71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
Senate Bill 520
Sponsored by COMMITTEE ON REVENUE
CHAPTER ................
AN ACT
Relating to energy incentives; creating new provisions; amending
ORS 307.175, 317.112, 317.115, 469.160, 469.170, 469.172 and
470.170; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 307.175 is amended to read:
307.175. (1) Property equipped with solar, geothermal, wind,
water { + , fuel cell + } or methane gas energy systems for the
purpose of heating, cooling or generating electrical energy shall
be exempt from ad valorem taxation in an amount that equals any
positive amount obtained by subtracting the real market value of
the property as if it were not equipped with such systems, from
the real market value of the property so equipped.
{ - (2) This section applies to tax years beginning on or
after January 1, 1976, but prior to July 1, 2002. - }
{ + (2) This section applies to tax years beginning prior to
July 1, 2012. + }
(3) This section { - shall - } { + does + } not apply to
property owned or leased by any individual or legal entity whose
principal business activity is directly or indirectly the
production, transportation or distribution of energy, including
but not limited to public utilities as defined in ORS 757.005 and
people's utility districts as defined in ORS 261.010.
SECTION 2. { + The amendments to ORS 307.175 by section 1 of
this 2001 Act apply to tax years beginning on or after July 1,
2002. + }
SECTION 3. ORS 317.112 is amended to read:
317.112. (1) A credit against taxes otherwise due under this
chapter for the taxable year shall be allowed to a commercial
lending institution in an amount equal to the difference between:
(a) The amount of finance charge charged during the taxable
year including interest on the loan and interest on any loan fee
financed at an annual rate of six and one-half percent, by the
lending institution to a dwelling owner who is or who rents to a
residential fuel oil customer, or who is or who rents to a wood
heating resident for the purpose of financing energy conservation
measures; and
(b) The amount of finance charge that would have been charged
during the taxable year, including interest on the loan and
interest on any loan fee financed by the lending institution for
the loan for energy conservation measures at an annual rate
{ - which - } { + that + } is the lesser of the following:
Enrolled Senate Bill 520 (SB 520-A) Page 1
(A) The annual rate charged by the commercial lending
institution for nonsubsidized loans made under like terms and
conditions at the time the loan for energy conservation measures
is made; or
(B) An upper limit established by rule by the administrator of
the Office of Energy.
(2) 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
{ - such - } { + the + } next succeeding tax year may be
carried forward and used in the second succeeding tax year, and
likewise until the 15th succeeding tax year. The credit may not
be carried forward beyond the 15th succeeding tax year.
(3) In order to be eligible for the tax credit allowed under
subsection (1) of this section, the loan shall:
(a) Be made only to an owner of an oil-heated or wood-heated
dwelling who presents the results of an energy audit pursuant to
{ - chapter 887, Oregon Laws 1977, chapter 889, Oregon Laws
1977, or under chapter 778, Oregon Laws 1981, - } { + ORS
469.631 to 469.645, 469.649 to 469.659, 469.673 to 469.683 or
469.685 that is + } conducted by a fuel oil dealer,
investor-owned utility { - , - } { + or + } publicly owned
utility or through the Office of Energy, regardless of whether
that fuel oil dealer or utility provides the dwelling's space
heating energy.
(b) Be subject to an annual rate not to exceed six and one-half
percent and have a term not exceeding 10 years.
{ - (c) Be made on or before December 31, 2001. - }
{ - (d) - } { + (c) + }Not finance any materials installed
in the construction of a new dwelling, additions to existing
structures or remodeling that adds living space.
{ - (e) - } { + (d) + } Finance only those energy
conservation measures that are recommended as cost-effective in
the energy audit, and any loan fee that is included in the body
of the loan. { - The requirement for cost-effectiveness shall
not apply in the case of a dwelling owner who has obtained
assistance and technical advice under chapter 887, Oregon Laws
1977, or chapter 889, Oregon Laws 1977. - }
(4) The credit allowed under this section { - shall - } { +
may + } not be allowed to the extent that the loan exceeds $5,000
for a single dwelling unit, or, if the dwelling owner is a
corporation described in ORS 307.375, to the extent that the loan
exceeds $2,000 for a single dwelling unit.
(5) A commercial lending institution may charge, finance and
collect a nonrefundable front-end loan fee, and such a fee
{ - shall - } { + does + } not affect the eligibility of the
loan for a tax credit under this section. The fee, if any,
{ - shall - } { + may + } not exceed that charged by the
lending institution for nonsubsidized loans made under like terms
and conditions at the time the loan for energy conservation
measures is made.
