Chapter 621 Oregon Laws 2003

AN ACT

HB 2188

Relating to taxation; creating new provisions; amending ORS 215.203, 215.236, 215.262, 215.263, 215.284, 215.720, 215.730, 215.800, 215.801, 215.808, 305.514, 305.620, 307.320, 308.236, 308A.056, 308A.250, 308A.377, 308A.700, 308A.703, 308A.706, 308A.709, 308A.712, 308A.718, 308A.724, 308A.730, 308A.733, 308A.743, 310.110, 310.147, 310.165, 315.104, 316.045, 317.063, 321.005, 321.257, 321.259, 321.262, 321.267, 321.272, 321.307, 321.347, 321.348, 321.354, 321.356, 321.358, 321.359, 321.367, 321.390, 321.408, 321.410, 321.415, 321.420, 321.485, 321.550, 321.560, 321.570, 321.580, 321.600, 321.609, 321.682, 321.684, 321.763, 321.805, 321.812, 321.814, 321.815, 321.830, 321.991 and 457.010 and section 1, chapter 728, Oregon Laws 1997, and section 4, chapter 460, Oregon Laws 1999; repealing ORS 92.102, 308A.721, 310.108, 321.273, 321.274, 321.282, 321.284, 321.287, 321.307, 321.312, 321.322, 321.351, 321.352, 321.353, 321.356, 321.365, 321.375, 321.379, 321.381, 321.405, 321.421, 321.426, 321.430, 321.432, 321.434, 321.435, 321.475, 321.485, 321.487, 321.705, 321.710, 321.715, 321.720, 321.725, 321.727, 321.730, 321.732, 321.737, 321.745, 321.747, 321.760, 321.763, 321.765, 321.810, 321.811, 321.814, 321.816, 321.823 and 321.950 and sections 4 and 37, chapter 1078, Oregon Laws 1999, section 11, chapter 816, Oregon Laws 2001, and section 29, chapter 860, Oregon Laws 2001; and prescribing an effective date.

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

WESTERN OREGON

FORESTLAND ASSESSMENT

AND REPEAL OF PRIVILEGE TAX

SECTION 1. ORS 321.257 is amended to read:

321.257. As used in ORS 321.257 to 321.390, unless the context requires otherwise:

[(1) “Arms-length transaction” means a transaction made in the open market where there is no duress, where each party is independent of the other and where there are no trades or hidden considerations involved.]

[(2) “Average Pacific Northwest Coast Lumber Price Index” means the average of the Western Wood Products Association Pacific Northwest Coast Lumber Price annual price indices for Douglas Fir and Hem-Fir.]

[(3)] (1) “Department” means the Department of Revenue.

[(4)] (2) “Forestland” means land in western Oregon [(a) which] that is being held or used for the predominant purpose of growing and harvesting trees of a marketable species and has been designated as forestland or [(b)] land in western Oregon, the highest and best use of which is the growing and harvesting of such trees. Trees of a marketable species may vary in different areas in western Oregon and may change as the utilization of forest trees changes. The size, age, location, quality and condition of trees do not necessarily determine marketable species. Forestland often contains isolated openings which because of rock outcrops, river wash, swamps, chemical conditions of the soil, brush and other like conditions prevent adequate stocking of such openings for the production of trees of a marketable species. If [such] the openings in their natural state are necessary to hold the surrounding forestland in forest use through sound management practices, [they] the openings are deemed forestland. Forestland does not include buildings, structures, machinery, equipment or fixtures erected upon, under or above the soil[, but does include]. Forestland includes roads described in ORS 308.236.

[(5) “Harvest” means the point at which timber that has been cut, severed or removed for purposes of sale or use is first measured in the ordinary course of business as determined by reference to common practice in the timber industry.]

[(6) “Immediate harvest value” means the amount that each species or subclassification of timber would sell for at a voluntary sale made in the ordinary course of business for purposes of immediate harvest. The value shall be determined by methods that make reasonable and adequate allowance for age, size, quality, growing conditions, costs of removal, accessibility to point of conversion, market conditions and all other relevant factors.]

[(7)] (3) “Land class” or “land classes” means one of the eight classifications of forestland, used for assessment purposes by the department, based upon State Tax Commission Valuation Division Supplements published in 1967, and identified in ORS [321.352 (1)] 321.210.

[(8) “Market area” means those groups of areas containing timber with similar values as designated by the department. The department shall designate market areas by rule.]

[(9) “Owner of timber” means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature holding title to harvested timber by virtue of:]

[(a) An instrument of conveyance;]

[(b) The harvesting of the timber; or]

[(c) The harvesting of the timber and payment therefor.]

(4) “State Forester” means the State Forester or the authorized representative of the State Forester.

[(10)] (5) “Sustained yield management” means the growing and harvesting of timber crops on a continuous basis on land that is primarily dedicated to timber production.

[(11)] (6) “Taxing district” or “district” means each county, city, school district and other corporation vested with the power to levy property taxes in western Oregon.

[(12) “Taxpayer” means the owner of timber at time of harvest.]

[(13)] (7) “Timber” means all logs which can be measured in board feet and other forest products as determined by department rule.

[(14) “Unit of proper measurement” means any unit of measurement commonly used in the timber industry for measuring timber and timber products harvested.]

[(15)] (8) “Western Oregon” means that portion of the state lying west of a line beginning at the intersection of the northern boundary of the State of Oregon and the western boundary of Wasco County, thence southerly along the western boundaries of the counties of Wasco, Jefferson, Deschutes and Klamath to the southern boundary of the State of Oregon.

SECTION 2. ORS 321.259 is amended to read:

321.259. The Legislative Assembly finds that:

(1) Multiple taxation through a yearly ad valorem levy on both trees and forestland managed in sustained yield timber operations discourages conservation, private ownership and investment of capital.

(2) The interests of the state, its citizens and future citizens are best served by sustained yield practices and taxing policies that encourage production of forest resources for commerce, recreation and watersheds, stabilize employment levels, prevent large population shifts and encourage millage of timber products within Oregon.

(3) Timber on private lands managed on a sustained yield basis should be treated as a crop and not taxed as real property.

[(4) A tax at time of harvest recognizes the hazards and uncertainties involved in growing a long-term timber crop on a sustained yield basis.]

[(5)] (4) Forestland should be taxed based on the value of the forestland in timber production[, and the majority of the tax should be imposed at the time of harvest].

SECTION 3. ORS 321.262 is amended to read:

321.262. The purposes of ORS 321.257 to 321.390 are:

(1) To impose with respect to forestlands in western Oregon a [system of ad valorem taxation] special assessment program whereby the value of forestland is determined [by the Legislative Assembly effective July 1, 1995, and annually adjusted as described in ORS 321.352] as prescribed in ORS 321.201 to 321.222.

(2) To establish a [privilege tax on timber harvested in western Oregon] special assessment program as a means of:

(a) Recognizing the long-term nature of the forest crop and fostering the public policy of Oregon to encourage the growing and harvesting of timber.

(b) Protecting the public welfare by assuring that the citizens of the state and future generations shall have the benefits to be derived from the continuous production of forest products from [the] private forestlands [of western Oregon].

(c) Promoting the state’s policy of encouraging forestry and the restocking of forestlands to provide present and future benefits by enhancing the water supply, preventing erosion, providing habitat for wildlife, providing scenic and recreational opportunities and providing for needed products.

[(d) Producing revenues for local taxing districts at the time of harvest in lieu of collecting a portion of ad valorem taxes on forestland.]

[(3) To assure local taxing districts that privilege tax receipts will be considered a local revenue source.]

SECTION 4. ORS 321.267 is amended to read:

321.267. [(1)] The following [timber and] forestland [are not subject to] may not be assessed under ORS 321.257 to 321.390:

[(a)] (1) [Timber and] Forestland assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665, 308.805 to 308.820 and 308.990.

[(b) Except as provided in ORS 321.347, timber and land classified under ORS 321.705 to 321.765.]

[(c) Timber on land that is exempt from ad valorem taxation.]

[(d)] (2) Except as provided in ORS 321.347, land [and Christmas trees which are grown or growing on that land which has been] that is prepared [by] using intensive cultivation and tilling and on which all unwanted plant growth is controlled continuously for the exclusive purpose of growing [such] Christmas trees.

[(e)] (3) [Except as provided in ORS 321.274, land and] Land used for the purpose of growing hardwood timber, including but not limited to hybrid cottonwood, [which are] if:

[(A)] (a) [Grown or growing on land which has been] The land is prepared [by] using intensive cultivation methods and [which] is cleared of competing vegetation for at least three years after tree planting;

[(B)] (b) The timber is of a species marketable as fiber for inclusion in the [“furnish”] furnish for manufacturing paper products;

[(C)] (c) The timber is harvested on a rotation cycle within 12 years after planting; and

[(D)] (d) The land and timber are subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

[(f)(A) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330 for at least five property tax years preceding the date the timber was harvested from the land.]

[(B) For purposes of this paragraph and ORS 321.273 (3) and (4), land that has been forestland assessed under ORS 321.354 for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under ORS 321.354.]

[(2) The tax imposed by ORS 321.273 shall be in addition to that levied by ORS 321.005 to 321.185 and 321.560 to 321.600.]

[(3) Nothing contained in ORS 321.257 to 321.390 shall prevent:]

[(a) The collection of ad valorem property taxes which became a lien prior to January 1, 1978.]

[(b) The collection of taxes levied by ORS 321.005 to 321.185 and 321.560 to 321.600.]

[(c) Except as provided in section 45, chapter 892, Oregon Laws 1977, the collection of amounts payable upon declassification described under ORS 321.705 to 321.765.]

SECTION 4a. If House Bill 2197 becomes law, section 4 of this 2003 Act (amending ORS 321.267) is repealed and ORS 321.267, as amended by sections 108 and 110, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.267. [(1)] The following [timber and] forestland [are not subject to] may not be assessed under ORS 321.257 to 321.390:

[(a)] (1) [Timber and] Forestland assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665, 308.805 to 308.820 and 308.990.

[(b) Timber on land that is exempt from ad valorem taxation.]

[(c)] (2) Except as provided in ORS 321.347, land [and Christmas trees that are grown or growing on that land] that [has been] is prepared [by] using intensive cultivation and tilling and on which all unwanted plant growth is controlled continuously for the exclusive purpose of growing [such] Christmas trees.

[(d)] (3) [Except as provided in ORS 321.274, land and] Land used for the purpose of growing hardwood timber, including but not limited to hybrid cottonwood, [that are] if:

[(A)] (a) [Grown or growing on land that has been] The land is prepared [by] using intensive cultivation methods and [that] is cleared of competing vegetation for at least three years after tree planting;

[(B)] (b) The timber is of a species marketable as fiber for inclusion in the [“furnish”] furnish for manufacturing paper products;

[(C)] (c) The timber is harvested on a rotation cycle within 12 years after planting; and

[(D)] (d) The land and timber are subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

[(e)(A) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330 for at least five property tax years preceding the date the timber was harvested from the land.]

[(f)] (4) Small tract forestland qualified under sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197),[of this 2003 Act] and timber harvested from small tract forestland qualified under sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act].

[(2) The tax imposed by ORS 321.273 shall be in addition to that levied by ORS 321.005 to 321.185 and 321.560 to 321.600.]

[(3) Nothing contained in ORS 321.257 to 321.390 shall prevent:]

[(a) The collection of ad valorem property taxes that became a lien prior to January 1, 1978.]

[(b) The collection of taxes levied by ORS 321.005 to 321.185 and 321.560 to 321.600.]

SECTION 5. ORS 321.272 is amended to read:

321.272. [(1)] All timber in western Oregon shall be exempt from ad valorem property taxation.

[(2) For the privilege of harvesting timber from privately owned land in western Oregon a tax is imposed as provided in ORS 321.257 to 321.322.]

[(3) The tax imposed by subsection (2) of this section is intended to recover the annuitized value of forgone property taxes on forestland.]

SECTION 6. ORS 321.307, as amended by section 11a, chapter 860, Oregon Laws 2001, is amended to read:

321.307. (1) The revenue from the taxes imposed by ORS 321.273 (2001 Edition) shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Western Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Western Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.273 (2001 Edition) and other expenses associated with forest taxation, and for costs incurred by the State Forestry Department in carrying out ORS 315.104 and 321.705 to 321.765 (2001 Edition) for the period beginning July 1, 2001, and ending July 1, 2003.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed by ORS 321.273 (2001 Edition) is appropriated continuously to the department and shall be used by the department for the payment of all refunds of taxes imposed by ORS 321.273 (2001 Edition) which have been audited and approved by the department. This appropriation shall be from the Western Oregon Timber Tax Account. Any penalties, interest and taxes due from the taxpayer on account of taxes imposed by ORS 321.273 (2001 Edition) shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

(3) Moneys remaining in the Western Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (10) (2001 Edition) shall be distributed as follows:

(A) Ninety-three percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the State School Fund for the purposes for which State School Fund moneys may be spent.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) Thirty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (10) (2001 Edition) shall be distributed to county general funds of western Oregon counties.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(4)(a) Moneys that are to be distributed to western Oregon counties under subsection (3)(b) of this section shall be distributed to each western Oregon county in the proportion that the assessed value of forestland in the county for the preceding fiscal year bears to the total assessed value of forestland for the preceding fiscal year.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 31 of each fiscal year, the department shall determine the amount distributable to counties from the Western Oregon Timber Tax Account as of May 15 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Western Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 15 of the fiscal year and transferred on or before May 31 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 6a. If House Bill 2197 becomes law, section 6 of this 2003 Act (amending ORS 321.307) is repealed and ORS 321.307, as amended by section 11a, chapter 860, Oregon Laws 2001, and section 63, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.307. (1) The revenue from the taxes imposed by ORS 321.273 (2001 Edition) shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 that shall be known as the Western Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Western Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.273 (2001 Edition) and other expenses associated with forest taxation, and for costs incurred by the State Forestry Department in carrying out ORS 315.104 and 321.367.

(3) Moneys remaining in the Western Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (10) (2001 Edition) shall be distributed as follows:

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 15 of each fiscal year, the department shall determine the amount distributable to counties from the Western Oregon Timber Tax Account as of May 1 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Western Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 1 of the fiscal year and transferred on or before May 15 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 7. ORS 321.347 is amended to read:

321.347. For the purposes of ORS 321.257 to 321.390:

(1) All land in western Oregon valued as forestland for ad valorem property tax purposes on January 1, 1977, shall retain that classification for the purposes of ORS 321.257 to 321.390 unless it is specifically excluded from the provisions thereof or unless it is removed from that classification as provided in ORS 321.359 or is no longer land the highest and best use of which is forestland.

(2) Land designated as forestland pursuant to ORS 321.605 to 321.680 (1975 Replacement Part) shall retain the original date of such designation.

(3) Lands classified as reforestation lands as of July 1, 1977, pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) shall be considered to have been designated as forestland from the date of original classification as reforestation lands. Any lands so classified prior to February 1, 1972, shall be presumed to have been designated not earlier than February 1, 1972.

(4) Pursuant to the election of the owner, as provided in section 45, chapter 892, Oregon Laws 1977, land which, as of January 1, 1977, was designated under the provisions of ORS 321.705 to 321.765 (2001 Edition) shall be considered to have been designated as forestland for the purposes of ORS 321.257 to 321.390 from the date of the original designation under those provisions. Any lands so designated prior to January 1, 1972, shall be presumed to have been designated not earlier than January 1, 1972, for the purposes of additional taxes imposed by ORS 308A.700 to 308A.733.

SECTION 7a. If House Bill 2197 becomes law, section 7 of this 2003 Act (amending ORS 321.347) is repealed and ORS 321.347, as amended by section 115, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.347. For the purposes of ORS 321.257 to 321.390:

(2) Land designated as forestland pursuant to ORS 321.605 to 321.680 (1975 Replacement Part) shall retain the original date of such designation.

(4) Pursuant to the election of the owner, as provided in section 45, chapter 892, Oregon Laws 1977, land which, as of January 1, 1977, was designated under the provisions of ORS 321.705 to 321.765 [(repealed)] (2001 Edition) shall be considered to have been designated as forestland for the purposes of ORS 321.257 to 321.390 from the date of the original designation under those provisions. Any lands so designated prior to January 1, 1972, shall be presumed to have been designated not earlier than January 1, 1972, for the purposes of additional taxes imposed by ORS 308A.700 to 308A.733.

SECTION 8. ORS 321.348 is amended to read:

321.348. (1) [As of the tax year beginning July 1, 1995, and] For each tax year [thereafter], forestland shall be assigned by the Department of Revenue to land classes as defined in ORS 321.257.

(2) Land classes assigned under subsection (1) of this section may be changed thereafter by the department upon the initiative of the department, or upon the request of an owner, if further investigation reveals that the basis for the land class determination was inaccurate. Any such redetermination of land class shall be certified immediately to the county assessor.

