ADVANCE REFUNDING PLAN
Procedure for Submission, Review and Approval of an Advance Refunding Plan or Forward Current Refunding Plan
(1) Plan Contents and Filing. Every public body (as defined in ORS 287A.001(14) must submit its plans for an advance refunding or forward current refunding (the “Refunding Plan”) and receive approval of the Refunding Plan by the Office of the State Treasurer (“OST”) prior to the sale of bonds connected to the Refunding Plan, as provided in this rule and ORS287A.365. The Refunding Plan request should include the name, phone number, U.S. mailing and e-mail address for the public body and for the public body’s bond counsel, Municipal Advisor (“MA”), and underwriter. The Refunding Plan must contain:
(a) A statement of purpose of the Refunding Plan;
(b) A description of the bonds to be refunded, including: date and premium, if any, when each is first callable; par amount originally issued, current amount outstanding, proposed amount and maturities to be refunded; and the dated date;
(c) A preliminary estimate of the Net Present Value Savings (“NPVS”): Present value savings is defined as the present value of the difference in debt service between the proposed refunded debt service and the proposed refunding debt service, discounted at the arbitrage yield of the refunding debt service. Any issuance expenses paid from sources other than bond proceeds and any other cash contributed to the escrow other than from bond proceeds must also be subtracted from proceeds to determine NPVS;
(d) A copy of the authorizing Ordinance/Resolution;
(e) A copy of the contract between the public body and its MA;
(f) Completed Municipal Debt Advisory Committee (“MDAC”) Form 1;
(g) Estimated costs of issuance for the MA, bond counsel and underwriting costs;
(h) Final Official Statement and Bond Purchase Agreement, if applicable;
(i) Final Net Present Value Savings as described in subsection (c) of this section;
(j) Final version of Issuer’s Arbitrage/Tax Certificate;
(k) Escrow verification report;
(l) Copy of the letter from MA to the public body as described in section (2) of this rule;
(m) Completed MDAC Form 2;
(n) Completed MDAC Form 3, if using a synthetic fixed rate refunding issue;
(o) Final Draft of Bond Counsel Legal Opinion with Executed version provided within 5 business days of Closing; and
(p) Any additional materials that may be required by OST in support of the Advance Refunding or Forward Current Refunding request.
(2) Municipal Advisor required.
(a) A public body must employ an independent registered MA whose function is to advocate for the public body and advise them on the refinancing transaction that is the subject of the Refunding Plan. The MA must be registered with the Securities and Exchange Commission as required under 17 CFR § 240.15Ba1-2. The MA may not also serve as the underwriter in the same negotiated bond sale as required in Rule G23 of the Municipal Securities Rulemaking Board.
(b) Prior to closing, the public body and the OST must receive from the MA a letter stating that the MA:
(A) is currently registered with the SEC as an MA and meets the requirements in subsection (2)(a) above;
(B) has reviewed the assumptions included in the Refunding Plan; and
(C) has provided a recommendation on the desirability or undesirability of completing the Refunding Plan and the reasons therefor. Forward current Refunding Plans must also include a description of the suitability of the public body for conducting a forward current refunding and an estimate in basis points of the premium paid to execute the forward refunding.
(3) OST Approval Procedure.
(a) Preliminary Approval. If the items in subsections (1)(a) through (1)(g) of this rule are completed and submitted to OST, then OST will notify the public body of OST’s preliminary approval and state its intention to issue a final approval conditioned upon receipt and approval of items in subsections (1)(h) through (1)(p) of this rule;
(b) Preliminary Refunding Plans should be submitted to OST sufficiently in advance to allow 10 working days for review. The 10-day review period begins the working day after all items (1)(a) through (1)(g) of this rule and the application fee identified in OAR 170-061-0015 have been received;
(c) Preliminary approval is valid for a period of one year from the date of the preliminary approval letter. After the one year period expires, a new application fee and Refunding Plan are required;
(d) Final Approval. If the items in subsections (1)(h) through (1)(p) of this rule are received and approved by OST, then OST will issue its final approval for the Refunding Plan within five working days. The five-day period begins after receipt of all items required for final approval; and
(e) At the discretion of OST, drafts of preliminary and final components of Refunding Plans may be accepted and reviewed in lieu of finalized documents with the understanding that finalized documents will be provided within five working days of the bond closing.
(4) Administrative Expenses. To reimburse OST for the services, duties and activities of OST in connection with reviewing the plan, fees and expenses will be charged to public bodies as identified in OAR 170-061-0015.
(5) Ongoing Evaluation. OST evaluates long term trends in Oregon debt issuance. Adverse trends associated with local government refundings may result in a review and revision of the factors used by OST to evaluate refundings with the goal of diminishing potential undesirable impacts upon the higher priority "new money" bond issues.
(6) Waiver of Certain Provisions. OST may waive certain provisions of this rule to accommodate unusual circumstances.
(7) Noncompliance. If OST finds that the Preliminary Refunding Plan is not in substantial compliance with ORS 287A and this rule, the plan may not be approved. Notice that the plan does not comply, and the reasons for this finding will be sent to the public body and its bond counsel within 10 business days after receipt of the plan.
(8) Submission. Refunding Plans should be submitted to OST as provided in OAR 170-055-0001(4).
(9) Through its review and approval or disapproval of a Refunding Plan, OST is not acting as a fiduciary or municipal advisor to a public body, is not providing advice with respect to the structure, timing, terms or other similar matters concerning the Refunding Plan and expects the public body to rely on the advice of its MA with respect to such matters.
[Publications: Publications referenced are available from the Agency.]
Stat. Auth.: ORS 287A.365
Stats. Implemented: ORS 287A.360 - 287A.380
Hist.: TD 2-1986, f. & ef. 6-16-86; TD 2-1990, f. 9-18-90, cert. ef. 9-19-90; TD 2-1994, f. & cert. ef. 9-9-94; OST 5-2004, f. & cert. ef. 6-23-04; OST 2-2006, f. & cert. ef. 8-4-06; OST 7-2008, f. & cert. ef. 12-29-08; OST 5-2010(Temp), f. 11-29-10, cert. ef. 12-1-10 thru 5-29-11; OST 2-2011, f. & cert. ef. 4-1-11; OST 2-2012(Temp), f. & cert. ef. 11-19-12 thru 5-15-13; Administrative correction, 6-27-13; OST 2-2015, f. & cert. ef. 7-10-15; OST 1-2016, f. & cert. ef. 2-10-16; OST 4-2016, f. & cert. ef. 6-30-16
State Archives • 800 Summer St. NE • Salem, OR 97310