Chapter 868 Oregon Laws 2001

AN ACT

HB 3173

Relating to tax credits for farmworker housing; creating new provisions; and amending ORS 314.752, 315.164, 315.167 and 317.147 and section 6, chapter 963, Oregon Laws 1989, and sections 2 and 5, chapter 766, Oregon Laws 1991.

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

SECTION 1. ORS 315.164, as amended by section 2, chapter 625, Oregon Laws 2001 (Enrolled House Bill 3172), and section 13a, chapter 613, Oregon Laws 2001 (Enrolled House Bill 3171), is amended to read:

315.164. (1) As used in this section and sections 3 and 4 of this 2001 Act:

(a) “Condition of habitability” means a condition that is in compliance with:

(A) The applicable provisions of the state building code under ORS chapter 455 and the rules adopted thereunder; or

(B) If determined on or before December 31, 1995, sections 12 and 13, chapter 964, Oregon Laws 1989.

(b) “Contributor” means a person that constructed, manufactured, installed or contributed money to finance a farmworker housing project.

[(b)] (c) “Eligible costs” includes finance costs, construction costs, excavation costs, installation costs and permit costs and excludes land costs.

[(c)] (d) “Farmworker” means any person who, for an agreed remuneration or rate of pay, performs temporary or permanent labor for another in the production of farm products or in the planting, cultivating or harvesting of seasonal agricultural crops or in the forestation or reforestation of lands, including but not limited to the planting, transplanting, tubing, precommercial thinning and thinning of trees and seedlings, the clearing, piling and disposal of brush and slash and other related activities.

[(d)] (e) “Farmworker housing” means housing:

(A) Limited to occupancy by farmworkers and their immediate families; and

(B) No dwelling unit of which is occupied by a relative of the owner or operator of the farmworker housing.

[(e)] (f) “Farmworker housing project” means construction, installation or rehabilitation of farmworker housing.

(g) “Owner” means a person that owns farmworker housing and does not include a person that only has an interest in the housing as a holder of a security interest.

[(f)] (h) “Rehabilitation” means to make repairs or improvements to a building that improve its livability and are consistent with applicable building codes.

[(g)] (i) “Relative” means a brother or sister (whether by the whole or by half blood), spouse, ancestor (whether by law or by blood), or lineal descendant of an individual.

(2) A [resident individual] taxpayer who is the owner or operator of farmworker housing is allowed a credit against the taxes otherwise due under ORS chapter 316, if the taxpayer is a resident individual, or[, if the taxpayer is a corporation, the credit shall be allowed] against the taxes otherwise due under ORS chapter 317, if the taxpayer is a corporation. The total amount of the credit shall be equal to [30] 50 percent of the eligible costs actually paid or incurred to complete a farmworker housing project, to the extent the eligible costs actually paid or incurred do not exceed the estimate of eligible costs approved by the Housing and Community Services Department under ORS 315.167.

[(3) The credit allowed under subsection (2) of this section shall be taken in five equal installments over a period of five consecutive tax years beginning in the tax year of the taxpayer during which the project is completed.]

(3) A taxpayer claiming a credit under this section may elect to transfer a portion of the credit to a contributor in the manner provided in section 3 of this 2001 Act. No more than 80 percent of the credit may be transferred.

(4)(a) The credit allowed under this section may be taken for the tax year in which the farmworker housing project is completed or in any of the nine tax years succeeding the tax year in which the project is completed.

(b) The credit allowed in any one tax year may not exceed 20 percent of the amount determined under subsection (2) of this section.

(5)(a) To claim a credit under this section, a taxpayer must show in each year following the completion of a farmworker housing project that the housing continues to be operated as farmworker housing.

(b) A taxpayer need not make the showing required in paragraph (a) of this subsection if the Housing and Community Services Department waives the requirement after the taxpayer has successfully met the requirement for the first five years after completion of the housing project.

(c) The Housing and Community Services Department shall determine by rule the factors necessary to grant a waiver. Such factors may include a documented decline in a particular area for farmworker housing.

[(4)] (6) The credit shall apply only to a farmworker housing project that is located within this state and physically begun on or after January 1, 1990.

[(5)(a)] (7)(a) A credit [is not] may not be allowed under this section unless the taxpayer claiming credit under this section:

(A) Obtains a letter of credit approval from the Housing and Community Services Department pursuant to ORS 315.167; and

(B) Files with the Department of Revenue an annual certification providing that all occupied units for which credit is being claimed are occupied by farmworkers and their immediate families.

