Chapter 169 Oregon Laws 2003

AN ACT

SB 225

Relating to taxation; creating new provisions; amending ORS 294.175, 307.120, 307.260, 308.062, 308.146, 308A.256 and 308A.315; repealing ORS 308.027; and prescribing an effective date.

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

SECTION 1. ORS 307.120 is amended to read:

307.120. (1) Real property owned or leased by any municipality and real and personal property owned or leased by any dock commission of any city or by any port organized under the laws of this state is exempt from taxation to the extent to which such property is:

(a) Leased, subleased, rented or preferentially assigned for the purpose of the berthing of ships, barges or other watercraft (exclusive of property leased, subleased, rented or preferentially assigned primarily for the purpose of the berthing of floating homes, as defined in ORS 830.700), the discharging, loading or handling of cargo therefrom or for storage of such cargo directly incidental to transshipment, or the cleaning or decontaminating of agricultural commodity cargo, to the extent the property does not further alter or process an agricultural commodity;

(b) Held under lease or rental agreement executed for any purpose prior to July 5, 1947, except that this exemption shall continue only during the term of the lease or rental agreement in effect on that date; or

(c) Used as an airport owned by and serving a municipality or port of less than 300,000 inhabitants as determined by the latest decennial census. Property owned or leased by the municipality or port, located within or contiguous to the airport is “used as an airport” within the meaning of this subsection if the proceeds of the lease, sublease or rental are used by the municipality or port exclusively for purposes of the maintenance and operation of the airport.

(2) Those persons having on January 1 of any year a lease, sublease, rent or preferential assignment or other possessory interest in property exempt from taxation under subsection (1)(a) of this section, except dock area property, shall make payments in lieu of taxes to any school district in which the exempt property is located as provided in subsection (3) of this section. The annual payment in lieu of taxes shall be one quarter of one percent (.0025) of the [assessed] real market value of the exempt property and the payment shall be made to the county treasurer on or before May 1 of each year.

(3)(a) On or before December 31 preceding any year for which a lease, sublease, rental or preferential assignment or other possessory interest in property is to be held, or within 30 days after acquisition of such an interest, whichever is later, any person described in subsection (2) of this section shall file with the county assessor a request for computation of the payment in lieu of tax for the exempt property in which the person has a possessory interest. The person shall also provide any information necessary to complete the computation that may be requested by the assessor. The request shall be made on a form prescribed by the Department of Revenue.

(b) On or before April 1 of each assessment year the county assessor shall compute the in lieu tax for the property subject to subsection (2) of this section for which a request for computation has been filed under paragraph (a) of this subsection and shall notify each person who has filed such a request:

(A) That the person is required to pay the amount in lieu of taxes to the county treasurer on behalf of the school district;

(B) Of the [assessed] real market value of the property subject to the payment in lieu of taxes; and

(C) Of the amount due, the due date of the payment in lieu of taxes and of the consequences of late payment or nonpayment.

(c) On or before July 15 of each tax year the county treasurer shall distribute to the school districts the amounts received for the respective districts under subsection (2) of this section. If the exempt property is located in more than one school district, the amount received shall be apportioned to the school districts on the basis of the ratio that each school district’s permanent limit on the rate of ad valorem property taxes bears to the total permanent limit on the rate of ad valorem property taxes applicable to all of the school districts in which the property is located.

(4) If a person described in subsection (2) of this section fails to request a computation or make a payment in lieu of taxes as provided in this section, the property shall not be exempt for the tax year but shall be assessed and taxed as other property similarly situated is assessed and taxed.

(5) Upon granting of a lease, sublease, rental, preferential assignment or other possessory interest in property described in subsection (1)(a) of this section, except dock area property, the municipality, dock commission or port shall provide the county assessor with the name and address of the lessee, sublessee, renter, preferential assignee or person granted the possessory interest.

