Or. Admin. Code § 690-090-0025

Current through Register Vol. 63, No. 11, November 1, 2024

Section 690-090-0025 - Criteria For Granting a Loan

(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.

Or. Admin. Code § 690-090-0025

WRD 1-1978, f. & ef. 2-13-78; WRD 1-1982, f. & ef. 1-11-82; WRD 9-1982, f. & ef. 8-9-82; WRD 8-1986, f. & ef. 6-18-86; WRD 15-1988, f. & cert. ef. 9-20-88; WRD 12-1990, f. & cert. ef. 8-8-90; WRD 3-1997, f. & cert. ef. 4-15-97

Stat. Auth.: ORS 183, ORS 197, ORS 536 & ORS 541

Stats. Implemented: ORS 541.710