71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
 
HA to HB 3770
 
LC 3115/HB 3770-5
 
                       HOUSE AMENDMENTS TO
                         HOUSE BILL 3770
 
     By COMMITTEE ON SCHOOL FUNDING AND TAX FAIRNESS/REVENUE
 
                             June 4
 
  On page 1 of the printed bill, delete lines 6 through 29 and
delete pages 2 through 4 and insert:
  '  { +  SECTION 2. + }  { + As used in sections 2 to 4 of this
2001 Act:
  ' (1) 'Business firm' has the meaning given that term in ORS
285B.650.
  ' (2) 'County per capita personal income' means the most
recently available county per capita personal income statistics
published by the Bureau of Economic Analysis of the United States
Department of Commerce for a county.
  ' (3) 'County unemployment rate' means the most recently
available unemployment rate for the county, as determined by the
Employment Department.
  ' (4) 'Facility' means the land, real property improvements and
personal property that are used by a business firm to conduct
business operations, and that are the subject of an application
for preliminary certification under section 3 of this 2001 Act or
annual certification under section 4 of this 2001 Act.
  ' (5) 'Qualified location' means any area within the boundaries
of a city of 10,000 or fewer residents that is located in a
county that:
  ' (a) Has a county unemployment rate that is in the highest
quartile of county unemployment rates in this state as of the
date of the application for preliminary certification under
section 3 of this 2001 Act; and
  ' (b) Has a county per capita personal income that is in the
lowest quartile of county per capita personal incomes in this
state as of the date of the application for preliminary
certification under section 3 of this 2001 Act. + }
  '  { +  SECTION 3. + }  { + (1) A business firm seeking the
income and corporate excise tax exemption allowed under section 6
or 8 of this 2001 Act shall, before the commencement of
construction or installation of property or improvements at the
location for which the exemption is sought and before the hiring
of any employees at that location, apply to the Economic and
Community Development Department for preliminary certification
under this section.
  ' (2) The application shall be on a form prescribed by the
department and shall contain the following information:
  ' (a) The proposed location of the facility;
  ' (b) A description of the property to be constructed,
acquired, installed or leased and that is to comprise the
facility upon being placed in service;
  ' (c) If any property described in paragraph (b) of this
subsection is to be leased, the term of the lease;
  ' (d) The number of full-time, year-round employees the
business firm intends to hire;
  ' (e) The minimum annual average compensation intended to be
given to the employees described in paragraph (d) of this
subsection;
  ' (f) A description of any other business activities of the
firm in this state at the time of application, sufficient for the
department to be able to determine if the proposed facility will
constitute a new business in this state; and
  ' (g) Any other information that the department requires.
  ' (3) An application filed under this section must be
accompanied by a fee in an amount prescribed by the Economic and
Community Development Department by rule. The fee required by the
department may not exceed $500.
  ' (4)(a) When an application is filed under this section, the
department shall send copies of the application to the governing
bodies of the city and county in which the facility is proposed
to be located.
  ' (b) The governing body of a city or county may object to the
preliminary certification of a business firm if the firm would be
in competition with an existing business employing individuals
within the city or county or would be incompatible with economic
growth standards that the city or county had adopted prior to the
date of application for preliminary certification. If the
governing body of the city or county decides to object to
preliminary certification of the firm, the governing body shall
adopt a resolution stating its objection and the reason for its
objection.
  ' (c) The governing body of a city or county has 60 days from
the date the application is sent to the city or county to object
to preliminary certification. If the objection is not made within
the 60-day period, the city or county shall be deemed to have
agreed to preliminary certification.
  ' (5) When an application is filed under this section, the
department shall review the application and determine whether all
of the following requirements are met:
  ' (a) The proposed facility is to be located at a qualified
location.
  ' (b) The proposed facility is intended to operate as a
facility for at least 10 years following the date the facility
becomes operational.
  ' (c) The business firm intends to hire at least 10 employees
for full-time, year-round employment at a minimum annual
compensation of:
  ' (A) 150 percent of the county per capita personal income of
the county in which the facility is to be located as of the date
of the application for preliminary certification; or
  ' (B) 100 percent of the county per capita personal income of
the county in which the facility is to be located as of the date
of the application for preliminary certification and also provide
health insurance coverage that at least equals the benefits
provided to employees of the city or county in which the facility
is to be located.
  ' (d) The business operations of the business firm that are to
be conducted at the facility constitute a new business that the
firm does not operate at another location in this state.
  ' (e) The business operations of the business firm will not
compete with existing businesses in the city or county in which
the facility is to be located.
  ' (6) If the department determines that the proposed facility,
if completed as described in the application, will meet the
criteria set forth in subsection (5) of this section and the
governing body of the city or county has not objected to
preliminary certification of the firm, the department shall issue
a preliminary certification to the firm.
  ' (7) If the department determines that the proposed facility,
as set forth in the application, does not meet the requirements
for preliminary certification under this section, the department
may not issue a preliminary certification. The applicant may
appeal the decision to not issue a preliminary certification in
the manner of a contested case under ORS 183.310 to 183.550. No
appeal may be made if the reason for not issuing a preliminary
certification is the objection of the governing body of the city
or county under subsection (4) of this section. + }
  '  { +  SECTION 4. + }  { + (1) Following completion of the
construction, acquisition or lease of the facility and the hiring
of employees to conduct business operations at the facility and
the commencement of operations at the facility, a business firm