(6) Nothing in this section or in rules adopted under this
section shall be construed to cause a loan to violate the usury
laws of this state.
(7) As used in this section, 'annual rate,' 'commercial lending
institution,' 'cost-effective,' 'dwelling, ' ' dwelling owner,'
'energy audit,' 'energy conservation measures,' 'finance charge,'
'fuel oil dealer,' 'residential fuel oil customer,' 'space
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heating' and 'wood heating resident' have the meaning given those
terms in ORS 469.710.
SECTION 4. { + The amendments to ORS 317.112 by section 3 of
this 2001 Act apply to corporate excise or income tax years
beginning on or after January 1, 2001. + }
SECTION 5. ORS 469.160 is amended to read:
469.160. As used in ORS 316.116, 317.115 and 469.160 to
469.180:
(1) 'Alternative energy device' means:
(a) Any system, mechanism or series of mechanisms, including
photovoltaic systems, that uses solar radiation or wind for space
heating, cooling or electrical energy for one or more dwellings
{ - that meets or exceeds 10 percent of the total energy
requirement for the dwelling or dwellings - } ;
(b) Any system that uses solar radiation for:
(A) Domestic water heating; or
(B) Swimming pool, spa or hot tub heating and that meets the
requirements set forth in ORS 316.116;
(c) A ground water heat pump and ground loop system;
(d) A wind powered turbine that generates electricity;
(e) Any wind powered device used to offset or supplement the
use of electricity by performing a specific task such as pumping
water;
(f) Equipment used in the production of alternative fuels;
(g) A generator powered by alternative fuels and used to
produce electricity;
(h) A fuel cell;
(i) An energy efficient appliance; or
(j) An alternative fuel device.
(2) 'Alternative fuel device' means any of the following:
(a) An alternative fuel vehicle;
(b) Related equipment; or
(c) A fueling station necessary to operate an alternative fuel
vehicle.
(3) 'Alternative fuel vehicle' means a motor vehicle as defined
in ORS 801.360 that is:
(a) Registered in this state; and
(b) Manufactured or modified to use an alternative fuel,
including but not limited to electricity, natural gas, ethanol,
methanol, propane and any other fuel approved in rules adopted by
the administrator of the Office of Energy that produces less
exhaust emissions than vehicles fueled by gasoline or diesel.
Determination that a vehicle is an alternative fuel vehicle shall
be made without regard to energy consumption savings.
(4) 'Coefficient of performance' means the ratio calculated by
dividing the usable output energy by the electrical input energy.
Both energy values must be expressed in equivalent units.
(5) 'Contractor' means a person whose trade or business
consists of offering for sale an alternative energy device,
construction service, installation service or design service.
(6)(a) 'Cost' means the actual cost of the acquisition,
construction and installation of the alternative energy device
paid by the taxpayer for the alternative energy device.
(b) For an alternative fuel vehicle, 'cost' means the
difference between the cost of the alternative fuel vehicle and
the same vehicle or functionally similar vehicle manufactured to
use conventional gasoline or diesel fuel or, in the case of
modification of an existing vehicle, the cost of the
modification. ' Cost' does not include any amounts paid for
remodification of the same vehicle.
Enrolled Senate Bill 520 (SB 520-A) Page 3
(c) For a fueling station necessary to operate an alternative
fuel vehicle, 'cost' means the cost to the contractor of
constructing or installing the fueling station in a dwelling and
of making the fuel station operational in accordance with the
specifications issued under ORS 469.160 to 469.180 and any rules
adopted by the administrator of the Office of Energy.
(d) For related equipment, 'cost' means the cost of the related
equipment and any modifications or additions to the related
equipment necessary to prepare the related equipment for use in
converting a vehicle to alternative fuel use.
(7) 'Domestic water heating' means the heating of water used in
a dwelling for bathing, clothes washing, dishwashing and other
related functions.
(8) 'Dwelling' means real or personal property ordinarily
inhabited as a principal or secondary residence and located
within this state. 'Dwelling' includes, but is not limited to, an
individual unit within multiple unit residential housing.
(9) 'Energy efficient appliance' means a clothes washer,
clothes dryer, water heater, refrigerator, freezer, dishwasher,
appliance designed to heat or cool a dwelling or other major
household appliance that has been certified by the Office of
Energy to have premium energy efficiency characteristics.
(10) 'First year energy yield' of an alternative energy device
is the usable energy produced under average environmental
conditions in one year.
(11) 'Fueling station' includes but is not limited to a
compressed natural gas compressor fueling system or an electric
charging system for vehicle power battery charging.
