Current through Register Vol. 63, No. 9, September 1, 2024
(1) Definitions. For purposes of this rule,
the following definitions shall apply:
(a)
"OST" means the Office of the State Treasurer.
(b) The "Act" means the Oregon School Bond
Guaranty Act set forth in ORS
328.321 to
328.356.
(c) "Authorized District Official" means the
chairperson of the board, the superintendent, president, or business
administrator for the School District, or other designee of the
board.
(d) "Business Day" means any
day on which the offices of the State Treasurer are open to the public for the
conduct of substantially all of the powers and duties of the agency. Saturdays,
Sundays, or state holidays or any other day recognized by state government as a
holiday or a day on which the State Treasurer's offices are officially closed
to the public shall not be considered a Business Day.
(e) "Certificate of Qualification" means a
letter from OST pursuant to ORS
328.331(3).
(f) "Determination of Ineligibility" means a
letter from OST pursuant to ORS
328.336.
(g) "Guaranty Program" means the school bond
guaranty program established by the Act.
(h) "Nationally Recognized Bond Counsel Firm"
means a bond counsel firm listed in the most recent publication of The Bond
Buyer's Municipal Market Place.
(i)
"Qualified Bonds" means bonds that are originally issued as tax credit bonds
under the Internal Revenue Code and any bonds resulting from a conversion of
such tax credit bonds to an interest bearing format over and above interest
payments that may be due and payable under the original terms of such tax
credit bonds.
(j) "Qualified Paying
Agent" means a paying agent acceptable to OST who agrees to comply with the
applicable requirements of the Act and provides a letter to OST acknowledging
as much.
(k) "School District" or
"District" means a common or union high school district, an education service
district, or a community college district.
(l) "State School Aid" means the State School
Fund Grant described in ORS
327.008(2),
plus amounts received from the Common School Fund under 327.410, plus amounts
received from federal forest revenues under 294.060, plus amounts received from
state managed forests under 530.115.
(m) "Repayment Assurance Agreement" means an
agreement between the State of Oregon, acting by and through its Office of the
State Treasurer and its Department of Education (the "State") and a "District"
in which the District agrees that if the State pays under the guaranty the
District will enter into a subsequent repayment agreement with respect to the
amount(s) paid by OST.
(n) Terms
not otherwise specifically defined herein shall have the meanings given in the
Act. For purposes of calculating outstanding bonds or other outstanding
borrowings as required under this rule, any borrowings that are defeased as
provided in ORS
287A.195(1)(d)(B)
shall be excluded and shall not be included in the amount of an outstanding
borrowing.
(2) Request
for Certificate of Qualification to Participate in Guaranty Program. School
Districts may request a Certificate of Qualification at any time during the
year by filing a Request for Certificate of Qualification. Such requests,
however, must be submitted no less than 30 days prior to sale of the bonds for
which the guaranty, if granted, will apply. Requests, and all other written
communications pursuant to the Guaranty Program, shall be submitted to OST as
provided in OAR 170-055-0001(4), and shall include:
(a) The name, county, and district number (if
applicable) of the requesting School District;
(b) The name of the business administrator or
other contact person for the requesting School District;
(c) The mailing address, phone number, e-mail
address, and fax number (if applicable) of the requesting School
District;
(d) A statement of
whether any of the School District's previously issued and outstanding debt is
covered by the Guaranty Program;
(e) A copy of the requesting School
District's most recent audited financial statements, audit opinion, and
management letter; and a statement by an Authorized District Official that they
have not been contacted and are not participating in any investigation by an
oversight agency or, alternatively, documentation of any conclusions reached by
such agency regarding their activities.
(f) A listing of outstanding general
obligation debt and associated debt service schedules, for debt issued by the
School District since the date of its most recent financial audit;
(g) A copy of the School District's Board
adopted policy or internal procedure that addresses post issuance compliance
with federal tax and securities laws.