(6)(a) Not later than 15 days prior to the date that a request is required to be made under subsection (3)(a) of this section, the municipality, dock commission or port granting a lease, sublease, rental, preferential assignment or other possessory interest in its exempt property for which in lieu tax payments are imposed under subsection (2) of this section, shall notify the person granted the interest:

(A) Of the obligation to file with the county assessor a request for appraisal and computation of in lieu tax no later than December 31 or within 30 days after the interest is granted, whichever is later.

(B) Of the obligation to pay the in lieu tax, in the amount of one-quarter of one percent (.0025) of the [assessed] real market value of the exempt property held, to the county treasurer before May 1 following the date of the request.

(C) That, if the request is not made within the time prescribed, or if the in lieu tax is not paid, or both, that the property shall not be exempt from taxation but shall be assessed and taxed in the same manner as other property similarly situated is assessed and taxed.

(b) Failure of a municipality, dock commission or port to give the notice as prescribed under this subsection shall not relieve any person from the requirements of this section.

(7) As used in this section:

(a) “Dock” means a structure extended from the shore or area adjacent to deep water for the purpose of permitting the mooring of ships, barges or other watercraft.

(b) “Dock area” means that part of the dock situated immediately adjacent to the mooring berth of ships, barges or other watercraft which is used primarily for the loading and unloading of waterborne cargo, but which shall not encompass any area other than that area from which cargo is hoisted or moved aboard a vessel, or to which cargo is set down when unloaded from a vessel when utilizing shipboard or dockside machinery.

(c) “Dock area property” means all real property situated in the dock area, and includes all structures, machinery or equipment affixed to that property.

(d) “School district” means a common or union high school district, but does not include a county education bond district, an education service district, a community college service district or a community college district.

SECTION 2. ORS 308A.256 is amended to read:

308A.256. (1) The maximum assessed value and assessed value of a homesite shall be determined as provided in this section.

(2) A homesite shall have an assessed value for ad valorem property tax purposes for the [assessment] tax year equal to the lesser of the homesite’s maximum assessed value or homesite value.

(3) The homesite value for purposes of ORS 308A.250 to 308A.259 shall equal the real market value of the bare land of the total parcel and contiguous acres under same ownership, as determined under ORS 308.205, divided by the number of acres in the total parcel and contiguous acres under the same ownership, plus the lesser of:

(a) $4,000; or

(b) The depreciated replacement cost of land improvements necessary to establish the homesite.

(4) For the purposes of establishing a homesite value, the value of one acre of land for each homesite, as determined in subsection (3) of this section shall be used.

(5) The homesite’s maximum assessed value shall equal 103 percent of the [property’s maximum] homesite’s assessed value for the previous [assessment year] tax year or 100 percent of the homesite’s maximum assessed value for the previous tax year, whichever is greater.

(6) For the first [assessment] tax year for which property constitutes a homesite under this section, the homesite’s maximum assessed value shall equal the homesite’s value as determined under subsection (3) of this section multiplied by the ratio of average maximum assessed value to real market value of the residential property class in the county.

SECTION 3. ORS 308A.315 is amended to read:

308A.315. (1) The maximum assessed value and assessed value of land classified as open space land under ORS 308A.300 to 308A.330 shall be determined as provided in this section.

(2) Land classified as open space land shall have an assessed value for the [assessment] tax year equal to the lesser of the land’s maximum assessed value or the land’s open space value determined under subsection (5) of this section.

(3) The land’s maximum assessed value shall equal 103 percent of the land’s [maximum] assessed value for the previous [assessment year] tax year or 100 percent of the land’s maximum assessed value for the previous tax year, whichever is greater.

(4)(a) For the first [assessment] tax year for which the land is classified as open space land, the land shall have a maximum assessed value equal to the land’s open space value determined under subsection (5) of this section multiplied by the ratio of the total maximum assessed value of all open space land within the county over the total open space value of all open space land in the county.