SECTION 9. The amendments to ORS 321.257, 321.259, 321.262, 321.267, 321.272, 321.307, 321.347 and 321.348 by sections 1 to 8 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 9a. If House Bill 2197 becomes law, section 9 of this 2003 Act is amended to read:

Sec. 9. The amendments to ORS 321.257, 321.259, 321.262, 321.267, 321.272, 321.307, 321.347 and 321.348 by sections 1 to 3, 4a, 5, 6a, 7a and 8 of this 2003 Act apply to property tax years beginning on or after July 1, [2003] 2004.

SECTION 10. ORS 321.354, as amended by section 7, chapter 1078, Oregon Laws 1999, and section 2, chapter 860, Oregon Laws 2001, is amended to read:

321.354. (1) [The Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be subject to special assessment as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more.] The assessed value of forestland within each land class described in ORS 321.210 shall be determined under this section.

(2) Forestland assessed under this section shall:

(a) Be disqualified from special assessment at a value per acre equal to 75 percent of the value per acre determined under ORS 321.353 (2) to (5) (2001 Edition) for the applicable land class of the forestland; and

(b) Qualify for special assessment at a value per acre equal to the specially assessed value certified to the county assessor for the tax year under ORS 321.216 for the applicable land class of the forestland.

(3) For each land class described in ORS 321.210, the forestland maximum assessed value per acre shall equal 103 percent of the forestland assessed value per acre for the preceding tax year or 100 percent of the forestland maximum assessed value per acre for the preceding tax year, whichever is greater.

(4)(a) The assessor shall compute the assessed value of forestland by multiplying the acreage of the forestland in each land class by the lesser of:

(A) The specially assessed value per acre; or

(B) The maximum assessed value per acre.

(b) If the forestland being assessed consists of different land classes, the assessed value of the forestland shall be the sum of the assessed values computed for each land class under paragraph (a) of this subsection.

(5) Notwithstanding subsection (4) of this section, the forestland shall be assessed as provided in ORS 308.232 if the real market value of the forestland is less than the value established under subsection (4) of this section.

(6) For purposes of this section:

[(a) The department shall certify to the county assessor of a county in which forestland identified in subsection (1) of this section is located a list of the property tax accounts containing forestland so identified.]

[(b) Forestland shall be considered to be in common ownership if the forestland is owned by the person directly or is owned by a corporation, partnership, association or other entity in which the person owns a majority interest.]

[(c)] (a) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.

[(d)] (b) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification occurring under subsection (2)(a) of this section.

SECTION 11. The amendments to ORS 321.354 by section 10 of this 2003 Act apply to tax years beginning on or after July 1, 2003.

SECTION 12. ORS 321.354, as amended by section 10 of this 2003 Act, is amended to read:

321.354. (1) [The assessed value of] Forestland within each land class described in ORS 321.210 shall [be determined under this section.]

[(2) Forestland assessed under this section shall:]

[(a) Be disqualified from special assessment at a value per acre equal to 75 percent of the value per acre determined under ORS 321.353 (2) to (5) (2001 Edition) for the applicable land class of the forestland; and]

[(b) Qualify for special assessment at a] have a specially assessed value per acre equal to the specially assessed value certified to the county assessor for the tax year under ORS 321.216 for the applicable land class of the forestland.

[(3)] (2) For each land class described in ORS 321.210, the forestland maximum assessed value per acre shall equal 103 percent of the forestland assessed value per acre for the preceding tax year or 100 percent of the forestland maximum assessed value per acre for the preceding tax year, whichever is greater.

[(4)(a)] (3)(a) The assessor shall compute the assessed value of forestland by multiplying the acreage of the forestland in each land class by the lesser of:

(A) The specially assessed value per acre; or

(B) The maximum assessed value per acre.

[(5)] (4) Notwithstanding subsection [(4)] (3) of this section, the forestland shall be assessed as provided in ORS 308.232 if the real market value of the forestland is less than the value established under subsection [(4)] (3) of this section.

[(6) For purposes of this section:]

[(a) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.]

[(b) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification occurring under subsection (2)(a) of this section.]

SECTION 13. The amendments to ORS 321.354 by section 12 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 13a. If House Bill 2197 becomes law, sections 10 (amending ORS 321.354), 11, 12 (amending ORS 321.354) and 13 of this 2003 Act are repealed.

SECTION 14. Section 15 of this 2003 Act is added to and made a part of ORS 321.257 to 321.390.

SECTION 15. (1) Notwithstanding ORS 308.210, 311.405 or 311.410, but subject to subsection (2) of this section, the removal under ORS 321.359 (1)(b)(C) of land from designation as forestland because the land is no longer forestland shall occur as of the January 1 assessment date for the tax year in which the county assessor discovers that the land is no longer forestland.

(2) Subsection (1) of this section applies only if notice of the removal is mailed by the county assessor prior to August 15 of the tax year for which the removal of the land is asserted.

SECTION 16. ORS 321.356 is amended to read:

321.356. (1) For the tax year beginning July 1, 2003, forestland subject to special assessment under ORS 321.353 (2001 Edition) for the previous tax year shall be disqualified from such special assessment. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this section shall be assessed as provided in ORS 321.354.

(2) Additional taxes may not be imposed as a result of a disqualification under this section.

(3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

SECTION 17. ORS 321.358 is amended to read:

321.358. (1) An owner of land desiring that it be designated as forestland shall make application to the county assessor on or before April 1 of the assessment year for which special assessment as forestland is first desired, and the owner may also do so within 30 days of receipt of notice of its assessment as omitted property.

(2) Notwithstanding subsection (1) of this section, an owner of land may apply to the county assessor by December 15 to have the land designated as forestland for the assessment year if:

(a) For the prior assessment year the land had been forestland [under ORS 321.257 (4)] by reason of the land being highest and best use forestland; and

(b) For the current assessment year the land is being assessed at a value reflecting a use other than highest and best use forestland.

(3) The application shall be made upon forms prepared by the Department of Revenue and supplied by the county assessor, and shall include the following:

(a) A description of all land the applicant desires to be designated as forestland.

(b) Date of acquisition.

(c) Whether the land is being held or used for the predominant purpose of growing and harvesting trees of marketable species.

(d) Whether there is a forest management plan for it.

(e) If so, whether the plan is being implemented, and the nature and extent of implementation.

(f) Whether the land is used for grazing.

(g) Whether the land has been platted under ORS chapter 92.

(h) Whether the land is timberland subject to ORS chapter 477, and if it is not, the reasons therefor.

(i) Whether the land, or any of it, is subject to a lease or option which permits it to be used for any purpose other than the growing and harvesting of trees.

(j) A summary of past experience and activity of the applicant in growing and harvesting trees.

(k) A summary of current and continuing activity of the applicant in growing and harvesting trees.

(L) A statement that the applicant is aware of the potential tax liability involved when the land ceases to be designated as forestland.

(m) An affirmation that the statements contained in the application are true.

(a) The application states the land is not being held or used for the predominant purpose of growing and harvesting trees of marketable species; or

(b) Subject to the provisions of ORS 321.257, the land does not substantially meet minimum stocking or acreage requirements under rules adopted by the department. Otherwise, the determination whether the land is properly classifiable as forestland shall be made with due regard to all relevant evidence and without any one or more items of evidence necessarily being determinative.

(5) The application shall be deemed to have been approved unless, within three months of the date such application was delivered to the assessor or prior to August 15, whichever is later, the assessor shall notify the applicant in writing of the extent to which the application is denied.

SECTION 18. ORS 321.359 is amended to read:

321.359. (1)(a) When land has once been designated as forestland either as a result of an application being filed therefor or through the application of ORS 321.347 (3) or (4), it shall be valued as such until the assessor removes the forestland designation under paragraph (b) of this subsection.

(b) The county assessor shall remove the forestland designation upon:

(A) Notification by the taxpayer to the assessor to remove the designation;

(B) Sale or transfer to an ownership making it exempt from ad valorem property taxation;

(D) The act of recording a subdivision plat under ORS chapter 92.

(2) A taxpayer whose application filed under ORS 321.358 has been denied in whole or in part, or a taxpayer whose forestland has had the designation thereof removed in whole or in part, may appeal to the tax court within the time and in the manner provided in ORS 305.404 to 305.560.

(3) If, under subsection (1)(b)(D) of this section, the county assessor removes the forestland designation upon the act of recording a subdivision plat, the land, or a part of the land, may be requalified for forestland designation upon:

(a) Payment of all additional tax and applicable interest that remains due and owing on the land;

(b) Submission by the owner of an application for designation as forestland [as provided in ORS 321.257 to 321.390];

(d) Meeting the requirements, if any, of applicable local government zoning ordinances with regard to minimum lot or parcel acreage for forest use.

SECTION 19. ORS 321.367 is amended to read:

321.367. (1) The State Forester shall identify all of the forestlands that fail to meet the minimum stocking required under ORS 527.610 to 527.770 and 527.992 and that are therefore underproductive as described under ORS 526.455.

(2)[(a)] At any time the State Forester has reason to believe that forestland is not being managed as forestland, the State Forester shall review the owner’s management plan, if any, and inspect the property. Subject to subsection [(4)] (5) of this section, the State Forester shall advise the owner as prescribed in subsection (3) of this section if the State Forester [then] determines the land is not being managed in accordance with a plan [which makes provision] that provides for:

[(A)] (a) Regeneration of all suitable nonstocked land;

[(B)] (b) Maintenance of a free-to-grow condition;

[(C)] (c) Protection from fire, insects, disease, animal damage, undesirable vegetative competition; and

[(D)] (d) Final harvest[,].

(3)(a) The State Forester shall advise the owner that the land is not being managed in accordance with a plan that meets the criteria set forth in [this] subsection (2) of this section and that a plan for the land that does meet the criteria must be developed and activated within one year after the date of the advisement.

(b) At the request of the owner, the State Forester shall assign a forester or provide a listing of foresters to assist the owner in developing and implementing an appropriate management plan for the land.

(c) As soon as practicable after the time indicated in the advisement has expired, the State Forester shall view the land to determine if the land is being managed in accordance with a plan that meets the criteria set forth in [paragraph (a) of this] subsection (2) of this section. If, upon inspection, the State Forester finds that the land is not being so managed, the State Forester shall notify the owner and the county assessor.

[(3)] (4) The county assessor, upon receipt of the notice from the State Forester, shall cease to treat [such lands] that land as forestland under ORS 321.257 to 321.390 and shall value [such lands under ORS 308.205] the land as prescribed under ORS 308.146 and 308.232.

[(4)] (5) If at the time that the State Forester views the land under subsection [(2)(c)] (3)(c) of this section, it is determined that a change in ownership has occurred, the State Forester shall notify the new owner as required under subsection [(2)(a)] (3) of this section in the manner of the original notification.

[(5)] (6) When the owner of [forestland declared ineligible for forestland taxation under this section] land disqualified from forestland assessment provides satisfactory information to the State Forester of subsequent action taken to correct the deficiency resulting in the disqualification of land, or provides an acceptable management plan to correct such deficiency, the State Forester shall so indicate to the county assessor. The assessor shall then assess the land under ORS 321.257 to 321.390, if the land is otherwise qualified for such assessment.

[(6)] (7) The State Forester shall adopt rules necessary to carry out the purposes of this section.

SECTION 20. ORS 321.390 is amended to read:

321.390. (1) Land described in ORS 321.267 [(1)(e)] (3)(relating to hardwood timberland, including hybrid cottonwood timberland) shall be assessed as farm use land under ORS 308A.050 to 308A.128[, unless the owner of the land makes the election under ORS 321.274].

(2)(a) If land is or becomes land described under ORS 321.267 [(1)(e)] (3) and the land is not located within an exclusive farm use zone, the owner shall make application for special valuation as farm use land in the manner provided under ORS 308A.077, as follows:

(A) If the change in use takes place on or after July 1, the owner shall file the application on or before April 1 of the following year.

(B) If the change in use takes place prior to July 1, the owner shall file the application on or before August 1 of the same year.

(b) If an application is filed as provided under this subsection, the owner shall have seven years beginning with the first year of classification to meet the income requirements of ORS 308A.071 and need not meet the two-year farm use requirements of ORS 308A.068.

SECTION 20a. If House Bill 2197 becomes law, section 20 of this 2003 Act (amending ORS 321.390) is repealed and ORS 321.390, as amended by section 126, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.390. (1) Land described in ORS 321.267 [(1)(d)] (3)(relating to hardwood timberland, including hybrid cottonwood timberland) shall be assessed as farm use land under ORS 308A.050 to 308A.128[, unless the owner of the land makes the election under ORS 321.274].

(2)(a) If land is or becomes land described under ORS 321.267 [(1)(d)] (3) and the land is not located within an exclusive farm use zone, the owner shall make application for special valuation as farm use land in the manner provided under ORS 308A.077, as follows:

(A) If the change in use takes place on or after July 1, the owner shall file the application on or before April 1 of the following year.

(B) If the change in use takes place prior to July 1, the owner shall file the application on or before August 1 of the same year.

SECTION 21. Section 15 of this 2003 Act and the amendments to ORS 321.356, 321.358, 321.359, 321.367 and 321.390 by sections 16 to 20 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 21a. If House Bill 2197 becomes law, section 21 of this 2003 Act is amended to read:

Sec. 21. Section 15 of this 2003 Act and the amendments to ORS 321.356, 321.358, 321.359, 321.367 and 321.390 by sections 16 to [20] 19 and 20a of this 2003 Act apply to property tax years beginning on or after July 1, [2003] 2004.

SECTION 22. ORS 321.273, 321.274, 321.282, 321.284, 321.287, 321.322, 321.351, 321.352, 321.353, 321.365, 321.375, 321.379, 321.381 and 321.950 are repealed.

SECTION 22a. If House Bill 2197 becomes law, section 22 of this 2003 Act is amended to read:

Sec. 22. ORS [321.273, 321.274, 321.282,] 321.284, [321.287, 321.322,] 321.351, [321.352, 321.353, 321.365,] 321.375, 321.379[,] and 321.381 [and 321.950] are repealed.

SECTION 22b. If House Bill 2197 becomes law, ORS 321.273, 321.274, 321.282, 321.287, 321.322, 321.352, 321.353, 321.365 and 321.950 are repealed on January 2, 2004.

SECTION 22c. Notwithstanding sections 114 (amending ORS 321.274), 62a (amending ORS 321.282) and 65 (amending ORS 321.353), chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), if House Bill 2197 becomes law, ORS 321.274, 321.282 and 321.353 are repealed on January 2, 2004.

SECTION 23. The repeal of ORS 321.273, 321.274, 321.282, 321.284, 321.287, 321.322, 321.351, 321.352, 321.353, 321.365, 321.375, 321.379, 321.381 and 321.950 by section 22 of this 2003 Act does not affect the imposition, collection or administration of western Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2003, or ad valorem property taxes imposed on western Oregon forestlands in property tax years ending before July 1, 2003.

SECTION 23a. If House Bill 2197 becomes law, section 23 of this 2003 Act is amended to read:

Sec. 23. (1) The repeal of ORS [321.273, 321.274, 321.282,] 321.284, [321.287, 321.322,] 321.351, [321.352, 321.353, 321.365,] 321.375, 321.379[,] and 321.381 [and 321.950] by section 22 of this 2003 Act does not affect the imposition, collection or administration of western Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2003, or ad valorem property taxes imposed on western Oregon forestlands in property tax years ending before July 1, 2003.

(2) The repeal of ORS 321.273, 321.274, 321.282, 321.287, 321.322, 321.352, 321.353, 321.365 and 321.950 by section 22b of this 2003 Act does not affect the imposition, collection or administration of western Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2004, or ad valorem property taxes imposed on western Oregon forestlands in property tax years ending before July 1, 2004.

SECTION 24. ORS 321.356 and section 4, chapter 1078, Oregon Laws 1999, are repealed on July 1, 2004.

SECTION 24a. If House Bill 2197 becomes law, section 24 of this 2003 Act is amended to read:

Sec. 24. ORS 321.356 [and section 4, chapter 1078, Oregon Laws 1999, are] is repealed on [July 1, 2004] January 2, 2006.

SECTION 25. The repeal of ORS 321.356 and section 4, chapter 1078, Oregon Laws 1999, by section 24 of this 2003 Act does not affect the disqualification of forestland under ORS 321.356 or section 4, chapter 1078, Oregon Laws 1999, that occurred prior to the repeal of ORS 321.356 or section 4, chapter 1078, Oregon Laws 1999.

SECTION 26. ORS 310.108, 321.307 and 321.312 and section 11, chapter 816, Oregon Laws 2001, and section 29, chapter 860, Oregon Laws 2001, are repealed on December 31, 2006.

SECTION 27. Any moneys remaining in the Western Oregon Timber Tax Account on December 31, 2006, are transferred to the General Fund and may be used for any purpose for which General Fund moneys may be used.

EASTERN OREGON PRIVILEGE TAX REPEAL

SECTION 28. ORS 321.408, 321.410, 321.415 and 321.420 are added to and made a part of ORS 321.805 to 321.825.

