Chapter 195 Oregon Laws 2003

 

AN ACT

 

HB 2131

 

Relating to governmental finance; creating new provisions; and amending ORS 190.080, 221.410, 223.230, 271.390, 286.061, 287.006, 287.012, 288.165, 288.815, 288.845, 294.326, 294.483, 295.005, 305.410, 305.580, 305.583, 305.587, 305.589, 310.140, 328.205 and 352.805.

 

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

 

          SECTION 1. Section 2 of this 2003 Act is added to and made a part of ORS 287.014 to 287.029.

 

          SECTION 2. (1) As used in this section:

          (a) “Agreement for exchange of interest rates” or “agreement” 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.

          (b) “Issuer” means a public body as defined in ORS 288.605, the Oregon Health and Science University or the Master Settlement Asset Corporation established in section 3, chapter 2, Oregon Laws 2002 (fifth special session).

          (c) “Obligation” means a bond, note, bond anticipation note, commercial paper, certificate of participation or other agreement made in exercise of the borrowing powers of the issuer.

          (2) If the issuer is a state issuer, including the State of Oregon or an agency, department, board or commission of the State of Oregon, the State Treasurer may exercise the authority granted by this section on behalf of the state issuer or the state issuer, with the approval of the State Treasurer, may exercise that authority directly.

          (3) Subject to subsection (2) of this section, an issuer, or the State Treasurer on behalf of a state issuer, may enter into an agreement for exchange of interest rates related to an obligation the issuer has issued or will issue to manage payment, interest rate, spread or similar exposure undertaken in connection with the obligation upon a finding by the issuer, or the State Treasurer on behalf of a state issuer, that the agreement benefits the issuer.

          (4) The issuer, or the State Treasurer on behalf of a state issuer, shall include in an agreement for exchange of interest rates provisions related to payment, term, security, collateralization, termination, default and remedy that the issuer, or the State Treasurer on behalf of a state issuer, determines necessary or appropriate upon consideration of the covenants applicable to the obligation and the creditworthiness of the parties.

          (5) The issuer, or the State Treasurer on behalf of a state issuer, may enter into an agreement for exchange of interest rates only if:

          (a) The long-term, senior, unsecured, unenhanced, unsubordinated debt obligations of the party, or the guarantors of the party, with whom the issuer, or the State Treasurer on behalf of a state issuer, enters the agreement are rated in one of the top three rating categories without gradation by at least two nationally recognized rating agencies; or

          (b) The obligations of the party, or the guarantors of the party, with whom the issuer, or the State Treasurer on behalf of a state issuer, enters the agreement are collateralized by cash or obligations rated in one of the top three rating categories without gradation by at least two nationally recognized rating agencies and:

          (A) The cash or obligations are deposited with the issuer, or the State Treasurer on behalf of a state issuer, or with an agent of the issuer;

          (B) The cash or obligations have a market value sufficient to fully collateralize the obligations of the party under the agreement as determined at the discretion of the issuer, or the State Treasurer on behalf of a state issuer; and

          (C) The collateral obligations are valued at least quarterly.

          (6) With respect to an obligation that the issuer, or the State Treasurer on behalf of a state issuer, has issued or will issue, the issuer, or the State Treasurer on behalf of a state issuer, may agree:

          (a) If the obligation bears interest at one or more variable rates, to pay sums equal to interest at one or more fixed rates or one or more different variable rates determined under a formula set forth in the agreement for exchange of interest rates on an amount not to exceed the outstanding principal amount of the obligation in exchange for an agreement for the issuer, or the State Treasurer on behalf of a state issuer, to be paid sums equal to interest on the same principal amount at a variable rate determined under a formula set forth in the agreement.

          (b) If the obligation bears interest at one or more fixed rates, to pay sums equal to interest at one or more variable rates or one or more different fixed rates determined under a formula set forth in the agreement for exchange of interest rates on an amount not to exceed the outstanding principal amount of the obligation in exchange for an agreement for the issuer, or the State Treasurer on behalf of a state issuer, to be paid sums equal to interest on the same principal amount at a fixed rate or rates set forth in the agreement.

          (7) The issuer, or the State Treasurer on behalf of a state issuer, may not enter into an agreement under this section that:

          (a) Has a term that exceeds the original term of the obligation for which the agreement for exchange of interest rates is made or, in the case of an option or a forward commitment, has a term that exceeds the reasonably expected term of the obligation for which the agreement is made; or

          (b) Is for a purpose other than to manage payment, interest rate, spread or similar exposure in connection with the obligation of the issuer.

          (8) The limitation on interest on an obligation in ORS 286.036, or any other similar limitation, does not apply to interest paid under an agreement for exchange of interest rates entered into under this section.

          (9) Upon entering into an agreement for exchange of interest rates under this section and continuing until the agreement is satisfied, terminated or otherwise no longer in effect, as long as no payment default has occurred, the issuer, or the State Treasurer on behalf of a state issuer, shall treat the amount or rate of interest on the obligation related to the agreement as the amount or rate of interest payable after giving effect to the agreement for the purpose of calculating:

          (a) Tax levies, if any, to pay bond debt service; or

          (b) Other amounts that are based upon the rate of interest of the obligation.

          (10) Subject to covenants applicable to the obligation, payments required to be made under the agreement by the issuer, or the State Treasurer on behalf of a state issuer:

          (a) May be made from revenues or other moneys committed to or legally available to pay the underlying debt obligation; and

          (b) May rank in an order of priority of payment relative to the payment of the underlying debt obligation as the issuer, or the State Treasurer on behalf of a state issuer, determines. In connection with entering into an agreement, the issuer, or the State Treasurer on behalf of a state issuer, may enter into an agreement that enhances or supports the credit of the issuer in the agreement or enhances or supports the liquidity of the agreement.

          (11) An agreement entered into under this section is not a debt or other obligation of the state issuer for purposes of any limitation upon the indebtedness of the state issuer.

          (12)(a) The Oregon Municipal Debt Advisory Commission shall promulgate administrative rules establishing required terms, conditions, annual or periodic reporting requirements and other requirements for an agreement for exchange of interest rates entered into by an issuer other than a state issuer.

          (b) The State Treasurer may promulgate administrative rules establishing required terms, conditions, annual or periodic reporting requirements and other requirements for an agreement for exchange of interest rates entered into by a state issuer acting with the approval of the State Treasurer under subsection (2) of this section.

          (13)(a) Before an agreement for exchange of interest rates may be entered into under this section, the issuer, or the State Treasurer on behalf of a state issuer, shall determine whether:

          (A) The agreement for exchange of interest rates is being executed for a permitted purpose and benefits the issuer; and

          (B) The requirements of this section have been met.

          (b) In addition to the determinations required under paragraph (a) of this subsection, an issuer other than a state issuer shall also determine whether the issuer has complied with the requirements of the administrative rules promulgated by the Oregon Municipal Debt Advisory Commission under subsection (12) of this section.

          (14) An issuer other than a state issuer shall notify the State Treasurer of the execution by the issuer of an agreement for exchange of interest rates under this section.

 

          SECTION 3. Section 4 of this 2003 Act is added to and made a part of ORS 288.150 to 288.165.

 

          SECTION 4. (1) As used in this section:

          (a) “Lawfully available funds” means revenues or other moneys of a governmental unit from whatever source derived, including but not limited to moneys credited to the governmental unit’s general fund, revenues from an ad valorem tax authorized to be levied under the governmental unit’s permanent rate limit under sections 11 and 11b, Article XI of the Oregon Constitution, and revenues derived from other taxes levied by the governmental unit in accordance with and subject to limitations and restrictions imposed under applicable law or contract, that are not dedicated, restricted or obligated by law or contract to an inconsistent expenditure or use.

          (b) “Obligation” has the meaning given that term in ORS 288.594.

          (2) When a governmental unit pledges its full faith and credit and taxing powers to the repayment of an obligation, the pledge constitutes an enforceable promise or contract by the governmental unit:

          (a) To pay the obligation out of lawfully available funds of the governmental unit; and

          (b) If lawfully available funds are insufficient to pay when due the amounts owing on the obligation, to levy, impose and collect a tax that is within the authority of the governmental unit to levy, impose and collect in an amount sufficient to pay the amounts owing under the obligation, including past due amounts and penalties.

          (3) If a governmental unit fails to pay when due an amount owing under an obligation secured by a pledge of the full faith and credit and taxing powers of the governmental unit, the owner of the obligation, or a trustee appointed to act on behalf of the owner, may bring an action in the circuit court for the county in which the principal offices of the governmental unit are located to compel the governmental unit to:

          (a) Appropriate and expend sufficient lawfully available funds to pay the amounts owing on the obligation; or

          (b) If lawfully available funds are insufficient to pay when due the amounts owing on the obligation, levy, impose and collect a tax that is within the authority of the governmental unit to levy, impose and collect in an amount sufficient to pay the amounts owing under the obligation, including past due amounts and penalties.