(b) If there is an insufficient amount of land classified as open space land in a county to permit a statistically reliable ratio to be determined under paragraph (a) of this subsection, the statewide totals of maximum assessed value of open space land and open space value shall be used in determining the ratio.

(c) The Department of Revenue shall prescribe rules setting forth the minimum amount of open space land in a county needed to establish a statistically reliable ratio.

(5) The open space value of land classified as such under ORS 308A.300 to 308A.330 shall be the land’s real market value under ORS 308.205:

(a) Assuming the highest and best use of the land to be the current open space use, such as park, sanctuary or golf course. The assessor shall not consider alternative uses to which the land might be put.

(b) Valuing the improvements on the land, if any, as required by ORS 308.205.

SECTION 4. The amendments to ORS 307.120, 308A.256 and 308A.315 by sections 1 to 3 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 5. Section 6 of this 2003 Act is added to and made a part of ORS chapter 307.

SECTION 6. (1) Unless determined under a provision of law governing the partial exemption that applies to the property, the maximum assessed value and assessed value of partially exempt property shall be determined as follows:

(a) The maximum assessed value:

(A) For the first tax year in which the property is partially exempt, shall equal the real market value of the property, reduced by the value of the partial exemption, multiplied by the ratio, not greater than 1.00, of the average maximum assessed value over the average real market value for the tax year of property in the same area and property class.

(B) For each tax year after the first tax year in which the property is subject to the same partial exemption, shall equal 103 percent of the property’s assessed value for the prior year or 100 percent of the property’s maximum assessed value under this paragraph from the prior year, whichever is greater.

(b) The assessed value of the property shall equal the lesser of:

(A) The real market value of the property reduced by the partial exemption; or

(B) The maximum assessed value of the property under paragraph (a) of this subsection.

(2) Unless determined under a provision of law governing the special assessment, the maximum assessed value subject to special assessment and the assessed value of property subject to special assessment shall be determined as follows:

(a) The maximum assessed value:

(A) For the first tax year in which the property is specially assessed, shall equal the specially assessed value of the property multiplied by the ratio, not greater than 1.00, of the average maximum assessed value over the average real market value for the tax year of property in the same area and property class.

(B) For each tax year after the first tax year in which property is subject to the same special assessment, shall equal 103 percent of the property’s assessed value for the prior year or 100 percent of the property’s maximum assessed value subject to special assessment from the prior year, whichever is greater.

(b) The assessed value of the property shall equal the lesser of:

(A) The specially assessed value of the property as determined under the law establishing the special assessment; or

(B) The property’s maximum assessed value subject to special assessment as determined under paragraph (a) of this subsection.

(3) As used in this section, “area” and “property class” have the meanings given those terms in ORS 308.149.

SECTION 7. ORS 308.146 is amended to read:

308.146. (1) The maximum assessed value of property 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.

(2) Except as provided in subsections (3) and (4) of this section, the assessed value of property to which this section applies shall equal the lesser of:

(a) The property’s maximum assessed value; or

(b) The property’s real market value.

(3) Notwithstanding subsections (1) and (2) of this section, the maximum assessed value and assessed value of property shall be determined as provided in ORS 308.149 to 308.166 if:

(a) The property is new property or new improvements to property;

(b) The property is partitioned or subdivided;

(d) The property is first taken into account as omitted property;

(e) The property becomes disqualified from exemption, partial exemption or special assessment; or

(f) A lot line adjustment is made with respect to the property, except that the total assessed value of all property affected by a lot line adjustment shall not exceed the total maximum assessed value of the affected property under paragraph (a) or (b) of this subsection.

(4) Notwithstanding subsections (1) and (2) of this section, if property is subject to partial exemption or special assessment, the property’s maximum assessed value and assessed value shall be determined as provided under the provisions of law [granting] governing the partial exemption or special assessment.

(5)(a) Notwithstanding subsection (1) of this section, when a portion of property is destroyed or damaged due to fire or act of God, for the year in which the destruction or damage is reflected by a reduction in real market value, the maximum assessed value of the property shall be reduced to reflect the loss from fire or act of God.