SECTION 29. ORS 321.408 is amended to read:

321.408. The purposes of ORS [321.405 to 321.487] 321.805 to 321.825 are:

(1) To impose with respect to forestland in eastern Oregon a [system of ad valorem taxation] special assessment program whereby the assessed value of forestland is determined [by the Legislative Assembly effective January 1, 1994, and annually adjusted as described in ORS 321.810] as prescribed in ORS 321.201 to 321.222.

(2) To establish a [privilege tax on timber harvested in eastern Oregon] special assessment program as a means of:

(a) Recognizing the findings in ORS 321.410 without discriminating in favor of either eastern or western Oregon.

(b) Recognizing the long-term nature of the forest crop and fostering the public policy of Oregon to encourage the growing and harvesting of timber.

(c) Protecting the public welfare by assuring that the citizens of the state and future generations shall have the benefits to be derived from the continuous production of forest products from [the] private forestland [of eastern Oregon].

(d) Promoting the state’s policy of encouraging forestry and the restocking of forestland to provide present and future benefits by enhancing the water supply, preventing erosion, providing habitat for wildlife, providing scenic and recreational opportunities and providing for needed products.

[(e) Producing revenues for local taxing districts at the time of harvest in lieu of collecting a portion of ad valorem taxes on forestland.]

[(3) To assure local taxing districts that privilege tax receipts will be considered a local revenue source.]

SECTION 30. ORS 321.410 is amended to read:

321.410. It is hereby found that:

(1) Multiple taxation through a yearly ad valorem levy on both trees and forestland managed in sustained yield timber operations discourages conservation, private ownership and investment of capital.

(2) The interests of the state, its citizens and future citizens are best served by sustained yield practices and tax policies that encourage production of forest resources for commerce, recreation and watersheds, stabilize employment levels, prevent large population shifts and encourage millage of timber products within Oregon.

(3) Timber on private lands managed on a sustained yield basis should be treated as a crop and not taxed as real property.

[(4) A tax at time of harvest recognizes the hazards and uncertainties involved in growing a long-term timber crop on a sustained yield basis.]

[(5)] (4) That portion of our state lying east of the summit of the Cascade Mountains differs greatly in forest tree types, soils, climate, growing conditions and topography from western Oregon.

[(6)] (5) Eastern Oregon forests predominate in Ponderosa pine and associated species, while western Oregon forests predominate in Douglas fir and associated species.

SECTION 31. ORS 321.415 is amended to read:

321.415. (1) Lands assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820 [and the timber thereon shall not be subject to the provisions of ORS 321.405 to 321.487] may not be assessed under ORS 321.805 to 321.825.

[(2) The tax imposed under the provisions of ORS 321.405 to 321.487 shall be additional to that levied under the provisions of ORS 321.005 to 321.185 and 321.560 to 321.600.]

[(3) Timber on timberland which is exempt from the ad valorem real property tax shall be exempt from the privilege tax imposed by ORS 321.405 to 321.487.]

[(4)] (2) Land used exclusively for growing cultured Christmas trees[, and the cultured Christmas trees growing thereon, as defined in ORS 215.203, shall not be subject to the provisions of ORS 321.405 to 321.487 and] may not be assessed under 321.805 to 321.825.

[(5)] (3) [Except as provided in ORS 321.426, land and] Land that is used to grow hardwood timber, including but not limited to hybrid cottonwood, [shall not be subject to the provisions of ORS 321.405 to 321.487 and] may not be assessed under 321.805 to 321.825 if [the land and timber are]:

(a) [Grown or growing on land which has been] The land is prepared [by] using intensive cultivation methods and [which] is cleared of competing vegetation for at least three years after tree planting;

(b) The timber is of a species marketable as fiber for inclusion in the [“furnish”] furnish for manufacturing paper products;

(d) The land and timber are subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

[(6)(a) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS 308A.050 to 308A.128 or 308A.300 to 308A.330 for at least five property tax years preceding the date the timber was harvested from the land, shall not be subject to the provisions of ORS 321.405 to 321.487.]

[(b) For purposes of this subsection and ORS 321.421 (4), land that has been forestland assessed under ORS 321.812 for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under ORS 321.812.]

[(7)] (4) Nothing contained in ORS [321.405 to 321.487] 321.805 to 321.825 shall prevent:

(a) The collection of ad valorem property taxes which became a lien against timber prior to July 1, 1962.

(b) The collection of taxes, charges or assessments made pursuant to law for protection.

SECTION 32. ORS 321.420 is amended to read:

321.420. [(1)] All timber in eastern Oregon shall be exempt from [levy and collection of the general] ad valorem [real] property [tax] taxation.

[(2) For the privilege of harvesting timber from privately owned land in eastern Oregon a tax is imposed as set forth in ORS 321.405 to 321.487.]

[(3) The tax imposed by subsection (2) of this section is intended to recover the annuitized value of forgone property taxes on forestland.]

SECTION 33. The amendments to ORS 321.408, 321.410, 321.415 and 321.420 by sections 29 to 32 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 33a. If House Bill 2197 becomes law, section 33 of this 2003 Act is amended to read:

Sec. 33. The amendments to ORS 321.408, 321.410, 321.415 and 321.420 by sections 29 to 32 of this 2003 Act apply to property tax years beginning on or after July 1, [2003] 2004.

SECTION 34. ORS 321.485 is amended to read:

321.485. (1) The revenue from the taxes imposed by ORS 321.405 to 321.487 (2001 Edition) shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Eastern Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Eastern Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.405 to 321.487 (2001 Edition) and other expenses associated with administering forest taxes and for costs incurred by the State Forestry Department in carrying out the provisions of ORS 526.425 by providing assistance to nonindustrial private forest landowners in eastern Oregon.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed under ORS 321.405 to 321.487 (2001 Edition) is appropriated continuously to the department from the suspense account referred to in subsection (1) of this section, and shall be used by the department for the payment of all refunds of taxes imposed under ORS 321.405 to 321.487 which have been audited and approved by the department. Any penalties, interest and taxes then due from the taxpayer shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

(3) Moneys remaining in the Eastern Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.811 (8) to (11) (2001 Edition) shall be distributed as follows:

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) Thirty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.811 (8) to (11) (2001 Edition) shall be distributed to county general funds of eastern Oregon counties.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(4)(a) Moneys that are to be distributed to eastern Oregon counties under subsection (3)(b) of this section shall be distributed to each eastern Oregon county in the proportion that the assessed value of forestland in the county in the preceding fiscal year bears to the total assessed value of forestland for the preceding fiscal year.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 31 of each fiscal year, the department shall determine the amount distributable to counties from the Eastern Oregon Timber Tax Account as of May 15 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Eastern Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 15 of the fiscal year and transferred on or before May 31 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Eastern Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 35. ORS 321.405, 321.421, 321.426, 321.430, 321.432, 321.434, 321.435 and 321.475 are repealed.

SECTION 35a. If House Bill 2197 becomes law, section 35 of this 2003 Act is amended to read:

Sec. 35. ORS [321.405, 321.421, 321.426, 321.430, 321.432,] 321.434[, 321.435 and 321.475 are] is repealed.

SECTION 35b. If House Bill 2197 becomes law, ORS 321.405, 321.421, 321.426, 321.430, 321.432, 321.435 and 321.475 are repealed on January 2, 2004.

SECTION 35c. Notwithstanding section 71a, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) (amending ORS 321.432), if House Bill 2197 becomes law, ORS 321.432 is repealed on January 2, 2004.

SECTION 36. The repeal of ORS 321.405, 321.421, 321.426, 321.430, 321.432, 321.434, 321.435 and 321.475 by section 35 of this 2003 Act does not affect the imposition, collection or administration of eastern Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2003, or ad valorem property taxes imposed on eastern Oregon forestlands in property tax years ending before July 1, 2003.

SECTION 36a. If House Bill 2197 becomes law, section 36 of this 2003 Act is amended to read:

Sec. 36. (1) The repeal of ORS [321.405, 321.421, 321.426, 321.430, 321.432,] 321.434[, 321.435 and 321.475] by section 35 of this 2003 Act does not affect the imposition, collection or administration of eastern Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2003, or ad valorem property taxes imposed on eastern Oregon forestlands in property tax years ending before July 1, 2003.

(2) The repeal of ORS 321.405, 321.421, 321.426, 321.430, 321.432, 321.435 and 321.475 by section 35b of this 2003 Act does not affect the imposition, collection or administration of eastern Oregon privilege taxes in privilege tax reporting periods ending before January 1, 2004, or ad valorem property taxes imposed on eastern Oregon forestlands in property tax years ending before July 1, 2004.

SECTION 37. ORS 321.485 and 321.487 are repealed on December 31, 2006.

SECTION 38. Any moneys remaining in the Eastern Oregon Timber Tax Account on December 31, 2006, are transferred to the General Fund and may be used for any purpose for which General Fund moneys may be used.

FOREST PRODUCTS

HARVEST TAX ADMINISTRATION

SECTION 39. ORS 321.550 is amended to read:

321.550. (1) No person shall harvest or cause to be harvested any timber from land in Oregon without first having notified the State Forester in writing with a copy to the Department of Revenue on forms prepared by the State Forester and the department of intent to harvest pursuant to ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] and 321.560 to 321.600.

(2) The notification shall specify where and when the harvest will take place and the nature of the harvest and shall include maps and other data as required by the State Forester and the department. The department shall establish by rule procedures to assure the receipt of the tax returns sent out or a report of nonharvest from the person. The department shall conduct field and office audits to ascertain the correctness of any [timber] forest products harvest tax return.

(3)(a) If[, on or after October 3, 1989,] a person fails to file a written notice as required in subsection (1) of this section with respect to any harvest over 5,000 board feet, the department shall notify the person. If, after the person has been notified, the person fails to file a written notice as required in subsection (1) of this section with respect to any subsequent harvest[,] over 5,000 board feet, there shall be added to the amount of the [timber] forest products harvest tax required to be shown on the return as a result of the subsequent harvest a delinquency penalty of $250 for each violation occurring within a calendar year. The department shall collect the penalty in the same manner as taxes are collected.

(b) No penalty shall be imposed under this subsection if a penalty for failure to file the notice with the State Forester has been imposed under ORS 527.992.

[(c) The delinquency penalty shall first be added to either the western Oregon forestland and privilege tax imposed under ORS 321.257 to 321.390, or the eastern Oregon privilege tax imposed under ORS 321.405 to 321.487, if either tax is applicable to the harvest. If neither tax is applicable, the delinquency penalty shall be added to the forest products harvest tax imposed under ORS 321.005 to 321.185.]

SECTION 39a. If House Bill 2197 becomes law, section 39 of this 2003 Act (amending ORS 321.550) is repealed and ORS 321.550, as amended by section 54, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

(3)(a) If a person fails to file a written notice as required in subsection (1) of this section with respect to any harvest over 5,000 board feet, the department shall notify the person. If, after the person has been notified, the person fails to file a written notice as required in subsection (1) of this section with respect to any subsequent harvest over 5,000 board feet, there shall be added to the amount of the timber tax required to be shown on the return as a result of the subsequent harvest a delinquency penalty of $250 for each violation occurring within a calendar year. The department shall collect the penalty in the same manner as taxes are collected.

(b) No penalty shall be imposed under this subsection if a penalty for failure to file the notice with the State Forester has been imposed under ORS 527.992.

(c) The delinquency penalty shall first be added to [the western Oregon forestland and privilege tax imposed under ORS 321.257 to 321.390, the eastern Oregon privilege tax imposed under ORS 321.405 to 321.487 or] the small tract forestland timber severance tax imposed under sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], if [any of these taxes is] applicable to the harvest. If [none of the listed taxes are] the small tract forestland timber severance tax is not applicable, the delinquency penalty shall be added to the forest products harvest tax imposed under ORS 321.005 to 321.185.

SECTION 40. ORS 321.560 is amended to read:

321.560. (1)[(a)] The provisions of ORS chapters 305 and 314 as to the audit and examination of reports and returns, determination of deficiencies, liens, assessments, claims for refund, conferences and appeals to the Oregon Tax Court, and the procedures relating thereto, shall apply to the determination of taxes, penalties and interest imposed under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600, except where the context requires otherwise.

[(b) In addition, on or before March 1 of the year of determination, any taxpayer may appeal to the Oregon Tax Court for the revision of a harvest value for an area determined pursuant to ORS 321.430.]

(2) If a taxpayer fails to file a return required by ORS 321.045[, 321.257 to 321.390 or 321.405 to 321.487,] or fails to pay a tax at the time the tax becomes due, there shall be added to the amount of tax required to be shown on the return a delinquency penalty of five percent of the amount of such tax.

(3) If the failure to file a return continues for a period in excess of three months after the due date, there shall be added to the amount of tax required to be shown on the return a failure to file penalty of 20 percent of the amount of such tax. This penalty is in addition to the delinquency penalty imposed by subsection (2) of this section.

(4) If all or any part of the delinquency or deficiency for which a determination is made is due to fraud or an intent to evade the provisions of ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600 or the rules adopted thereunder, a penalty of 100 percent of such delinquency or deficiency shall be added, plus interest at the rate established under ORS 305.220 for each month, or any fraction thereof, computed on the full amount of the delinquency or deficiency plus penalty, from the time the return was due.

(5) For purposes of this section, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax which is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax which may be lawfully claimed upon the return.

(6) A delinquent tax or a deficiency shall bear interest at the rate established under ORS 305.220 for each month, or any fraction thereof, from the time the return was due.

SECTION 40a. If House Bill 2197 becomes law, section 40 of this 2003 Act (amending ORS 321.560) is repealed and ORS 321.560, as amended by section 55, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.560. (1)[(a)] The provisions of ORS chapters 305 and 314 as to the audit and examination of reports and returns, determination of deficiencies, liens, assessments, claims for refund, conferences and appeals to the Oregon Tax Court, and the procedures relating thereto, apply to the determination of taxes, penalties and interest imposed under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], except where the context requires otherwise.

(2) If a taxpayer fails to file a return required by ORS 321.045[, 321.257 to 321.390 or 321.405 to 321.487] or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], or fails to pay a tax at the time the tax becomes due, there shall be added to the amount of tax required to be shown on the return a delinquency penalty of five percent of the amount of such tax.

(4) If all or any part of the delinquency or deficiency for which a determination is made is due to fraud or an intent to evade the provisions of ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197),[of this 2003 Act] or the rules adopted thereunder, a penalty of 100 percent of such delinquency or deficiency shall be added, plus interest at the rate established under ORS 305.220 for each month, or any fraction thereof, computed on the full amount of the delinquency or deficiency plus penalty, from the time the return was due.

(5) For purposes of this section, the amount of tax required to be shown on the return shall be reduced by the amount of any part of the tax that is paid on or before the date prescribed for payment of the tax and by the amount of any credit against the tax that may be lawfully claimed upon the return.

(6) A delinquent tax or a deficiency shall bear interest at the rate established under ORS 305.220 for each month, or any fraction thereof, from the time the return was due.

SECTION 41. ORS 321.570 is amended to read:

321.570. (1) If any tax imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600, or any portion of [such] the tax, is not paid within 30 days after the date that the written notice and demand for payment required under ORS 305.895 is mailed, the Department of Revenue may issue a warrant, directed to the sheriff of any county of the state, commanding the sheriff to levy upon and sell the real and personal property of the taxpayer owning the same, found within that county, for the payment of the amount of the tax, with the added penalties, interest and cost of executing the warrant, and to return the warrant to the department and to pay to it the money collected from the sale, within 60 days after receipt of the warrant. A copy of the warrant shall be mailed or delivered to the taxpayer by the department at the taxpayer’s last-known address.

(2) The sheriff shall, within five days after the receipt of the warrant, record a copy with the county clerk, and the clerk shall immediately enter in the County Clerk Lien Record the name of the taxpayer mentioned in the warrant, and the amount of the tax or portion of the tax and penalties for which the warrant is issued and the date when the copy is recorded. The amount of the warrant so recorded shall become a lien upon the title to and interest in real property of the taxpayer against which it is issued, in the same manner as a judgment duly docketed. The sheriff immediately shall proceed upon the warrant in all respects, with like effect, and in the same manner prescribed by law in respect to executions issued against property upon judgments of a court of record, and shall be entitled to the same fees for services in executing the warrant, to be added to and collected as a part of the warrant liability.

(3) In the discretion of the department a warrant of like terms, force and effect may be issued and directed to any agent authorized to collect this tax. In the execution of the warrant, such agent has the powers conferred by law upon sheriffs, but is entitled to no fee or compensation in excess of actual expenses paid in the performance of such duty.

(4) If a warrant is returned not satisfied in full, the department shall have the same remedies to enforce the claim for taxes against the taxpayer as if the state had a recorded judgment against the taxpayer for the amount of the tax.