(h) A certificate, signed by an Authorized
District Official:
(A) Stating whether the
requesting School District has ever failed to pay debt service on any of its
bonds, certificates of participation, or other financial obligations when due,
and explaining the circumstances and resolution of any such defaults or
failures;
(B) Describing current
lawsuits against the School District challenging the ability or authority of
the School District to issue bonds or that may materially affect the ability of
the School District to make scheduled debt service payments on its bonds when
due;
(C) Stating that the
requesting School District has filed its current budget document(s) with the
Oregon Department of Education, and in accordance with Oregon Local Budget
Law;
(D) Stating the amount of debt
the School District is authorized by law to incur, and stating that the
requesting School District is within this limit;
(E) Describing the possible repayment
structure of all bonds the School District may issue during the period of the
requested Certificate of Qualification, including any Qualified Bonds. Such
repayment structure shall cover the estimated debt service schedule and, for
Qualified Bonds, include any scheduled deposits to a sinking fund and the
interest rate to which such bonds may be converted, if they may be converted to
an interest bearing format over and above interest payments that may be due and
payable under the original terms of such bonds;
(F) Attesting to the accuracy and
completeness of the materials provided; and
(G) Stating that the School District has
engaged a Qualified Paying Agent, who, under the terms of the agreement between
the two parties (the "Paying Agent Agreement"), has agreed to provide the
School District with a written notification by January 15 of each year of the
required debt service amounts (including any scheduled deposits to a sinking
fund for Qualified Bonds) which are due in the then-current fiscal year and the
following two fiscal years, such that the School District may have the proper
information to levy adequate amounts for such payments coming due in the
following fiscal years. For example, a notification provided by January 15,
2010 shall include information on debt service due in the current FY 2010 year
(July 1, 2009 through June 30, 2010), the FY 2011 year (July 1, 2010 through
June 30, 2011), and FY 2012 year (July 1, 2011 through June 30,
2012).
(i) A
non-refundable application processing fee as set forth in OAR
170-061-0015;
(j) An authorizing
resolution of the District that expressly authorizes the District to
participate in the Guaranty Program and that affirmatively pledges the taxing
power and full faith and credit of the District to payment of any payments made
by the State Treasurer pursuant to ORS
328.341;
and
(k) Any additional materials
that may be required by OST in support of the request for participation in the
Guaranty Program.
(3)
Review of Request for Certificate of Qualification. Upon receipt of a request
for a Certificate of Qualification, OST shall determine whether all items
listed in section (2) of this rule have been provided, whether such items are
current, and whether such items demonstrate that the requesting School District
is likely to be able to repay any amounts paid by OST under ORS
328.341.
To make its determination, OST may request additional information from the
School District, as well as from any other person or entity that collects
information pertaining to the financial well-being of the requesting School
District.
(4) Issuance of
Certificate of Qualification. Upon determining that a School District is
eligible to participate in the Guaranty Program, OST shall issue a Certificate
of Qualification to the School District, if the District has entered into a
Repayment Assurance Agreement with OST. A Certificate of Qualification will not
apply to Qualified Bonds unless the School District indicated in its request
for a Certificate of Qualification that it planned to issue Qualified Bonds
under the Certificate of Qualification. OST shall act upon a School District's
request for a Certificate of Qualification within 10 business days after
receipt of a request under section (2) of this rule. The Certificate of
Qualification:
(a) Shall evidence the School
District's immediate qualification for the Guaranty Program contingent upon
compliance with section (6) and all other sections of this rule for each bond
issue contemplated for guaranty under the Act;
(b) Be valid for one year from the date of
its issuance;
(c) May be applied to
any or all general obligation bonds or general obligation refunding bonds
issued by the School District during such one-year period that comply with this
rule and the Act, except Qualified Bonds for which specific approval must be
noted as set forth in OAR 170-061-0015(4)(d). A bond shall be considered issued
as of its dated date.
(d) Will
specifically state whether it applies to Qualified Bonds issued by the School
District during the period of its validity.
(5) A School District that has received a
Certificate of Qualification, but did not request Qualified Bonds to be
included under the Certificate of Qualification, may submit an amended request
at least one month prior to the scheduled issuance date for any Qualified Bonds
requesting an amended Certificate of Qualification that specifically covers the
Qualified Bonds, which request shall include the information required for such
bonds in OAR 170-063-0000(2). OST shall act upon such request within 5 business
days.