(12) 'Placed in service' means:
(a) The date an alternative energy device is ready and
available to produce usable energy or save energy.
(b) For an alternative fuel vehicle:
(A) In the case of purchase, the date that the alternative fuel
vehicle is first purchased as an alternative fuel vehicle ready
and available for use.
(B) In the case of modification, the date that the modification
is completed and the vehicle is ready and available for use as an
alternative fuel vehicle.
(c) For a fueling station necessary to operate an alternative
fuel vehicle, the date that the fueling station is first
operational.
(d) For related equipment, the date that the equipment is first
operational.
(13) 'Related equipment' means equipment necessary to convert a
vehicle to use an alternative fuel.
SECTION 6. ORS 469.170 is amended to read:
469.170. (1) Any person may claim a tax credit under ORS
316.116 (or ORS 317.115, if the person is a corporation) if the
person:
(a) Meets the requirements of ORS 316.116 (or ORS 317.115, if
applicable);
(b) Meets the requirements of ORS 469.160 to 469.180; and
(c) Pays, subject to subsection { - (10) - } { + (9) + } of
this section, all or a portion of the costs of an alternative
energy device.
(2) A credit under ORS 317.115 may be claimed only if the
alternative energy device is a fueling station necessary to
operate an alternative fuel vehicle.
(3) In order to be eligible for a tax credit under ORS 316.116
or 317.115, a person claiming a tax credit for construction or
Enrolled Senate Bill 520 (SB 520-A) Page 4
installation of an alternative energy device (including a fueling
station) shall have the system certified by the Office of Energy
or constructed or installed by a contractor certified by the
Office of Energy under subsection (5) of this section. This
subsection does not apply to an alternative fuel vehicle or to
related equipment. Certification of an alternative fuel vehicle
or related equipment shall be accomplished under rules that shall
be adopted by the administrator of the Office of Energy.
(4) Verification of the purchase, construction or installation
of an alternative energy device shall be made in writing on a
form provided by the Department of Revenue and, if applicable,
shall contain:
(a) The location of the alternative energy device;
(b) A description of the type of device;
(c) If the device was constructed or installed by a contractor,
evidence that the contractor has any license, bond, insurance and
permit required to sell and construct or install the alternative
energy device;
(d) If the device was constructed or installed by a contractor,
a statement signed by the contractor that the applicant has
received:
(A) A statement of the reasonably expected energy savings of
the device;
(B) A copy of consumer information published by the Office of
Energy;
(C) An operating manual for the alternative energy device; and
(D) A copy of the contractor's certification certificate or
alternative energy device system certificate as appropriate;
(e) If the device was not constructed or installed by a
contractor, evidence that:
(A) The Office of Energy has issued an alternative energy
device system certificate for the device; and
(B) The taxpayer has obtained all building permits required for
construction or installation of the device;
(f) A statement, signed by both the taxpayer claiming the
credit and the contractor if the device was constructed or
installed by a contractor, that the construction or installation
meets all the requirements of ORS 469.160 to 469.180 or, if the
device is a fueling station and the taxpayer is the contractor, a
statement signed by the contractor that the construction or
installation meets all of the requirements of ORS 469.160 to
469.180;
(g) The date the alternative energy device was purchased;
(h) The date the alternative energy device was placed in
service; and
(i) Any other information that the administrator of the Office
of Energy or the Department of Revenue determines is necessary.
(5)(a) When the Office of Energy finds that an alternative
energy device can meet the standards adopted under ORS 469.165,
the administrator of the Office of Energy may issue a contractor
system certification to the person selling and constructing or
installing the alternative energy device.
(b) Any person who sells or installs more than 12 alternative
energy devices in one year shall apply for a contractor system
certification. An application for a contractor system
certification shall be made in writing on a form provided by the
Office of Energy and shall contain:
(A) A statement that the contractor has any license, bonding,
insurance and permit that is required for the sale and
construction or installation of the alternative energy device;
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(B) A specific description of the alternative energy device,
including, but not limited to, the material, equipment and
mechanism used in the device, operating procedure, sizing and
siting method and construction or installation procedure;
(C) The addresses of three installations of the system that are
available for inspection by the Office of Energy;
(D) The range of installed costs to purchasers of the device;
(E) Any important construction, installation or operating
instructions; and
(F) Any other information that the Office of Energy determines
is necessary.
(c) A new application for contractor system approval shall be
filed when there is a change in the information supplied under
paragraph (b) of this subsection.