SECTION 41a. If House Bill 2197 becomes law, section 41 of this 2003 Act (amending ORS 321.570) is repealed and ORS 321.570, as amended by section 56, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.570. (1) If any tax imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], or any portion of [such] the tax, is not paid within 30 days after the date that the written notice and demand for payment required under ORS 305.895 is mailed, the Department of Revenue may issue a warrant, directed to the sheriff of any county of the state, commanding the sheriff to levy upon and sell the real and personal property of the taxpayer owning the same, found within that county, for the payment of the amount of the tax, with the added penalties, interest and cost of executing the warrant, and to return the warrant to the department and to pay to it the money collected from the sale, within 60 days after receipt of the warrant. A copy of the warrant shall be mailed or delivered to the taxpayer by the department at the taxpayer’s last-known address.

SECTION 42. ORS 321.580 is amended to read:

321.580. If any taxpayer neglects or refuses to make a return required to be made by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600 the Department of Revenue is authorized to determine the tax due, based upon any information in its possession or that may come into its possession. The department shall give the taxpayer written notice of the tax and delinquency charges and the tax and delinquency charges shall be a lien from the time of severance. If the tax and delinquency charges are not paid within 30 days from the mailing of the notice, the department shall proceed to collect the tax in the manner provided in ORS 321.570.

SECTION 42a. If House Bill 2197 becomes law, section 42 of this 2003 Act (amending ORS 321.580) is repealed and ORS 321.580, as amended by section 57, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.580. If any taxpayer neglects or refuses to make a return required to be made by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], the Department of Revenue is authorized to determine the tax due, based upon any information in its possession or that may come into its possession. The department shall give the taxpayer written notice of the tax and delinquency charges and the tax and delinquency charges shall be a lien from the time of severance. If the tax and delinquency charges are not paid within 30 days from the mailing of the notice, the department shall proceed to collect the tax in the manner provided in ORS 321.570.

SECTION 43. ORS 321.600 is amended to read:

321.600. All taxes, interest and penalties due and unpaid under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600 shall constitute a debt due the State of Oregon and may be collected, together with interest, penalty and costs, by appropriate judicial proceeding, which remedy is in addition to all other existing remedies. However, no proceeding for the collection of taxes under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600 shall be instituted after the expiration of six years from the date [such] the taxes were due.

SECTION 43a. If House Bill 2197 becomes law, section 43 of this 2003 Act (amending ORS 321.600) is repealed and ORS 321.600, as amended by section 58, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.600. All taxes, interest and penalties due and unpaid under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), [of this 2003 Act] constitute a debt due the State of Oregon and may be collected, together with interest, penalty and costs, by appropriate judicial proceeding, which remedy is in addition to all other existing remedies. However, no proceeding for the collection of taxes under ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), [of this 2003 Act] shall be instituted after the expiration of six years from the date [such] the taxes were due.

SECTION 44. ORS 321.609 is amended to read:

321.609. (1) ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] and 321.560 to 321.600 shall be enforced and the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] and 321.560 to 321.600 shall be collected by the Department of Revenue, which shall have the power to prescribe forms and to adopt rules for the ascertainment, assessment and collection of the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600.

(2) For the purpose of determining the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487 or] and 321.560 to 321.600, the department may:

(a) Require any person to furnish any information deemed necessary.

(b) Examine the books, records and files of such person.

(d) Enter upon and inspect the land of any owner of the land from which any timber has been harvested.

SECTION 44a. If House Bill 2197 becomes law, section 44 of this 2003 Act (amending ORS 321.609) is repealed and ORS 321.609, as amended by section 59, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.609. (1) ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] and 321.560 to 321.600 and sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), [of this 2003 Act] shall be enforced and the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] and 321.560 to 321.600 and sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), [of this 2003 Act] shall be collected by the Department of Revenue, which shall have the power to prescribe forms and to adopt rules for the ascertainment, assessment and collection of the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act].

(2) For the purpose of determining the taxes imposed by ORS 321.005 to 321.185[, 321.257 to 321.390, 321.405 to 321.487] or 321.560 to 321.600 or sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197) [of this 2003 Act], the department may:

(a) Require any person to furnish any information deemed necessary.

(b) Examine the books, records and files of such person.

(d) Enter upon and inspect the land of any owner of the land from which any timber has been harvested.

SECTION 45. ORS 321.682 is amended to read:

321.682. (1) Except as otherwise specifically provided by law, it shall be unlawful for the Department of Revenue or any officer or employee of the department to divulge or make known in any manner the amount of the tax or any particulars set forth or disclosed in any report or return required to be filed under ORS 321.045[, 321.322, 321.435 and 321.950] or any appraisal data collected to make determinations of specially assessed value of forestland pursuant to ORS 321.201 to 321.222. It shall be unlawful for any person or entity to whom information is disclosed or given by the department pursuant to ORS 321.684 (2) or any other provision of state law to divulge or use such information for any purpose other than that specified in the provisions of law authorizing the use or disclosure. No subpoena or judicial order shall be issued compelling the department or any of its officers or employees, or any person who has acquired information pursuant to ORS 321.684 (2) or any other provision of state law, to divulge or make known the amount of tax or any particulars set forth or disclosed in any report or return except where the taxpayer’s liability for [timber] forest products harvest tax is to be adjudicated by the court from which such process issues.

(2) As used in this section, “officer,” “employee” or “person” includes an authorized representative of the officer, employee or person, or any former officer, employee or person, or an authorized representative of such former officer, employee or person.

SECTION 45a. If House Bill 2197 becomes law, section 45 of this 2003 Act (amending ORS 321.682) is repealed and ORS 321.682, as amended by section 60, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.682. (1) Except as otherwise specifically provided by law, it shall be unlawful for the Department of Revenue or any officer or employee of the department to divulge or make known in any manner the amount of the tax or any particulars set forth or disclosed in any report or return required to be filed under ORS 321.045[, 321.322, 321.435 or 321.950] or section 10, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), [of this 2003 Act] or any appraisal data collected to make determinations of specially assessed value of forestland pursuant to ORS 321.201 to 321.222. It shall be unlawful for any person or entity to whom information is disclosed or given by the department pursuant to ORS 321.684 (2) or any other provision of state law to divulge or use such information for any purpose other than that specified in the provisions of law authorizing the use or disclosure. No subpoena or judicial order shall be issued compelling the department or any of its officers or employees, or any person who has acquired information pursuant to ORS 321.684 (2) or any other provision of state law, to divulge or make known the amount of tax or any particulars set forth or disclosed in any report or return except where the taxpayer’s liability for timber tax is to be adjudicated by the court from which such process issues.

SECTION 46. ORS 321.684 is amended to read:

321.684. (1) The Department of Revenue may:

(a) Furnish to any taxpayer or authorized representative, upon request of the taxpayer or authorized representative, a copy of the taxpayer’s [timber] forest products harvest tax return filed with the department for any year, or a copy of any report filed by the taxpayer in connection with the return.

(b) Publish a list of taxpayers who are entitled to unclaimed tax refunds.

(c) Publish statistics classified so as to prevent the identification of taxable value or any particulars contained in any report or return.

(d) Disclose a taxpayer’s name, address and social security number or employer identification number to the extent necessary in connection with the processing and mailing of forms for any report or return required in the administration of ORS 321.045[, 321.322, 321.435 and 321.950].

[(e) Disclose names and addresses of taxpayers filing under ORS 321.282 (4) and 321.432 to Oregon State University pursuant to surveys and programs related to forest management.]

[(f)] (e) Disclose to the State Forester, upon request of the forester, for the purpose of soliciting nominations and conducting elections referred to in ORS 526.610, the names of producers meeting producer class qualifications established under ORS 526.610 who filed forest products harvest tax returns.

[(g)] (f) Disclose appraisal data collected to make determinations of specially assessed value of forestland under ORS 321.201 to 321.222 to any member of a forestland value advisory committee the department has convened under ORS 321.213.

(2) The department also may disclose and give access to information described in ORS 321.682 to:

(a) The Commissioner of Internal Revenue or authorized representative, for tax purposes only.

(b) The United States Forest Service, Bureau of Land Management and the State Forestry Department pursuant to their regulatory programs and for investigative purposes related to timber theft.

(c) The Attorney General, assistants and employees in the Department of Justice or other legal representative of the State of Oregon, to the extent the department considers disclosure or access necessary for the performance of the duties of advising or representing the department pursuant to ORS 321.045[, 321.322, 321.435 and 321.950].

(d) Employees of the State of Oregon, other than the Department of Revenue or Department of Justice, to the extent the department considers disclosure or access necessary for such employees to perform their duties under contracts or agreements between the department and any other department, agency or subdivision of the State of Oregon in the department’s administration of the tax laws.

(e) The Legislative Revenue Officer or the authorized representative of the Legislative Revenue Officer upon compliance with ORS 173.850. [Such] The officer or representative [shall] may not remove from the premises of the department any materials that would reveal the identity of any taxpayer or any other person or the volume of harvest and value reported on individual returns and reports.

(f) Any agency of the State of Oregon, or any person, or any officer or employee of [such] the agency or person to whom disclosure or access is given by state law and not otherwise referred to in this section, including but not limited to the Secretary of State as Auditor of Public Accounts under section 2, Article VI of the Constitution of the State of Oregon.

(3) Each officer or employee of the department and each person described or referred to in subsection (2)(b) to (f) of this section to whom disclosure or access to the tax information is given under subsection (2) of this section or any other provision of state law, prior to beginning employment or the performance of duties involving such disclosure or access, shall be advised in writing of the provisions of ORS 321.682 and 321.686 relating to penalties for the violation of ORS 321.682, and shall, as a condition of employment or performance of duties, execute a certificate for the department, in a form prescribed by the department, stating in substance that the person has read these provisions of law, that the person has had them explained and that the person is aware of the penalties for the violation of ORS 321.682.

SECTION 47. The amendments to ORS 321.550, 321.560, 321.570, 321.580, 321.600, 321.609, 321.682 and 321.684 by sections 39 to 46 of this 2003 Act apply to forest products harvest tax reporting periods beginning on or after January 1, 2003.

SECTION 47a. If House Bill 2197 becomes law, section 47 of this 2003 Act is amended to read:

Sec. 47. The amendments to ORS 321.550, 321.560, 321.570, 321.580, 321.600, 321.609, 321.682 and 321.684 by sections [39 to] 39a, 40a, 41a, 42a, 43a, 44a, 45a and 46 of this 2003 Act apply to forest products harvest tax and small tract forestland timber severance tax reporting periods beginning on or after January 1, [2003] 2004.

WESTERN OREGON SMALL TRACT

OPTIONAL TAX REPEAL

SECTION 48. ORS 321.763 is amended to read:

321.763. (1) For the tax year beginning July 1, 2003, forestland classified under ORS 321.705 to 321.765 (2001 Edition) shall be declassified from such classification. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this section shall be assessed as provided in ORS 321.354.

(2) Additional taxes may not be imposed as a result of a declassification under this section.

(3) The notification requirements and other procedures that the State Forester and county assessor must follow in declassifying forestland do not apply to a declassification under this section.

(4) A declassification of forestland classified under ORS 321.705 to 321.765 (2001 Edition) constitutes a disqualification for purposes of section 11, Article XI of the Oregon Constitution.

SECTION 48a. If House Bill 2197 becomes law, section 48 of this 2003 Act (amending ORS 321.763) is repealed and ORS 321.763, as amended by section 80, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.763. (1) For the tax year beginning July 1, 2003, forestland classified under ORS 321.705 to 321.765 [(repealed)] (2001 Edition) shall be declassified from such classification. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this section shall be assessed as provided in ORS 321.354.

(2) Additional taxes may not be imposed as a result of a declassification under this section.

(3) The notification requirements and other procedures that the State Forester and county assessor must follow in declassifying forestland do not apply to a declassification under this section.

(4) A declassification of forestland classified under ORS 321.705 to 321.765 [(repealed)] (2001 Edition) constitutes a disqualification for purposes of section 11, Article XI of the Oregon Constitution.

SECTION 49. ORS 92.102, 308A.721, 321.705, 321.710, 321.715, 321.720, 321.725, 321.727, 321.730, 321.732, 321.737, 321.745, 321.747, 321.760 and 321.765 are repealed.

SECTION 50. The repeal of ORS 308A.721, 321.705, 321.710, 321.715, 321.720, 321.725, 321.727, 321.730, 321.732, 321.737, 321.745, 321.747, 321.760 and 321.765 by section 49 of this 2003 Act does not affect the classification or declassification of land under ORS 321.705 to 321.765 or the imposition, collection or administration of ad valorem property taxes imposed on land classified under ORS 321.705 to 321.765 in property tax years ending before July 1, 2003.

SECTION 51. ORS 321.763 is repealed July 1, 2004.

SECTION 52. The repeal of ORS 321.763 by section 51 of this 2003 Act does not affect the declassification of western Oregon small tract optional tax forestland under ORS 321.763 that occurred prior to the repeal of ORS 321.763.

EASTERN OREGON

FORESTLAND ASSESSMENT

SECTION 53. ORS 321.805 is amended to read:

321.805. As used in ORS 321.805 to 321.825, unless the context requires otherwise:

[(1) “Average Pacific Northwest Inland Lumber Price Index” means the average of the Western Wood Products Association Pacific Northwest Inland Lumber Price annual price indices for Douglas Fir-Larch, White Fir (Hem-Fir) and Coast Inland North Ponderosa Pine.]

(1) “Cultured Christmas trees” means trees:

(a) Grown on lands used exclusively for that purpose, capable of preparation by intensive cultivation methods such as plowing or turning over the soil;

(b) Of a marketable species;

(c) Managed to produce trees meeting U.S. No. 2 or better standards for Christmas trees as specified by the Agriculture Marketing Services of the United States Department of Agriculture; and

(d) Evidencing periodic maintenance practices of shearing for Douglas fir and pine species, weed and brush control, and basal pruning, fertilizing, insect and disease control, stump culture, soil cultivation or irrigation.

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

(3) “Eastern Oregon” means that portion of the state lying east of a line beginning at the intersection of the northern boundary of the State of Oregon and the western boundary of Wasco County, thence south along the western boundaries of the counties of Wasco, Jefferson, Deschutes and Klamath to the southern boundary of the State of Oregon.

[(2)] (4) “Forestland” means land [east of the summit of the Cascade Mountains which] in eastern Oregon that [is not assessed as farmland pursuant to ORS 308A.050 to 308A.128 and is not assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820; and which either] is being held or used for the predominant purpose of growing and harvesting trees of a marketable species and that has been designated as forestland under ORS 321.805 to 321.825[, or is land] or land in eastern Oregon, the highest and best use of which is the growing and harvesting of such trees. Forestland is the land alone. Forestland often contains isolated openings that because of rock outcrops, river wash, swamps, chemical conditions of the soil, brush and other like conditions prevent adequate stocking of such openings for the production of trees of a marketable species. If such openings in their natural state are necessary to hold the surrounding forestland in forest use through sound management practices, [they] the openings are deemed forestland.

[(3) “Owner” means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature owning or controlling forestland.]

(5) “State Forester” means the State Forester or the authorized representative of the State Forester.

[(4)] (6) [The] “Summit of the Cascade Mountains” [shall be considered to be] means a line beginning at the intersection of the northern boundary of the State of Oregon and the western boundary of Wasco County, thence southerly along the western boundaries of the counties of Wasco, Jefferson, Deschutes and Klamath to the southern boundary of the State of Oregon.

(7) “Timber” means all logs which can be measured in board feet and other forest products as determined by department rule, but does not include western juniper or products from harvested western juniper.

SECTION 54. ORS 321.812, as amended by section 40, chapter 1078, Oregon Laws 1999, and section 8, chapter 860, Oregon Laws 2001, is amended to read:

321.812. (1) The [Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be subject to special assessment as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more] assessed value of forestland shall be determined under this section.

(2) Forestland assessed under this section shall:

(a) Be disqualified from special assessment at a value per acre equal to 75 percent of the value per acre determined under ORS 321.811 (2) to (7) (2001 Edition); and

(b) Qualify for special assessment at a value per acre equal to the specially assessed value certified to the county assessor for the tax year under ORS 321.216.

(3) Forestland assessed under this section shall have a maximum assessed value per acre equal to 103 percent of the forestland assessed value per acre for the preceding tax year or 100 percent of the forestland maximum assessed value per acre for the preceding tax year, whichever is greater.

(4)(a) The assessor shall compute the assessed value of forestland by multiplying the acreage of the forestland by the lesser of:

(A) The specially assessed value per acre; or

(B) The maximum assessed value per acre.

(b) Notwithstanding paragraph (a) of this subsection, the forestland shall be assessed as provided in ORS 308.232 if the real market value of the forestland is less than the value established under paragraph (a) of this subsection.

(5) For purposes of this section:

[(c)] (a) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.

SECTION 55. The amendments to ORS 321.812 by section 54 of this 2003 Act apply to tax years beginning on or after July 1, 2003.

SECTION 56. ORS 321.812, as amended by section 54 of this 2003 Act, is amended to read:

321.812. [(1) The assessed value of forestland shall be determined under this section.]