          (4) An owner of the obligation, or a trustee appointed to act on behalf of the owner, may initiate a proceeding to impose remedial sanctions under ORS 33.055 against members of a governing body for failure to comply with an order of the court under this subsection.

 

          SECTION 5. Section 6 of this 2003 Act is added to and made a part of ORS 280.040 to 280.145.

 

          SECTION 6. Subject to ORS 294.305 to 294.565 and the applicable provisions of a charter, ordinance or resolution of a subdivision, a subdivision may use revenues raised by a local option tax beyond the period of years during which the subdivision is authorized to levy the local option tax if the revenue is used for the purpose authorized by the electors.

 

          SECTION 7. ORS 190.080 is amended to read:

          190.080. (1) An intergovernmental entity created by an intergovernmental agreement under ORS 190.010 may, according to the terms of the agreement:

          (a) Issue revenue bonds under ORS 288.805 to 288.945 or enter into financing agreements authorized under ORS 271.390 to accomplish the public purposes of the parties to the agreement, if after a public hearing the governing body of each of the units of local government that are parties to the agreement approves, by resolution or order, the issuance of the revenue bonds or entering into the financing agreement;

          (b) Enter into agreements with vendors, trustees or escrow agents for the installment purchase or lease, with option to purchase, of real or personal property if the period of time allowed for payment under an agreement does not exceed 20 years; and

          (c) Adopt all rules necessary to carry out its powers and duties under the intergovernmental agreement.

          (2) Except as provided in ORS 190.083, an intergovernmental entity may not levy taxes or issue general obligation bonds.

          (3) The debts, liabilities and obligations of an intergovernmental entity shall be, jointly and severally, the debts, liabilities and obligations of the parties to the intergovernmental agreement that created the entity, unless the agreement specifically provides otherwise.

          (4) A party to an intergovernmental agreement creating an intergovernmental entity may assume responsibility for specific debts, liabilities or obligations of the intergovernmental entity.

          (5) Any moneys collected by or credited to an intergovernmental entity shall not accrue to the benefit of private persons. Upon dissolution of the entity, title to all assets of the intergovernmental entity shall vest in the parties to the intergovernmental agreement. The agreement creating the entity shall provide a procedure for:

          (a) The disposition, division and distribution of any assets acquired by the intergovernmental entity; and

          (b) The assumption of any outstanding indebtedness or other liabilities of the entity by the parties to the intergovernmental agreement that created the entity.

          (6) An intergovernmental entity created by intergovernmental agreement under ORS 190.010 may be terminated at any time by unanimous vote of all the parties to the intergovernmental agreement or as provided by the terms of the agreement.

 

          SECTION 8. ORS 271.390 is amended to read:

          271.390. (1) As used in this section:

          (a) “Council of governments” means a council of governments or other similar entity created prior to the enactment of ORS 190.010 (5) on September 29, 1991.

          [(a)] (b) “Municipality” has the meaning given that term in ORS 288.515.

          [(b)] (c) “Real or personal property” means land, improvements to land, structures, fixtures, personal property, including furnishings, equipment and computer software purchases and licenses, and any costs that may be capitalized under generally accepted accounting principles and treated as costs of personal property.

          (2) [Any] A municipality or a council of governments may enter into contracts for the leasing, rental or financing of any real or personal property that the governing body determines is needed, including contracts for rental, long term leases under an optional contract for purchase, financing agreements with vendors, financial institutions or others, or for purchase of any property. Leases or contracts made by a municipality or a council of governments shall be made subject to the terms of its charter, intergovernmental agreement or other organizing document, if applicable. If authorized by the governing body, such contracts may:

          (a) Provide that the obligations of the municipality or council of governments under the contract shall be secured by a mortgage on or other security interest in the property to be leased, rented, purchased or financed under the contract.

          (b) Provide that the obligations of the municipality or council of governments under the contract shall be payable out of all or any designated portion of the lawfully available revenues of the municipality or council of governments, which revenues may be pledged to the payment of those obligations.

          (c) If authorized by the charter, intergovernmental agreement or other organizing document of the municipality or council of governments, contain a covenant on the part of the municipality or council of governments to budget and appropriate in each fiscal year, in accordance with law, sums sufficient to pay when due the amounts owing under the contract.

          (d) Provide for the issuance of certificates of participation in the payment obligations of the municipality or council of governments under the contract and contain such other covenants, agreements and provisions as are determined to be necessary or appropriate in order to better secure the obligations of the municipality or council of governments.

          (3) The lien of [any such] the pledge, mortgage or security interest [shall be] is valid and binding from the time of entering into the contract [is entered into]. The [revenues] revenue or property [shall be] is immediately subject to the lien without physical delivery, filing or other act, and the lien [shall be] is superior to all other claims and liens of any kind whatsoever. Subject to the terms, provisions and limitations of the contract, the lien may be foreclosed by a proceeding brought in the circuit court of the county in which the municipality, or the greater part thereof, or the main office of the council of governments is located, and any tangible real or personal property subject to the lien may be sold upon the order of the court. The proceeds of the sale shall first be applied to the payment of the costs of foreclosure and then to the amounts owing under the contract, with any balance being paid to the municipality or council of governments. The authority granted by this section is in addition to, and not in lieu of, any other statutory or charter authority.

          (4) [Any] A municipality or council of governments that has entered into a lease purchase or installment purchase agreement may enter into a financing agreement to refinance the [municipality’s] obligations of the municipality or council of governments under the lease purchase or installment purchase agreement.

          (5) The estimated weighted average life of a financing contract executed under this section [shall] may not exceed the estimated dollar weighted average life of the real or personal property that is financed with the contract.

 

          SECTION 9. ORS 221.410 is amended to read:

          221.410. (1) Except as limited by express provision or necessary implication of general law, a city may take all action necessary or convenient for the government of its local affairs.

          (2)(a) [No city] A city may not, unless authorized to do so by its electors, [shall] contract a voluntary floating indebtedness in excess of the sum of $5,000 for general city purposes. A city official or employee who creates or officially approves such an indebtedness in excess of the limitation shall be liable for the amount of the excess.

          (b) Notwithstanding paragraph (a) of this subsection, a city may contract a voluntary floating indebtedness in excess of the sum of $5,000 for general city purposes without an election specifically approving the indebtedness if authorized to do so by a statute or charter.

          [(3) Cities affected by subsections (1) and (2) of this section are those defined in ORS 221.010.]

          (3) As used in this section, “city” has the meaning given that term in ORS 221.010.

 

          SECTION 10. ORS 223.230 is amended to read:

          223.230. (1) After expiration of the time for filing application under ORS 223.210, the [city] governmental unit shall enter in a docket kept for that purpose, under separate heads for each local improvement, by name or number, a description of each lot or parcel of land or other property against which the final assessment is made, or which bears or is chargeable for a portion of the actual cost of the local improvement, with the name of the owner and the amount of the unpaid final assessment. The entries shall be made as of the date of initial determination and levy of the final assessment.

          (2) The docket shall stand thereafter as a lien docket as for ad valorem property taxes assessed and levied in favor of the [city] governmental unit against each lot or parcel of land or other property, until paid, for the following:

          (a) For the amounts of the unpaid final assessments therein docketed, with interest on the installments of the final assessments at the rate determined by the governing body of the [city] governmental unit under ORS 223.215; and

          (b) For any additional interest or penalties imposed by the [city] governmental unit with respect to any installments of final assessments [which] that are not paid when due.

          (3) All unpaid final assessments together with accrued and unpaid interest and penalties are a lien on each lot or parcel of land or other property, respectively, in favor of the [city] governmental unit, and the lien shall have priority over all other liens and encumbrances whatsoever.

          (4) For a local improvement district assessment lien or system development charge installment payment contract lien to continue, each [city, not later than June 30, 1998,] governmental unit shall make the appropriate lien record, as prescribed by this section and ORS 223.393, [and this section of the city] available on hard copy or through an on-line electronic medium.

 

          SECTION 11. ORS 286.061 is amended to read:

          286.061. (1) All bonds issued by the State of Oregon under ORS 286.010 to 286.078, 287.018, 288.020, 293.701, 351.315, 351.345 to 351.460, 351.545, 367.234, 367.258, 367.370 to 367.430, 367.555, 367.565, 367.700, 367.715, 407.415, 407.515, 456.519, 468.195, 470.220, 530.130, 530.230, 541.780 and 541.785 shall be direct general obligations of the State of Oregon, in negotiable form, and shall embody an absolute promise to pay the amounts thereof in any coin or currency which, at the time of payment, is legal tender for the payment of public and private debts within the United States of America.

          (2) The bonds shall be executed with a facsimile signature of the Governor and Secretary of State and the manual or facsimile signature of the State Treasurer or Deputy State Treasurer in accordance with ORS 288.540. The bonds shall be issued as bearer coupon bonds or in registered form, either as to principal or interest, or both.