(d) The Office of Energy may issue contractor system
certificates to each contractor who on October 3, 1989, has a
valid dealer system certification, which shall authorize the sale
and installation of the same domestic water heating alternative
energy devices authorized by the dealer certification.
(e) If the Office of Energy finds that an alternative energy
device can meet the standards adopted under ORS 469.165, the
administrator may issue an alternative energy device system
certificate to the taxpayer constructing or installing or having
an alternative energy device constructed or installed.
(f) An application for an alternative energy device system
certificate shall be made in writing on a form provided by the
Office of Energy and shall contain:
(A) A specific description of the alternative energy device,
including, but not limited to, the material, equipment and
mechanism used in the device, operating procedure, sizing, siting
method and construction or installation procedure;
(B) The constructed or installed cost of the device; and
(C) A statement that the taxpayer has all permits required for
construction or installation of the device.
(6) To claim the tax credit, the verification form described in
subsection (4) of this section shall be submitted with the
taxpayer's tax return for the year the alternative energy device
is placed in service or the immediately succeeding tax year. A
copy of the contractor's certification certificate, alternative
energy device system certificate or alternative fuel vehicle or
related equipment certificate also shall be submitted.
(7) The verification form and contractor's certificate,
alternative energy device system certificate or alternative fuel
vehicle or related equipment certificate described under this
section shall be effective for purposes of tax relief allowed
under ORS 316.116 or 317.115.
(8) The verification form and contractor's certificate
described under this section may be transferred to the first
purchaser of a dwelling or, in the case of construction or
installation of a fueling station in an existing dwelling, the
current owner, who intends to use or is using the dwelling as a
principal or secondary residence.
{ - (9) A tax credit under ORS 316.116 or 317.115 is allowed
only with respect to an alternative energy device that is placed
in service on or before December 31, 2001. - }
{ - (10) An investor owned utility that pays to a contractor
the present value to the utility of the tax credit granted for a
fueling station under ORS 316.116 or 317.115 shall be entitled to
claim the credit in the manner and subject to rules adopted by
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the Department of Revenue to carry out the purposes of this
subsection. - }
{ + (9) Any person that pays the present value of the tax
credit for an alternative energy device provided under ORS
316.116 or 317.115 and 469.160 to 469.180 to the person who
constructs or installs the alternative energy device shall be
entitled to claim the credit in the manner and subject to rules
adopted by the Department of Revenue to carry out the purposes of
this subsection. 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 subsection. + }
SECTION 7. ORS 469.172 is amended to read:
469.172. The following devices are not eligible for the
alternative energy device tax credit under ORS 316.116:
(1) Standard { + efficiency + } furnaces;
(2) Standard back-up heating systems;
(3) Woodstoves or wood furnaces, or any part of a heating
system that burns wood;
{ - (4) Air-to-air and air-to-water heat pumps or any device
that uses ambient air to make heat; - }
{ - (5) - } { + (4) + } Heat pump water heaters { + that
are part of a geothermal heat pump space heating system + };
{ - (6) - } { + (5) + } Structures that cover or enclose a
swimming pool;
{ - (7) - } { + (6) + } Swimming pools, hot tubs or spas
used to store heat;
{ - (8) - } { + (7) + } Above ground, uninsulated swimming
pools, hot tubs or spas;
{ - (9) - } { + (8) + } Photovoltaic systems installed on
recreational vehicles;
{ - (10) Devices that use water or geothermal resources for
space heating, cooling, electrical energy, domestic water heating
or swimming pool, spa or hot tub heating; - }
{ - (11) Devices that use wind for space heating, cooling,
domestic water heating or swimming pool, spa or hot tub
heating; - }
{ - (12) - } { + (9) + } Conversion of an existing
alternative energy device to another type of alternative energy
device;
{ - (13) - } { + (10) + } Repair or replacement of an
existing alternative energy device; or
{ - (14) - } { + (11) + } Any other device identified by
the Office of Energy. { + The Office of Energy may adopt rules
defining standards for eligible and ineligible devices under this
section. + }
SECTION 8. ORS 317.115 is amended to read:
317.115. (1) A business tax credit is allowed against the taxes
otherwise due under this chapter based upon costs paid or
incurred for construction or installation in a dwelling of a
fueling station necessary to operate an alternative fuel vehicle.
The credit is allowed to the contractor who constructs the
dwelling in which the fueling station is incorporated or installs
the fueling station in the dwelling but may be taken by { - an
investor owned utility - } { + any person + } under the
circumstances described in ORS 469.170 { - (10) - }
{ + (9) + } and the rules adopted thereunder.
