The Oregon Facilities Authority ("OFA") is the Oregon state agency that helps nonprofit organizations access low-cost financing for capital projects through the issuance of tax exempt conduit revenue bonds. OFA was created by the Oregon Legislature in 1989. Since inception, it has issued over $5.4 billion in bonds. The interest on these bonds is exempt from federal income tax and state personal income tax. Because the interest on these bonds is exempt from federal income tax and state personal income tax, qualified organizations can achieve lower borrowing costs by partnering with OFA to finance their capital projects.
With certain exceptions, OFA can assist any nonprofit organization with a presence in Oregon that qualifies as a section 501(c)(3) organization under federal income tax law, for capital projects including:
- Purchase of facilities or equipment
- Major remodeling of facilities
- Construction financing
- Refinancing of loans originated for capital purposes
Although projects financed by OFA to date have been located only in Oregon, recent changes to the statute governing OFA now allow OFA to finance projects located outside of Oregon so long as the organization has a substantial presence in Oregon.
OFA bonds are issued by the State of Oregon, Office of the State Treasurer. OFA’s role is to evaluate projects proposed by nonprofits and make recommendations to the State Treasurer for bond issuance. The State Treasurer makes the final decision about whether to issue the bonds, after receiving a recommendation from OFA. OFA and the Office of the State Treasurer work closely together throughout the bond approval process. Federal tax rules and state law govern the eligibility of borrowers and transactions for OFA conduit bond financing.
OFA can accommodate a variety of financing structures and has developed its programs to meet the needs of a diverse group of organizations across a wide range of conduit financings. All of these programs involve the State’s issuance of a tax-exempt revenue bond or the making of a tax-exempt loan, with the proceeds of the bond or loan then loaned to the nonprofit organization.
The State of Oregon does not guarantee the repayment of any OFA conduit revenue bond, nor is any State asset or funding source at risk of non-repayment of these bonds. A nonprofit must repay the bonds from project revenues or from other available sources. OFA itself is funded solely from fees paid by borrowers. It does not receive any funding from the State Legislature or from other public sources.