[(2) Forestland assessed under this section shall:]

[(a) Be disqualified from special assessment at a value per acre equal to 75 percent of the value per acre determined under ORS 321.811 (2) to (7) (2001 edition); and]

[(b)] (1) [Qualify for special assessment at a] Forestland shall have a specially assessed value per acre equal to the specially assessed value certified to the county assessor for the tax year under ORS 321.216.

[(3)] (2) Forestland [assessed under this section] shall have a maximum assessed value per acre equal to 103 percent of the forestland assessed value per acre for the preceding tax year or 100 percent of the forestland maximum assessed value per acre for the preceding tax year, whichever is greater.

[(4)(a)] (3)(a) The assessor shall compute the assessed value of forestland by multiplying the acreage of the forestland by the lesser of:

(A) The specially assessed value per acre; or

(B) The maximum assessed value per acre.

[(5) For purposes of this section:]

[(a) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.]

SECTION 57. The amendments to ORS 321.812 by section 56 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 57a. If House Bill 2197 becomes law, sections 54 (amending ORS 321.812), 55, 56 (amending ORS 321.812) and 57 of this 2003 Act are repealed.

SECTION 58. ORS 321.814 is amended to read:

321.814. (1) For the tax year beginning July 1, 2003, forestland subject to special assessment under ORS 321.811 (2001 Edition) for the previous tax year shall be disqualified from such special assessment, and shall be assessed as provided in ORS 321.812.

(2) Additional taxes may not be imposed as a result of a disqualification under this section.

(3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

SECTION 59. ORS 321.815 is amended to read:

321.815. (1) An owner of land desiring that it be designated as forestland for purposes of ORS 321.805 to 321.825 shall make application to the county assessor on or before April 1 of the assessment year for which special assessment as forestland is first desired, and the owner may also do so within 30 days of receipt of notice of its assessment as omitted property.

(2) Notwithstanding subsection (1) of this section, an owner of land may apply to the county assessor by December 15 to have the land designated as forestland for the assessment year if:

(a) For the prior assessment year the land had been forestland [under ORS 321.257 (4)] by reason of the land being highest and best use forestland; and

(b) For the current assessment year the land is being assessed at a value reflecting a use other than highest and best use forestland.

(3) The application shall be made upon forms prepared by the Department of Revenue and supplied by the county assessor, and shall include the following:

(a) A description of all land the applicant desires to be designated as forestland.

(b) Date of acquisition.

(c) Whether the land is being held or used for the predominant purpose of growing and harvesting trees of marketable species.

(d) Whether there is a forest management plan for it.

(e) If so, whether the plan is being implemented, and the nature and extent of implementation.

(f) Whether the land is being held or used for the predominant purpose of grazing or raising of livestock.

(g) Whether the land has been platted under ORS chapter 92.

(h) Whether a permit has been granted for harvesting for excepted purposes under the Oregon Forest Practices Act.

(i) Whether the land is timberland subject to ORS chapter 477, and if it is not, the reasons therefor.

(j) Whether the land, or any of it, is subject to a lease or option which permits it to be used for any purpose other than the growing and harvesting of trees.

(k) A summary of past experience and activity of the applicant in growing and harvesting trees.

(L) A summary of current and continuing activity of the applicant in growing and harvesting trees.

(m) A statement that the applicant is aware of the potential tax liability involved when the land ceases to be designated as forestland.

(n) An affirmation that the statements contained in the application are true.

(4) The county assessor shall approve an application for forestland designation if the assessor finds that the land is properly classifiable as forestland. The county assessor shall not find land properly classifiable as forestland if the application states the land is not being held or used for the predominant purpose of growing and harvesting trees of marketable species. Otherwise, the determination whether the land is properly classifiable as forestland shall be made with due regard to all relevant evidence and without any one or more items of evidence necessarily being determinative.

(5) The application shall be considered to have been approved unless, within three months of the date such application was delivered to the assessor or prior to August 15, whichever is later, the assessor shall notify the applicant in writing of the extent to which the application is denied.

SECTION 60. ORS 321.830 is amended to read:

321.830. (1) Land described in ORS 321.415 [(5)] (3)(relating to hardwood timberland, including hybrid cottonwood timberland) shall be assessed as farm use land under ORS 308A.050 to 308A.128[, unless the owner of the land makes the election under ORS 321.426].

(2)(a) If land is or becomes land described under ORS 321.415 [(5)] (3) and the land is not located within an exclusive farm use zone, the owner shall make application for special valuation in the manner provided under ORS 308A.077, as follows:

(A) If the change in use takes place on or after July 1, the owner shall file the application on or before April 1 of the following tax year.

(B) If the change in use takes place prior to July 1, the owner shall file the application on or before August 1 of the tax year.

SECTION 61. The amendments to ORS 321.805, 321.815 and 321.830 by sections 53, 59 and 60 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 61a. If House Bill 2197 becomes law, section 61 of this 2003 Act is amended to read:

Sec. 61. The amendments to ORS 321.805, 321.815 and 321.830 by sections 53, 59 and 60 of this 2003 Act apply to property tax years beginning on or after July 1, [2003] 2004.

SECTION 62. ORS 321.830 is added to and made a part of ORS 321.805 to 321.825.

SECTION 63. ORS 321.810, 321.811, 321.816 and 321.823 are repealed.

SECTION 63a. If House Bill 2197 becomes law, section 63 of this 2003 Act is amended to read:

Sec. 63. ORS 321.810, 321.811, 321.816 and 321.823 are repealed on July 1, 2004.

SECTION 64. The repeal of ORS 321.810, 321.811, 321.816 and 321.823 by section 63 of this 2003 Act does not affect the imposition, collection or administration of ad valorem property taxes imposed on eastern Oregon forestlands in property tax years ending before July 1, 2003.

SECTION 64a. If House Bill 2197 becomes law, section 64 of this 2003 Act is amended to read:

Sec. 64. The repeal of ORS 321.810, 321.811, 321.816 and 321.823 by section 63 of this 2003 Act does not affect the imposition, collection or administration of ad valorem property taxes imposed on eastern Oregon forestlands in property tax years ending before July 1, [2003] 2004.

SECTION 65. ORS 321.814 and section 37, chapter 1078, Oregon Laws 1999, are repealed July 1, 2004.

SECTION 65a. If House Bill 2197 becomes law, section 65 of this 2003 Act is amended to read:

Sec. 65. ORS 321.814 [and section 37, chapter 1078, Oregon Laws 1999, are] is repealed [July 1, 2004] January 2, 2006.

SECTION 66. The repeal of ORS 321.814 and section 37, chapter 1078, Oregon Laws 1999, by section 65 of this 2003 Act does not affect the disqualification of forestland under ORS 321.814 or section 37, chapter 1078, Oregon Laws 1999, that occurred prior to the repeal of ORS 321.814 or section 37, chapter 1078, Oregon Laws 1999.

CONFORMING AMENDMENTS

SECTION 67. ORS 215.203 is amended to read:

215.203. (1) Zoning ordinances may be adopted to zone designated areas of land within the county as exclusive farm use zones. Land within such zones shall be used exclusively for farm use except as otherwise provided in ORS 215.213, 215.283 or 215.284. Farm use zones shall be established only when such zoning is consistent with the comprehensive plan.

(2)(a) As used in this section, “farm use” means the current employment of land for the primary purpose of obtaining a profit in money by raising, harvesting and selling crops or the feeding, breeding, management and sale of, or the produce of, livestock, poultry, fur-bearing animals or honeybees or for dairying and the sale of dairy products or any other agricultural or horticultural use or animal husbandry or any combination thereof. “Farm use” includes the preparation, storage and disposal by marketing or otherwise of the products or by-products raised on such land for human or animal use. “Farm use” also includes the current employment of land for the primary purpose of obtaining a profit in money by stabling or training equines including but not limited to providing riding lessons, training clinics and schooling shows. “Farm use” also includes the propagation, cultivation, maintenance and harvesting of aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission. “Farm use” includes the on-site construction and maintenance of equipment and facilities used for the activities described in this subsection. “Farm use” does not include the use of land subject to the provisions of ORS chapter 321, except land used exclusively for growing cultured Christmas trees as defined in subsection (3) of this section or land described in ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3).

(b) “Current employment” of land for farm use includes:

(A) Farmland, the operation or use of which is subject to any farm-related government program;

(B) Land lying fallow for one year as a normal and regular requirement of good agricultural husbandry;

(C) Land planted in orchards or other perennials, other than land specified in subparagraph (D) of this paragraph, prior to maturity;

(D) Land not in an exclusive farm use zone which has not been eligible for assessment at special farm use value in the year prior to planting the current crop and has been planted in orchards, cultured Christmas trees or vineyards for at least three years;

(E) Wasteland, in an exclusive farm use zone, dry or covered with water, neither economically tillable nor grazeable, lying in or adjacent to and in common ownership with a farm use land and which is not currently being used for any economic farm use;

(F) Except for land under a single family dwelling, land under buildings supporting accepted farm practices, including the processing facilities allowed by ORS 215.213 (1)(x) and 215.283 (1)(u);

(G) Water impoundments lying in or adjacent to and in common ownership with farm use land;

(H) Any land constituting a woodlot, not to exceed 20 acres, contiguous to and owned by the owner of land specially valued for farm use even if the land constituting the woodlot is not utilized in conjunction with farm use;

(I) Land lying idle for no more than one year where the absence of farming activity is due to the illness of the farmer or member of the farmer’s immediate family. For purposes of this paragraph, illness includes injury or infirmity whether or not such illness results in death;

(J) Any land described under ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3); and

(K) Land used for the primary purpose of obtaining a profit in money by breeding, raising, kenneling or training of greyhounds for racing.

(c) As used in this subsection, “accepted farming practice” means a mode of operation that is common to farms of a similar nature, necessary for the operation of such farms to obtain a profit in money, and customarily utilized in conjunction with farm use.

(3) “Cultured Christmas trees” means trees:

(a) Grown on lands used exclusively for that purpose, capable of preparation by intensive cultivation methods such as plowing or turning over the soil;

(b) Of a marketable species;

(c) Managed to produce trees meeting U.S. No. 2 or better standards for Christmas trees as specified by the Agriculture Marketing Services of the United States Department of Agriculture; and

(d) Evidencing periodic maintenance practices of shearing for Douglas fir and pine species, weed and brush control and one or more of the following practices: Basal pruning, fertilizing, insect and disease control, stump culture, soil cultivation, irrigation.

SECTION 67a. If House Bill 2197 becomes law, section 67 of this 2003 Act (amending ORS 215.203) is repealed and ORS 215.203, as amended by section 117, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

(b) “Current employment” of land for farm use includes:

(A) Farmland, the operation or use of which is subject to any farm-related government program;

(B) Land lying fallow for one year as a normal and regular requirement of good agricultural husbandry;

(C) Land planted in orchards or other perennials, other than land specified in subparagraph (D) of this paragraph, prior to maturity;

(F) Except for land under a single family dwelling, land under buildings supporting accepted farm practices, including the processing facilities allowed by ORS 215.213 (1)(x) and 215.283 (1)(u);

(G) Water impoundments lying in or adjacent to and in common ownership with farm use land;

(J) Any land described under ORS 321.267 [(1)(d)] (3) or 321.415 [(5)] (3); and

(K) Land used for the primary purpose of obtaining a profit in money by breeding, raising, kenneling or training of greyhounds for racing.

(3) “Cultured Christmas trees” means trees:

(a) Grown on lands used exclusively for that purpose, capable of preparation by intensive cultivation methods such as plowing or turning over the soil;

(b) Of a marketable species;

(c) Managed to produce trees meeting U.S. No. 2 or better standards for Christmas trees as specified by the Agriculture Marketing Services of the United States Department of Agriculture; and

SECTION 68. ORS 215.236 is amended to read:

215.236. (1) As used in this section, “dwelling” means a single-family residential dwelling not provided in conjunction with farm use.

(2) The governing body or its designee may not grant final approval of an application made under ORS 215.213 (3) or 215.284 (1), (2), (3), (4) or (7) for the establishment of a dwelling on a lot or parcel in an exclusive farm use zone that is, or has been, receiving special assessment without evidence that the lot or parcel upon which the dwelling is proposed has been disqualified for special assessment at value for farm use under ORS 308A.050 to 308A.128 or other special assessment under ORS 308A.315, 321.257 to 321.390[, 321.730 or 321.815] or 321.805 to 321.825 and any additional tax imposed as the result of disqualification has been paid.

(3) The governing body or its designee may grant tentative approval of an application made under ORS 215.213 (3) or 215.284 (1), (2), (3), (4) or (7) for the establishment of a dwelling on a lot or parcel in an exclusive farm use zone that is specially assessed at value for farm use under ORS 308A.050 to 308A.128 upon making the findings required by ORS 215.213 (3) or 215.284 (1), (2), (3), (4) or (7). An application for the establishment of a dwelling that has been tentatively approved shall be given final approval by the governing body or its designee upon receipt of evidence that the lot or parcel upon which establishment of the dwelling is proposed has been disqualified for special assessment at value for farm use under ORS 308A.050 to 308A.128 and any additional tax imposed as the result of disqualification has been paid.

(4) The owner of a lot or parcel upon which the establishment of a dwelling has been tentatively approved as provided by subsection (3) of this section shall, before final approval, simultaneously:

(a) Notify the county assessor that the lot or parcel is no longer being used as farmland;

(b) Request that the county assessor disqualify the lot or parcel for special assessment under ORS 308A.050 to 308A.128, 308A.315, 321.257 to 321.390[, 321.730 or 321.815] or 321.805 to 321.825; and

(5) A lot or parcel that has been disqualified pursuant to subsection (4) of this section may not requalify for special assessment unless, when combined with another contiguous lot or parcel, it constitutes a qualifying parcel.

(6) When the owner of a lot or parcel upon which the establishment of a dwelling has been tentatively approved notifies the county assessor that the lot or parcel is no longer being used as farmland and requests disqualification of the lot or parcel for special assessment at value for farm use, the county assessor shall:

(a) Disqualify the lot or parcel for special assessment at value for farm use under ORS 308A.050 to 308A.128 or other special assessment by removing the special assessment;

(b) Provide the owner of the lot or parcel with written notice of the disqualification; and

(7) The Department of Consumer and Business Services, a building official, as defined in ORS 455.715 (1), or any other agency or official responsible for the administration and enforcement of the state building code, as defined in ORS 455.010, may not issue a building permit for the construction of a dwelling on a lot or parcel in an exclusive farm use zone without evidence that the owner of the lot or parcel upon which the dwelling is proposed to be constructed has paid the additional tax, if any, imposed by the county assessor under subsection (6)(c) of this section.

SECTION 69. ORS 215.262 is amended to read:

215.262. (1) The Legislative Assembly declares that the creation of small parcels for nonfarm dwellings in exclusive farm use zones introduces potential conflicts into commercial agricultural areas and allows a limited number of nonfarm dwellings in exclusive farm use zones. To protect the state’s land base for commercial agriculture from being divided into multiple parcels for nonfarm dwellings while continuing to allow a limited number of nonfarm dwellings on less productive agricultural land not suitable for farm use, it is necessary to:

(a) Limit the incremental division of lots or parcels larger than the minimum size established under ORS 215.780 into smaller lots or parcels for the purpose of creating new nonfarm dwellings; and

(b) Allow a limited number of lots or parcels equal to or less than the minimum size established under ORS 215.780 to be partitioned into not more than two parcels unsuitable for farm use and eligible for siting nonfarm dwellings under ORS 215.284.

(2) The amendments to ORS 215.263 by section 3, chapter 704, Oregon Laws 2001, address the partition of land within an exclusive farm use zone to create parcels smaller than the minimum size established under ORS 215.780 for the purpose of siting dwellings not provided in conjunction with farm use in eastern Oregon, as defined in ORS [321.405] 321.805, and in western Oregon, as defined in ORS 321.257.

SECTION 70. ORS 215.263 is amended to read:

215.263. (1) Any proposed division of land included within an exclusive farm use zone resulting in the creation of one or more parcels of land shall be reviewed and approved or disapproved by the governing body or its designee of the county in which the land is situated. The governing body of a county by ordinance shall require such prior review and approval for such divisions of land within exclusive farm use zones established within the county.

(2) The governing body of a county or its designee may approve a proposed division of land to create parcels for farm use as defined in ORS 215.203 if it finds:

(a) That the proposed division of land is appropriate for the continuation of the existing commercial agricultural enterprise within the area; or

(b) The parcels created by the proposed division are not smaller than the minimum size established under ORS 215.780.

(3) The governing body of a county or its designee may approve a proposed division of land in an exclusive farm use zone for nonfarm uses, except dwellings, set out in ORS 215.213 (2) or 215.283 (2) if it finds that the parcel for the nonfarm use is not larger than the minimum size necessary for the use. The governing body may establish other criteria as it considers necessary.

