71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
House Bill 2204
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor John A. Kitzhaber,
M.D., for Department of Revenue)
CHAPTER ................
AN ACT
Relating to taxation.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 to 9 of this 2001 Act are added to
and made a part of ORS chapter 308. + }
SECTION 2. { + As used in sections 2 to 9 of this 2001 Act:
(1) 'Government restriction on use' means a restriction that
limits the use of multiunit rental housing to qualified income
rental housing in order to receive a government incentive,
including but not limited to the following government incentives:
(a) A low income housing tax credit under section 42 of the
Internal Revenue Code;
(b) Financing derived from exempt facility bonds for qualified
residential rental projects under section 142 of the Internal
Revenue Code;
(c) A low interest loan under section 235 or 236 of the
National Housing Act (12 U.S.C. 1715z or 1715z-1) or under 42
U.S.C. 1485;
(d) A government rent subsidy; and
(e) A government guaranteed loan.
(2) 'Multiunit rental housing':
(a) Means residential property consisting of four or more
dwelling units; and
(b) Does not include assisted living facilities. + }
SECTION 3. { + An owner of multiunit rental housing that is
subject to a government restriction on use may choose, at the
discretion of the owner, to have the multiunit rental housing
assessed under the special assessment provided in section 4 of
this 2001 Act or may choose to have the multiunit rental housing
assessed under the ordinary methods of assessing property in this
state. Multiunit rental housing that is subject to a government
restriction on use is not required to be assessed under the
special assessment provided in section 4 of this 2001 Act. + }
SECTION 4. { + (1) The specially assessed value, maximum
assessed value and assessed value of multiunit rental housing
shall be determined under this section if:
(a) The property is subject to a government restriction on use;
and
(b) The owner of the property has filed an application for
special assessment under section 5 of this 2001 Act and that
application has been approved.
Enrolled House Bill 2204 (HB 2204-B) Page 1
(2) The specially assessed value of property assessed under
this section shall be determined in the manner elected by the
property owner under section 6 of this 2001 Act.
(3)(a) For the first tax year for which property is assessed
under this section, the maximum assessed value of property
subject to special assessment under this section shall equal the
product of the specially assessed value of the property under
subsection (2) of this section multiplied by the ratio, not
greater than 1.00, of the average maximum assessed value to the
average real market value of property in the same area and
property class as the specially assessed property.
(b) For each tax year after the first tax year in which the
property is assessed under this section and prior to any
disqualification from special assessment, the maximum assessed
value of property assessed under this section shall equal 103
percent of the property's assessed value from the prior year or
100 percent of the property's maximum assessed value from the
prior year, whichever is greater.
(c) If omitted property is added to the property assessed under
this section or a lot line adjustment is made to property
assessed under this section, the maximum assessed value of
property subject to special assessment under this section shall
be determined as prescribed in ORS 308.149 to 308.166,
substituting the specially assessed value under subsection (2) of
this section for real market value.
(4) The assessed value of property subject to special
assessment under this section shall equal the lowest of:
(a) The specially assessed value of the property determined
under subsection (2) of this section;
(b) The maximum assessed value of the property determined under
subsection (3) of this section; or
(c) The real market value of the property.
(5) For each tax year following the first tax year in which
property is subject to special assessment under this section, the
owner of the multiunit rental housing must comply with any
requirements prescribed by the Department of Revenue by rule for
the continued special assessment of the property under this
section.
(6) The definitions in ORS 308.149 apply to this section. + }
SECTION 5. { + (1) An owner of multiunit rental housing
seeking to have the property assessed under section 4 of this
2001 Act must file a written application under this section.
(2) Except as provided in subsection (3) of this section, an
application, and an election form as described in section 6 of
this 2001 Act, must be filed with the county assessor on or
before April 1 preceding the first tax year for which special
assessment under section 4 of this 2001 Act is sought.
(3) An application and election form may be filed after April 1
and on or before December 31 of the first tax year for which
special assessment under section 4 of this 2001 Act is sought, if
the application and election form are accompanied by a late
filing fee equal to the greater of $200 or one-tenth of one
percent of the real market value of the property to which the
application relates, as of the assessment date for that tax year.
(4) The application must be in the form and contain the
information prescribed by the Department of Revenue, including:
(a) The name and address of the property owner;
(b) The address and tax lot or account number of the multiunit
rental housing;
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(c) A description and documentation of the government
restriction on use to which the multiunit rental housing is
subject, including but not limited to a deed declaration,
restrictive covenant, contractual agreement or other legally
binding government restriction on use; and
(d) The anticipated duration of the government restriction on
use.
(5) A completed election form under section 6 of this 2001 Act,
and an accompanying income and expense statement (if available),
must be submitted simultaneously with an application filed under
this section and is considered to be a part of the application.
The election shall apply to each tax year for which the property
is subject to special assessment under section 4 of this 2001
Act, unless the owner changes the election as described in
section 6 (2) of this 2001 Act.
(6) The county assessor shall review the application. If the
assessor determines that the property consists of multiunit
rental housing that is subject to a government restriction on
use, the assessor shall approve the application. Approval of the
application shall result in the property to which the application
relates being qualified to be assessed under section 4 of this
2001 Act.
(7) The county assessor shall notify the applicant in writing
of the assessor's determination within 120 days following the
date the application was filed with the assessor.
