Chapter 583 Oregon Laws 2001

AN ACT

SB 521

Relating to energy incentives; creating new provisions; amending ORS 315.354, 315.356, 469.185, 469.205, 469.206, 469.207, 469.210 and 469.215; and prescribing an effective date.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 315.354 is amended to read:

315.354. (1) A credit is allowed against the taxes otherwise due under ORS chapter 316 (or, if the taxpayer is a corporation, under ORS chapter 317 or 318), based upon the certified cost of the facility during the period for which that facility is certified under ORS 469.185 to 469.225. The credit is allowed as follows:

(a) Except as provided in paragraph (b) of this subsection, the credit allowed in each of the first two tax years in which the credit is claimed shall be 10 percent of the certified cost of the facility, but [shall] may not exceed the tax liability of the taxpayer. The credit allowed in each of the succeeding three years shall be five percent of the certified cost, but [shall] may not exceed the tax liability of the taxpayer.

(b) If the application for certification under ORS 469.185 to 469.225 was filed with the Office of Energy on or after January 1, 2001, and the certified cost of the facility does not exceed $20,000, the total amount of the credit allowable under subsection (4) of this section may be claimed in the first tax year for which the credit may be claimed, but may not exceed the tax liability of the taxpayer.

(2) The facility must be in Oregon[,] and[:] the taxpayer must be an eligible applicant under ORS 469.205 (1)(c).

[(a) Owned during the tax year by the taxpayer claiming the credit;]

[(b)] (3) If the facility is a qualified transit pass contract, the taxpayer must be the obligated purchaser of transit passes[; or].

[(c) If the taxpayer is a corporation, financed by a public utility described in ORS 469.205 (1)(c)(B), that has been issued a certificate under ORS 469.215.]

[(3) A credit under this section may be claimed by a taxpayer for a facility only in those tax years which begin on and after January 1, 1980.]

(4) The maximum total credit or credits allowed for a facility under this section to eligible taxpayers [shall] may not exceed 35 percent of the certified cost of [such] the facility.

(5)(a) Upon any sale, termination of the lease or contract, exchange or other disposition of the facility, notice thereof shall be given to the administrator of the Office of Energy who shall revoke the certificate covering the facility as of the date of such disposition. The [transferee] new owner, or upon re-leasing of the facility, the new lessor, may apply for a new certificate under ORS 469.215, but the tax credit available to [that transferee] the new owner shall be limited to the amount of credit not claimed by the [transferor] former owner or, for a new lessor, the amount of credit not claimed by the lessor under all previous leases.

(b) The Office of Energy may not revoke the certificate covering a facility under paragraph (a) of this subsection if the tax credit associated with the facility has been transferred to a taxpayer who is an eligible applicant under ORS 469.205 (1)(c)(A).

(6) Any tax credit otherwise allowable under this section [which] that is not used by the taxpayer in a particular year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit remaining unused in that next succeeding tax year may be carried forward and used in the second succeeding tax year, and likewise, any credit not used in that second succeeding tax year may be carried forward and used in the third succeeding tax year, and likewise, any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and likewise, any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, and likewise, any credit not used in that fifth succeeding tax year may be carried forward and used in the sixth succeeding tax year, and likewise, any credit not used in that sixth succeeding tax year may be carried forward and used in the seventh succeeding tax year, and likewise, any credit not used in that seventh succeeding tax year may be carried forward and used in the eighth succeeding tax year, but may not be carried forward for any tax year thereafter. Credits may be carried forward to and used in a tax year beyond the years specified in subsection (1) of this section only as provided in this subsection.

(7) The credit provided by this section is not in lieu of any depreciation or amortization deduction for the facility to which the taxpayer otherwise may be entitled for purposes of ORS chapter 316, 317 or 318 for such year.

(8) The taxpayer’s adjusted basis for determining gain or loss [shall] may not be decreased by any tax credits allowed under this section.