(b) This subsection does not apply:

(A) To any property that is assessed under ORS 308.505 to 308.665.

(B) If the damaged or destroyed property is property that, when added to the assessment and tax roll, constituted minor construction for which no adjustment to maximum assessed value was made.

(6)(a) If, during the period beginning on January 1 and ending on July 1 of an assessment year, any real or personal property is destroyed or damaged, the owner or purchaser under a recorded instrument of sale in the case of real property, or the person assessed, person in possession or owner in the case of personal property, may apply to the county assessor to have the real market and assessed value of the property determined as of July 1 of the current assessment year.

(b) The person described in paragraph (a) of this subsection shall file an application for assessment under this section with the county assessor on or before August 1 of the current year.

(c) If the conditions described in this subsection are applicable to the property, then notwithstanding ORS 308.210, the property shall be assessed as of July 1, at 1:00 a.m. of the assessment year, in the manner otherwise provided by law.

(7)(a) Paragraph (b) of this subsection applies if:

(A) A conservation easement or highway scenic preservation easement is in effect on the assessment date;

(B) The tax year is the first tax year in which the conservation easement or highway scenic preservation easement is taken into account in determining the property’s assessed value; and

(C) A report has been issued by the county assessor under ORS 271.729 within 12 months preceding or following the date the easement was recorded.

(b) The assessed value of the property shall be as determined in the report issued under ORS 271.729, but may be further adjusted by changes in value as a result of any of the factors described in ORS 309.115 (2), to the extent adjustments do not cause the assessed value of the property to exceed the property’s maximum assessed value.

SECTION 8. Section 6 of this 2003 Act and the amendments to ORS 308.146 by section 7 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 9. ORS 294.175 is amended to read:

294.175. (1) As used in this section and ORS 294.178 to 294.187:

(a) “Department” means the Department of Revenue.

(b) “Expenditures” has the meaning given the term for purposes of ORS 294.305 to 294.520 and may be further defined by rule of the department. “Expenditures” does not include any item or class of items that cannot reasonably be allocated to an organizational unit.

(c) “Expenditures for assessment and taxation” means expenditures for any of the activities, functions or services required of a county in the assessment, equalization, levy, collection or distribution of property taxes under ORS chapters 305, 306, 307, 308, 308A, 309, 310, 311, 312 and 321. “Expenditures for assessment and taxation” specifically includes expenditures for appraising principal or secondary industrial properties, the responsibility for the making of which has been delegated by the department to a county under ORS 306.126 (3).

(d) “Grant” has the meaning given the term for purposes of ORS 294.305 to 294.520, and is further described under ORS 294.178.

(2) On or before May 1 of each year, each county shall file with the department a true copy of its estimates of expenditures for assessment and taxation for the ensuing year as prepared for purposes of ORS 294.352 but in accordance with any rules adopted by the department.

(3) Upon receipt of the estimate, the department shall review the estimate to determine its adequacy to provide the resources needed to achieve compliance with ORS [308.027,] 308.232, 308.234, ORS chapter 309 and other laws requiring equality and uniformity in the system of property taxation within the county in order that the same equality and uniformity may be achieved throughout the state.

(4) If, upon initial review of the estimate, the department determines that the proposed expenditures, or any of them, are not at the level or of the type needed to achieve adequacy, the department shall notify the county governing body. The notice shall contain an explanation of the reasons for the determination and may describe specific items or classifications of expenditure which the department has determined are required, or are not required, in order to achieve adequacy. The notice shall fix the date upon which a conference with the county governing body or representatives of the county governing body shall be held.

