Current through Register Vol. 63, No. 9, September 1, 2024
(1)
No application for loan funds may be approved by the director unless the
director makes findings required by ORS
541.720 and additional findings
as follows:
(a) The proposed water
development project is feasible and a reasonable risk from practical and
economic standpoints;
(b) The plan
for the construction, operation and maintenance of the proposed water
development project is satisfactory and, if the primary purposes of the project
include irrigation or drainage, the agricultural potential is
confirmed;
(c) The plan for
construction and operation will provide multipurpose facilities, to the extent
practicable;
(d) The applicant is a
qualified, credit-worthy and responsible water developer and is willing and
able to enter into a contract with the commission for construction and
repayment as provided in ORS
541.730;
(e) Moneys in the Water Development Fund are
or will be available for the construction of the proposed water development
project;
(f) There is a need for
the proposed project;
(g) The
proposed project is in the public interest;
(h) The applicant's financial resources are
adequate to provide the working capital needed to operate and maintain the
project;
(i) The construction cost
associated with any secondary use does not exceed the construction cost of the
primary use of the water development project;
(j) The project will not be in conflict with
any state or federal agency statutes or administrative rules; and
(k) The project meets the requirements
established in OAR 690-005-0045 (Standards for Goal Compliance and
Compatibility with Acknowledged Comprehensive Plans).
(2) The director may deny any loan request or
set such terms and conditions as needed to assure a sound loan or to protect
the program funds.
(3) In order to
maximize the number of users of the Water Development Loan Fund, the director
may, at the director's discretion, deny a loan if granting the loan would
deplete the Water Development Loan Fund and preclude the granting of loans to a
greater number of borrowers.
(4)
The director shall require the applicant to obtain insurance coverage adequate
to protect the State's interest during and after construction of the project
and for the life of the loan, in amounts and terms deemed satisfactory to the
director.
(5) The director may
require borrowers to submit audited financial statements or other annual
financial information pertaining to the loan annually.
(6) For any water development project
requiring the filing of a water right application, the director shall make any
loan approval conditioned upon issuance of a permit or approved transfer in
accordance with ORS Chapter 536, 537, and 540.
(7) For any community water supply project,
the director shall make any loan approval conditioned upon the project
complying with the standards of the Oregon Health Division.
(8) Unless the director finds financial
factors warrant otherwise, an applicant that is a sole proprietorship,
profit-making partnership, corporation or cooperative shall meet the following
conditions:
(a) Have been in existence and
operating for at least three years.
(b) Have made a profit after taxes for the
last three years before loan application.
(c) Meet the following financial standards:
(A) Have a ratio of current assets to current
debt of at least 1.75 to 1;
(B)
Have a ratio of quick assets, consisting of cash, marketable securities,
accounts and notes receivable, and other assets readily convertible to cash, to
current debt of at least 1 to 1; and
(C) Have a ratio of total debt to owner's
equity of no more than 2 to 1.
(D)
The director may exempt an applicant from this rule if the applicant shows that
financially sound entities of the same type and under similar size and
circumstance do not normally meet these standards.
(d) Provide a personal or corporate guarantee
or other acceptable credit enhancement satisfactory to the director.
(e) Demonstrate, to the director's
satisfaction, compliance with all outstanding loan obligations and agreements
in the last five years, all required reserve accounts are fully funded and all
other loan covenants are being met.
(f) A publicly traded entity must demonstrate
they have received unqualified audit opinions from their Certified Public
Accountant, completed in accordance with Generally Accepted Auditing Standards
covering the last three years financial statements. The director may, at the
director's discretion, accept a qualified audit opinion if the opinion does not
indicate material deficiencies in the applicant's financial position,
management or internal controls, or compliance with loan or bond
obligations.
(9) Unless
the director finds financial factors warrant otherwise, an applicant that is a
non-profit corporation or non-profit cooperative shall meet the following
conditions:
(a) Have been in existence and
operating for at least three years.
(b) Demonstrate adequate income to fund all
expenses, debt obligations and a reserve for unforeseen contingencies, for at
least the last three years before loan application;
(c) Meet the following financial standards:
(A) Have a ratio of current assets to current
debt of at least 1.75 to 1;
(B)
Have a ratio of quick assets, consisting of cash, marketable securities,
accounts and notes receivable, and other assets readily convertible to cash, to
current debt of at least 1 to 1; and
(C) Have a ratio of total debt to equity of
no more than 2 to 1.
(D) The
director may exempt an applicant from this rule if the applicant shows that
financially sound entities of the same type and under similar size and
circumstance do not normally meet these standards.
(d) Demonstrate, to the director's
satisfaction, compliance with all outstanding loan obligations and agreements
in the last five years, all required reserve accounts are fully funded and all
other loan covenants are being met.