(b) The certification described under this subsection shall be made on the form and in the time and manner prescribed by the Department of Revenue.

[(6)] (8) Except as provided under subsection [(7)] (9) of this section, the credit allowed in any one year may not exceed the tax liability of the taxpayer.

[(7)] (9) Any tax credit otherwise allowable under this section that is not used by the taxpayer in a particular tax year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit remaining unused in [such] the 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 any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, and any credit not used in that fifth succeeding tax year may be carried forward and used in the sixth succeeding tax year, and any credit not used in that sixth succeeding tax year may be carried forward and used in the seventh succeeding tax year, and any credit not used in that seventh succeeding tax year may be carried forward and used in the eighth succeeding tax year, and any credit not used in that eighth succeeding tax year may be carried forward and used in the ninth succeeding tax year, but may not be carried forward for any tax year thereafter.

[(8)(a)] (10)(a) The credit provided by this section is not in lieu of any depreciation or amortization deduction for the project to which the taxpayer otherwise may be entitled under ORS chapter 316 or 317 for [such] the year.

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

[(9)(a) If the taxpayer is a person who is not, and will not be, the owner or operator of the farmworker housing, the taxpayer is entitled to the credit allowed under this section only if, upon completion of the farmworker housing project and first occupation by farmworkers, the housing complies with all safety or health laws, rules, regulations and standards applicable for farmworker housing.]

[(b) If the taxpayer is a person who is, or will be, the owner or operator of the farmworker housing at any time during the period for which the credit is claimed, the housing must:]

(11) For a taxpayer to receive a credit under this section, the farmworker housing must:

[(A)] (a) Comply with all occupational safety or health laws, rules, regulations and standards;

[(B)] (b) If registration is required, be registered as a farmworker camp with the Department of Consumer and Business Services under ORS 658.750; [and]

[(C)] (c) Upon occupancy and if an indorsement is required, be operated by a person who holds a valid indorsement as a farmworker camp operator under ORS 658.730; and

(d) Continue to be operated as farmworker housing for a period of at least 10 years after the completion of the farmworker housing project, unless a waiver has been granted under subsection (5) of this section.

[(c) For purposes of this section, “owner” does not include a person whose only interest in the housing is as holder of a security interest.]

[(10)(a)] (12)(a) Pursuant to the procedures for a contested case under ORS 183.310 to 183.550, the Department of Revenue may order the disallowance of the credit allowed under this section if it finds, by order, that:

(A) The credit was obtained by fraud or misrepresentation; or

(B) In the event that an owner or operator claims or claimed the credit:

(i) The taxpayer has failed to continue to substantially [to] comply with the occupational safety or health laws, rules, regulations or standards;

(ii) After occupancy and if registration is required, the farmworker housing is not registered as a farmworker camp with the Department of Consumer and Business Services under ORS 658.750; [or]

(iii) After occupancy and if an indorsement is required, the farmworker housing is not operated by a person who holds a valid indorsement as a farmworker camp operator under ORS 658.730; or

(iv) The taxpayer has failed to make a showing that the housing continues to be operated as farmworker housing as required under subsection (5)(a) of this section and the taxpayer has not been granted a waiver by the Housing and Community Services Department under subsection (5)(b) of this section.

(b) If the tax credit is disallowed pursuant to this subsection, notwithstanding ORS 314.410 or other law, all prior tax relief provided to the taxpayer shall be forfeited and the Department of Revenue shall proceed to collect those taxes not paid by the taxpayer as a result of the prior granting of the credit.

(c) If the tax credit is disallowed pursuant to this subsection, the taxpayer shall be denied any further credit provided under this section, in connection with the farmworker housing project, as the case may be, from and after the date that the order of disallowance becomes final.

[(11)] (13) In the event that the farmworker housing is destroyed by fire, flood, natural disaster or act of God before all of the credit has been used, the taxpayer may nevertheless claim the credit as if no destruction had taken place. In the event of fire, if the fire chief of the fire protection district or unit determines that the fire was caused by arson, as defined in ORS 164.315 and 164.325, by the taxpayer or by another at the taxpayer’s direction, then the fire chief shall notify the Department of Revenue. Upon conviction of arson, the Department of Revenue shall disallow the credit in accordance with subsection [(10)] (12) of this section.

[(12)(a)] (14)(a) A nonresident individual shall be allowed the credit computed in the same manner and subject to the same limitations as the credit allowed a resident by this section. However, the credit shall be prorated using the proportion provided in ORS 316.117.