(5)(a) Subject to paragraph (b) of this subsection, if, upon initial review, or upon or after conference held on the date specified in the notice under subsection (4) of this section, or another date or dates convenient to the department and the county governing body, the department determines that the expenditures as initially filed, or that the expenditures as agreed upon at the conference, are at the level and of the type needed to achieve adequacy for that year or over a period of years under a plan presented as described under ORS 294.181, the department shall certify to the county governing body that its estimate of expenditures for assessment and taxation so determined are adequate and that the county will be included in the computation made under ORS 294.178 for the purpose of determining the amount of that county’s quarterly grant. The department shall include in the certification an estimate of the percentage share of the funds available in the County Assessment Function Funding Assistance Account that the county will receive under ORS 294.178 and an estimate of the total amount of the grant that will be forthcoming to the county from that account for the ensuing year on account of the certification.

(b) The department shall not certify expenditures under this subsection that the department determines are in excess of the expenditures necessary to meet the requirements of subsection (3) of this section.

(6) Any certification issued under subsection (5) of this section shall be issued as of the June 15 following the filing of the estimate of expenditures under subsection (2) of this section. If, as of June 15, agreement has not been reached between the department and the county governing body upon the estimate, the department shall issue a denial of certification.

(7) A county may appeal the determination of the department under subsection (5)(b) of this section or the denial of certification issued under subsection (6) of this section to the Director of the Oregon Department of Administrative Services. Appeal shall be filed within 10 days after the date that the denial of certification is issued. The sole issue upon appeal shall be the adequacy of expenditures for assessment and taxation as filed with the department under subsection (2) of this section, and the determination, if any, made by the department under subsection (5)(b) of this section. If the Oregon Department of Administrative Services does not issue an order approving the expenditures before July 1 of the fiscal year for which the expenditures are proposed, the certification for purposes of ORS 294.175 to 294.187 shall be considered denied.

SECTION 10. ORS 308.062 is amended to read:

308.062. (1) If the Department of Revenue determines that appraisals in any county are not being made as provided by law, to meet the requirements of real market value and under a program [which will insure] that ensures compliance with ORS [308.027 and] 308.234, or if the department determines that the county is not in compliance with a conference agreement or a plan developed at a conference as provided under ORS 294.181, it shall make a written report to the county court or board of county commissioners of the county, describing the provisions of law which are not being followed and recommending specific measures to be taken by the county court or board and the assessor to cure the deficiencies noted.

(2) If the department thereafter discovers that any measure or measures are not being taken as recommended under subsection (1) of this section, and that as a result, in the department’s opinion, appraisals in the county are not being made as provided by law, including meeting the requirements of ORS 308.232 or 308.234, the department shall give 30 days’ written notice to the assessor and to the county court or board of county commissioners of its intention to use the most practicable means to cure the deficiencies, including but not limited to the use of its own employees and equipment or the use of fee appraisers. If within the 30-day period the assessor and the county court or board of county commissioners fail to take action to correct the deficiencies through the providing of funds and personnel, or by the submission of a plan acceptable to the department, the department shall proceed to cure the deficiencies. The county court or board of county commissioners shall bear the full expense of the necessary actions taken by the Department of Revenue for the benefit of the county, aided by the provisions of subsection (3) of this section.

(3) In the event that the department must perform services within or for a county pursuant to subsection (2) of this section, the costs shall be advanced from its Assessment and Taxation County Account, described in ORS 306.125, and, except as otherwise provided by law, that account shall be reimbursed for the sum of such costs from the county’s share of the state shared funds, unless other provision is made by action of the county court or board. Reimbursement of the Assessment and Taxation County Account shall be made from time to time upon the order of the Secretary of State to the State Treasurer, based upon the Department of Revenue’s certified, itemized statement of such costs to the Secretary of State. Reimbursement shall be from an equal proportion of all state share funds required or permitted to be distributed to the county that are not otherwise dedicated as provided by law. If the county is a county for which expenditures for assessment and taxation have been certified under ORS 294.175, the total reimbursement to the department shall not exceed the amount of the expenditures so certified. If the county is a county for which expenditures for assessment and taxation have not been certified under ORS 294.175, the total reimbursement to the department shall not exceed the total amount of expenditures as determined for purposes of issuing the notice required under ORS 294.175 (4). Copies of the department’s certified itemized statement of costs shall be sent to the county court or board and to the county assessor.

