a water developer other
than a water developer described in ORS 541.700 (7)(a), (b), (c) or (d) for the
construction of a water development project under ORS 541.700 to 541.855, the
State of Oregon has a lien for the amount of the unpaid balance of the loan.
The lien created by this subsection attaches to the real property held in fee simple of the water
developer or to the user charges, including interest, owed to or received by
the water developer. The lien created by
this subsection does not attach to a leasehold. At the discretion of the
Water Resources Commission, the lien may attach to all real property, whether
owned by the water developer or other persons, which is served by the water
development project or which is served by a water source enhanced or restored
by the water development project.
(b) Except for tax liens, the lien created by this section is
prior and superior to all other liens or encumbrances upon the affected real
property or user charges, without regard to the date on which the other liens
or encumbrances attached to the real property or user charges. However, the Water Resources Commission
may elect to accept a second or parity lien position against the real property
or user charges encumbered by this section, if the commission determines the
lien position would provide adequate security for the water development loan,
as set forth in rules adopted by the commission.
(c) The existence or foreclosure of the lien created by this
subsection shall not cause the acceleration of payment of user charges or other
payments on affected real property. Such payments shall continue to be made as
they become due.
(2) When a loan is made under ORS 541.700 to 541.855 to a water
developer described in ORS 541.700 (7)(a), (b), (c) or (d), the loan shall be
secured by a mortgage or security agreement in the full amount of the loan [which]. The mortgage or security agreement shall be a first lien, or a parity or second lien if the
commission determines it would provide adequate security, upon such real
property of the water developer as the commission shall require for adequate
security.
(3) When a lien created by subsection (1) of this section is
foreclosed, a person whose real property is subject to the lien solely because
that real property is irrigated or drained by reason of a water development
project or because the real property is served by a water source improved by a
water development project for watershed enhancement, shall only have that
portion of real property subjected to foreclosure that represents that person's
pro rata share of the indebtedness.
(4) When a loan is made to a water developer under ORS 541.700
to 541.855, the commission shall file notice of the loan with the recording
officer of each county in which is situated real property of the water
developer or real property to which the lien created by subsection (1) or (2)
of this section may attach. The notice shall contain a description of the real
property of the water developer, a description of any other real property that
will be served by the water development project and to which the lien is to
attach, the amount of the loan and a statement that the State of Oregon has a
lien against such real property as provided in subsection (1) or (2) of this
section.
(5) Upon payment of all amounts loaned to a water developer
pursuant to ORS 541.700 to 541.855, the commission shall file with each
recording officer referred to in subsection (4) of this section a satisfaction
notice that indicates repayment of the loan.
(6) The commission may cause to be instituted appropriate
proceedings to foreclose liens for delinquent loan payments, and shall pay the
proceeds of any such foreclosure, less expenses incurred in foreclosing, into
the Water Development Administration and Bond Sinking Fund. In a foreclosure
proceeding, the commission may bid on property offered for sale in the
proceeding and may acquire title to the property on behalf of the state.
(7) The commission may take any action, make any disbursement,
hold any funds or institute any action or proceeding necessary to protect the
state's interest.
(8) Notwithstanding ORS 293.240, the commission may compromise,
release, discharge, waive, cancel or settle a claim against a water developer
if such action:
(a) Is consistent with the purposes of ORS 541.700 to 541.855;
(b) Does not impair the ability to pay the administrative
expenses of the commission or the obligations of any bonds outstanding; and
(c) Is, under the circumstances, the means most likely to
preserve the claim or to recover the greatest part of the amount claimed.
(9) The commission, by rule, may set out procedures to be used
when a water developer is unable to make required loan payments because of
illness, injury, death, involuntary job loss or economic stress due to factors
beyond individual control. The rules shall be effective to the extent permitted
by the terms of the contracts associated with affected loans. The rules:
(a) May provide for a temporary reduction of loan payment;
(b) May provide for any other solution jointly agreed to by the
water developer and the commission;
(c) Shall provide for repayment of the amount of any loan
payments reduced under the rules in accordance with terms and conditions agreed
upon by the borrower and the commission; and
(d) Shall require the commission to consider the effect of any
payment reduction or delay on the solvency of the program as a whole, on
estimates of the most probable financial position of the program in the future
and on other borrowers in the program.
(10)(a) Upon application by a water developer, the commission
may grant a partial release of security when the commission determines that
granting the requested release will not jeopardize the water development loan
program's security position.
(b) The remaining property must qualify as security for the
loan balance under the applicable law.
(c) Notwithstanding compliance with paragraph (b) of this
subsection, the commission may require that the loan balance be reduced as
consideration for granting the requested release.
SECTION 5.
ORS 541.765 is amended to read:
541.765. In addition to those uses of moneys in the Water
Development Fund otherwise provided in ORS 541.700 to 541.855, the Water
Resources Commission may authorize loans of such moneys to those persons to
whom approval has been granted by the [Congress
of the United States] federal
government or any agency or instrumentality of the United States for the
funding and construction of federal water development projects. Any such person
shall apply for a loan to the commission, in such form as the commission
prescribes, and shall furnish such proof of federal approval for funding and
construction as the commission considers appropriate.
SECTION 6.
ORS 541.770 is amended to read:
541.770. If the Water Resources Commission approves an
application for the loan of moneys authorized by ORS 541.765, the commission
shall enter into a loan contract with the borrower that provides, among other
matters:
(1) That the loan be secured by a first lien, or parity or second lien if appropriate,
in the same manner as provided in ORS 541.740.
(2) That the loan bear interest at the same rate of interest as
provided in ORS 541.730.
(3) That the loan becomes due and payable to the Water
Development Administration and Bond Sinking Fund not later than 60 days after
the date that federal funds for the acquisition of easements and rights of way
for the project are paid to the borrower or 30 years from the date of the loan,
whichever is earlier.
(4) Such provisions as the commission considers necessary to
insure expenditure of the moneys loaned for the purposes provided in ORS
541.765.
(5) That the commission may cause to be instituted appropriate
proceedings to foreclose liens for delinquent loan payments, and shall pay the
proceeds of any such foreclosure, less expenses in foreclosing, into the Water
Development Administration and Bond Sinking Fund.
Approved by the Governor
June 3, 1999
Filed in the office of
Secretary of State June 3, 1999
Effective date October 23,
1999
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