(b) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085.

(c) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117.

[(13)] (15) The Department of Revenue may adopt rules for carrying out the provisions of this section.

SECTION 2. Sections 3 and 4 of this 2001 Act are added to and made a part of ORS chapter 315.

SECTION 3. (1) A taxpayer that is a contributor is allowed a credit against the taxes otherwise due under ORS chapter 316, if the taxpayer is a resident individual, or ORS chapter 317, if the taxpayer is a corporation, to the extent the owner or operator of farmworker housing transferred a portion of the credit allowed to the owner or operator under ORS 315.164.

(2) An owner or operator of farmworker housing may transfer a portion of the credit allowed to the owner or operator under ORS 315.164 to one or more contributors in portions that do not total more than 80 percent of the total credit the owner or operator may claim.

(3) To receive a credit under this section:

(a) The owner or operator and contributor must jointly file a statement with the Department of Revenue stating the portion of credit the contributor is allowed to claim and any other information the department may require by rule; and

(b) The contributor must show that upon completion of the farmworker housing project and first occupation by farmworkers, the housing complies with all occupational safety or health laws, rules, regulations and standards applicable for farmworker housing.

(4) A contributor remains eligible to receive a credit under this section even if the owner or operator of the farmworker housing becomes ineligible for the credit as a result of:

(a) Failure to file the annual certification under ORS 315.164 (7);

(b) Failure to continue to substantially comply with occupational safety or health laws, rules, regulations or standards under ORS 315.164 (11);

(c) Failure to register as a farmworker camp with the Department of Consumer and Business Services under ORS 658.750;

(d) Failure of the operator to hold a valid indorsement as a farmworker camp operator under ORS 658.730; or

(e) Failure to comply with any other rules or provisions relating to the operation or maintenance of the farmworker housing after the contributor has completed work on the project.

(5)(a) A contributor does not remain eligible to receive a credit under this section if the Department of Revenue finds, by order of a disallowance of credit and pursuant to the procedures for a contested case under ORS 183.310 to 183.550, that the contributor obtained the credit by fraud or misrepresentation, including a finding that the housing did not comply with all occupational safety or health laws, rules, regulations and standards applicable for farmworker housing at the time the housing was completed.

(b) If the credit is disallowed pursuant to this subsection, notwithstanding ORS 314.410 or other law, all prior tax relief provided to the taxpayer shall be forfeited and the department shall proceed to collect those taxes not paid by the taxpayer as a result of the prior granting of the credit.

(c) If the credit is disallowed pursuant to this subsection, the taxpayer shall be denied any further credit provided under this section, in connection with the farmworker housing project, as the case may be, from and after the date that the order of disallowance becomes final.

(6)(a) The credit allowed under this section may be taken for the tax year in which the farmworker housing project is completed or in any of the nine tax years succeeding the tax year in which the project is completed.

(b) The credit allowed in any one tax year may not exceed 20 percent of the amount determined under subsection (2) of this section that was transferred to the contributor claiming the credit.

(7) Except as provided under subsection (8) of this section, the credit allowed in any one year may not exceed the tax liability of the taxpayer.

(8) Any tax credit otherwise allowable under this section that is not used by the taxpayer in a particular tax year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit remaining unused in such 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 any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, and any credit not used in that fifth succeeding tax year may be carried forward and used in the sixth succeeding tax year, and any credit not used in that sixth succeeding tax year may be carried forward and used in the seventh succeeding tax year, and any credit not used in that seventh succeeding tax year may be carried forward and used in the eighth succeeding tax year, and any credit not used in that eighth succeeding tax year may be carried forward and used in the ninth succeeding tax year, but may not be carried forward for any tax year thereafter.

(9)(a) A nonresident individual shall be allowed the credit computed in the same manner and subject to the same limitations as the credit allowed a resident by this section. However, the credit shall be prorated using the proportion provided in ORS 316.117.

(b) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the department terminates the taxpayer’s taxable year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085.

(10) The department may adopt rules for carrying out the provisions of this section.

SECTION 4. Upon an order of the disallowance of a credit for farmworker housing under ORS 315.164 (12) or section 3 (5) of this 2001 Act, the Department of Revenue immediately shall collect any taxes due by reason of the disallowance and shall have the benefit of all the laws of this state pertaining to the collection of income and excise taxes. An assessment of the taxes is not necessary and a statute of limitation shall not preclude the collection of the taxes.

