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OREGON STATE TREASURY
OREGON SCHOOL BOND GUARANTY PROGRAM
Oregon School Bond Guaranty Program
(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) 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
(d) A statement of whether any
of the School District's previously issued and outstanding debt is covered by the
(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
(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 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,
(h) A non-refundable application
processing fee as set forth in OAR 170-061-0015;
(i) 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
(j) Any additional materials
that may be required by OST in support of the request for participation in the Guaranty
(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.
(a) Any District submitting
debt service schedules under section (2) that indicate the amount of periodic debt
service paid, or projected to be paid, by the District on its outstanding bonds
guaranteed under the Guaranty Program, outstanding debt payable through a fund diversion
agreement with the State Department of Education, and any other debt that has been
guaranteed for repayment by the State of Oregon that is outstanding or anticipated
at the time its request is submitted to OST, is equal to eighty (80) percent or
more of the amount of State School Aid transferred to, or projected to be transferred
to, the District by the State of Oregon in any fiscal year that the requested guaranty
would be in effect, will be considered a repayment risk by OST and OST will require
the requesting District to pledge revenues or property to secure some or all of
its repayment obligation to the State of Oregon or to purchase bond insurance or
another form of credit enhancement acceptable to OST as a condition to issuance
of a Certificate of Qualification,
(b) If after its review, OST
determines that a District does not fall within the parameters set forth in paragraph
(a) of this section but, due to other factors, the fiscal stability of the District
may not be sufficiently strong to assure repayment to the State of Oregon of any
amounts paid by OST under ORS 328.341, OST may require the requesting District to
pledge additional revenues or property to secure its repayment obligation to the
State of Oregon or to purchase bond insurance or another form of credit enhancement
acceptable to OST as a condition to issuance of a Certificate of Qualification,
(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. 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
(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);
(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
(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
(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
(a) The School District fails
to meet the provisions outlined in the Act or any of the requirements outlined in
(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). 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;
(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.
Stat. Auth.: ORS 328.321 - 328.356
Stats. Implemented: ORS 328.321
- 328.356 & 328.331
Hist.: OST 3-1998(Temp),
f. 12-14-98, cert. ef. 1-2-99 thru 6-30-99; OST 2-1999, f. 6-22-99, cert. ef. 7-1-99;
OST 1-2000(Temp), f. 10-31-00, cert. ef. 10-31-00 thru 4-27-01, Administrative correction
6-7-01; OST 7-2008, f. & cert. ef. 12-29-08; OST 5-2009(Temp), f. & cert.
ef. 10-30-09 thru 4-27-10; OST 1-2010, f. & cert. ef. 1-15-10; OST 1-2014(Temp),
f. & cert. ef. 1-15-14 thru 7-14-14; OST 2-2014, f. & cert. ef. 4-11-14
The official copy of an Oregon Administrative Rule is
contained in the Administrative Order filed at the Archives Division,
800 Summer St. NE, Salem, Oregon 97310. Any discrepancies with the
published version are satisfied in favor of the Administrative Order.
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