          (3) Not less than 20 days before the payment of the principal or interest falls due on any of the bonds, the respective program shall prepare and submit to the State Treasurer, for verification, a claim duly approved by the agency for the amount necessary to meet the payment thereof. Upon such verification, the agency shall present the claim in like manner as other claims against the state are presented. The claim shall be paid out of moneys provided by law for its payment.

          (4) Notwithstanding any other provision of law, when bonds, obligations or other evidence of indebtedness are sold, the proceeds may be used to pay attorney, consultant, paying agent, trustee or [and] other professional fees and other expenses incurred [in the preparation, authorization, issuance, sale and delivery of, and in all proceedings relating to such] to authorize, issue, carry and repay the bonds, obligations or other evidence of indebtedness.

          (5) The State Treasurer may establish funds and accounts separate and distinct from the General Fund as may be authorized by law or reasonably required to protect the bond proceeds and to arrange for their redemption.

 

          SECTION 12. ORS 287.006 is amended to read:

          287.006. (1) Each [city and town] municipality shall annually cause to be levied upon the taxable property within its boundaries a sum sufficient, with such other revenues as are available, to pay the maturing interest and principal of all general obligation bonds and to provide a sinking or debt service fund to pay the interest and principal of all other bonds issued after June 3, 1929, by [such city or town] the municipality at or before the maturity date or dates thereof. If any such other bonds are not callable or subject to retirement by purchase or otherwise before the ultimate maturity dates specified in such bonds, the surplus of the sinking or debt service fund over and above current requirements to pay interest and principal shall be invested in the classes of securities specified in ORS 294.035 and 294.040.

          (2) The earnings of the sinking or debt service fund shall be added to and become a part thereof for the purpose of paying interest and principal of the bonds for which the fund was created.

          (3) A municipality may not use or divert the fund [shall not be diverted or used] for any other purpose[; but] if principal, interest and premium, if any, remain outstanding on the bonds. However, if a surplus remains after all [interest and] principal, interest and premium, if any, of a given issue have been paid, the [surplus may be transferred to such other fund as the governing body of the particular city may designate] governing body of the municipality may transfer the surplus to another fund designated by the governing body of the municipality. However, funds of municipal utilities [shall] may not be diverted or transferred to other funds.

          (4) Annual sinking or debt service fund installments to pay the principal of municipal utility bonds issued after June 3, 1929, to defray costs of construction, extension and betterments may be deferred, if necessary, for a period not to exceed five years from the issuing date or dates of such bonds.

          (5) This section does not apply to or affect bonds issued pursuant to applications to pay assessments for improvements in installments under statutory or charter authority.

 

          SECTION 13. ORS 287.012 is amended to read:

          287.012. (1) Notwithstanding any other provision of law, when bonds, obligations or other evidence of indebtedness issued by any district, authority or public corporation after August 9, 1961, are sold, the proceeds may be used to pay attorney, consultant, paying agent, trustee or other professional fees and other expenses incurred [in the preparation, authorization, issuance and sale of, and in all proceedings relating to, such] to authorize, issue, carry and repay the bonds, obligations or other evidence of indebtedness.

          (2) When bonds are sold, the proceeds received in excess of the principal shall be placed with the principal in the improvement fund for which the bonds were issued or in a debt service fund to repay the bond.

 

          SECTION 14. ORS 288.165, as amended by section 1, chapter 1, Oregon Laws 2002, and section 4, chapter 1, Oregon Laws 2002 (fourth special session), is amended to read:

          288.165. (1) Subject to any applicable limitations imposed by the Constitution or laws of the State of Oregon or the charter, ordinance or resolution of a governmental unit, a governmental unit or the State of Oregon, acting through the State Treasurer pursuant to section 3, chapter 1, Oregon Laws 2002, may borrow money by entering into a credit agreement, or issuing notes, warrants, short-term promissory notes, commercial paper or other obligations:

          (a) In anticipation of taxes, grants or other revenues for purposes that include, but are not limited to, the payment of current expenses;

          (b) To provide interim financing for capital assets to be undertaken by the governmental unit; or

          (c) To refund outstanding obligations.

          (2) To secure obligations authorized under this section, a governmental unit or the State Treasurer may:

          (a) Pledge its anticipated taxes, grants, other revenues, the proceeds of any bonds or other permanent financing, or any combination thereof;

          (b) Segregate any pledged funds in separate accounts [which] that may be held by the governmental unit, the State Treasurer or third parties;

          (c) Enter into contracts with third parties to obtain standby lines of credit or other financial commitments designated to provide additional security for obligations authorized by this section;

          (d) Establish any reserves deemed necessary for the payment of the obligations; and

          (e) Adopt resolutions and enter into agreements containing covenants and provisions for protection and security of the owners of obligations, which shall constitute enforceable contracts with such owners.

          (3) Obligations authorized by this section [which] that are issued in anticipation of taxes or other revenues[,] and any obligations authorized by this section [which] that are issued to refund them[, shall] may not be issued prior to the beginning of, and shall mature not later than, the end of the fiscal period in which the taxes or other revenues are expected to be received. Obligations issued by a governmental unit in anticipation of taxes or other revenues [shall] may not be issued in an amount greater than 80 percent of the amount budgeted to be received in the fiscal period in which the obligations are issued.

          (4) Obligations authorized by this section [which] that are issued in anticipation of a grant [shall mature not later than one year after the date the grant is estimated to be received. Obligations issued] or to provide interim financing for capital assets shall mature not later than [one year from the estimated completion or acquisition of the capital assets] five years after the obligations are issued and may be redeemed beginning not later than one year after the grant is expected to be received or the capital asset is projected to be completed.

          (5) Notwithstanding subsections (3) and (4) of this section, a school district, education service district, community college district or community college service district may issue obligations that are issued in anticipation of taxes, grants or other revenues to mature not later than 13 months after the date the obligations were issued.

          (6) Refunding obligations issued pursuant to subsection (1)(c) of this section shall mature [as soon as the issuer deems practicable and no later than 18 months] not later than five years after the refunding obligations are issued.

          (7) The debt limitations imposed by law or the charter of any governmental unit [shall] do not affect the right of any governmental unit to issue obligations under authority of this section, nor [shall] are any of the obligations to be taken into consideration in determining the percentage or extent to which the governmental unit is indebted under the debt limitation. Obligations issued to refund outstanding obligations [shall not be] are not considered to be within any of such debt limitations.

          (8) Except as provided in this section, obligations authorized by this section may be in any form and contain any terms, including provisions for redemption at the option of the owner and provisions for the varying of interest rates in accordance with any index, banker’s loan rate or other standard.

          (9) The governing body of an issuing governmental unit, in the ordinance or resolution authorizing the issuance of obligations under this section, may delegate to any elected or appointed official or employee of the governmental unit the authority to determine maturity dates, principal amounts, redemption provisions, interest rates or the method for determining a variable or adjustable interest rate, denominations and other terms and conditions of such obligations [which] that are not appropriately determined at the time of enactment or adoption of the authorizing ordinance or resolution, which delegated authority shall be exercised subject to applicable requirements of law and such limitations and criteria as may be set forth in such ordinance or resolution. Except to the extent of any such delegation, the governmental unit or the State Treasurer shall determine:

          (a) The maximum effective rate of interest the obligations shall bear;

          (b) The manner of sale;

          (c) The discount, if any, the governmental unit may allow;

          (d) The terms and conditions by which the obligations may be redeemed prior to maturity;

          (e) The maturities of the obligations;

          (f) The form and denominations of the notes or other obligations; and

          (g) All other terms and conditions related to the sale of the obligations.

          (10) The governmental unit or the State Treasurer may contract with third parties to serve as issuing, paying and authenticating agents for any obligations authorized by this section.

          (11) Obligations authorized by this section may be sold at public or private sale upon such terms as the governmental unit or the State Treasurer finds advantageous, with such disclosure as the governmental unit or State Treasurer deems appropriate. ORS 287.040 applies to obligations issued by governmental units under this section.

          (12) As used in this section, “fiscal period” means:

          (a) In the case of a governmental unit, a fiscal year.

          (b) In the case of the State of Oregon, a biennium.

 

          SECTION 15. ORS 288.815 is amended to read:

          288.815. (1) A municipality, upon adoption of a resolution or [an] a nonemergency ordinance authorizing the issuance of bonds in accordance with [subsections (1) to (7) of] this section, may issue revenue bonds [authorized by] under ORS 288.805 to 288.945.

          (2) A municipality may not sell revenue bonds under ORS 288.805 to 288.945 authorized by a nonemergency ordinance until the period for referral of the ordinance has expired. If a nonemergency ordinance authorizing bonds is referred, the municipality may not sell the bonds unless the voters approve the revenue bonds.