(6) School Districts to
Provide Information Specific to Each Bond Issued Under the Program. A School
District which has received a Certificate of Qualification may, while the
Certificate of Qualification is in effect, obtain the state's guaranty of a
series of its bonds under the Guaranty Program, by:
(a) Fully complying with Oregon
Administrative Rule 170-061-0000 (Notice and Reporting Requirements by Public
Bodies When Issuing Bonds), including providing notification on MDAC Form 1 to
OST at least 10 business days prior to the marketing of any bonds referencing
participation in the Guaranty Program, for the bonds which will be guaranteed
(this may be submitted simultaneously with information described in section (2)
of this rule); and
(b) Submitting
the following documents to OST at least 5 business days prior to the closing of
the bonds to which the guaranty will apply:
(A) A copy of a resolution adopted by the
board or governing body of the School District, authorizing the School District
to issue the bonds and participate in the Guaranty Program;
(B) An opinion from a Nationally Recognized
Bond Counsel Firm that the bonds, when issued, will be general obligation bonds
as defined in the Act, and will be valid and binding obligations of the
issuer;
(C) A certificate stating
that no litigation is pending or threatened against the School District,
questioning the authority of the School District to issue the bonds or levy
taxes to pay the bonds;
(D) A
specific statement as to whether any of the bonds will be Qualified Bonds;
and
(E) Any additional materials
that may be required by OST in support of the request for participation in the
Guaranty Program, including but not limited to, any information or agreement
requested by OST with respect to creation of sufficient debt service funds,
assurance that any bond insurance, pledge of security or other credit
enhancement required for issuance of the Certificate remains in effect and
available, or other repayment mechanisms to pay any outstanding bonds,
including Qualified Bonds or to repay OST when payment is due.
(7) Letter of
Confirmation. No later than the day on which the bonds are scheduled to close,
OST shall, if the Certificate of Qualification is in effect and the School
District has complied with section (6)(a) and (6)(b) of this rule, issue a
Letter of Confirmation identifying the series of bonds to which the guaranty
shall apply, and stating that the guaranty shall apply to that series of bonds
if the series of bonds closes within 15 business days after the date of the
letter, and there is filed with bond counsel a certificate, signed by an
Authorized District Official and dated the date of the closing, stating that no
litigation is pending or threatened against the School District which questions
the authority of the District to issue the bonds or levy taxes to pay the
bonds. If the series of bonds described in the letter of confirmation is closed
within that 15 business day period, and the non-litigation certificate is filed
with bond counsel as required by this Section, the series of bonds shall be
guaranteed under the Guaranty Program, and the guaranty shall not be affected
by any denial or revocation pursuant to section (10) of this rule.
(8) Guaranty Fees. School Districts whose
bonds are guaranteed by the state shall submit to OST, within 10 business days
of closing of any guaranteed bonds, a fee as set forth in OAR
170-061-0015.
(9) Ratings. OST will
undertake to have the Oregon School Bond Guaranty Program rated by one or more
of the major debt rating agencies. School Districts may contact the Debt
Management Division of OST to determine which agencies have rated the program.
School Districts proposing to issue bonds under the Guaranty Program may:
(a) Engage, at their own expense, one or more
of the rating agencies to apply the rating of the Guaranty Program to their
bonds; and
(b) At their discretion,
and at their own expense, choose to obtain an underlying rating on the
bonds.
(10) Denial or
Revocation of Qualification/Determination of Ineligibility. OST may deny a
School District's request for a Certificate of Qualification, or revoke a
previously issued Certificate of Qualification, and issue a Determination of
Ineligibility in accordance with the Act, if:
(a) The School District fails to meet the
provisions outlined in the Act or any of the requirements outlined in this
rule;
(b) The State has ever paid,
pursuant to the Guaranty Program, any principal of or interest on any of the
School District's bonds; or
(c) OST
has reason to question the financial integrity of the School District,
including but not limited to, whether sufficient funds exist to repay any
outstanding Bonds, including Qualified Bonds, when payment is due or to repay
the State of Oregon for any payments made by OST under ORS
328.341.
(11) Guaranty Final Upon Issuance.
Pursuant to ORS
328.336,
issuance of a Determination of Ineligibility shall not affect the validity of
the state's guaranty of any outstanding bonds issued under a Letter of
Confirmation pursuant to section (7) of this rule.