(e) Demonstrate they have received
unqualified audit opinions from their Certified Public Accountant, completed in
accordance with Generally Accepted Auditing Standards, covering the last three
years financial statements. The director may, at the director's discretion,
accept a qualified audit opinion if the opinion does not indicate material
deficiencies in the applicant's financial position, management or internal
controls, or compliance with loan or bond obligations.
(f) Demonstrate there is professional
management in place, including a manager with experience in water delivery
systems, satisfactory to the director.
(10) An applicant that is an irrigation
district, water improvement district, water control district, drainage
district, or port district shall meet the following conditions:
(a) Unless the director finds financial
factors warrant otherwise, have been in existence and operating for at least
three years.
(b) Have a loan to
value ratio of all real property within the district which is served by the
water development project or which is served by a water source enhanced or
restored by the water development project, including new debt and outstanding
debt of the district, that does not exceed 1 to 10.
(c) Collect assessments or user charges
which, together with other available funds on hand for each fiscal year, are
sufficient to generate coverage by revenues net of operation and maintenance
expenses of 125 percent of annual debt service from property owners. The
director, at the director's discretion, may allow establishment of a rate or
collection stabilization fund to satisfy this condition.
(d) Demonstrate, to the satisfaction of the
director, compliance with all outstanding loan obligations and agreements in
the last five years, all required reserve accounts are fully funded and all
other loan covenants are being met.
(e) Demonstrate they have received
unqualified audit opinions from their Certified Public Accountant, completed in
accordance with Generally Accepted Auditing Standards, covering the last three
years financial statements. The director may, at the director's discretion,
accept a qualified audit opinion if the opinion does not indicate material
deficiencies in the applicant's financial position, management or internal
controls, or compliance with loan or bond obligations.
(f) Demonstrate a percentage of collection of
assessments or user charges that is satisfactory to the director and either
have in place or adopt a standard package of delinquency and foreclosure
policies acceptable to the director prior to receiving a loan.
(g) Districts with less than 100 members may
be required to provide additional financial information, guarantees or other
form of credit enhancement as required by the director.
(h) Demonstrate there is professional
management in place, including a manager with experience in water delivery
systems, satisfactory to the director.
(i) In any case of a loan to, or the purchase
of bonds issued by, a district to which the judicial confirmation procedure
authorized by ORS 548.105 is available and in
which subject matter jurisdiction exists under
548.105, no loan agreement shall
be executed unless the district first has delivered to the director a certified
copy of the circuit court judgment confirming the regularity and legality of
the proceedings and order or other determination providing for the issue of the
district's bonds.
(11) An
applicant that is a city or county shall meet the following conditions:
(a) Except when the city or county offers a
general obligation, collect assessments or user charges which, together with
other available funds on hand for each fiscal year, are sufficient to generate
coverage by revenues net of operation and maintenance expenses of 125 percent
of annual debt service from property owners. The director, at the director's
discretion, may allow establishment of a rate or collection stabilization fund
to satisfy this condition.
(b)
Demonstrate, to the satisfaction of the director, compliance with all
outstanding loan obligations and agreements in the last five years, all
required reserve accounts are fully funded and all other loan covenants are
being met.
(c) Demonstrate they
have received unqualified audit opinions from their Certified Public
Accountant, completed in accordance with Generally Accepted Auditing Standards,
covering the last three years financial statements. The director may, in the
director's judgment, accept a qualified audit opinion if the opinion does not
indicate material deficiencies in the applicant's financial position,
management or internal controls, or compliance with loan or bond
obligations.
(d) Demonstrate a
percentage of collection of assessments, user charges or other revenue pledged
for repayment that is satisfactory to the director and either have in place or
adopt a standard package of delinquency and foreclosure policies acceptable to
the director prior to receiving a loan.
(e) Demonstrate there is professional
management in place, including a manager with experience in water delivery
systems, satisfactory to the director.
(12) The director may require applicants to
establish a reserve fund, if not prohibited or unduly restricted by federal tax
law as determined at the discretion of the director, up to the maximum annual
debt service or maximum allowed by federal law, or pledge other reserve funds
the director deems acceptable as loan security. The director shall establish
conditions for use of the fund and its duration in the loan contract.
(13) The director may place additional
conditions on the applicant in the loan contract limiting additional
borrowing.
(14) Findings under this
rule and ORS 541.720 are for lending purposes
only. Such findings do not endorse the project, its design, or its parts and
provide no assurances of any kind for any other purpose.
Stat. Auth.: ORS 183, ORS 197, ORS 536 & ORS 541
Stats. Implemented: ORS
541.710