(4) In western Oregon, as defined in ORS 321.257, but not in the Willamette Valley, as defined in ORS 215.010, the governing body of a county or its designee:

(a) May approve a division of land in an exclusive farm use zone to create up to two new parcels smaller than the minimum size established under ORS 215.780, each to contain a dwelling not provided in conjunction with farm use if:

(A) The nonfarm dwellings have been approved under ORS 215.213 (3) or 215.284 (2) or (3);

(B) The parcels for the nonfarm dwellings are divided from a lot or parcel that was lawfully created prior to July 1, 2001;

(C) The parcels for the nonfarm dwellings are divided from a lot or parcel that complies with the minimum size established under ORS 215.780;

(D) The remainder of the original lot or parcel that does not contain the nonfarm dwellings complies with the minimum size established under ORS 215.780; and

(E) The parcels for the nonfarm dwellings are generally unsuitable for the production of farm crops and livestock or merchantable tree species considering the terrain, adverse soil or land conditions, drainage or flooding, vegetation, location and size of the tract. A parcel may not be considered unsuitable based solely on size or location if the parcel can reasonably be put to farm or forest use in conjunction with other land.

(b) May approve a division of land in an exclusive farm use zone to divide a lot or parcel into two parcels, each to contain one dwelling not provided in conjunction with farm use if:

(A) The nonfarm dwellings have been approved under ORS 215.284 (2) or (3);

(B) The parcels for the nonfarm dwellings are divided from a lot or parcel that was lawfully created prior to July 1, 2001;

(C) The parcels for the nonfarm dwellings are divided from a lot or parcel that is equal to or smaller than the minimum size established under ORS 215.780 but equal to or larger than 40 acres;

(D) The parcels for the nonfarm dwellings are:

(i) Not capable of producing more than at least 50 cubic feet per acre per year of wood fiber; and

(ii) Composed of at least 90 percent Class VI through VIII soils;

(E) The parcels for the nonfarm dwellings do not have established water rights for irrigation; and

(F) The parcels for the nonfarm dwellings are generally unsuitable for the production of farm crops and livestock or merchantable tree species considering the terrain, adverse soil or land conditions, drainage or flooding, vegetation, location and size of the tract. A parcel may not be considered unsuitable based solely on size or location if the parcel can reasonably be put to farm or forest use in conjunction with other land.

(5) In eastern Oregon, as defined in ORS [321.405] 321.805, the governing body of a county or its designee:

(A) The nonfarm dwellings have been approved under ORS 215.284 (7);

(B) The parcels for the nonfarm dwellings are divided from a lot or parcel that was lawfully created prior to July 1, 2001;

(C) The parcels for the nonfarm dwellings are divided from a lot or parcel that complies with the minimum size established under ORS 215.780;

(D) The remainder of the original lot or parcel that does not contain the nonfarm dwellings complies with the minimum size established under ORS 215.780; and

(b) May approve a division of land in an exclusive farm use zone to divide a lot or parcel into two parcels, each to contain one dwelling not provided in conjunction with farm use if:

(A) The nonfarm dwellings have been approved under ORS 215.284 (7);

(B) The parcels for the nonfarm dwellings are divided from a lot or parcel that was lawfully created prior to July 1, 2001;

(C) The parcels for the nonfarm dwellings are divided from a lot or parcel that is equal to or smaller than the minimum size established under ORS 215.780 but equal to or larger than 40 acres;

(D) The parcels for the nonfarm dwellings are:

(i) Not capable of producing more than at least 20 cubic feet per acre per year of wood fiber; and

(ii) Either composed of at least 90 percent Class VII and VIII soils, or composed of at least 90 percent Class VI through VIII soils and are not capable of producing adequate herbaceous forage for grazing livestock. The Land Conservation and Development Commission, in cooperation with the State Department of Agriculture and other interested persons, may establish by rule objective criteria for identifying units of land that are not capable of producing adequate herbaceous forage for grazing livestock. In developing the criteria, the commission shall use the latest information from the United States Natural Resources Conservation Service and consider costs required to utilize grazing lands that differ in acreage and productivity level;

(E) The parcels for the nonfarm dwellings do not have established water rights for irrigation; and

(6) This section does not apply to the creation or sale of cemetery lots, if a cemetery is within the boundaries designated for a farm use zone at the time the zone is established.

(7) This section does not apply to divisions of land resulting from lien foreclosures or divisions of land resulting from foreclosure of recorded contracts for the sale of real property.

(8) The governing body of a county may not approve any proposed division of a lot or parcel described in ORS 215.213 (1)(e) or (k), 215.283 (1)(e) or (2)(L) or 215.284 (1), or a proposed division that separates a processing facility from the farm operation specified in ORS 215.213 (1)(x) or 215.283 (1)(u).

(9) The governing body of a county may approve a proposed division of land in an exclusive farm use zone to create a parcel with an existing dwelling to be used:

(a) As a residential home as described in ORS 197.660 (2) only if the dwelling has been approved under ORS 215.213 (3) or 215.284 (1), (2), (3), (4) or (7); and

(b) For historic property that meets the requirements of ORS 215.213 (1)(q) and 215.283 (1)(o).

(10)(a) Notwithstanding ORS 215.780, the governing body of a county or its designee may approve a proposed division of land provided:

(A) The land division is for the purpose of allowing a provider of public parks or open space, or a not-for-profit land conservation organization, to purchase at least one of the resulting parcels; and

(B) A parcel created by the land division that contains a dwelling is large enough to support continued residential use of the parcel.

(b) A parcel created pursuant to this subsection that does not contain a dwelling:

(A) Is not eligible for siting a dwelling, except as may be authorized under ORS 195.120;

(B) May not be considered in approving or denying an application for siting any other dwelling;

(C) May not be considered in approving a redesignation or rezoning of forestlands except for a redesignation or rezoning to allow a public park, open space or other natural resource use; and

(D) May not be smaller than 25 acres unless the purpose of the land division is:

(i) To facilitate the creation of a wildlife or pedestrian corridor or the implementation of a wildlife habitat protection plan; or

(ii) To allow a transaction in which at least one party is a public park or open space provider, or a not-for-profit land conservation organization, that has cumulative ownership of at least 2,000 acres of open space or park property.

(11) The governing body of a county or its designee may approve a division of land smaller than the minimum lot or parcel size described in ORS 215.780 (1) and (2) in an exclusive farm use zone provided:

(a) The division is for the purpose of establishing a church, including cemeteries in conjunction with the church;

(b) The church has been approved under ORS 215.213 (1) or 215.283 (1);

(d) The remaining lot or parcel, not including the church, meets the minimum lot or parcel size described in ORS 215.780 (1) and (2) either by itself or after it is consolidated with another lot or parcel.

(12) The governing body of a county may not approve a division of land for nonfarm use under subsection (3), (4), (5), (9), (10) or (11) of this section unless any additional tax imposed for the change in use has been paid.

(13) Parcels used or to be used for training or stabling facilities may not be considered appropriate to maintain the existing commercial agricultural enterprise in an area where other types of agriculture occur.

SECTION 71. ORS 215.284 is amended to read:

215.284. (1) In the Willamette Valley, a single-family residential dwelling not provided in conjunction with farm use may be established, subject to approval of the governing body or its designee, in any area zoned for exclusive farm use upon a finding that:

(a) The dwelling or activities associated with the dwelling will not force a significant change in or significantly increase the cost of accepted farming or forest practices on nearby lands devoted to farm or forest use;

(b) The dwelling will be sited on a lot or parcel that is predominantly composed of Class IV through Class VIII soils that would not, when irrigated, be classified as prime, unique, Class I or Class II soils;

(d) The dwelling will not materially alter the stability of the overall land use pattern of the area; and

(e) The dwelling complies with such other conditions as the governing body or its designee considers necessary.

(2) In counties not described in subsection (1) of this section, a single-family residential dwelling not provided in conjunction with farm use may be established, subject to approval of the governing body or its designee, in any area zoned for exclusive farm use upon a finding that:

(b) The dwelling is situated upon a lot or parcel or portion of a lot or parcel that is generally unsuitable land for the production of farm crops and livestock or merchantable tree species, considering the terrain, adverse soil or land conditions, drainage and flooding, vegetation, location and size of the tract. A lot or parcel or portion of a lot or parcel may not be considered unsuitable solely because of size or location if it can reasonably be put to farm or forest use in conjunction with other land;

(d) The dwelling will not materially alter the stability of the overall land use pattern of the area; and

(e) The dwelling complies with such other conditions as the governing body or its designee considers necessary.

(3) In counties in western Oregon, as defined in ORS 321.257, not described in subsection (4) of this section, a single-family residential dwelling not provided in conjunction with farm use may be established, subject to approval of the governing body or its designee, in any area zoned for exclusive farm use upon a finding that:

(d) The dwelling will not materially alter the stability of the overall land use pattern of the area; and

(e) The dwelling complies with such other conditions as the governing body or its designee considers necessary.

(4)(a) In the Willamette Valley, a lot or parcel allowed under paragraph (b) of this subsection for a single-family residential dwelling not provided in conjunction with farm use may be established, subject to approval of the governing body or its designee, in any area zoned for exclusive farm use upon a finding that the originating lot or parcel is equal to or larger than the applicable minimum lot or parcel size and:

(A) Is not stocked to the requirements under ORS 527.610 to 527.770;

(B) Is composed of at least 95 percent Class VI through Class VIII soils; and

(b) Any parcel to be created for a dwelling from the originating lot or parcel described in paragraph (a) of this subsection will not be smaller than 20 acres.

(c) The dwelling or activities associated with the dwelling allowed under this subsection will not force a significant change in or significantly increase the cost of accepted farming or forest practices on nearby lands devoted to farm or forest use.

(d) The dwelling allowed under this subsection will not materially alter the stability of the overall land use pattern of the area.

(e) The dwelling allowed under this subsection complies with such other conditions as the governing body or its designee considers necessary.

(5) No final approval of a nonfarm use under this section shall be given unless any additional taxes imposed upon the change in use have been paid.

(6) If a single-family dwelling is established on a lot or parcel as set forth in ORS 215.705 to 215.750, no additional dwelling may later be sited under subsection (1), (2), (3), (4) or (7) of this section.

(7) In counties in eastern Oregon, as defined in ORS [321.405] 321.805, a single-family residential dwelling not provided in conjunction with farm use may be established, subject to the approval of the county governing body or its designee, in any area zoned for exclusive farm use upon a finding that:

(b) The dwelling will be sited on a lot or parcel created after January 1, 1993, as allowed under ORS 215.263 (5);

(d) The dwelling complies with such other conditions as the governing body or its designee considers necessary.

SECTION 72. ORS 215.800 is amended to read:

215.800. (1) The Legislative Assembly declares that the protection and preservation of the wildlife resources of this state ought to be encouraged by recognizing wildlife habitat conservation and enhancement as an allowed land use in areas:

(a) Zoned for exclusive farm use, mixed farm and forest use or highest and best use forestland; or

(b) Assessed as designated forestland [or under the Western Oregon Small Tract Optional Tax].

(2) The Legislative Assembly further declares that ORS 215.800 to 215.808 are intended to allow for the conservation and enhancement of wildlife habitat.

(3) The Legislative Assembly further recognizes that the integration of wildlife habitat conservation and management plans with generally accepted agricultural and forestry practices in farm and forest zones is an important element in exercising good stewardship over these lands.

SECTION 73. ORS 215.801 is amended to read:

215.801. As used in ORS 215.800 to 215.808:

(1) “Cooperating agency” means the State Department of Fish and Wildlife, the United States Fish and Wildlife Service, the United States Natural Resources Conservation Service, the Oregon State University Extension Service or other persons with wildlife habitat conservation and management training considered appropriate for the preparation of a conservation and management plan, as established by rules of the State Department of Fish and Wildlife.

(2) “Department” means the State Department of Fish and Wildlife.

(3) “Forestland” means forestland as defined in ORS 321.257[, 321.705] or 321.805.

(4) “Lot” has the meaning given that term in ORS 92.010.

(5) “Parcel” has the meaning given that term in ORS 215.010 (1).

(6) “Wildlife habitat conservation and management plan” or “plan” means a plan developed by a cooperating agency and landowner that specifies the conservation and management practices, including farm and forest uses consistent with the overall intent of the plan, that will be conducted to preserve, enhance and improve wildlife habitat on an affected lot or parcel.

SECTION 74. ORS 215.808 is amended to read:

215.808. (1) The State Department of Fish and Wildlife shall review and approve plans submitted under ORS 215.802 (1) for compliance with the standards set forth in the rules adopted under ORS 215.806.

(2) The State Fish and Wildlife Commission may establish by rule a limit on the number of plans that may be approved for each tax year. An application that is not approved because the maximum number of plans for a tax year have already been approved shall be held for consideration for approval for the next tax year.

(3) When a plan is approved by the department and is implemented, the owner of the land subject to the plan may make application to the county assessor for open space use assessment under ORS 308A.300 to 308A.330 for that land, except that, if approved, the land shall be assessed:

(a) At its value for farm use under ORS 308A.050 to 308A.128 if the land is in an exclusive farm use zone or a farm and forest zone and has historically been in farm use; or

(b) At its forestland value if, but for application under this section, the land is zoned as highest and best use forestland[,] or is assessed as designated forestland [or assessed under the Western Oregon Small Tract Optional Tax].

(4) If the land that is the subject of the application includes a farm or forest homesite, upon approval the homesite shall be assessed as provided in ORS 308A.250 to 308A.259.

(5) Application shall be made as provided in ORS 308A.300 to 308A.330 except that:

(a) The granting authority shall be the State Department of Fish and Wildlife. The department shall approve the plan relating to the land of the applicant and determine compliance with the plan in accordance with rules adopted under ORS 215.806.

(b) The owner, in lieu of designating the paragraph of ORS 308A.300 (1) under which the open space use falls, shall designate the open space use as wildlife habitat conservation and management under ORS 215.800 to 215.808.

(c) Applications for open space use assessment under this section shall be made to the county assessor not later than April 1 immediately preceding the first tax year for which such assessment is requested.

(d) The application shall include a certified copy of the department’s declaration that the land described in the application is subject to a wildlife habitat conservation and management plan approved by the department and that the plan is being implemented.

(e) When the application for open space use assessment includes a certified copy of the declaration described in paragraph (d) of this subsection, the county assessor may not refer the application to the planning commission or to the county governing body under ORS 308A.309 (1), but shall assess the land described in the application at its assessed value under the appropriate special assessment program listed under subsection (3) or (4) of this section. In each year in which the land is assessed under the provisions of this section, the county assessor shall also enter on the assessment roll, as a notation, the assessed value of the land were it not so assessed.

(6) An approved wildlife habitat conservation and management plan shall be reviewed by the department periodically to ensure that the land is managed in accordance with the plan. If the plan is not being implemented as approved, the department shall notify the owner and require compliance measures to be taken within six months. If the plan is still not being implemented as required by the department at the end of the six-month period, the department shall notify the county assessor of the county in which the affected land is situated. The county assessor shall withdraw the land from open space use classification as provided in ORS 308A.321 (1), except that notice of the withdrawal shall be given to the governing body of the county in which the land is situated.

(7) Notwithstanding ORS 215.236 and 308A.700 to 308A.733, land that is assessed as provided in this section may not be subject to any additional taxes when the land is changed to open space use assessment based on wildlife habitat conservation and management as provided in ORS 215.800 to 215.808 and shall be allowed to return unrestricted to assessment under the appropriate special assessment program listed in subsection (3) or (4) of this section, if otherwise qualified, without payment of any additional taxes. However, the land may be subject to additional taxes as provided in ORS 308A.700 to 308A.733.

SECTION 75. The amendments to ORS 215.800, 215.801 and 215.808 by sections 72 to 74 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 76. Section 4, chapter 460, Oregon Laws 1999, is amended to read:

Sec. 4. (1) As used in this section, “eastern Oregon” has the meaning given that term in ORS [321.405] 321.805 but also includes Hood River County.

(2) Of the 10 additional enterprise zones provided for in the amendments to ORS 285B.653 by section 2, chapter 460, Oregon Laws 1999, [of this 1999 Act] and initially designated after [the effective date of this 1999 Act] October 23, 1999, at least four of the enterprise zones must be located in eastern Oregon.

(3) The designation of any enterprise zone provided for in the amendments to ORS 285B.653 by section 2, chapter 460, Oregon Laws 1999, [of this 1999 Act] is not effective unless made on or before January 1, 2004.

(4) When requesting a change to the boundary of an enterprise zone under ORS 285B.680, the zone sponsor and any other city or county that seeks to become a sponsor as part of the boundary change proceeding may request a waiver of the distance limit imposed under ORS 285B.683 (1)(c). The Director of the Economic and Community Development Department shall grant the waiver and order the change to the enterprise zone boundary, if:

(a) The proposed boundary change satisfies all other requirements for a boundary change; and

(b) The director makes a determination, consistent with rules adopted by the Economic and Community Development Department, that designation of a separate enterprise zone is not a practical option under the particular circumstances, that the overall distances involved can be effectively administered and that the waiver will further the goals and purposes of applicable state policies.