[(9) Except as provided in subsection (2)(c) of this section, a credit under the provisions of this section shall not be allowed to any of the following:]

[(a) A public utility, as defined in ORS 757.005, that retails electricity or natural gas to more than 100 customers or, if the taxpayer is a corporation, a public utility, as defined in ORS 757.005, that retails electricity or natural gas to more than 100 customers unless the credit is for a facility for commercial or residential property owned and managed by the utility;]

[(b) A people’s utility district, as defined in ORS 261.010, a municipal utility or a cooperative utility that retails electricity or natural gas to more than 100 customers; or]

[(c) A subsidiary or an affiliated interest, as defined in ORS 757.015, of a public utility described in paragraph (a) of this subsection, or if the taxpayer is a corporation, a subsidiary or an affiliated interest, as defined in ORS 757.015, of a public utility described in paragraph (a) of this subsection unless the credit is for a facility for commercial or residential property owned and managed by the subsidiary or affiliated interest.]

SECTION 2. ORS 315.356 is amended to read:

315.356. (1) If a taxpayer obtains a grant or tax credit from the federal government other than an investment tax credit or a low income housing tax credit in connection with a facility which has been certified by the administrator of the Office of Energy, the certified cost of the facility shall be reduced on a dollar for dollar basis. Any income or excise tax credits which such taxpayer would be entitled to under ORS 315.354 and 469.185 to 469.225 after any such reduction shall not be reduced by such federal grants or tax credits. A taxpayer applying for a federal grant or credit shall notify the Department of Revenue by certified mail within 30 days after each application, and after the receipt of any grant.

[(2) If a facility eligible for a credit under ORS 315.354 is financed in part by any governmental or quasi-governmental body or municipal corporation, as defined in ORS 297.405, a tax credit may be claimed only on the portion of the cost that is privately financed.]

[(3)] (2) A taxpayer is eligible to participate in both this tax credit program and low interest, government-sponsored loans.

[(4)] (3) A taxpayer who receives a tax credit or ad valorem tax relief on a pollution control facility or an alternative energy device under ORS 307.405, 315.304 or 316.116 is not eligible for a tax credit on the same facility or device under ORS 315.354 and 469.185 to 469.225.

[(5)] (4) [No credit shall] A credit may not be allowed under ORS 315.354 if the taxpayer has received a tax credit on the same facility or device under ORS 315.324.

SECTION 3. The amendments to ORS 315.354 and 315.356 by sections 1 and 2 of this 2001 Act apply to tax years beginning on or after January 1, 2001.

SECTION 4. ORS 469.185 is amended to read:

469.185. As used in ORS 469.185 to 469.225 and 469.878:

(1) “Alternative fuel vehicle” means a vehicle as defined by the administrator of the Office of Energy by rule that is used primarily in connection with the conduct of a trade or business and that is manufactured or modified to use an alternative fuel, including but not limited to electricity, ethanol, methanol, gasohol and propane or natural gas, regardless of energy consumption savings.

(2) “Car sharing facility” means the expenses of operating a car sharing program, including but not limited to the fair market value of parking spaces used to store the fleet of cars available for a car sharing program, but does not include the costs of the fleet of cars.

(3) “Car sharing program” means a program in which drivers pay to become members in order to have joint access to a fleet of cars from a common parking area on an hourly basis. “Car sharing program” does not include operations conducted by car rental agencies.

[(2)] (4) “Cost” means the capital costs and expenses necessarily incurred in the acquisition, erection, construction and installation of a facility, including site development costs and expenses for a sustainable building practices facility.

[(3)] (5) “Energy facility” means any capital investment for which the first year energy savings yields a simple payback period of greater than one year. An energy facility includes:

(a) Any land, structure, building, installation, excavation, machinery, equipment or device, or any addition to, reconstruction of or improvement of, land or an existing structure, building, installation, excavation, machinery, equipment or device necessarily acquired, erected, constructed or installed by any person in connection with the conduct of a trade or business and actually used in the processing or utilization of renewable energy resources to:

(A) Replace a substantial part or all of an existing use of electricity, petroleum or natural gas;

(B) Provide the initial use of energy where electricity, petroleum or natural gas would have been used;

(C) Generate electricity to replace an existing source of electricity or to provide a new source of electricity for sale by or use in the trade or business; or

(D) Perform a process that obtains energy resources from material that would otherwise be solid waste as defined in ORS 459.005.