(2) The credit is 25 percent of the cost of the fueling station
but the total credit shall not exceed $750 if the fueling station
is placed in service on or after January 1, 1998.
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(3) To qualify for a credit under this section, all of the
following are required:
(a) The fueling station must be constructed, installed and
operated in accordance with ORS 469.160 to 469.180 and a
certificate issued thereunder.
(b) The contractor must present with the claim for credit a
verification form signed not only by the contractor but by the
owner, contract purchaser or tenant authorizing the contractor to
claim the credit and indicating that the owner, contract
purchaser or tenant will not claim a credit based upon the cost
of the same fueling station under ORS 316.116 or this section.
(c) The credit must be claimed for the tax year in which the
fueling station that has been certified under ORS 469.160 to
469.180 first is placed in service or the immediately succeeding
tax year.
(4) The credit allowed under this section shall not affect the
computation of basis for purposes of this chapter, nor shall the
credit affect the computation or be in lieu of any depreciation
deduction for the fueling station.
(5) The credit allowed under this section in any one year shall
not exceed the tax liability of the taxpayer for that year.
(6) Any tax credit otherwise allowable under this section 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 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, but may not be carried forward for any
tax year thereafter.
(7) The certificate and verification form described under ORS
469.170 may be transferred by the contractor to the first
purchaser of the dwelling that incorporates the fueling station
if the purchaser intends to use the dwelling as a principal or
secondary residence or, in the case of construction or
installation of a fueling station in an existing dwelling, the
current owner, if the current owner intends to use, or uses, the
dwelling as a principal or secondary residence. A certificate and
verification form so transferred may be used by the purchaser to
claim a credit under ORS 316.116.
SECTION 9. { + The amendments to ORS 317.115, 469.160, 469.170
and 469.172 by sections 5 to 8 of this 2001 Act apply to
applications for tax credits under ORS 316.116 or 317.115 that
are approved by the Office of Energy on or after January 1,
2001. + }
SECTION 10. ORS 470.170 is amended to read:
470.170. (1) When a loan is made under this chapter { - , - }
to an applicant other than a municipal corporation, the loan
shall be secured { - by - } { + pursuant to + } a mortgage
{ - or - } { + , trust deed, + } security agreement { + ,
pledge, assignment or similar instrument, by a security interest
or lien on real or personal property + } in the full amount of
the loan { - which mortgage or security agreement shall be a
lien upon real or personal property - } { + or as the
administrator of the Office of Energy shall require for adequate
security, + } including but not limited to long-term leasehold
Enrolled Senate Bill 520 (SB 520-A) Page 8
interests or equitable interests in real property or personal
property { - as the administrator of the Office of Energy shall
require for adequate security - } . { + In lieu of, or in
addition to, any of the collateral otherwise described in this
subsection, the applicant may secure the loan by providing credit
enhancement, including but not limited to a letter of credit or
payment bond, or a guaranty acceptable to the administrator. + }
(2) When a loan is made to a municipal corporation for the
development of a small scale local energy project under this
chapter, the loan shall be secured as the administrator shall
require for adequate security. The security may be in the form of
a lien, mortgage, interest under a lease-purchase contract or
other form of security acceptable to the administrator and the
municipal corporation.
(3) When a loan made under this chapter is secured by a lien on
the real property of the applicant, the administrator shall
perfect the lien by recording as provided by law.
(4) Upon payment of all amounts loaned to an applicant pursuant
to this chapter, the administrator shall file a satisfaction
{ + or release + }notice that indicates repayment of the loan.
(5) The administrator may cause to be instituted appropriate
proceedings to foreclose liens for delinquent loan payments, and
shall pay the proceeds of any such foreclosure, less the
administrator's expenses incurred in foreclosing, into the
sinking fund. In a foreclosure proceeding the administrator may
bid on property offered for sale in the proceedings and may
acquire title to the property on behalf of the state.
(6) The administrator may take any action, make any
disbursement, hold any funds or institute any action or
proceeding necessary to protect the state's interest.
(7) The administrator may settle, compromise or release, for
reasons other than uncollectibility as provided in ORS 293.240,
all or part of any loan obligation so long as the administrator's
action is consistent with the purposes of this chapter and does
not impair the ability to pay the administrative expenses of the
Office of Energy or the obligations of any bonds then
outstanding.
SECTION 11. { + 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. + }
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Passed by Senate March 7, 2001
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 31, 2001
...........................................................
Speaker of House
Enrolled Senate Bill 520 (SB 520-A) Page 9
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled Senate Bill 520 (SB 520-A) Page 10