SECTION 77. ORS 305.514 is amended to read:

305.514. (1) A plaintiff may elect to file a small claims procedure in the following classes of cases:

(a) A proceeding for refund or to set aside additional taxes assessed or taxes assessed when no return was filed in any case involving taxes imposed under ORS chapters 314, 316, 317 and 318, with respect to any year for which the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(b) A proceeding by a taxpayer in any property tax case in which a taxpayer has the right to appeal and that involves only the question of the assessed or specially assessed value of real or personal property, where a board of property tax appeals (by order of the board), an assessor or a tax collector has determined that the assessed or specially assessed value of:

(A) A parcel of land is not in excess of $250,000;

(B) The improvement on a parcel of land is not in excess of $250,000;

(D) Personal property is not in excess of $250,000.

(c) A proceeding for the refund or the revision of taxes imposed by ORS chapter 118 where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

(d) A proceeding for the elderly rental assistance authorized under ORS 310.635 without limitation to the amount in controversy.

[(e) A proceeding by a taxpayer in any case authorized by ORS 321.560 where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.]

[(f)] (e) A proceeding for refund or the revision of taxes imposed by the Tobacco Products Tax Act where the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

[(g)] (f) A proceeding for refund or to set aside additional taxes assessed or taxes assessed when no return was filed in any case involving taxes administered by a state agency or department under ORS 305.620 with respect to any year in which the amount in controversy does not exceed $5,000, exclusive of interest and penalties.

[(h)] (g) A proceeding for refund or to set aside interest or penalties assessed in connection with any tax administered by the Department of Revenue, where the amount in controversy does not exceed $5,000. This paragraph does not apply to the denial of a request for the discretionary waiver of interest or penalties.

(2) Under a small claims procedure, the hearing shall not be recorded and the parties shall have no right to appeal the determination of the magistrate.

(3)(a) If the plaintiff elects a small claims procedure in a property tax case involving only the question of the assessed or specially assessed value of real property, the plaintiff may elect, in lieu of a hearing in the magistrate division, to have the property appraised as provided in this subsection.

(b) The election by the taxpayer may be included in the petition, or may be made by a separate petition in a form and filed as prescribed by the rules of the tax court. The clerk of the court shall give notice of the election by the taxpayer to the applicable county assessor.

(c) If the taxpayer elects as provided under this paragraph to have the real property appraised, there shall be no hearing in the magistrate division and the magistrate shall appoint an independent fee appraiser to appraise the property. The appraisal by the appointed appraiser shall be in writing and signed by the appraiser. For the purpose of the proceeding, the appraisal shall constitute the real market or specially assessed value of the property and shall be incorporated in the determination of the magistrate of the property’s assessed or specially assessed value.

(d) The taxpayer shall pay to the appraiser appointed under paragraph (c) of this subsection a reasonable fee for the appraisal services rendered by the appraiser.

SECTION 78. ORS 305.620 is amended to read:

305.620. (1) Any state agency or department may enter into agreements with any political subdivision of this state for the collection, enforcement, administration and distribution of local taxes of the political subdivision imposed upon or measured by gross or net income, wages or net earnings from self-employment or local general sales and use taxes.

(2) The department or agency shall prescribe the rules by which the agreements entered into under subsection (1) of this section are administered.

(3) The department or agency shall prescribe the rules by which the taxes described by subsection (1) of this section are administered, collected, enforced and distributed.

(4) A political subdivision may appear as an intervenor at any conference held by the Department of Revenue or conference, hearing or proceeding held by another department or agency in connection with a local tax administered by the department or agency. The political subdivision may be represented by its own counsel. The department or agency shall adopt rules governing the procedures to be followed by the political subdivision in making an appearance.

(5) Costs incurred by the department or agency in the administration, enforcement, collection and distribution of taxes under the agreements entered into under subsection (1) of this section shall be first deducted from the taxes collected before distribution is made to the political subdivision which is a party to the agreement.

(6) The Oregon Tax Court shall have exclusive jurisdiction to review determinations of the Department of Revenue or orders of another department or agency relating to the collection, enforcement, administration and distribution of local taxes under agreements entered into under subsection (1) of this section.

(7) A proceeding for refund or to set aside additional taxes or taxes assessed when no return was filed may be initiated before the state agency or department or as provided in ORS 305.514 [(1)(g)] (1)(f).

(8) An appeal from a determination or an order may be taken by the taxpayer or by the political subdivision whose taxes are in issue, by filing an original and two certified copies of a complaint with the clerk of the Oregon Tax Court at its principal office at the state capital, Salem, Oregon, within 60 days after the notice of the determination of the Department of Revenue or the order of the department or agency is sent to the taxpayer or the political subdivision. The filing of the complaint in the Oregon Tax Court shall constitute perfection of the appeal. Service of the taxpayer’s complaint shall be accomplished by the clerk of the tax court by filing a certified copy of the complaint with the administrative head of the department or agency and a certified copy with the political subdivision. Service of the political subdivision’s complaint shall be accomplished by the clerk of the tax court by filing a certified copy of the complaint with the administrative head of the department or agency and mailing a certified copy of the complaint to the taxpayer. The complaint of a taxpayer shall be entitled in the name of the person filing as plaintiff and the department or agency as defendant. The complaint of a political subdivision shall be entitled in the name of the political subdivision as plaintiff and the taxpayer and the department or agency as defendants. A copy of the order of the department or agency shall be attached to the original complaint. All procedures shall be in accordance with ORS 305.405 to 305.494.

SECTION 79. ORS 307.320 is amended to read:

307.320. The value of any deciduous trees, shrubs, plants or crops, whether annual or perennial, and any cultured Christmas trees, as defined in ORS 215.203, or timber described under ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3), growing upon agricultural land devoted to agricultural purposes, shall be exempt from assessment and taxation and shall not be deemed real property under the provisions of ORS 307.010.

SECTION 79a. If House Bill 2197 becomes law, section 79 of this 2003 Act (amending ORS 307.320) is repealed and ORS 307.320, as amended by section 118, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

307.320. The value of any deciduous trees, shrubs, plants or crops, whether annual or perennial, and any cultured Christmas trees, as defined in ORS 215.203, or timber described under ORS 321.267 [(1)(d)] (3) or 321.415 [(5)] (3), growing upon agricultural land devoted to agricultural purposes, shall be exempt from assessment and taxation and shall not be deemed real property under the provisions of ORS 307.010.

SECTION 80. ORS 308.236 is amended to read:

308.236. (1) The availability, usefulness and cost of using roads, including all roads of the owner of land or timber, and all roads which such owner has the right to use, shall be taken into consideration in determining the real market value of land[, the immediate harvest value of timber in eastern Oregon as defined in ORS 321.430 (3) and the immediate harvest value of timber in western Oregon as defined in ORS 321.257].

(2) Farm or grazing land roads and forest roads themselves, except principal exterior timber access roads, shall not be appraised, valued or assessed and they shall not be classed as improvements under ORS 308.215. The underlying land upon which roads are constructed shall be assessed if it is otherwise subject to assessment.

(3)(a) As used in this section, “road” includes fills, ballast, bridges, culverts, drains, surfacing and other appurtenances of a like kind commonly associated with roads, but excludes railroads.

(b) “Principal exterior timber access roads” means those portions of high standard main-line private roads that provide access from a conversion center or public way to the exterior boundary of the principal forest area served by the road. A high standard main-line private road is a permanent road of two lanes or more which is paved, macadamized, or with fine-gravel surface which is permanently and continuously maintained.

SECTION 81. ORS 308A.056 is amended to read:

308A.056. (1) As used in ORS 308A.050 to 308A.128, “farm use” means the current employment of land for the primary purpose of obtaining a profit in money by:

(a) Raising, harvesting and selling crops;

(b) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(d) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(e) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(f) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(g) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land described in this section; or

(h) Using land described in this section for any other agricultural or horticultural use or animal husbandry or any combination thereof.

(2) “Farm use” does not include the use of land subject to timber and forestland taxation under ORS chapter 321, except land used exclusively for growing cultured Christmas trees or land described in ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3)(relating to land used to grow certain hardwood timber, including hybrid cottonwood).

(3) For purposes of this section, land is currently employed for farm use if the land is:

(a) Farmland, the operation or use of which is subject to any farm-related government program;

(b) Land lying fallow for one year as a normal and regular requirement of good agricultural husbandry;

(c) Land planted in orchards or other perennials, other than land specified in paragraph (d) of this subsection, prior to maturity;

(d) Land not in an exclusive farm use zone that has not been eligible for assessment at special farm use value in the year prior to planting the current crop and has been planted in orchards, cultured Christmas trees or vineyards for at least three years;

(e) Wasteland, in an exclusive farm use zone, dry or covered with water, neither economically tillable nor grazeable, lying in or adjacent to and in common ownership with farm use land and that is not currently being used for any economic farm use;

(f) Except for land under a single family dwelling, land under buildings supporting accepted farming practices, including the processing facilities allowed by ORS 215.213 (1)(x) and 215.283 (1)(u);

(g) Water impoundments lying in or adjacent to and in common ownership with farm use land;

(h) Any land constituting a woodlot, not to exceed 20 acres, contiguous to and owned by the owner of land specially valued for farm use even if the land constituting the woodlot is not utilized in conjunction with farm use;

(i) Land lying idle for no more than one year when the absence of farming activity is the result of the illness of the farmer or a member of the farmer’s immediate family, including injury or infirmity, regardless of whether the illness results in death;

(j) Land described under ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3) (relating to land used to grow certain hardwood timber, including hybrid cottonwood); or

(k) Land used for the primary purpose of obtaining a profit in money by breeding, raising, kenneling or training greyhounds for racing.

(4) As used in this section:

(a) “Accepted farming practice” means a mode of operation that is common to farms of a similar nature, necessary for the operation of these similar farms to obtain a profit in money and customarily utilized in conjunction with farm use.

(b) “Cultured Christmas trees” means trees:

(A) Grown on lands used exclusively for that purpose, capable of preparation by intensive cultivation methods such as plowing or turning over the soil;

(B) Of a marketable species;

(C) Managed to produce trees meeting U.S. No. 2 or better standards for Christmas trees as specified by the Agricultural Marketing Service of the United States Department of Agriculture; and

(D) Evidencing periodic maintenance practices of shearing for Douglas fir and pine species, weed and brush control and one or more of the following practices:

(i) Basal pruning;

(ii) Fertilizing;

(iii) Insect and disease control;

(iv) Stump culture;

(v) Soil cultivation; or

(vi) Irrigation.

SECTION 81a. If House Bill 2197 becomes law, section 81 of this 2003 Act (amending ORS 308A.056) is repealed and ORS 308A.056, as amended by section 120, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

308A.056. (1) As used in ORS 308A.050 to 308A.128, “farm use” means the current employment of land for the primary purpose of obtaining a profit in money by:

(a) Raising, harvesting and selling crops;

(b) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(d) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(e) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(f) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(g) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land described in this section; or

(h) Using land described in this section for any other agricultural or horticultural use or animal husbandry or any combination thereof.

(2) “Farm use” does not include the use of land subject to timber and forestland taxation under ORS chapter 321, except land used exclusively for growing cultured Christmas trees or land described in ORS 321.267 [(1)(d)] (3) or 321.415 [(5)] (3)(relating to land used to grow certain hardwood timber, including hybrid cottonwood).

(3) For purposes of this section, land is currently employed for farm use if the land is:

(a) Farmland, the operation or use of which is subject to any farm-related government program;

(b) Land lying fallow for one year as a normal and regular requirement of good agricultural husbandry;

(c) Land planted in orchards or other perennials, other than land specified in paragraph (d) of this subsection, prior to maturity;

(f) Except for land under a single family dwelling, land under buildings supporting accepted farming practices, including the processing facilities allowed by ORS 215.213 (1)(x) and 215.283 (1)(u);

(g) Water impoundments lying in or adjacent to and in common ownership with farm use land;

(j) Land described under ORS 321.267 [(1)(d)] (3) or 321.415 [(5)] (3) (relating to land used to grow certain hardwood timber, including hybrid cottonwood); or

(k) Land used for the primary purpose of obtaining a profit in money by breeding, raising, kenneling or training greyhounds for racing.

(4) As used in this section:

(b) “Cultured Christmas trees” means trees:

(A) Grown on lands used exclusively for that purpose, capable of preparation by intensive cultivation methods such as plowing or turning over the soil;

(B) Of a marketable species;

(C) Managed to produce trees meeting U.S. No. 2 or better standards for Christmas trees as specified by the Agricultural Marketing Service of the United States Department of Agriculture; and

(D) Evidencing periodic maintenance practices of shearing for Douglas fir and pine species, weed and brush control and one or more of the following practices:

(i) Basal pruning;

(ii) Fertilizing;

(iii) Insect and disease control;

(iv) Stump culture;

(v) Soil cultivation; or

(vi) Irrigation.

SECTION 82. ORS 308A.250 is amended to read:

308A.250. As used in ORS 308A.250 to 308A.259:

(1) “Exclusive farm use zone” has the meaning given that term in ORS 308A.053.

(2) “Forestland” means forestland that is a parcel of land of more than 10 acres that has been zoned in the comprehensive plan for exclusive farm use, forest use or farm and forest use and that is, as of the assessment date for which value for the forest homesite is being determined:

(a) Land that has as its highest and best use the growing and harvesting of trees of a marketable species; or

(b) Land that has been designated as forestland under ORS 321.257 to 321.390 or 321.805 to 321.825. [; or]

[(c) Land that has been classified under ORS 321.705 to 321.765.]

(3) “Homesite” means land described in ORS 308A.253, including all tangible improvements to the land under and adjacent to a dwelling and other structures, if any, that are customarily provided in conjunction with the dwelling.

(4) “Nonexclusive farm use zone farmland” has the meaning given that term in ORS 308A.053.

(5) “Owner” or “owners” means:

(a) The person who holds an estate in the homesite in fee simple or for life.

(b) Any one of tenants in common or tenants by the entirety, holding an estate in the homesite in fee simple or for life.

(c) Any person of legal age, duly authorized in writing to act on behalf of any person described in paragraph (a) or (b) of this subsection in filing an application for special assessment of nonexclusive farm use zone farmland.

(d) The guardian or conservator of an owner, or the executor or administrator of an owner’s estate.

(e) The purchaser of the fee simple or life estate of an owner under a contract of sale.

SECTION 83. ORS 308A.377 is amended to read:

308A.377. (1) Land may be designated as riparian upon application and approval of the application under ORS 308A.356 and 308A.359 if the land is being assessed under any of the following special assessment programs:

(a) ORS 308A.050 to 308A.128 (relating to farm use special assessment).

(b) ORS [321.347, 321.348, 321.353, 321.358 and 321.359] 321.257 to 321.390 (relating to special assessment as designated forestland in western Oregon).

[(d) ORS 321.705 to 321.765 (relating to classification as Western Oregon Small Tract Optional Tax forestland).]

[(e)] (d) ORS 308A.300 to 308A.330 (relating to classification as open space land).

(2) Notwithstanding the provisions of any of the special assessment laws listed in subsection (1) of this section, the additional taxes, penalties and interest that would be due as a result of a change of designation to riparian shall be abated and shall not be collected.

SECTION 84. ORS 308A.700 is amended to read:

308A.700. As used in ORS 308A.700 to 308A.733:

(1) “Disqualification” includes the removal of forestland designation under ORS 321.359 or 321.820 [or the declassification from Western Oregon Small Tract Optional Tax classification under ORS 321.760].

(2) “Urban growth boundary” means an urban growth boundary contained in a city or county comprehensive plan that has been acknowledged by the Land Conservation and Development Commission pursuant to ORS 197.251 or an urban growth boundary that has been adopted by a metropolitan service district under ORS 268.390 (3).

SECTION 85. ORS 308A.703 is amended to read:

308A.703. (1) This section applies to land upon the land’s disqualification from special assessment under any of the following sections:

(a) Exclusive farm use zone farmland under ORS 308A.113;

(b) Nonexclusive farm use zone farmland under ORS 308A.116;

(d) Eastern Oregon designated forestland under ORS 321.820; or

[(e) Western Oregon Small Tract Optional Tax classification under ORS 321.760; or]

[(f)] (e) Wildlife habitat open space use assessment under ORS 215.808.

(2) Following a disqualification listed in subsection (1) of this section, an additional tax shall be added to the tax extended against the land on the next assessment and tax roll, to be collected and distributed in the same manner as other ad valorem property tax moneys. The additional tax shall be equal to the difference between the taxes assessed against the land and the taxes that would otherwise have been assessed against the land, for each of the number of years determined under subsection (3) of this section.

(3) The number of years for which additional taxes shall be calculated shall equal the lesser of the number of consecutive years the land had qualified for the special assessment program for which disqualification has occurred or:

(a) Ten years, in the case of exclusive farm use zone farmland, but only if the land, immediately following disqualification, remains outside an urban growth boundary;

(b) Ten years, in the case of wildlife habitat open space use assessment land within an exclusive farm use zone, but only if the land, immediately following disqualification, remains outside an urban growth boundary; or

(A) Nonexclusive farm use zone farmland;

(B) Western Oregon designated forestland;

[(D) Western Oregon Small Tract Optional Tax classified forestland;]

[(E)] (D) Exclusive farm use zone farmland that is not described in paragraph (a) of this subsection; or

[(F)] (E) Wildlife habitat open space use special assessment land that is not described in paragraph (b) of this subsection.

