Oregon Revised Statutes Chapter 305 § 305.586 — Legislative findings; policy on remedies for misspent bond proceeds

Legislative findings; policy on remedies for misspent bond proceeds. (1) As used in this section: (a) “Capital construction” has the meaning given that term in ORS 310.140. (b) “Capital costs” has the meaning given that term in ORS 310.140. (c) “Capital improvements” has the meaning given that term in ORS 310.140. (2) The Legislative Assembly finds that, when general obligation bonds are issued by a government unit to finance capital costs or to finance the costs of capital construction or capital improvements, subjecting the taxes imposed to pay the principal and interest on that bonded indebtedness to the limits of Article XI, section 11b (1), of the Oregon Constitution, reduces the credit quality of the bonds, injures bondholders and increases the cost of borrowing for all local governments in Oregon. The Legislative Assembly also finds that it is in the best interests of the State of Oregon and local governments in Oregon to ensure that, if a local government body expends proceeds from the bonds for other than capital costs, capital construction or capital improvements, whichever is an authorized use of proceeds of the bonds, the holders of the bonds, who are innocent with regard to the expenditure, will not suffer impairment of their security and interest in the bonds as a result. (3) It is the policy of the State of Oregon and a matter of statewide concern that, notwithstanding ORS 305.587 (1) and 305.589 (8), if in a proceeding commenced under ORS 305.583 or 305.589, the Oregon Tax Court finds that the proceeds of general obligation bonds issued for capital construction or capital improvements as defined in Article XI, section 11 (13), of the Oregon Constitution, or general obligation bonds issued for capital costs, as defined in Article XI, section 11L, of the Oregon Constitution, have been expended for purposes other than capital costs or the costs of capital construction or capital improvements, the court shall endeavor, to the fullest extent practicable and consistent with equitable principles, to fashion a remedy that does not impair the security or value of the bonds to the bondholders and does not prejudice the ability of the local government body to satisfy its obligations under the bonds. (4) In addition, the court shall fashion any remedy in a manner that takes into account the financial capacity and practical alternatives available to the local government body, and shall ensure that the remedy is proportional to, and restricted to correcting the amount of, any unlawful expenditure of bond proceeds. To the fullest extent possible, the court shall avoid any remedy that either invalidates, in whole or in part, the bonds or taxes levied or to be levied for payment of the bonds, or that makes any amount of the bonds for which the proceeds lawfully were expended subject to the limits of Article XI, section 11b (1), of the Oregon Constitution. [1997 c.171 §5; 2013 c.491 §7]