(b) Any acquisition of, addition to, reconstruction of or improvement of land or an existing structure, building, installation, excavation, machinery, equipment or device necessarily acquired, erected, constructed or installed by any person in connection with the conduct of a trade or business in order to substantially reduce the consumption of purchased energy.

(c) A necessary feature of a new commercial building or multiple unit dwelling, as dwelling is defined by ORS 469.160, that causes that building or dwelling to exceed an energy performance standard in the state building code.

(d) The replacement of an electric motor with another electric motor that substantially reduces the consumption of electricity.

[(4)] (6) “Facility” means an energy facility, recycling facility, transportation facility, car sharing facility, sustainable building practices facility, alternative fuel vehicle or facilities necessary to operate alternative fuel vehicles, including but not limited to an alternative fuel vehicle refueling station.

[(5)] (7) “Qualified transit pass contract” means a purchase agreement entered into between a transportation provider and [an employer] a person, the terms of which obligate the [employer] person to purchase transit passes on behalf or for the benefit of [the employer’s] employees, students, patients or other individuals over a specified period of time.

[(6)] (8) “Recycling facility” means equipment used by a trade or business solely for recycling:

(a) Including:

(A) Equipment used solely for hauling and refining used oil;

(B) New vehicles or modifications to existing vehicles used solely to transport used recyclable materials that cannot be used further in their present form or location such as glass, metal, paper, aluminum, rubber and plastic;

(C) Trailers, racks or bins that are used for hauling used recyclable materials and are added to or attached to existing waste collection vehicles; and

(D) Any equipment used solely for processing recyclable materials such as bailers, flatteners, crushers, separators and scales.

(b) But not including equipment used for transporting or processing scrap materials that are recycled as a part of the normal operation of a trade or business as defined by the administrator.

[(7)(a)] (9)(a) “Renewable energy resource” includes, but is not limited to, straw, forest slash, wood waste or other wastes from farm or forest land, industrial waste, solar energy, wind power, water power or geothermal energy.

(b) “Renewable energy resource” does not include a hydroelectric generating facility larger than one megawatt of installed capacity unless the facility qualifies as a research, development or demonstration facility.

(10) “Sustainable building practices facility” means a commercial building in which building practices that reduce the amount of energy, water or other resources needed for construction and operation of the building are used. “Sustainable building practices facility” may be further defined by the Office of Energy by rule, including rules that establish traditional building practice baselines in energy, water or other resource usage for comparative purposes for use in determining whether a facility is a sustainable building practices facility.

[(8)] (11) “Transportation facility” means a transportation project that reduces energy use during commuting to and from work or school, during work-related travel, or during travel to obtain medical or other services, and may be further defined by the Office of Energy by rule. “Transportation facility” includes, but is not limited to, a qualified transit pass contract or a transportation services contract.

[(9)] (12) “Transportation provider” means a public, private or nonprofit entity that provides transportation services to members of the public.

[(10)] (13) “Transportation services contract” means a contract that is related to a transportation facility, and may be further defined by the Office of Energy by rule.

SECTION 5. ORS 469.205 is amended to read:

469.205. (1) Prior to erection, construction, installation or acquisition of a proposed facility any person may apply to the Office of Energy for preliminary certification under ORS 469.210 if:

(a) The erection, construction, installation or acquisition of the facility is to be commenced on or after October 3, 1979;

(b) The facility complies with the standards or rules adopted by the administrator of the Office of Energy; and

(c) The applicant meets one of the following criteria:

(A) The applicant is a person to whom a tax credit has been transferred; or

[(A)] (B) The applicant will be the owner or contract purchaser of the facility at the time of erection, construction, installation or acquisition of the proposed facility, and:

(i) The applicant is the owner, contract purchaser or lessee of a trade or business that plans to utilize the facility in connection with Oregon property; or

(ii) The applicant is the owner, contract purchaser or lessee of a trade or business that plans to lease the facility to a person who will utilize the facility in connection with Oregon property[; or].