          [(2)] (3) [The authorizing resolution or ordinance must provide that no bonds may be sold, or in the case of a private negotiated sale, no purchase agreement can be executed, for] A municipality may not sell revenue bonds under ORS 288.805 to 288.945 authorized by a resolution until at least 60 days following publication of the notice required in subsection [(6)] (7) of this section.

          [(3)] (4) The [authorizing] resolution [or ordinance] must provide that electors residing within the municipality may file a petition with the municipality asking [to have] that the question of whether to issue [such] the bonds described in the resolution be referred to a vote.

          [(4)] (5) If the municipality receives petitions containing valid signatures of that municipality’s electors totaling not less than five percent of the municipality’s electors, the question of issuing [such] the bonds described in the resolution shall be placed on the ballot at the next legally available election date.

          [(5)] (6) If [such] a petition is filed with the municipality within 60 days following publication of the notice described in subsection [(6)] (7) of this section, [no bonds may be sold until] bonds may not be sold until the issuance of bonds described in the resolution [or ordinance] is approved by a majority of the electors of that jurisdiction voting on the [resolution or ordinance] question.

          [(6)] (7) A notice describing the purposes for which the bonds described in the resolution are sold shall be published by the municipality in at least one newspaper of general circulation within the municipality[,] and in the same manner as are other public notices of that municipality. [Such] The notice shall contain:

          (a) The date the [authorizing] resolution [or ordinance] was adopted and the number thereof, if any;

          (b) Expected source of revenue for repayment of the revenue bonds;

          (c) Estimated principal amount of the bonds to be sold;

          (d) The procedures by which the question of issuing the revenue bonds may be referred to a vote;

          (e) The time in which the required signatures must be gathered;

          (f) Any other information the municipality may wish to include; and

          (g) The fact that the [authorizing] resolution [or ordinance] is available for inspection at the appropriate office of the municipality.

          [(7)] (8) Nothing in [subsections (1) to (7) of] this section [shall in any way prohibit] prohibits the municipality on its own initiative from referring the resolution or nonemergency ordinance authorizing the sale of revenue bonds to a vote of the electors of the municipality.

          [(8)] (9) When the public body issuing revenue bonds is a municipality, the municipality shall issue [such] the bonds in accordance with the provisions of ORS 288.515 to 288.560.

 

          SECTION 16. ORS 288.845 is amended to read:

          288.845. (1) [Unless the bonds are to be sold to the federal government or the State of Oregon or to any corporation, department or agency of those governments, a municipality] When issuing revenue bonds at a private negotiated sale, a municipality may obtain an [must retain] independent expert [advice which shall] to advise the municipality and to evaluate:

          (a) The terms and conditions of the proposed sale;

          (b) The pricing of the proposed sale; and

          (c) Any other relevant aspects of the sale.

          (2) The evaluation [required] authorized by subsection (1) of this section [shall] must be made either in writing or, if orally, at a public meeting of the municipality authorizing a private negotiated sale.

 

          SECTION 17. ORS 295.005 is amended to read:

          295.005. As used in ORS 295.005 to 295.165, unless the context requires otherwise:

          (1) “Certificate of participation” or “certificate” means a nonnegotiable document issued by a pool manager to a public official.

          (2) “Custodian bank” or “custodian” means the following institutions designated by the depository bank for its own account:

          (a) The Federal Reserve Bank designated to serve this state, or any branch of that bank;

          (b) The Federal Home Loan Bank designated to serve this state, or any branch of that bank;

          (c) Any insured institution or trust company, as those terms are defined in ORS 706.008, that is authorized to accept deposits or transact trust business in this state, provided, however, that no insured institution or trust company may be a custodian bank unless it certifies in writing to the State Treasurer that it will furnish the reports required under ORS 714.075 to the Director of the Department of Consumer and Business Services. With the approval of the State Treasurer, a depository bank may be a custodian bank with respect to its own securities; and

          (d) The fiscal agency of the State of Oregon, duly appointed and acting as such agency pursuant to ORS 288.010 to 288.110.

          (3) “Custodian’s receipt” or “receipt” means a document issued by a custodian bank to a pool manager describing the securities deposited with it by a depository bank to secure public fund deposits.

          (4) “Depository bank” or “depository” means any insured institution or trust company, as those terms are defined in ORS 706.008, that maintains a head office or a branch in this state in the capacity of an insured institution or trust company. However, an insured institution or trust company is not a depository bank unless it has:

          (a) Certified in writing to the State Treasurer that it will furnish the reports required under ORS 714.075 to the Director of the Department of Consumer and Business Services; and

          (b) Entered into a written agreement with the State Treasurer and a custodian that pledges the securities deposited by the insured institution or trust company with the custodian as collateral for deposits of public funds held by the insured institution or trust company. The agreement shall be approved by the board of directors or loan committee of the insured institution or trust company and shall be continuously maintained as a written record of the institution or company.

          (5) “Pool manager” means:

          (a) The State Treasurer;

          (b) Any insured institution or trust company, as those terms are defined in ORS 706.008, that is authorized to accept deposits or transact trust business in this state; but a depository bank shall not be a pool manager with respect to securities that it deposits with its custodians as collateral for the security of public fund deposits and no insured institution or trust company may be a pool manager unless it certifies in writing to the State Treasurer that it will furnish the reports required under ORS 714.075 to the Director of the Department of Consumer and Business Services;

          (c) The Federal Reserve Bank designated to serve this state, or any branch of that bank; or

          (d) The Federal Home Loan Bank designated to serve this state, or any branch of that bank.

          (6) “Public funds” or “funds” means the funds under the control or in the custody of a public official by virtue of office, other than those that, under law other than ORS 295.005 to 295.165, are:

          (a) Deposited for the purpose of [meeting the payment of principal or interest on bonds or like obligations] paying principal, interest or premium, if any, on bonds, like obligations and related costs or securing an obligation related to an agreement for exchange of interest rates entered into under section 2 of this 2003 Act; or

          (b) Invested in authorized investments. Funds invested under ORS 293.701 to 293.820 are invested in authorized investments for purposes of this paragraph when the funds are transferred by the State Treasurer to a third party under the terms of a contract for investment of funds that requires such a transfer.

          (7) “Security” or “securities” means:

          (a) Obligations of the United States, including those of its agencies and instrumentalities;

          (b) Obligations of the International Bank for Reconstruction and Development;

          (c) Bonds of any state of the United States (A) that are rated in one of the four highest grades by a recognized investment service organization that has been engaged regularly and continuously for a period of not less than 10 years in rating state and municipal bonds or, (B) having once been so rated are ruled to be eligible securities for the purposes of ORS 295.005 to 295.165, notwithstanding the loss of such rating;

          (d) Bonds of any county, city, school district, port district or other public body in the United States payable from ad valorem taxes levied generally on substantially all property within the issuing body and that meet the rating requirement or are ruled to be eligible securities as provided in paragraph (c) of this subsection;

          (e) Bonds of any county, city, school district, port district or other public body issued pursuant to the Constitution or statutes of the State of Oregon or the charter or ordinances of any county or city within the State of Oregon, if the issuing body has not been in default with respect to the payment of principal or interest on any of its bonds within the preceding 10 years or during the period of its existence if that is less than 10 years;

          (f) Bond anticipation notes issued, sold or assumed by an authority under ORS 441.560;

          (g) One-family to four-family housing mortgage loan notes related to property situated in the State of Oregon, which are owned by a depository bank, no payment on which is more than 90 days past due, and which are eligible collateral for loans from the Federal Reserve Bank of San Francisco under section 10(b) of the Federal Reserve Act and regulations thereunder;

          (h) Bonds, notes, letters of credit or other securities or evidence of indebtedness constituting the direct and general obligation of a federal home loan bank or Federal Reserve bank;

          (i) Debt obligations of domestic corporations that are rated in one of the three highest grades by a recognized investment service organization that has been engaged regularly and continuously for a period of not less than 10 years in rating corporate debt obligations;

          (j) Collateralized mortgage obligations and real estate mortgage investment conduits that are rated in one of the two highest grades by a recognized investment service organization that has been engaged regularly and continuously for a period of not less than 10 years in rating corporate debt obligations; and

          (k) One-family to four-family housing mortgages that have been secured by means of a guarantee as to full repayment of principal and interest by an agency of the United States Government, including the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

          (8) “Public official” means each officer or employee of this state or any agency, political subdivision or public or municipal corporation thereof who by law is made the custodian of or has control of any public funds.

          (9) “Value” means the current market value of securities.

 

          SECTION 18. ORS 305.410 is amended to read:

          305.410. (1) Subject only to the provisions of ORS 305.445 relating to judicial review by the Supreme Court and to subsection (2) of this section, the tax court shall be the sole, exclusive and final judicial authority for the hearing and determination of all questions of law and fact arising under the tax laws of this state. For the purposes of this section, and except to the extent that they preclude the imposition of other taxes, the following are not tax laws of this state:

          (a) ORS 577.110 to 577.605 relating to beef council contributions.

