Smaller cities often face challenges in meeting grant matching requirements and complying with expenditure limitations. During the 2026 legislative session, the Oregon legislature passed a bill to help mitigate some of those challenges: SB 1585.
What SB 1585 Does
SB 1585 caps matching fund requirements for certain state grants to small cities for specific capital improvement projects. The bill also requires that incorporated cities with a population of fewer than 20,000 people must be allowed to use grant money awarded for these capital construction and municipal infrastructure projects for all phases of a funded project, including but not limited to engineering, planning and support, and construction.
Which Grants Are Covered
Specifically, SB 1585 applies matching fund requirements to the following state grants:
- Oregon Transportation Commission for safety improvement projects near schools
- Oregon Department of Transportation from the Connect Oregon program and the Multimodal Active Transportation fund for certain infrastructure projects
- Infrastructure Finance Authority for levee projects
- Parks and Natural Resources Fund
- Oregon Water Resources Department for planning studies to evaluate the feasibility of developing a water conservation, reuse, or storage project
Matching Fund Requirements by City Population
The bill’s maximum matching fund requirements for incorporated cities are:
- For a population of 5,000 or fewer people: Up to 3 percent of a grant award of $100,000 or less, and 5 percent of a grant award greater than $100,000
- For a population of 5,000–7,500 people: 7 percent of a grant award
- For a population of 7,500–10,000 people: 9 percent of a grant award
- For a population of 10,000–20,000 people: 12 percent of a grant award
Provided the governor signs the bill, SB 1585 will go into effect in June of this year.
If you have questions about how SB 1585 may affect your funding, please contact a member of Miller Nash’s public entities team.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