[(iii) The applicant is a person to whom a tax credit has been transferred under ORS 469.208.]

[(B) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing rental housing unit energy conservation measures as described in ORS 469.636 or alternative fuel vehicles for commercial or industrial customers as provided in ORS 469.878.]

[(C) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing alternative fuel vehicles or associated facilities.]

[(D) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing transportation facilities.]

(2) An application for preliminary certification shall be made in writing on a form prepared by the Office of Energy and shall contain:

(a) A statement that the applicant or the lessee of the applicant’s facility:

(A) Intends to convert from a purchased energy source to a renewable energy resource;

(B) Plans to acquire, construct or install a facility that will use a renewable energy resource or solid waste instead of electricity, petroleum or natural gas;

(C) Plans to use a renewable energy resource in the generation of electricity for sale or to replace an existing or proposed use of an existing source of electricity;

(D) Plans to acquire, construct or install a facility that substantially reduces the consumption of purchased energy;

(E) Plans to acquire, construct or install equipment for recycling as defined in ORS 469.185 [(6)] (8);

(F) Plans to acquire an alternative fuel vehicle or to convert an existing vehicle to an alternative fuel vehicle;

(G) Plans to acquire, construct or install a facility necessary to operate alternative fuel vehicles;

(H) Plans to acquire transit passes for use by [the applicant’s employees] individuals specified by the applicant; [or]

(I) Plans to acquire, construct or install a transportation facility[.];

(J) Plans to acquire a sustainable building practices facility; or

(K) Plans to acquire a car sharing facility and operate a car sharing program.

(b) A detailed description of the proposed facility and its operation and information showing that the facility will operate as represented in the application.

(c) Information on the amount by which consumption of electricity, petroleum or natural gas by the applicant or the lessee of the applicant’s facility will be reduced, and on the amount of energy that will be produced for sale, as the result of using the facility or, if applicable, information about the expected level of sustainable building practices facility performance.

(d) The projected cost of the facility.

(e) If applicable, a copy of the proposed qualified transit pass contract, [or] transportation services contract or contract for lease of parking spaces for a car sharing facility.

(f) Any other information the administrator of Office of Energy considers necessary to determine whether the proposed facility is in accordance with the provisions of ORS 469.185 to 469.225, and any applicable rules or standards adopted by the administrator.

(3) An application for preliminary certification shall be accompanied by a fee established under ORS 469.217. The administrator may refund the fee if the application for certification is rejected.

(4) The administrator may allow an applicant to file the preliminary application after the start of erection, construction, installation or acquisition of the facility if the administrator finds:

(a) Filing the application before the start of erection, construction, installation or acquisition is inappropriate because special circumstances render filing earlier unreasonable; and

(b) The facility would otherwise qualify for tax credit certification pursuant to ORS 469.185 to 469.225.

(5) A preliminary certification of a sustainable building practices facility shall be applied for and issued as prescribed by the Office of Energy by rule.

SECTION 6. ORS 469.206 is amended to read:

469.206. (1) The owner of [an energy] a facility [described in ORS 469.185 (3)(a)(A) or (B)] may transfer a tax credit for the [energy] facility in exchange for a cash payment equal to the present value of the tax credit.

(2) The Office of Energy may establish by rule uniform discount rates to be used in calculating the present value of a tax credit under this section.

SECTION 7. ORS 469.207 is amended to read:

469.207. (1) Except as provided in subsection (3) of this section, an applicant under ORS 469.205 (1)(c) [(A)(iii) or (B)] shall be eligible for a tax credit for energy conservation measures installed in rental housing units pursuant to ORS 469.636. The tax credit shall apply to only the first $5,000 of actually installed energy conservation measure costs per dwelling unit.

(2) An owner, contract purchaser or lessee of a rental housing unit for which energy conservation measures have been financed by an applicant under subsection (1) of this section is ineligible for an energy conservation measure tax credit for such measures.