          (b) ORS 576.051 to 576.584 relating to commodity commission assessments.

          (c) ORS chapter 477 relating to fire protection assessments.

          (d) ORS chapters 731, 732, 733, 734, 737, 742, 743, 744, 746, 748 and 750 relating to insurance company fees and taxes.

          (e) ORS chapter 473 relating to liquor taxes.

          (f) ORS chapter 583 relating to milk marketing, production or distribution fees.

          (g) ORS chapter 825 relating to motor carrier taxes.

          (h) ORS chapter 319 relating to motor vehicle and aircraft fuel taxes.

          (i) ORS title 59 relating to motor vehicle and motor vehicle operators’ license fees and ORS title 39 relating to boat licenses.

          (j) ORS chapter 578 relating to wheat commission assessments.

          (k) ORS chapter 462 relating to racing taxes.

          (L) ORS chapter 657 relating to unemployment insurance taxes.

          (m) ORS chapter 656 relating to workers’ compensation contributions, assessments or fees.

          (n) ORS chapter 579 relating to potato commission assessments.

          (o) ORS 311.420, 311.425, 311.455, 311.650, 311.655 and ORS chapter 312 relating to foreclosure of real and personal property tax liens.

          (2) The tax court and the circuit courts shall have concurrent jurisdiction to try actions or suits to determine:

          (a) The priority of property tax liens in relation to other liens.

          (b) The validity of any deed, conveyance, transfer or assignment of real or personal property under ORS 95.060 and 95.070 (1983 Replacement Part) or 95.200 to 95.310 where the Department of Revenue has or claims a lien or other interest in the property.

          (3) Subject only to the provisions of ORS 305.445 relating to judicial review by the Supreme Court, the tax court shall be the sole, exclusive and final judicial authority for the hearing and determination of all questions of law and fact concerning the authorized uses of the proceeds of bonded indebtedness described in section 11 (11)(d), Article XI of the Oregon Constitution.

          [(3)] (4) Except as permitted under section 2, amended Article VII, Oregon Constitution, this section and ORS 305.445, no person shall contest, in any action, suit or proceeding in the circuit court or any other court, any matter within the jurisdiction of the tax court.

 

          SECTION 19. ORS 305.580 is amended to read:

          305.580. (1) The provisions of ORS 305.583, 305.585, 305.587 and 305.589 shall provide the exclusive remedy for determination of questions concerning:

          (a) The effect of the limits of section 11b, Article XI of the Oregon Constitution on taxes, fees, charges and assessments of units of government.

          (b) The authorized uses of the proceeds of bonded indebtedness described in section 11 (11)(d), Article XI of the Oregon Constitution.

          (2) A petition filed with the regular division of the Oregon Tax Court pursuant to ORS 305.583, 305.585, 305.587 or 305.589 shall have priority over all other cases pending before the regular division and shall be heard and decided as soon after coming to issue as is reasonably possible.

 

          SECTION 20. ORS 305.583 is amended to read:

          305.583. (1) An interested taxpayer may petition the regular division of the Oregon Tax Court to determine [the effect of the limits of section 11 or 11b, Article XI of the Oregon Constitution on any tax, fee, charge or assessment imposed by a unit of government] a question described in ORS 305.580. For purposes of this section and a question described in ORS 305.580 (1)(a), “interested taxpayer” means a person [who] that is subject to the tax, fee, charge or assessment in question. For purposes of this section and a question described in ORS 305.580 (1)(b), “interested taxpayer” means a person that is subject to a tax, fee, charge or assessment that is pledged to secure or available for payment of bonded indebtedness described in section 11 (11)(d), Article XI of the Oregon Constitution.

          (2) The petition shall be filed and perfected in the following manner only:

          (a) The petitioner shall file an original and two certified copies of a petition with the clerk of the tax court at its principal office in Salem, Oregon. The petition shall name as respondent the government unit that imposes the tax, fee, charge or assessment, that issues the bonded indebtedness or, in the case of an urban renewal agency, that receives the taxes[, as respondent]. The filing in the tax court shall constitute the perfection of the petition. The clerk of the tax court shall serve the government unit by mailing a certified copy of the petition to the recording officer or chief administrative officer of the local government unit or to the Attorney General if the tax, fee, charge or assessment in question is imposed by the State of Oregon. The clerk also shall serve a copy of any petition naming a local government unit as respondent upon the Oregon Department of Justice.

          (b) The petition shall state the facts and grounds upon which the petitioner contends that the tax, fee, charge or assessment is affected by section 11 or 11b, Article XI of the Oregon Constitution, or that a use of the proceeds of bonded indebtedness is not authorized. The case shall proceed thereafter in the manner provided for appeals concerning ad valorem property tax assessments. ORS 305.405 to 305.494 shall apply to such actions.

          (3)(a) Except as provided in subsections (4) to (7) of this section, in the case of a question regarding the effect of the limits of section 11b, Article XI of the Oregon Constitution, on any tax, fee, charge or assessment that is imposed under a resolution or ordinance approved by the governing body of a local government unit, the petition shall be filed within 60 days after the action of the governing body approving the ordinance or resolution, adopting a new ordinance or resolution or changing an existing ordinance or resolution under which the tax, fee, charge or assessment is imposed, if the resolution or ordinance includes a classification of the tax, fee, charge or assessment as subject to or not subject to section 11 or 11b, Article XI of the Oregon Constitution. If the local government unit has not classified the tax, fee, charge or assessment, the petition shall be filed within 60 days after the later of:

          (A) The last date, but no later than November 15, that the tax statements were mailed for the tax year in which the tax, fee, charge or assessment was imposed; or

          (B) The date of imposition of the tax, fee, charge or assessment on the petitioner.

          (b) If the local government unit adopts an ordinance or resolution classifying all or any of the taxes, fees, charges or assessments it imposes as subject to or not subject to section 11 or 11b, Article XI of the Oregon Constitution, as described in ORS 310.145, the petition shall be filed within 60 days after the governing body adopts the ordinance or resolution.

          (4) In the case of a question concerning any tax, fee, charge or assessment that is characterized by the local government unit as an assessment for local improvements, the petition shall be filed within 60 days after the local government unit gives notice of its intention to characterize the charge as an assessment for local improvements. Notice may be given to affected property owners by the local government unit either when a local improvement district is formed, in a notice of intent to assess given by the local government unit or by other individual notice prior to assessment. Notice shall be given no later than the date the assessment is imposed. Notice given as provided under this subsection is in lieu of the notice required under subsection (8) of this section.

          (5) In the case of a question concerning any taxes levied to pay principal and interest on bonded indebtedness approved by the governing body of a local government unit, the petition shall be filed within 60 days after the date the issuance of the bonded indebtedness was approved by the governing body of the local government unit if the resolution or ordinance of the governing body authorizing issuance of the bonded indebtedness includes a classification of the bonded indebtedness as subject to or not subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution. If the local government unit has not classified the bonded indebtedness, the petition shall be filed within 60 days after the date specified in subsection (3)(a) of this section.

          (6) In the case of a question concerning any taxes levied to pay principal and interest on bonded indebtedness not subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution, that was approved by the electors of the local government unit at an election held on or after September 29, 1991, the petition shall be filed within 60 days after the date of the election at which the question of issuing the bonded indebtedness was approved by the electors of the local government unit.

          (7) In the case of a question concerning the effect of section 11 or 11b, Article XI of the Oregon Constitution, on any tax, fee, charge or assessment imposed by the state, the petition shall be filed within 60 days after the first imposition of the tax, fee, charge or assessment by a state agency. For purposes of this subsection, a tax, fee, charge or assessment shall be considered imposed when it is due as provided by statute or when the state agency notifies a person that the tax, fee, charge or assessment is due.

          (8) A local government unit:

          (a) Shall give notice of its adoption of an ordinance or resolution classifying any of its taxes, fees, charges or assessments as not being subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution, by publishing, within 15 days after adoption of the ordinance or resolution, an advertisement in a newspaper of general circulation in the county in which the local government unit is located or, if there is no newspaper of general circulation, in a newspaper of general circulation in a contiguous county.

          (b) May give notice of its adoption of an ordinance or resolution specifying the authorized uses of the proceeds of bonded indebtedness by publishing, within 15 days after adoption of the ordinance or resolution, an advertisement in a newspaper of general circulation in the county in which the local government unit is located or, if there is no newspaper of general circulation, in a newspaper of general circulation in a contiguous county.