SECTION 11. ORS 308.027 is repealed.

SECTION 12. ORS 307.260 is amended to read:

307.260. (1)(a) Each veteran or surviving spouse qualifying for the exemption under ORS 307.250 shall file with the county assessor, on forms supplied by the assessor, a claim therefor in writing on or before April 1 of the assessment year for which the exemption is claimed, except that when the property designated is acquired after March 1 but prior to July 1 the claim for that year shall be filed within 30 days after the date of acquisition.

(b) Not later than April 10 in each year, the county assessor shall notify each veteran or surviving spouse of a veteran in the county who secured an exemption under ORS 307.250 in the preceding year but who did not make application therefor on or before April 1 of the current year. Such notice may be given on an unsealed postal card. Any veteran or surviving spouse so notified may secure such exemption, if still qualified, by making application therefor to the county assessor not later than May 1 of the current year, accompanied by a late-filing fee of $10 which shall be deposited in the general fund of the county for general governmental expenses. If the claim for any year is not filed within the time specified, the exemption shall not be allowed on the assessment roll of that year.

(2) The claim shall set out the basis of the claim and designate the property to which the exemption may apply. Except as provided in subsection (3) of this section, claims for exemptions under ORS 307.250 (1)(a) and (2)(a) shall have annexed thereto the certificate last issued by United States Department of Veterans Affairs or the branch of the Armed Forces of the United States, as the case may be, but dated within three years prior to the date of the claim for exemption, certifying the rate of disability of the claimant. Claims for exemption under ORS 307.250 (1)(b) shall, except as provided in subsection (3) of this section, have annexed thereto, in addition to any certificate prescribed, a statement by the claimant under oath or affirmation setting forth the total gross income received by the claimant from all sources during the last calendar year. There shall be annexed to each claim the affidavit or affirmation of the claimant that the statements contained therein are true.

(3) The provisions of subsection (2) of this section which require a veteran to annex to the claim certificates of either the United States Department of Veterans Affairs, any branch of the Armed Forces of the United States or a duly licensed physician, shall not apply to a veteran who has filed the required certificate after attaining the age of 65 years or to a veteran who has filed, on or after September 27, 1987, a certificate certifying a disability rating that, under federal law, is permanent and cannot be changed.

(4)(a) Notwithstanding subsection (1) of this section, a surviving spouse may file a claim for the exemption under ORS 307.250 at any time during the tax year if:

(A) The veteran died during the previous [or current] tax year; or

(B) The property designated as the homestead was acquired after March 1 but prior to July 1 of the assessment year and the veteran died within 30 days of the date the property was acquired.

(b) The claim shall be allowed by the county assessor if the surviving spouse meets all of the qualifications for an exemption under ORS 307.250 other than the timely filing of a claim under subsection (1) of this section.

(c) If taxes on the exempt value have been paid, the taxes shall be refunded in the manner prescribed in paragraph (d) of this subsection. If taxes on the exempt value have not been paid, the taxes and any interest thereon shall be abated.

(d) The tax collector shall notify the governing body of the county of any refund required under this section and the governing body shall cause a refund of the taxes and any interest paid to be made from the unsegregated tax collections account described in ORS 311.385. The refund under this subsection shall be made without interest. The county assessor and tax collector shall make the necessary corrections in the records of their offices.

SECTION 13. The amendments to ORS 307.260 by section 12 of this 2003 Act apply to tax years beginning on or after July 1, 2003.

SECTION 14. This 2003 Act takes effect on the 91st day after the date on which the regular session of the Seventy-second Legislative Assembly adjourns sine die.

Approved by the Governor May 30, 2003

Filed in the office of Secretary of State June 2, 2003

Effective date November 26, 2003

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