(12) Reference to Guaranty. School Districts
with a valid Certificate of Qualification, and that have complied with section
(6) and all other sections of this rule, shall evidence the State's guaranty of
the School District's bonds by:
(a)
Referencing the guaranty on the cover of the preliminary official statement(s)
and official statement(s), or other offering document(s), for the applicable
bond(s);
(b) Referencing the
guaranty on the face of the School District's applicable bond(s); and
(c) Including language describing the
guaranty (to be provided by OST) in the School District's preliminary official
statement(s) and official statement(s), or any other offering document(s), for
the applicable bond(s). For bonds that are sold through a private placement, or
otherwise, without an offering document that includes language describing the
guaranty, the School District must include in a lender letter or similar
acknowledgement from the initial bond purchaser language describing the
guaranty (to be provided by OST) and a requirement that such language will be
provided to any subsequent purchaser of the bond. Language supplied by OST must
be used in its entirety and may not be modified or amended.
(13) School Districts to Report
Changes Affecting Qualification. School Districts who have had bonds guaranteed
under the Guaranty Program shall promptly notify OST if at any time there are
material changes or occurrences that might affect the School District's
eligibility to qualify or maintain its qualification to participate in the
Guaranty Program, including but not limited to:
(a) Failure to adopt a resolution or
ordinance that formally adopts the budget, sets appropriations, and if needed,
levies property taxes in accordance with Oregon local budget law;
(b) Failure to pay debt service on any
outstanding bond, certificate of participation, or similar financial
obligation; or
(c) Failure to
establish or levy for debt service scheduled (including any sinking fund
deposits) for any outstanding bonds, including Qualified Bonds, or a material
change in any other repayment mechanism for outstanding bonds, including
Qualified Bonds.
(14)
Notice to OST of debt service payments. School Districts who are unable to
transfer scheduled debt service payments to a Qualified Paying Agent 15 days
prior to the payment date and Qualified Paying Agents who have not received
sufficient funds 10 days prior to the payment date, shall provide notice to OST
as provided in OAR 170-055-0001(4) and by telephone to (503) 378-4930 or email
to DMD@ost.state.or.us.
(15) Notice
to OST of sinking fund deposits. School Districts shall provide written
verification that they have made any required sinking fund deposits for
Qualified Bonds by May 1 of each year to their Qualified Paying Agents and such
Qualified Paying Agent shall promptly notify OST if they do not receive such
annual verification.
(16)
Repayment. Respective School Districts are responsible for paying all of their
obligations guaranteed by the State under the Guaranty Program and for the
advance funding of any debt service fund established for such obligations. Any
funds paid by the State on behalf of a School District under the Guaranty
Program shall be recovered by OST in a manner consistent with the
Act.
(17) Reporting on Debt Service
Fund. Any School District with outstanding Qualified Bonds guaranteed under the
Guaranty Program shall report to the OST at least annually the amount of moneys
paid into the School District's debt service fund to pay the Qualified Bonds
together with a calculation demonstrating that such advance payments are
scheduled to be fully funded and sufficient to repay the Qualified Bonds in
full when payment is due. To the extent moneys are not scheduled to be paid
into the debt service fund on an annual basis, the School District in its
notification shall demonstrate that current balances in the debt service fund,
along with any future deposits, will be sufficient to repay the Qualified Bonds
in full when due. School Districts with outstanding Qualified Bonds that are
subject to conversion to taxable interest bearing bonds and any Qualified
Paying Agents for such Qualified Bonds shall promptly notify OST of such
conversion as provided in OAR-170-055-0001(4) and by telephone to (503)
378-4930 or email to DMD@ost.state.or.us.
(18) Interest. OST will charge interest in
connection with the recovery of funds under the Act. Any interest charged will
be in a manner consistent with the Act.
(19) Penalty. In addition to charging
interest, OST may impose a penalty on a School District for which the State
made a payment under the Guaranty Program. Any penalty imposed will be
consistent with the Act.
(20)
Exceptions. OST may waive any or all provisions of this rule to the extent
provided by law. This rule shall be effective on the date it is adopted by OST
and filed with the Secretary of State and its requirements shall apply to any
Certificates of Qualification that are in effect on such date.
Statutory/Other Authority: ORS
328.321 - 328.356
Statutes/Other Implemented: ORS
328.321 - 328.356 & 328.331