          (9) [The] A notice described in subsection (8) of this section shall:

          (a) Appear in the general news section of the newspaper, not in the classified advertisements;

          (b) Measure at least three inches square;

          (c) Be printed in a type size at least equal to 8-point type; and

          (d) State that the local government unit has adopted a resolution or ordinance:

          (A) Classifying one or more of its taxes, fees, charges or assessments as not being subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution, that the reader may contact a designated individual within the local government unit to obtain a copy of the ordinance or resolution and that judicial review of the classification of the taxes, fees, charges or assessments may be sought within 60 days of the date of the resolution or ordinance; or

          (B) Specifying the authorized uses of the proceeds of bonded indebtedness, that the reader may contact a designated individual within the local government unit to obtain a copy of the ordinance or resolution and that judicial review of the specification of authorized uses may be sought within 60 days of the date of the resolution or ordinance.

          [(9)] (10) An ordinance or resolution that results in a mere change in the amount of a tax, fee, charge or assessment and does not result in a change in the characteristics or attributes of the tax, fee, charge or assessment, or contain a change in purpose to which the revenue is applied, may [shall] not be considered a change that may result in a proceeding commenced under subsection (3) of this section.

          (11) In the case of a question concerning the authorized uses of the proceeds of bonded indebtedness, if the governing body has not published the notice described in subsection (8)(b) of this section, the petition shall be filed within 180 days after the questioned use of the proceeds is made.

 

          SECTION 21. ORS 305.587 is amended to read:

          305.587. (1) If, in a proceeding commenced under ORS 305.583, the regular division of the Oregon Tax Court finds that a challenged tax, fee, charge or assessment is subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution, the tax court may:

          (a) Order the government unit to make refunds to petitioners of any part of the challenged tax, fee, charge or assessment imposed on or after the date that is 90 days before the date the petition was filed and that was collected in excess of the limits of section 11 or 11b, Article XI of the Oregon Constitution. The tax court may not order refunds if the government unit previously had obtained a judgment of the tax court or the Oregon Supreme Court under ORS 305.589, that the tax, fee, charge or assessment in question was not subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution.

          (b) Order such other relief as it considers appropriate, including cancellation of taxes imposed but not collected, but such relief shall have prospective effect only. In cases involving local government units, a copy of the tax court’s order shall be served upon the assessor of the county or counties in which the local government unit is located at the same time the order is served upon the parties.

          (2) If the tax court orders a unit of government to make refunds of any tax, fee, charge or assessment that was imposed and collected in excess of the limits of section 11 or 11b, Article XI of the Oregon Constitution, the government unit shall do so out of the resources of the government unit. No refund so ordered shall be paid from the unsegregated tax collections account. The assessor shall not be required to recompute the amount of tax due from any property or property owner with respect to the tax, fee, charge or assessment that is the subject of the order for any tax year for which a tax statement has been delivered under ORS 311.250.

          (3) If, in a proceeding commenced under ORS 305.585, the tax court finds that a tax, fee, charge or assessment is not subject to the limits of section 11 or 11b, Article XI of the Oregon Constitution, the tax court may order such relief as it considers appropriate, but such relief shall have prospective effect only. In cases involving local government units, a copy of the tax court’s order shall be served upon the assessor of the county or counties in which the local government unit is located at the same time the order is served upon the parties. The assessor shall not be required to recompute the amount of tax due from any property or property owner with respect to the tax, fee, charge or assessment that is the subject of the order for any tax year for which a tax statement has been delivered under ORS 311.250.

          (4) For purposes of this section, taxes, fees, charges or assessments are deemed imposed when the statement or bill for the taxes, fees, charges or assessments is mailed.

          (5) In the case of a question concerning the authorized uses of the proceeds of bonded indebtedness, the tax court shall construe the provisions of the measure authorizing the bonded indebtedness and the use of the proceeds liberally to allow the government unit to provide the facilities or services approved by the voters.

          (6) If, in a proceeding commenced under ORS 305.583, the regular division of the tax court finds that a use of the proceeds of bonded indebtedness is not authorized by the applicable law, the tax court may prohibit the expenditure or proceed in accordance with ORS 305.586.

 

          SECTION 22. ORS 305.589 is amended to read:

          305.589. (1) A local government unit or an association of local government units acting for the common benefit of and on behalf of consenting members may petition the regular division of the Oregon Tax Court for a judicial declaration of the court concerning [the effect of section 11b, Article XI of the Oregon Constitution on any tax, fee, charge or assessment imposed or to be imposed by, or bonded indebtedness incurred or to be incurred by, that local government unit or by any of the consenting members of the association of local government units] a question described in ORS 305.580.

          (2) Notice of the commencement of a proceeding under this section shall be given by the petitioner or petitioners by publication of notice directed to all electors, taxpayers and other interested persons, without naming such electors, taxpayers or other interested persons individually. The notice shall be published at least once a week for three successive weeks in a newspaper of general circulation within the boundaries of the local government unit and each of the consenting members of the association of local government units, if any, or if no such newspaper is published therein, then in a contiguous county.

          (3) The petitioner or petitioners may elect to give further notice to affected electors, taxpayers and other interested persons, or the court may order such further notice as the court considers practicable.

          (4) The action authorized by this section shall be a special proceeding in the nature of an ex parte proceeding in the absence of the intervention of a respondent in opposition to the petition.

          (5) Jurisdiction of the local government unit and of consenting members of an association of local government units shall be obtained by filing of the petition. Jurisdiction over the electors, taxpayers and other interested persons shall be complete 10 days after the date of completing publication of the notice provided for in subsection (2) of this section, or giving of any further notice as provided for in subsection (3) of this section. Jurisdiction of any other party shall be obtained by appearance of any interested person who seeks and is granted leave to intervene in the proceeding.

          (6)(a) Any elector, taxpayer or interested person or local government unit that may be affected by the tax, fee, charge or assessment that is the subject of the petition may intervene as a petitioner or respondent by filing the appropriate appearance.

          (b) Any elector, taxpayer or interested person or local government unit that may be affected by the use of the proceeds of the bonded indebtedness or a person that is subject to a tax, fee, charge or assessment that is pledged to secure or available for payment of the bonded indebtedness that is the subject of the petition may intervene as a petitioner or respondent by filing the appropriate appearance.

          (7) Any party to a proceeding commenced under this section, including a consenting member of an association of local government units that was a party to the proceeding, may appeal from the final judgment rendered by the tax court to the Oregon Supreme Court in the manner provided for appeals from other decisions of the tax court under ORS 305.445.

          (8)(a) If, in a proceeding commenced under this section, the court finds that a tax, fee, charge or assessment is subject to the limits of section 11b, Article XI of the Oregon Constitution, the court may order such relief as it considers appropriate, but such relief shall be prospective only.

          (b) If, in a proceeding commenced under this section, the court finds that a use of the proceeds of bonded indebtedness is not authorized, the tax court may prohibit the expenditure or proceed in accordance with ORS 305.586.

          (9) Costs of the proceeding may be allowed and apportioned between the parties in the discretion of the court.

          (10) As used in this section:

          (a) “Local government unit” means any unit of local government, including a city, county, incorporated town or village, school district, any other special district, or any other municipal or quasi-municipal corporation, intergovernmental authority created pursuant to ORS 190.010, a district as defined in ORS 198.010, 198.180, 198.210 and 198.330 or an urban renewal agency established under ORS 457.035.

          (b) “Consenting member” means a member of an association of local government units who affirmatively consents, through filing of a consenting certificate with the tax court, to the commencement of a proceeding under this section.

          (c) “Association of local government units” means an association, or any other lawful organization, composed of member local government units organized for the mutual benefit of such local government units.

 

          SECTION 23. ORS 310.140, as amended by section 24, chapter 46, Oregon Laws 2003 (Enrolled House Bill 2424), is amended to read:

          310.140. The Legislative Assembly finds that section 11b, Article XI of the Oregon Constitution, was drafted by citizens and placed before the voters of the State of Oregon by initiative petition. Section 11b, Article XI of the Oregon Constitution, uses terms that do not have established legal meanings and require definition by the Legislative Assembly. Section 11b, Article XI of the Oregon Constitution, was amended by section 11 (11), Article XI of the Oregon Constitution. This section is intended to interpret the terms of section 11b, Article XI of the Oregon Constitution, as originally adopted and as amended by section 11 (11), Article XI of the Oregon Constitution, consistent with the intent of the people in adopting these provisions, so that the provisions of section 11b, Article XI of the Oregon Constitution, may be given effect uniformly throughout the State of Oregon, with minimal confusion and misunderstanding by citizens and affected units of government. As used in the revenue and tax laws of this state, and for purposes of section 11b, Article XI of the Oregon Constitution:

          (1) “Actual cost” means all direct or indirect costs incurred by a government unit in order to deliver goods or services or to undertake a capital construction project. The “actual cost” of providing goods or services to a property or property owner includes the average cost or an allocated portion of the total amount of the actual cost of making a good or service available to the property or property owner, whether stated as a minimum, fixed or variable amount. “Actual cost” includes, but is not limited to, the costs of labor, materials, supplies, equipment rental, property acquisition, permits, engineering, financing, reasonable program delinquencies, return on investment, required fees, insurance, administration, accounting, depreciation, amortization, operation, maintenance, repair or replacement and debt service, including debt service payments or payments into reserve accounts for debt service and payment of amounts necessary to meet debt service coverage requirements.