SECTION 5. ORS 315.167 is amended to read:

315.167. (1) Prior to beginning a seasonal or year-round farmworker housing project for which credit under ORS 315.164 will be claimed, a taxpayer shall apply to the Department of Consumer and Business Services for a letter of credit approval.

(2) The application shall be on such form as is prescribed by the Department of Consumer and Business Services and shall provide:

(a) The name, address and taxpayer identification number of the taxpayer;

(b) The location of the proposed farmworker housing;

(d) An estimate of the eligible costs of the project; and

(e) Any other information as the Department of Consumer and Business Services may require.

(3) The Department of Consumer and Business Services shall consider applications in the chronological order in which the applications are filed with the department.

(4) Applications filed in compliance with this section shall be approved by the Department of Consumer and Business Services to the extent that the total of estimated eligible costs for all approved projects for the calendar year is equal to or less than [$3.3] $7.5 million. No application shall be approved if the addition of the estimated eligible costs of the project to the estimated eligible costs for all approved projects for the calendar year would exceed [$3.3] $7.5 million.

(5) Upon approval of an application, the Department of Consumer and Business Services shall send a letter of credit approval to the taxpayer. The letter of credit approval shall state the approved amount of estimated eligible costs for the project.

(6) At the conclusion of each calendar year, the Department of Consumer and Business Services shall send a list of the names, addresses and taxpayer identification numbers of taxpayers to whom a letter of credit approval has been issued under this section during the calendar year, along with approved amounts of estimated eligible costs for each project, to the Department of Revenue.

(7) Notwithstanding that a letter of credit approval has been issued to a taxpayer under this section, the Department of Revenue may disallow, in whole or in part, a claim for credit under ORS 315.164 upon the Department of Revenue’s determination that under the provisions of ORS 315.164 the taxpayer is not entitled to the credit or is only entitled to a portion of the amount claimed.

SECTION 6. ORS 317.147 is amended to read:

317.147. (1) As used in this section:

(a) “[Commercial] Lending institution” means a bank, mortgage banking company, trust company, savings bank, savings and loan association, credit union, national banking association, federal savings and loan association, [or] federal credit union maintaining an office in this state, nonprofit community development financial institution or nonprofit public benefit corporation operating as a lending institution.

(b) “Seasonal farmworker housing” has the meaning given the term under ORS 315.164.

(2)(a) A [commercial] lending institution shall be allowed a credit against the taxes otherwise due under this chapter for the tax year equal to [30] 50 percent of the interest income earned during the tax year on loans to finance only costs directly associated with construction or rehabilitation of seasonal or year-round farmworker housing if, at the time the loan is made, the borrower certifies, to the satisfaction of the lender, that upon completion of the construction or rehabilitation and first occupation by farmworkers, the housing will comply with all occupational safety or health laws, rules, regulations and standards applicable for farmworker housing and that the housing will be occupied only by seasonal or year-round farmworkers and their immediate families.

(b) A copy of the certification described under paragraph (a) of this subsection shall be submitted to the Department of Revenue at the time that a credit under this section is first claimed.

(3) The credit allowed under this section shall apply only to loans to construct or rehabilitate seasonal or year-round farmworker housing located within this state.

(4) This credit shall apply only to loans made on or after January 1, 1990.

(5) The credit allowed in any one year [shall] may not exceed the tax liability of the taxpayer.

(6) If the loan has a term of longer than 10 years, then the credit shall be allowed only for the tax year of the taxpayer during which the loan is made and the nine tax years immediately following.

(7) The credit allowed under this section shall not apply to loans in which the interest rate charged exceeds 13-1/2 percent per annum.

(8) The credit allowed under this section shall apply only to interest income from the loan and shall not apply to any other loan fees or other charges collected by the [commercial] lending institution with respect to the loan.

(9) The credit allowed under this section shall only apply to interest income actually collected by the [commercial] lending institution during the tax year.

(10)(a) Except as provided in paragraph (b) of this subsection, if the [commercial] lending institution sells the loan to another [commercial] lending institution [as defined in subsection (1) of this section], then the credit shall pass to the assignee or transferee of the loan, subject to the same conditions and limitations as set forth in this section.

(b) A [commercial] lending institution may assign, sell or otherwise transfer the loan to another person and retain the right to claim the credit granted under this section if the [commercial] lending institution also retains responsibility for servicing the loan.

(c)(A) A lending institution that is not subject to taxation under this chapter may sell or otherwise transfer the credit allowed to the lending institution under this section to a taxpayer that is subject to taxation under this chapter.