(8) An applicant may appeal the determination of the county
assessor as provided in ORS 305.275. + }
SECTION 6. { + (1) The owner of multiunit rental housing that
is subject to a government restriction on use and that is to be
assessed under section 4 of this 2001 Act must elect the method
by which the specially assessed value of the property is to be
determined. The property owner must elect one of the following
methods to determine the specially assessed value of the
property:
(a) Through an annual net operating income approach to value
that uses actual income and stabilized operating expenses that
are based on the actual history of the property (if available)
and a capitalization rate. The income, expenses and
capitalization rate used must be consistent with the Uniform
Standards of Professional Appraisal Practice and may be further
defined by rules adopted by the Department of Revenue. Factors to
be considered in setting a capitalization rate include the risks
associated with multiunit rental housing subject to a government
restriction on use, including but not limited to diminished
ownership control, income generating potential and liquidity. The
capitalization rate that is set pursuant to this paragraph must
be equal to or greater than the capitalization rate used for
valuing multiunit rental housing that is not subject to a
government restriction on use;
(b) By adjusting the unrestricted market value of the property
being specially assessed, computed without regard to any
government restriction on use applicable to the property, based
on the ratio of the average annual rent of those dwelling units
of the property that are subject to a government restriction on
use to the average annual rent of comparable multiunit rental
housing that is not subject to a government restriction on use;
or
(c) Through an alternate method for determining the specially
assessed value of multiunit rental housing that is subject to a
Enrolled House Bill 2204 (HB 2204-B) Page 3
government restriction on use that may be adopted by the
department by rule.
(2)(a) An election under this section must be made at the time
an application for special assessment is filed under section 5 of
this 2001 Act, and is considered to be a part of the application.
(b) A property owner may change the election the owner
previously made. Except as provided in subsection (3) of this
section, a new election under this section must be made on or
before April 1 preceding the tax year for which the new election
applies. The election shall be made in writing to the county
assessor of the county in which the property is located, in the
form prescribed by the department.
(c) The election form must be accompanied by a written
statement of the actual income and stabilized operating expenses
of the property, as described in subsection (1)(a) of this
section.
(3) A change in election may be made after April 1 and on or
before December 31 of the tax year, if the election form is
accompanied by a late filing fee equal to the greater of $200 or
one-tenth of one percent of the real market value of the property
to which the election relates, as of the assessment date for that
tax year. + }
SECTION 7. { + (1) An owner of property assessed under section
4 of this 2001 Act must notify the county assessor if:
(a) The property is no longer multiunit rental housing that is
subject to a government restriction on use;
(b) New property is constructed at the location of the
multiunit rental housing, or new improvements are made to the
multiunit rental housing;
(c) An event described in ORS 308.146 (3)(b) or (c) occurs with
respect to the multiunit rental housing; or
(d) The owner chooses not to have the property assessed under
section 4 of this 2001 Act.
(2) The notification must be made within 60 days following the
date on which the circumstance described in subsection (1) of
this section occurred.
(3) The notification must be made in writing and must indicate
the date on which the circumstance described in subsection (1) of
this section occurred.
(4) The Department of Revenue may by rule prescribe penalties
to be imposed on a property owner if notification is not made as
required by subsections (1) to (3) of this section.
(5)(a) Property shall be disqualified from special assessment
under section 4 of this 2001 Act as of the tax year immediately
following any change, event or choice described in subsection
(1)(a), (c) or (d) of this section.
(b) Following disqualification for any change or event
described in subsection (1)(a) or (c) of this section, a property
owner may apply for special assessment pursuant to section 5 of
this 2001 Act.
(c) Following disqualification for a choice described in
subsection (1)(d) of this section, a property owner may reapply
only once for special assessment pursuant to section 5 of this
2001 Act within the 10-year period following the year in which
the property was first qualified for special assessment. An owner
may not reapply for special assessment pursuant to section 5 of
this 2001 Act after the end of that 10-year period.
(6) New property constructed at the location of the multiunit
rental housing or new improvements made to the multiunit rental
housing may qualify for special assessment under section 4 of
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this 2001 Act only if the property owner files an application
under section 5 of this 2001 Act in the time and manner
prescribed by section 5 of this 2001 Act. Notwithstanding section
6 of this 2001 Act, the new property or new improvements, if
otherwise qualified for special assessment, must be specially
assessed using the method elected by the property owner for the
existing multiunit rental housing.
(7) As used in this section, 'new property or new improvements'
has the meaning given that term in ORS 308.149. + }
SECTION 8. { + ORS 306.353 to 306.359 do not apply to sections
2 to 9 of this 2001 Act. + }
SECTION 9. { + The Department of Revenue shall prescribe rules
implementing the provisions of section 6 (1)(a) of this 2001 Act.
The department may prescribe any other rules necessary to
administer the provisions of sections 2 to 9 of this 2001 Act,
including rules establishing one or more alternative methods for
determining the specially assessed value of multiunit rental
housing under section 6 (1)(c) of this 2001 Act. + }
SECTION 10. { + Sections 2 to 9 of this 2001 Act apply to
property tax years beginning on or after July 1, 2002. + }
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Passed by House May 14, 2001
Repassed by House June 12, 2001
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate June 8, 2001
...........................................................
President of Senate
Enrolled House Bill 2204 (HB 2204-B) Page 5
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled House Bill 2204 (HB 2204-B) Page 6