          (2) “Assessment for local improvement” means any tax, fee, charge or assessment that does not exceed the actual cost incurred by a unit of government for design, construction and financing of a local improvement.

          (3) “Bonded indebtedness” means any formally executed written agreement representing a promise by a unit of government to pay to another a specified sum of money, at a specified date or dates at least one year in the future.

          (4) “Capital construction”:

          (a) For bonded indebtedness issued prior to December 5, 1996, and for the proceeds of any bonded indebtedness approved by electors prior to December 5, 1996, that were spent or contractually obligated to be spent prior to June 20, 1997, means the construction, modification, replacement, repair, remodeling or renovation of a structure, or addition to a structure, that is expected to have a useful life of more than one year, and includes, but is not limited to:

          (A) Acquisition of land, or a legal interest in land, in conjunction with the capital construction of a structure.

          (B) Acquisition, installation of machinery or equipment, furnishings or materials that will become an integral part of a structure.

          (C) Activities related to the capital construction, [such as] including planning, design, [acquisition of] authorizing, issuing, carrying or repaying interim or permanent financing, research, land use and environmental impact studies, acquisition of permits or licenses or other services connected with the construction.

          (D) Acquisition of existing structures, or legal interests in structures, in conjunction with the capital construction.

          (b) For bonded indebtedness issued on or after December 5, 1996, except for the proceeds of any bonded indebtedness approved by electors prior to December 5, 1996, that were spent or contractually obligated to be spent before June 20, 1997, has the meaning given that term in paragraph (a) of this subsection, except that “capital construction”:

          (A) Includes public safety and law enforcement vehicles with a projected useful life of five years or more; and

          (B) Does not include:

          (i) Maintenance and repairs, the need for which could be reasonably anticipated;

          (ii) Supplies and equipment that are not intrinsic to the structure; or

          (iii) Furnishings, unless the furnishings are acquired in connection with the acquisition, construction, remodeling or renovation of a structure, or the repair of a structure that is required because of damage or destruction of the structure.

          (5) “Capital improvements”:

          (a) For bonded indebtedness issued prior to December 5, 1996, and for the proceeds of any bonded indebtedness approved by electors before December 5, 1996, that were spent or contractually obligated to be spent before June 20, 1997, means land, structures, facilities, as that term is defined in ORS 288.805, machinery, equipment or furnishings having a useful life longer than one year.

          (b) For bonded indebtedness issued on or after December 5, 1996, except for the proceeds of any bonded indebtedness approved by electors prior to December 5, 1996, that were spent or contractually obligated to be spent before June 20, 1997, has the meaning given that term in paragraph (a) of this subsection, except that “capital improvements”:

          (A) Includes public safety and law enforcement vehicles with a projected useful life of five years or more; and

          (B) Does not include:

          (i) Maintenance and repairs, the need for which could be reasonably anticipated;

          (ii) Supplies and equipment that are not intrinsic to the structure; or

          (iii) Furnishings, unless the furnishings are acquired in connection with the acquisition, construction, remodeling or renovation of a structure, or the repair of a structure that is required because of damage or destruction of the structure.

          (6) “Direct consequence of ownership” means that the obligation of the owner of property to pay a tax arises solely because that person is the owner of the property, and the obligation to pay the tax arises as an immediate and necessary result of that ownership without respect to any other intervening transaction, condition or event.

          (7)(a) “Exempt bonded indebtedness” means:

          (A) Bonded indebtedness authorized by a specific provision of the Oregon Constitution;

          (B) Bonded indebtedness incurred or to be incurred for capital construction or capital improvements that was issued as a general obligation of the issuing governmental unit on or before November 6, 1990;

          (C) Bonded indebtedness incurred or to be incurred for capital construction or capital improvements that was issued as a general obligation of the issuing governmental unit after November 6, 1990, with the approval of the electors of the issuing governmental unit; or

          (D) Bonded indebtedness incurred or to be incurred for capital construction or capital improvements, if the issuance of the bonds is approved by voters on or after December 5, 1996, in an election that is in compliance with the voter participation requirements of section 11 (8), Article XI of the Oregon Constitution.

          (b) “Exempt bonded indebtedness” includes bonded indebtedness issued to refund or refinance any bonded indebtedness described in paragraph (a) of this subsection.

          (8)(a) “Incurred charge” means a charge imposed by a unit of government on property or upon a property owner that does not exceed the actual cost of providing goods or services and that can be controlled or avoided by the property owner because:

          (A) The charge is based on the quantity of the goods or services used, and the owner has direct control over the quantity;

          (B) The goods or services are provided only on the specific request of the property owner; or

          (C) The goods or services are provided by the government unit only after the individual property owner has failed to meet routine obligations of ownership of the affected property, and such action is deemed necessary by an appropriate government unit to enforce regulations pertaining to health or safety.

          (b) For purposes of this subsection, an owner of property may control or avoid an incurred charge if the owner is capable of taking action to affect the amount of a charge that is or will be imposed or to avoid imposition of a charge even if the owner must incur expense in so doing.

          (c) For purposes of paragraph (a)(A) of this subsection, an owner of property has direct control over the quantity of goods or services if the owner of property has the ability, whether or not that ability is exercised, to determine the quantity of goods or services provided or to be provided.

          (9)(a) “Local improvement” means a capital construction project, or part thereof, undertaken by a governmental unit, pursuant to ORS 223.387 to 223.399, or pursuant to a local ordinance or resolution prescribing the procedure to be followed in making local assessments for benefits from a local improvement upon the lots that have been benefited by all or a part of the improvement:

          (A) That provides a special benefit only to specific properties or rectifies a problem caused by specific properties;

          (B) The costs of which are assessed against those properties in a single assessment upon the completion of the project; and

          (C) For which the property owner may elect to make payment of the assessment plus appropriate interest over a period of at least 10 years.

          (b) For purposes of paragraph (a) of this subsection, the status of a capital construction project as a local improvement is not affected by the accrual of a general benefit to property other than the property receiving the special benefit.

          (10) “Maintenance and repairs, the need for which could be reasonably anticipated”:

          (a) Means activities, the type of which may be deducted as an expense under the provisions of the federal Internal Revenue Code, as amended and in effect on December 31, 2000, that keep the property in ordinarily efficient operating condition and that do not add materially to the value of the property nor appreciably prolong the life of the property;

          (b) Does not include maintenance and repair of property that is required by damage, destruction or defect in design, or that was otherwise not reasonably expected at the time the property was constructed or acquired, or the addition of material that is in the nature of the replacement of property and that arrests the deterioration or appreciably prolongs the useful life of the property; and

          (c) Does not include street and highway construction, overlay and reconstruction.

          (11) “Projected useful life” means the useful life, as reasonably estimated by the unit of government undertaking the capital construction or capital improvement project, beginning with the date the property was acquired, constructed or reconstructed and based on the property’s condition at the time the property was acquired, constructed or reconstructed.

          (12) “Routine obligations of ownership” means a standard of operation, maintenance, use or care of property established by law, or if established by custom or common law, a standard that is reasonable for the type of property affected.

          (13) “Single assessment” means the complete assessment process, including preassessment, assessment or reassessment, for any local improvement authorized by ORS 223.387 to 223.399, or a local ordinance or resolution that provides the procedure to be followed in making local assessments for benefits from a local improvement upon lots that have been benefited by all or part of the improvement.

          (14) “Special benefit only to specific properties” shall have the same meaning as “special and peculiar benefit” as that term is used in ORS 223.389.

          (15) “Specific request” means:

          (a) An affirmative act by a property owner to seek or obtain delivery of goods or services;

          (b) An affirmative act by a property owner, the legal consequence of which is to cause the delivery of goods or services to the property owner; or

          (c) Failure of an owner of property to change a request for goods or services made by a prior owner of the property.

          (16) “Structure” means any temporary or permanent building or improvement to real property of any kind that is constructed on or attached to real property, whether above, on or beneath the surface.

          (17) “Supplies and equipment intrinsic to a structure” means the supplies and equipment that are necessary to permit a structure to perform the functions for which the structure was constructed, or that will, upon installation, constitute fixtures considered to be part of the real property that is comprised, in whole or part, of the structure and land supporting the structure.

          (18) “Tax on property” means any tax, fee, charge or assessment imposed by any government unit upon property or upon a property owner as a direct consequence of ownership of that property, but does not include incurred charges or assessments for local improvements. As used in this subsection, “property” means real or tangible personal property, and intangible property that is part of a unit of real or tangible personal property to the extent that such intangible property is subject to a tax on property.