(B) A transferee of a credit under this section shall be allowed the credit for the tax years that would have been allowable to the transferor had the transfer not occurred.

(C) The Department of Revenue shall by rule establish procedures for transferring a credit under this section.

SECTION 7. Section 6, chapter 963, Oregon Laws 1989, as amended by section 56, chapter 746, Oregon Laws 1995, is amended to read:

Sec. 6. (1) ORS 315.164 shall apply to seasonal or year-round farmworker housing projects completed in tax years that begin on or after the January 1 immediately following the date that both chapter 962, Oregon Laws 1989, and chapter 964, Oregon Laws 1989, have become both effective and operative [and which are completed on or before December 31, 2001].

(2) ORS 317.147 applies to loans made in tax years that begin on or after the January 1 immediately following the date that both chapter 964, Oregon Laws 1989, and chapter 962, Oregon Laws 1989, have become both effective and operative [and which are made on or before December 31, 2001].

SECTION 8. Section 5, chapter 766, Oregon Laws 1991, as amended by section 58, chapter 746, Oregon Laws 1995, is amended to read:

Sec. 5. ORS 315.164 shall apply to seasonal or year-round farmworker housing projects completed in tax years that begin on or after January 1, 1991[, and that are completed on or before December 31, 2001].

SECTION 8a. Section 2, chapter 766, Oregon Laws 1991, as amended by section 57, chapter 746, Oregon Laws 1995, is amended to read:

Sec. 2. The amendments to ORS 317.147 by section 1, chapter 766, Oregon Laws 1991, apply to loans made in tax years that begin on or after January 1, 1990[, and on or before December 31, 2001].

SECTION 9. ORS 314.752 is amended to read:

314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax credits allowed or allowable to a C corporation for purposes of ORS chapter 317 or 318 shall not be allowed to an S corporation. The business tax credits allowed or allowable for purposes of ORS chapter 316 shall be allowed or are allowable to the shareholders of the S corporation.

(2) In determining the tax imposed under ORS chapter 316, as provided under ORS 314.734, on income of the shareholder of an S corporation, there shall be taken into account the shareholder’s pro rata share of business tax credit (or item thereof) that would be allowed to the corporation (but for subsection (1) of this section) or recapture or recovery thereof. The credit (or item thereof), recapture or recovery shall be passed through to shareholders in pro rata shares as determined in the manner prescribed under section 1377(a) of the Internal Revenue Code.

(3) The character of any item included in a shareholder’s pro rata share under subsection (2) of this section shall be determined as if such item were realized directly from the source from which realized by the corporation, or incurred in the same manner as incurred by the corporation.

(4) If the shareholder is a nonresident and there is a requirement applicable for the business tax credit that in the case of a nonresident that the credit be allowed in the proportion provided in ORS 316.117, then that provision shall apply to the nonresident shareholder.

(5) As used in this section, “business tax credit” means a tax credit granted to personal income taxpayers to encourage certain investment, to create employment, economic opportunity or incentive or for charitable, educational, scientific, literary or public purposes that is listed under this subsection as a business tax credit or is designated as a business tax credit by law or by the Department of Revenue by rule and includes but is not limited to the following credits: ORS 315.104 (forestation and reforestation), ORS 315.134 (fish habitat improvement), ORS 315.138 (fish screening, by-pass devices, fishways), ORS 315.156 (crop gleaning), ORS 315.164 and section 3 of this 2001 Act(farmworker housing), ORS 315.204 (dependent care assistance), ORS 315.208 (dependent care facilities), ORS 315.234 (child development program contributions), ORS 315.254 (youth apprenticeship sponsorship), ORS 315.304 (pollution control facility), ORS 315.324 (plastics recycling), ORS 315.354 and ORS 469.207 (energy conservation facilities), ORS 315.504 (Oregon Capital Corporation), ORS 315.604 (bone marrow transplant expenses) and ORS 317.115 (fueling stations necessary to operate an alternative fuel vehicle).

SECTION 10. Sections 3 and 4 of this 2001 Act and the amendments to ORS 314.752, 315.164, 315.167 and 317.147 and section 6, chapter 963, Oregon Laws 1989, and section 5, chapter 766, Oregon Laws 1991, by sections 1, 5, 6, 7, 8 and 9 of this 2001 Act apply to farmworker housing completed in tax years beginning on or after January 1, 2002.

Approved by the Governor July 30, 2001

Filed in the office of Secretary of State July 30, 2001

Effective date January 1, 2002

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