Or. Admin. R. 330-110-0042 - Bond Refunding
(1) The
Department must pursue opportunities to refund bonds to reduce interest sums
paid by the Department .
(a) When the
Department refunds a bond with tax-exempt bonds, the Department must share, on
an equitable basis, the savings from any refunding with the affected borrowers
in an amount consistent with a finding by the Director that the sinking fund
has, and will continue to have, sufficient funds to make payments required
under ORS 470.300(1).
Affected borrowers are those whose loans were made with the proceeds of the
refunded bonds.
(b) For the
purposes of OAR 330-110-0042(1), savings from a refunding are shared on an
equitable basis if the Department receives half the savings, and the affected
borrowers receive or split half the savings, net of costs, from a bond
refunding. When the Internal Revenue Code or other law limits the amount of
refunding savings the Department may retain or provide to the affected
borrowers, the Department may receive less or more than half the savings, and
the affected borrowers will receive the remainder. If multiple loans were
funded from the proceeds of the refunded bonds, the affected borrowers will
share the savings in proportion with their respective shares of the proceeds of
the refunded bonds that were used to make their loans, adjusted for the
remaining term to maturity of their loans.
(2) Savings from a bond refunding accrue over
the remaining term of the refunded bonds. The Department will share these
savings with affected borrowers by reducing the amount of their loan payments
over the remaining term of the loans. If the accumulated savings over the
remaining term of a loan is less than $15,000 or if the Director finds that it
is in the interest of both the Department and the borrowers, the Department may
reduce the principal amount of the loan by the net present value of the
savings, calculated using a discount rate of the maximum arbitrage yield of the
refunding bonds as defined in Section 148 of the Internal Revenue
Code.
(3) The Department must not
refund tax-exempt bonds with taxable bonds, unless the Department is able to
share the savings associated with such a refunding with the borrowers whose
loans are linked to such bonds.
(4)
At least 120 days before the date on which the Department intends to issue
refunding bonds, the Department must notify each borrower whose loan was made
from the proceeds of the bonds being refunded and must offer the borrower the
opportunity to prepay the borrower's loan. The Department will request that the
borrower notify the Department of its intent to prepay their loan within 60
days of the date of the notification or risk losing the opportunity to
prepay.
Notes
Publications: Publications referenced are available from the agency.
Stat. Auth.: ORS 469 & 470.140
Stats. Implemented: ORS 470.270
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