that obtained preliminary certification under section 3 of this
2001 Act shall apply for annual certification under this section.
  ' (2) The application shall be filed with the Economic and
Community Development Department on or before 30 days after the
end of the income or corporate excise tax year of the business
firm.
  ' (3) The application shall contain the following information:
  ' (a) A description of the business operations conducted at the
facility;
  ' (b) The date business operations commenced at the facility;
  ' (c) The number of full-time, year-round employees employed by
the business firm at the facility;
  ' (d) A schedule of the annual compensation paid to the
employees; and
  ' (e) Any other information required by the department.
  ' (4) An application filed under this section must be
accompanied by a fee in an amount prescribed by the Economic and
Community Development Department by rule. The fee required by the
department may not exceed $100.
  ' (5) The department shall review a business firm's application
and approve the application if:
  ' (a) The business operations of the firm at the facility
commenced within 10 years before the date of application for
annual certification;
  ' (b) The facility and the business operations actually
conducted at the facility are reasonably similar to the proposed
facility and proposed operations described in the application for
preliminary certification; and
  ' (c) The business firm has met the employment and minimum
compensation requirements described in section 3 (5)(c) of this
2001 Act.
  ' (6) In the case of the first application for annual
certification filed by a business firm under this section, the
department may approve the application only if, in addition to
the requirements under subsection (5) of this section, business
operations commenced at the facility within six months following
the date of preliminary certification under section 3 of this
2001 Act.
  ' (7) The department may consult with the city or county in
determining whether to approve or disapprove an application under
this section.
  ' (8) If the department determines to approve an application,
it shall issue an annual certification to the business firm.
  ' (9) If the department determines to disapprove an
application, the business firm or any owner of the business firm
may not be allowed the exemption described in section 6 or 8 of
this 2001 Act for the tax year for which the annual certification
was sought or for any subsequent tax year.
  ' (10) The decision of the department to disapprove an
application under this section may be appealed in the manner of a
contested case under ORS 183.310 to 183.550.
  ' (11) An annual certification may not be issued under this
section for a tax year that is more than 10 years following the
year business operations at the facility are commenced.
  ' (12) The department must determine to approve or disapprove
an application under this section within 30 days of the date the
application is filed. + }
  '  { +  SECTION 5. + }  { + Section 6 of this 2001 Act is added
to and made a part of ORS chapter 316. + }
  '  { +  SECTION 6. + }  { + (1) For each tax year in which a
business firm receives an annual certification under section 4 of
this 2001 Act, the income of the taxpayer apportionable to the
certified facility of the business firm shall be exempt from tax
under this chapter.
  ' (2) The income of a resident taxpayer that is exempt under
this section shall be determined by:
  ' (a) Multiplying the federal taxable income of the taxpayer by
the ratio of the taxpayer's federal adjusted gross income derived
from the business firm over the taxpayer's federal adjusted gross
income; and
  ' (b) Multiplying the amount determined under paragraph (a) of
this subsection by the ratio of the business firm's income
derived from the firm's activities at the certified facility over
the business firm's income from all business activities.
  ' (3) The income of a nonresident or part-year resident
taxpayer that is exempt under this section shall be determined
by:
  ' (a) Multiplying the Oregon-sourced federal taxable income of
the taxpayer by the ratio of the taxpayer's federal adjusted
gross income derived from the business firm over the taxpayer's
federal adjusted gross income; and
  ' (b) Multiplying the amount determined under paragraph (a) of
this subsection by the ratio of the business firm's income
derived from the firm's activities at the certified facility over
the business firm's income from all business activities.
  ' (4) The Department of Revenue shall by rule prescribe a
method by which a business firm determines the extent to which
the firm's income is derived from the firm's activities at the
certified facility.
  ' (5)(a) A partnership or S corporation shall report the
information necessary to compute exempt income under this section
to the firm's owners within 30 days following the issuance of the
annual certification to the partnership or S corporation under
section 4 of this 2001 Act.
  ' (b) The department may permit extensions of time for
reporting the information required under this subsection.
  ' (6) As used in this section:
  ' (a) 'Business firm' has the meaning given that term in
section 2 of this 2001 Act.
  ' (b) 'Certified facility' means a facility, as defined in
section 2 of this 2001 Act, for which an annual certification
under section 4 of this 2001 Act has been issued. + }
  '  { +  SECTION 7. + }  { + Section 8 of this 2001 Act is added
to and made a part of ORS chapter 317. + }
  '  { +  SECTION 8. + }  { + (1) For each tax year in which a
business firm has received an annual certification for a facility
under section 4 of this 2001 Act, the income of the business firm
that is apportionable to the certified facility shall be exempt
from tax under this chapter.
  ' (2) The income of a business firm that is exempt under this
section shall be determined by multiplying the taxable income of
the business firm (as determined before application of this
section) by the sum of:
  ' (a) 50 percent of the ratio of the payroll of the business
firm from employment at the certified facility over total
statewide payroll of the business firm, as determined under ORS
314.660; and
  ' (b) 50 percent of the ratio of the average value of the
property of the business firm at the certified facility over the
average value of the property of the business firm statewide, as
determined under ORS 314.655.
  ' (3) The sum computed under subsection (2) of this section
shall be the amount of the business firm's income that is exempt
from tax under this chapter.
  ' (4) As used in this section:
  ' (a) 'Business firm' has the meaning given that term in
section 2 of this 2001 Act.
  ' (b) 'Certified facility' means a facility, as defined in
section 2 of this 2001 Act, for which an annual certification
under section 4 of this 2001 Act has been issued. + } ' .
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