69th OREGON LEGISLATIVE ASSEMBLY--1997 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 3643

                           A-Engrossed

                         House Bill 3266
                   Ordered by the House May 28
             Including House Amendments dated May 28

Sponsored by Representative MONTGOMERY (at the request of Ben
  Lombard, Jr.)


                             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.

  Requires Office of Energy to   { - pursue advance refunding
opportunities for bonds issued under - }   { + provide borrower
with opportunity to prepay + } small scale local energy project
 { - bond program. Establishes advance refunding requirements - }
 { +  loan through defeasance. Directs office to pursue
opportunities for refunding bonds and to share any savings from
refunding with borrowers.  Requires office to notify certain
borrowers at least 120 days prior to refunding and offer
opportunity to prepay loan + }.

                        A BILL FOR AN ACT
Relating to small scale local energy projects; amending ORS
  470.150 and 470.270.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 470.150 is amended to read:
  470.150. Except as provided in ORS 470.155, if the
administrator of the Office of Energy approves the financing of a
small scale local energy project, the administrator, on behalf of
the state, and the applicant may enter into a loan contract,
secured by a first lien or by other good and sufficient
collateral in the manner provided in ORS 470.155 to 470.210. The
contract:
  (1) May provide that the administrator, on behalf of the state,
must approve the arrangements made by the applicant for the
development, operation and maintenance of the small scale local
energy project, using moneys in the loan fund for the project
development.
  (2) Shall provide a plan for repayment by the applicant to the
sinking fund of moneys borrowed from the loan fund used for the
development of the small scale local energy project and interest
on those moneys used at a rate of interest the administrator
determines is necessary to provide adequate funds to recover the
administrative expenses incurred under this chapter.  The
repayment plan, among other matters:
  (a) Shall provide for commencement of repayment by the
applicant of moneys used for project development and interest
thereon not later than two years after the date of the loan
contract or at any other time as the administrator may provide.
 { + In addition to any other prepayment option provided in a
borrower's loan agreement, the Office of Energy shall provide a
borrower the opportunity to prepay the borrower's loan, without
any additional premium, by defeasing such loan to the call date
of the bond or bonds funding the applicable loan, or any
refunding bonds linked to the loan, but such defeasance shall
occur only if the administrator finds that after the defeasance,
the sinking fund will have sufficient funds to make payments
required under ORS 470.300 (1). + }
  (b) May provide for reasonable extension of the time for making
any repayment in emergency or hardship circumstances, if approved
by the administrator.
  (c) Shall provide for evidence of debt assurance of and
security for repayment by the applicant considered necessary or
proper by the administrator.
  (d) Shall set forth the period of loan which shall not exceed
the usable life of the completed project, or 30 years from the
date of the loan contract, whichever is less.
  (e) May set forth a procedure for formal declaration of default
of payment by the administrator, including formal notification of
all relevant federal, state and local agencies; and further, a
procedure for notification of all relevant federal, state and
local agencies that declaration of default has been rescinded
when appropriate.
  (3) May include provisions satisfactory to the administrator
for field inspection, the administrator to be the final judge of
completion of the project.
  (4) May provide that the liability of the state under the
contract is contingent upon the availability of moneys in the
loan fund for use in the planning and development of the project.
  (5) May include further provisions the administrator considers
necessary to insure expenditure of the funds for the purposes set
forth in the approved application.
  (6) May provide that the administrator may institute an
appropriate action or suit to prevent use of the project financed
by the loan fund by any person who is delinquent in the repayment
of any moneys due the sinking fund.
  SECTION 2. ORS 470.270 is amended to read:
  470.270. (1) After consultation with the State Treasurer, the
administrator of the Office of Energy may issue refunding bonds
for the purpose of refunding outstanding bonds issued under ORS
470.220 to 470.290. The refunding bonds may be sold in the same
manner as other bonds are sold under ORS 470.220 to 470.290. All
moneys obtained from the sale of refunding bonds shall be
credited by the State Treasurer to the sinking fund. The issuance
of the refunding bonds, the maturity date, and other details
thereof, the rights of the holders thereof, and the duties of the
Governor, Secretary of State and State Treasurer with respect
thereto, shall be governed by the other provisions of ORS 470.220
to 470.290, insofar as those provisions are applicable. The
refunding bonds may be issued to refund bonds previously issued
for refunding purposes. Pending the use of moneys obtained from
the sale of refunding bonds for proper purposes, such moneys may
be invested in the manner provided by law.
  (2) Notwithstanding any provision of ORS 470.150, if the Office
of Energy issues taxable refunding bonds at a lower interest rate
to refund outstanding general obligation bonds, and is unable to
allow loan recipients to receive a portion of the interest
savings, the administrator shall allow the loan recipient to
prepay the outstanding loan balance upon the request of the
recipient. The administrator shall respond to such a request
within 30 days after receiving the request by specifying the
outstanding principal balance after applying reserves held by the
state for the borrower and the prepayment premium as listed in
the bond document, loan document or bond purchase agreement.
   { +  (3) The Office of Energy shall pursue opportunities for
refunding bonds to reduce interest sums payable by the office.
When the office refunds a bond with tax-exempt bonds, the office
shall share, on an equitable basis, the savings from any
refunding with the borrowers whose loans were made with the
proceeds of the refunded bonds in an amount consistent with a
finding by the administrator that the sinking fund has, and will
continue to have, sufficient funds to make payments required
under ORS 470.300 (1). The Office of Energy shall not refund
tax-exempt bonds with taxable bonds, unless the office is able to
share the savings associated with such a refunding with the
borrowers whose loans are linked to such bonds. At least 120 days
before the date on which the Office of Energy intends to issue
refunding bonds, the administrator shall notify each borrower
whose loan was made from the proceeds of the bonds being refunded
and shall offer the borrower the opportunity to prepay the
borrower's loan. + }
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