 

          SECTION 24. ORS 328.205 is amended to read:

          328.205. (1) Common and union high school districts may contract a bonded indebtedness for any one or more of the following purposes for the district:

          (a) To acquire, construct, reconstruct, improve, repair, equip or furnish a school building or school buildings or additions thereto;

          (b) To fund or refund the removal or containment of asbestos substances in school buildings and for repairs made necessary by such removal or containment;

          (c) To acquire or to improve all property, real and personal, [appurtenant thereto or connected therewith,] to be used for district purposes, including school buses;

          (d) To fund or refund outstanding indebtedness; and

          (e) To provide for the payment of the debt.

          (2) However, when a common or union high school district is found under ORS 327.103 not to be a standard school or when a school district is operating a conditionally standard school under ORS 327.103 (3), the school district may contract a bonded indebtedness only for the purposes enumerated in subsection (1) of this section that are approved by the Superintendent of Public Instruction pursuant to rules of the State Board of Education.

          (3) The school district may use the proceeds received from the sale of school district bonds to pay for any costs incurred by [such] the school district in [issuing and selling such] authorizing, issuing, carrying or repaying the bonds, including, but not limited to, attorney, consultant, paying agent, trustee or other professional fees and the cost of publishing notices of bond elections, printing such bonds and advertising such bonds for sale.

 

          SECTION 25. ORS 294.326 is amended to read:

          294.326. (1) Except as provided in subsections (3) to (11) of this section, it is unlawful for any municipal corporation to expend money or to certify to the assessor an ad valorem tax rate or estimated amount of ad valorem taxes to be imposed in any year unless the municipal corporation has complied with ORS 294.305 to 294.565.

          (2) To the extent that any of subsections (3) to (11) of this section apply in a given case, the municipal corporation need not comply with ORS 294.305 to 294.565.

          (3) Subsection (1) of this section shall not apply to the expenditure in the year of receipt of grants, gifts, bequests or devises transferred to a municipal corporation in trust for specific purposes or to other special purpose trust funds at the disposal of municipal corporations. However, subsection (1) of this section shall apply to the expenditure of grants, gifts, bequests or devises transferred to a municipal corporation for undesignated general purposes or to the expenditure of grants, gifts, bequests or devises transferred to a municipal corporation in trust for specific purposes which were received in a prior year. Expenditure of grants, gifts, bequests and devises exempt from subsection (1) of this section by this subsection shall be lawful only after enactment by the governing body of the municipal corporation of appropriation ordinances or resolutions authorizing the expenditure.

          (4) Subsection (1) of this section shall not apply whenever the governing body of a municipal corporation has declared the existence of an unforeseen occurrence or condition which could not have been foreseen at the time of the preparation of the budget for the current year or current budget period or could not have foreseen a pressing necessity for the expenditure or has received a request for services or facilities, the cost of which shall be supplied by a private individual, corporation or company or by another governmental unit necessitating a greater expenditure of public money for any specific purpose or purposes than the amount budgeted therefor in order to provide the services for which it was responsible. Such governing body may make excess expenditures for such specific purpose or purposes beyond the amount budgeted and appropriated therefor to the extent that maintenance, repair or self-insurance reserves authorized by ORS 294.366 or nontax funds are available or may be made available. Such expenditures shall be lawful only after the enactment of appropriate appropriation ordinances or resolutions authorizing the expenditures. The ordinance or resolution shall state the need for the expenditure, the purpose for the expenditure and the amount appropriated.

          (5) Subsection (1) of this section shall not apply to the expenditure during the current year or current budget period of the proceeds of the sale of the following bonds or other obligations, or to the expenditure during the current year or current budget period of other funds to pay debt service on the following bonds or other obligations:

          (a) Bonds that are issued under the Uniform Revenue Bond Act, ORS 288.805 to 288.945, for which the [60-day] referral period described in ORS 288.815 [(2)] ended after the preparation of the budget of the current year or current budget period;

          (b) Bonds or other obligations that were approved by the electors during the current year or current budget period; or

          (c) Bonds or other obligations issued during the current year or current budget period to refund previously issued bonds or obligations.

          (6) Notwithstanding subsection (5) of this section, subsection (1) of this section shall not apply to:

          (a) Expenditures of funds received from the sale of conduit revenue bonds issued for private business or nonprofit corporations by cities, counties, county service districts, port districts, special districts, the Port of Portland or the State of Oregon or to pay debt service on such bonds;

          (b) Expenditures of funds that have been irrevocably placed in escrow for the purpose of defeasing and paying bonds; or

          (c) Expenditures of assessments or other revenues to redeem bonds or other obligations that are payable from such assessments or other revenues, when such assessments or other revenues are received as a result of prepayments or other unforeseen circumstances.

          (7) Subsection (1) of this section shall not apply to expenditures of funds received from assessments against benefited property for local improvements as defined in ORS 223.001 to the extent that the cost of such improvements is to be paid by owners of benefited property.

          (8) Subsection (1) of this section shall not apply to the expenditure of funds accumulated to pay deferred employee compensation.

          (9) Subsection (1) of this section shall not apply to refunds or the interest on them granted by counties under ORS 311.806.

          (10) Subsection (1) of this section shall not apply to refunds, received by a municipal corporation when purchased items are returned after an expenditure has been made. Expenditure of refunded amounts to which this subsection applies shall be lawful only after the governing body of the municipal corporation has enacted, after public hearing, appropriate appropriation ordinances or resolutions authorizing such expenditure.

          (11) Subsection (1) of this section shall not apply to a newly formed municipal corporation during the fiscal year in which it was formed. If a new municipal corporation is formed between March 1 and June 30, subsection (1) of this section shall not apply to the municipal corporation during the fiscal year immediately following the fiscal year in which it was formed.

 

          SECTION 26. ORS 294.483 is amended to read:

          294.483. (1) A municipal corporation that has outstanding limited general obligation bonds that were issued pursuant to ORS 287.049 shall budget and appropriate, subject to any applicable covenants or agreements which limit payment of certain obligations to particular sources of funds, amounts sufficient to pay, in each succeeding fiscal year or budget period, debt service on such bonds. However, this section does not require the municipal corporation to adopt a supplemental budget to pay the principal and interest coming due on limited tax bonds, as defined in ORS 288.150, in the fiscal year or budget period in which such bonds are authorized and issued.

          (2) A municipal corporation shall not be required to adopt a supplemental budget to:

          (a) Expend during the current year or current budget period proceeds of the sale of the following bonds or other obligations:

          (A) Bonds that are issued under the Uniform Revenue Bond Act, ORS 288.805 to 288.945, for which the [60-day] referral period described in ORS 288.815 [(2)] ended after the preparation of the budget for the current year or current budget period.

          (B) Bonds or other obligations that were approved by the electors during the current year or current budget period.

          (C) Bonds or other obligations issued during the current year or current budget period to refund previously issued bonds or obligations.

          (b) Expend during the current year or current budget period other funds to pay the principal and interest coming due on bonds or other obligations listed in paragraph (a) of this subsection.

          (c) Expend assessments or other revenues to redeem bonds or other obligations that are payable from such assessments or other revenues, when such assessments or other revenues are received as a result of prepayments or other unforeseen circumstances.

 

          SECTION 27. ORS 352.805 is amended to read:

          352.805. (1) Revenue bonds shall be payable solely from that portion of education facility revenues which the municipality pledges therefor in the resolution authorizing issuance of revenue bonds.

          (2) A municipality may authorize the issuance of revenue bonds by resolution or nonemergency ordinance under the procedure described in ORS 288.815.

          (3) The resolution may provide for the establishment of one or more special funds and may place such funds under the control of one or more trustees. The resolution may obligate the municipality to deposit and expend the proceeds of the revenue bonds only into and from such fund or funds, and to set aside and pay into such fund or funds specified education facility revenues.

          (4) Any pledge of education facility revenues made by a municipality shall be valid and binding, without physical delivery or additional action, from the time that the pledge is made against any parties having subsequent claims of any kind in tort, contract or otherwise against a municipality or an educational institution, irrespective of whether such parties have actual notice thereof. The pledge shall be noted in the resolution authorizing issuance of revenue bonds, which shall be constructive notice thereof to all parties and the resolution need not be recorded, nor shall the filing of any financing statement under the Uniform Commercial Code be required to perfect such pledge.

          (5) The municipality may establish the terms under which its revenue bonds shall be issued and sold.

          (6) All revenue bonds issued pursuant to ORS 352.790 to 352.820 shall be legal securities which may be used by any insured institution or trust company, as those terms are defined in ORS 706.008, for deposit with the State Treasurer or a county treasurer or city treasurer as security for deposits in lieu of a surety bond under any law relating to deposits of public moneys. The revenue bond shall constitute legal investments for public bodies, trustees and other fiduciaries, banks, savings and loan associations and insurance companies. All revenue bonds shall constitute negotiable instruments within the meaning of and for all purposes of the law of this state.

 

Approved by the Governor June 4, 2003

 

Filed in the office of Secretary of State June 5, 2003

 

Effective date January 1, 2004

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