(3) No applicant under ORS 469.205 (1)(c) [(A)(iii) or (B)] shall be eligible for a tax credit for energy conservation measures installed in rental housing units pursuant to ORS 469.636 if the rental housing units are constructed on or after January 1, 1996.

SECTION 7a. ORS 469.210 is amended to read:

469.210. (1) The administrator of the Office of Energy may require the submission of plans, specifications and contract terms, and after examination thereof, may request corrections and revisions of the plans, specifications and terms.

(2) If the administrator determines that the proposed acquisition, erection, construction or installation is technically feasible and should operate in accordance with the representations made by the applicant, and is in accordance with the provisions of ORS 469.185 to 469.225 and any applicable rules or standards adopted by the administrator, the administrator shall issue a preliminary certificate approving the acquisition, erection, construction or installation of the facility. If the administrator determines that the acquisition, erection, construction or installation does not comply with the provisions of ORS 469.185 to 469.225 and applicable rules and standards, the administrator shall issue an order denying certification.

[(3) If within 120 days of the receipt of an application for preliminary certification, the administrator fails to issue a preliminary certificate of approval or an order denying certification, the preliminary certificate shall be considered to have been denied.]

SECTION 8. ORS 469.215 is amended to read:

469.215. (1) No final certification shall be issued by the administrator of the Office of Energy under this section unless the facility was acquired, erected, constructed or installed under a preliminary certificate of approval issued under ORS 469.210 and in accordance with the applicable provisions of ORS 469.185 to 469.225 and any applicable rules or standards adopted by the administrator.

(2) Any person may apply to the Office of Energy for final certification of a facility:

(a) [After having obtained] If the office issued preliminary certification for the facility under ORS 469.210; and

(b)(A) After completion of erection, construction, installation or acquisition of the proposed facility or, if the facility is a qualified transit pass contract, after entering into the contract with a transportation provider; or

(B) After transfer of the facility, as provided in ORS 315.354 (5).

(3) An application for final certification shall be made in writing on a form prepared by the Office of Energy and shall contain:

(a) A statement that the conditions of the preliminary certification have been complied with;

(b) The actual cost of the facility certified to by a certified public accountant who is not an employee of the applicant or, if the actual cost of the facility is less than $50,000, copies of receipts for purchase and installation of the facility;

(c) A statement that the facility is in operation or, if not in operation, that the applicant has made every reasonable effort to make the facility operable; and

(d) Any other information determined by the administrator to be necessary prior to issuance of a final certificate, including inspection of the facility by the Office of Energy.

(4) The administrator shall act on an application for certification before the 60th day after the filing of the application under this section. The administrator, after consultation with the Public Utility Commission, may issue the certificate together with such conditions as the administrator determines are appropriate to promote the purposes of this section and ORS 315.354, 469.185, 469.200, 469.205 and 469.878. The action of the administrator shall include certification of the actual cost of the facility. However, in no event shall the administrator certify an amount for tax credit purposes which is more than 10 percent in excess of the amount approved in the preliminary certificate issued for the facility.

(5) If the administrator rejects an application for final certification, or certifies a lesser actual cost of the facility than was claimed in the application, the administrator shall send to the applicant written notice of the action, together with a statement of the findings and reasons therefor, by certified mail, before the 60th day after the filing of the application. Failure of the administrator to act constitutes rejection of the application.

(6) Upon approval of an application for final certification of a facility, the administrator shall certify the facility. Each certificate shall bear a separate serial number for each device. Where one or more devices constitute an operational unit, the administrator may certify the operational unit under one certificate.

SECTION 9. The amendments to ORS 469.185, 469.205, 469.206, 469.207, 469.210 and 469.215 by sections 4 to 8 of this 2001 Act apply to preliminary or final certifications issued on or after January 1, 2001, and to the facilities for which these certifications are issued.

SECTION 10. This 2001 Act takes effect on the 91st day after the date on which the regular session of the Seventy-first Legislative Assembly adjourns sine die.

Approved by the Governor June 25, 2001

Filed in the office of Secretary of State June 25, 2001

Effective date October 6, 2001

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