(4) The additional taxes described in this section shall be deemed assessed and imposed in the year to which the additional taxes relate.

(5) If the disqualification of the land is the result of the sale or transfer of the land to an ownership making the land exempt from ad valorem property taxation, the lien for additional taxes shall attach as of the day preceding the sale or transfer.

(6) The amount determined to be due under this section may be paid to the tax collector prior to the time of the next general property tax roll, pursuant to the provisions of ORS 311.370.

[(7) If additional taxes are imposed under this section as a result of the declassification of Western Oregon Small Tract Optional Tax classified forestland, the following amounts shall be added to and considered a part of the additional taxes otherwise due under this section, to be collected in the same manner in which additional taxes are collected:]

[(a) The amount of privilege taxes that would have been payable under ORS 321.257 to 321.322, during the five years immediately preceding the extension of additional taxes on the tax roll; and]

[(b) Interest on the amounts of taxes added pursuant to paragraph (a) of this subsection at the rate of six percent a year from the date at which such increased taxes would have been payable if the forestland had been valued without regard to ORS 321.720.]

[(8) The Department of Revenue shall provide the amounts described in subsection (7) of this section to the county assessor.]

SECTION 86. ORS 308A.706 is amended to read:

308A.706. (1) Notwithstanding that land may have been disqualified from special assessment, the additional taxes described under ORS 308A.703 shall not be imposed and shall remain a potential tax liability if, as of the date the disqualification is taken into account on the assessment and tax roll, the land is any of the following:

(a) Disqualified exclusive farm use zone farmland or nonexclusive farm use zone farmland that:

(A) Is not being used as farmland; and

(B) Is not being used for industrial, commercial, residential or other use that is incompatible with a purpose to return the land to farm use.

(b) Acquired by a governmental agency or body as a result of an exchange of the land for land of approximately equal value held by the governmental agency or body.

(A) The land is registered under ORS 273.581 as a natural heritage conservation area;

(B) The land is acquired by a private nonprofit corporation;

(C) The land is retained by the corporation, or transferred to the state by the corporation, for the purpose of educational, scientific and passive recreational use consistent with conservation of the ecological values and natural heritage elements of the area;

(D) If the land is retained by the corporation, it remains open to the public without charge for the uses described in subparagraph (C) of this paragraph; and

(E) The land is managed pursuant to a voluntary management agreement under ORS 273.581 (5).

(d) Qualified for special assessment under:

(A) ORS 308A.062, relating to farm use special assessment of land in an exclusive farm use zone;

(B) ORS 308A.068, relating to farm use special assessment of nonexclusive farm use zone farmland;

[(D) ORS 321.730, relating to classification as Western Oregon Small Tract Optional Tax forestland;]

[(E)] (D) ORS 321.815, relating to classification as designated forestland in eastern Oregon; or

[(F)] (E) ORS 215.808, relating to wildlife habitat open space use assessment.

[(e) Declassified Western Oregon Small Tract Optional Tax forestland that is considered to be western Oregon designated forestland under ORS 321.347 (4).]

[(f)] (e) Disqualified nonexclusive farm use zone farmland, to the extent the additional taxes are deferred or abated as provided in ORS 308A.119.

(2) In any case where the additional tax is deferred under the provisions of this section but may subsequently be imposed under ORS 308A.712, the county assessor shall continue to enter the notation “potential additional tax liability” on the assessment and tax roll.

SECTION 87. ORS 308A.709 is amended to read:

308A.709. Notwithstanding that land may have been disqualified from special assessment, no additional taxes may be imposed under ORS 308A.703 if, as of the date the disqualification is taken into account on the assessment and tax roll, the land is any of the following:

(1) Acquired by a governmental agency as a result of the lawful exercise of the power of eminent domain or the threat or imminence thereof.

(2) Acquired by purchase, agreement or donation under ORS 390.121 (relating to State Parks and Recreation Commission acquisitions).

(3) Acquired by a city, county, metropolitan service district created under ORS chapter 268 or park and recreation district organized under ORS chapter 266 for public recreational purposes or for the preservation of scenic or historic places.

(4) Acquired for wildlife management purposes under ORS 496.146.

(5) Public property that was leased or rented to a taxable owner as described in ORS 307.110 at the time of disqualification, and the reason for the disqualification was the termination of the lease under which the land was assessed.

(6) Land that ceases to be located within the boundaries of an exclusive farm use zone as the result of a change in the boundaries of the zone or removal of the zone following an action by the governing body of the county or city that:

(a) Was not requested or initiated by the owner of the land; or

(b) Was requested by:

(A) The State Parks and Recreation Department for public park purposes under ORS 390.121; or

(B) The State Fish and Wildlife Commission for wildlife management purposes under ORS 496.146.

[(7) Declassified as Western Oregon Small Tract Optional Tax forestland under ORS 321.760 (1)(c) and (d) because:]

[(a) The State Forester has determined that the predominant use of the land is for the production of cultured Christmas trees; or]

[(b) Notwithstanding ORS 321.727, the land is transferred to an owner who, upon completion of the transfer, has a total ownership of forestland in western Oregon of less than 10 acres.]

[(8)] (7) Forestland acquired by a federal, state or local governmental agency. In the case of an acquisition described in this subsection, a lien for additional taxes and interest may not attach on the day preceding the day of transfer of the forestland to the governmental agency.

SECTION 88. ORS 308A.712 is amended to read:

308A.712. (1) If the disqualification of land from special assessment results in the deferral of additional taxes under ORS 308A.706:

(a) The amount of deferred additional taxes shall be determined as provided for in this section in lieu of ORS 308A.703; and

(b) The deferred additional taxes shall be added to the assessment and tax roll for the year in which the event described in subsections (2) to (6) of this section is first taken into account for property tax purposes, to be collected and distributed in the same manner as other ad valorem property taxes.

(2) If additional taxes are deferred under ORS 308A.706 (1)(a) (relating to compatible nonuse of farmland) and subsequently the land is changed to an industrial, commercial, residential or other use incompatible with a return of the land to farm use, then:

(a) The amount of additional tax due for each year to which the additional tax applies shall be the difference between the taxes assessed against the land and the taxes that would have been assessed against the land in that year had the land not been in special assessment; and

(b) The number of years for which the additional tax shall be collected shall be the total number of years (whether or not continuous) that the farm use special assessment was in effect for the land, not to exceed:

(A) In the case of disqualified exclusive farm use zone farmland located outside an urban growth boundary, 10 tax years, or such lesser number of years, corresponding to the number of years of farm use zoning applicable to the property; or

(B) In the case of all other farmland disqualified from farm use special assessment, five tax years.

(3)(a) If additional taxes are deferred under ORS 308A.706 (1)(b) (relating to government exchange of land), additional taxes shall be collected when the land acquired as a result of the exchange is disqualified from special assessment. The additional taxes shall equal the total amount of additional taxes under ORS 308A.703 (2) attributable to the number of years the land transferred to the governmental agency or body received the special assessment before the exchange plus the number of years, if any, the land acquired from the governmental agency or body received a special assessment after the exchange.

(b) The total number of years taken into account shall not exceed the maximum number of years for which additional taxes may be collected under the provision of law applicable to either the exchanged land (immediately before the exchange) or the acquired land, whichever is greater.

(4) If additional taxes are deferred under ORS 308A.706 (1)(c) (relating to natural heritage), the additional taxes that would have been imposed under ORS 308A.703 at the time of disqualification shall be collected when the land is no longer used as described in ORS 308A.706 (1)(c).

(5) If additional taxes are deferred under ORS 308A.706 (1)(d) (relating to change in special assessment), the additional taxes that would have been collected at the time of disqualification shall be collected at the time the land is disqualified from any other special assessment law listed in ORS 308A.706 (1)(d). The total amount of additional tax shall be calculated as follows:

(a) The amount of the additional tax due for each year to which the additional tax applies shall be the difference between the taxes assessed against the land and the taxes that would have been assessed against the land in that year had the land not been in special assessment; and

(b) The number of years for which the additional tax shall be collected shall be the total number of continuous tax years that a special assessment listed in ORS 308A.706 (1)(d) was in effect for the land, not to exceed:

(A) Five tax years; or

(B) If the property had, within the past 10 tax years, been disqualified from a special assessment program described in ORS 308A.703 (3)(a) or (b) and had been continuously subject to special assessment, then 10 tax years. However, the number of continuous preceding years of special assessment under the special assessment programs listed in ORS 308A.703 (3)(c) that may be taken into consideration for purposes of computing the additional tax may not exceed five years.

(6) In determining the additional tax under subsection (5) of this section, [:]

[(a)] the number of continuous preceding years of special assessment counted shall not include those years in which the land was specially assessed under any of the special assessment laws listed in ORS 308A.706 (1)(d) prior to a disqualification of the land for special assessment as exclusive farm use zone farmland under the conditions described in ORS 308A.709 (6).

[(b) The number of continuous preceding years of special assessment counted shall not include those years of special assessment under ORS 321.705 to 321.765 if the land was disqualified under the conditions described in ORS 308A.709 (7).]

SECTION 89. ORS 308A.718 is amended to read:

308A.718. (1) The county assessor shall send notice as provided in this section if land is disqualified under any of the following special assessment programs:

(a) Farm use special assessment under ORS 308A.050 to 308A.128.

(b) Farm or forest homesite special assessment under ORS 308A.250 to 308A.259.

(c) Western Oregon designated forestland special assessment under ORS [321.347, 321.348, 321.353, 321.358 and 321.359] 321.257 to 321.390.

(d) Eastern Oregon designated forestland special assessment under ORS 321.805 to 321.825.

(2) Notwithstanding that a change in use described in this section is not a disqualification, the assessor shall send notice as provided in this section when the highest and best use of land changes from forestland to a different highest and best use.

(3) Within 30 days after the date that land is disqualified from special assessment, the assessor shall notify the taxpayer in writing of the disqualification and shall state the reason for the disqualification.

(4) Following receipt of the notification, the taxpayer may appeal the assessor’s determination to the Oregon Tax Court within the time and in the manner provided in ORS 305.404 to 305.560.

(5)(a) When any land has been granted special assessment under any of the special assessment laws listed in subsection (1) of this section and the land is disqualified from such special assessment, the county assessor shall furnish the owner with a written explanation summarizing:

(A) ORS 308A.706 (1)(d) (relating to change in special assessment);

(B) ORS 308A.727 (relating to change in use to open space use special assessment for certain golf courses);

(C) The administrative act necessary under ORS 308A.724 to change the property to another classification described in this paragraph; and

(D) The imposition of any penalties that would result from the disqualification if no requalification or reclassification is made under one of the other special assessment laws listed in this paragraph.

(b) The written explanation required by this subsection shall be given in conjunction either with the notice of disqualification required under this section or with an order or notice of disqualification otherwise provided by law.

(c)(A) If no notice of disqualification is required to be made by this section or other provision of law, the written explanation required by this subsection shall be made by the county assessor.

(B) A written explanation made under this paragraph shall be made by the assessor within 30 days of the effective date of the disqualification.

(6) Subsections (1) to (5) of this section do not apply if the reason for the disqualification is:

(a) The result of a request for disqualification by the property owner; or

(b) Because the property is being acquired by a government or tax-exempt entity.

SECTION 90. ORS 308A.724 is amended to read:

308A.724. (1)(a) In order for additional taxes imposed under ORS 308A.703 to be deferred under ORS 308A.706 (1)(d) (relating to change in special assessment), the owner must file an application or claim for classification under another special assessment law.

(b) If the disqualification is effective prior to July 1 in any year, the owner shall file the required claim or application on or before August 1 of that year.

(c) If the disqualification is effective on or after July 1 in any year, the county taxing authorities shall continue the classification on the current assessment and tax rolls, and the owner shall file the required claim or application in the next calendar year in accordance with the laws governing the particular special assessment program.

(2) If an owner of land disqualified under one of the special assessment laws listed in ORS 308A.706 (1)(d) seeks to qualify for farm use special assessment of nonexclusive farm use zone farmland under ORS 308A.068, the owner shall have five years, beginning with the first year in which application is made under this section, to qualify for the two-year farm use requirement of ORS 308A.068 and the income requirement under ORS 308A.071.

(3) Notwithstanding subsection (1) of this section, an owner may make application under this section at any time within 30 days of the date notice of disqualification is sent by the assessor under ORS 308A.718 [or declassification certification is made by the State Forester under ORS 321.760].

SECTION 91. ORS 308A.730 is amended to read:

308A.730. (1) If land specially valued under ORS 308A.062, 308A.068, 321.257 to 321.390[, 321.720] or 321.805 to 321.825 is acquired by a governmental agency or body as a result of an exchange of the land for land of approximately equal value held by the governmental agency or body and the land acquired from the governmental agency or body is not farm use land located within an exclusive farm use zone or is not land, the highest and best use of which is the growing and harvesting of trees of a marketable species, the owner shall make application for special valuation as farm or forest land in the manner provided under ORS 308A.077, 321.358[, 321.730] or 321.815, whichever is applicable, as follows:

(a) If the exchange takes place prior to July 1, the owner shall file the application on or before August 1.

(b) If the exchange takes place on or after July 1, the owner shall file the application on or before April 1 of the following year.

(2) Failure to file an application as required under this section, or failure to otherwise meet the qualification for special valuation under the special assessment law for which application is made shall disqualify the land under ORS 308A.703. However, the amount of additional taxes imposed upon the disqualification under this subsection shall be equal to those that would have been imposed against the land transferred to the governmental agency or body on account of the exchange were it not for ORS 308A.706 (1)(b).

(3) If an application filed under this section is for classification for farm use special assessment under ORS 308A.068, the owner shall have five years beginning with the first year of classification to meet the income requirements under ORS 308.372 and need not meet the two-year farm use requirements of ORS 308A.068.

(4) This section [shall] does not apply to an exchange of forestland to which ORS 308A.706 (1)(b) (relating to governmental exchange) applies.

SECTION 92. ORS 308A.733 is amended to read:

308A.733. (1) Where any property has been granted special assessment for the purposes of property taxation under any of the special assessment laws listed in subsection (2) of this section, and the owner or other qualified person applies for a change in the classification under another special assessment law, the applicant shall have 30 days thereafter within which to withdraw the application, by giving written notice to the public official or agency to whom the applicant applied for the change in classification. If no notice of withdrawal is given by the applicant, the application shall be acted upon and the change in classification made, as otherwise provided by law.

(2) This section applies to the following special assessment laws:

(a) ORS 308A.050 to 308A.128 (relating to special assessment at value for farm use).

(b) ORS [321.347, 321.348, 321.353, 321.358 and 321.359] 321.257 to 321.390 (relating to special assessment as designated forestland in western Oregon).

[(d) ORS 321.705 to 321.765 (relating to classification as Western Oregon Small Tract Optional Tax forestland).]

[(e)] (d) ORS 308A.300 to 308A.330 (relating to classification as open space land).

[(f)] (e) ORS 308A.350 to 308A.383 (relating to designation as riparian land).

SECTION 93. ORS 308A.743 is amended to read:

308A.743. (1) Land that is specially assessed under ORS 215.800 to 215.808, 308A.050 to 308A.128, 308A.300 to 308A.330, 321.257 to 321.390[, 321.705 to 321.765] or 321.805 to 321.825, or land that is exempt from property tax under ORS 308A.350 to 308A.383, may not be disqualified from the special assessment or exemption, and may not be subject to additional taxes under ORS 308A.700 to 308A.733, if the property owner has:

(a) Entered into a wildlife habitat conservation and management plan, as described in ORS 215.800 to 215.808, approved by the State Department of Fish and Wildlife; or

(b) Executed a conservation easement, as defined in ORS 271.715, or a deed restriction and the land:

(A) Is managed in compliance with the conservation easement or deed restriction; and

(B) Continues to meet the requirements for special assessment or exemption. The existence of the conservation easement or deed restriction may not cause the disqualification of the land from special assessment or exemption or preclude the disqualification of the land from special assessment or exemption for some other reason.

(2) A property owner who executes a conservation easement may convey the easement to a land trust or other qualified entity without a loss of benefits under this section.

(3) In order for land to be subject to this section:

(a) The conservation easement, deed restriction or wildlife habitat conservation and management plan must be recorded in the records of the clerk of the county in which the land is located; and

(b) A copy of the conservation easement, deed restriction or wildlife habitat conservation and management plan, along with the property tax account number for the land, must be sent to the county assessor.

SECTION 94. ORS 310.110 is amended to read:

310.110. (1) If a taxing district lies in two or more counties, and the district certifies an item of ad valorem property tax as an amount in the notice required under ORS 310.060, the amount certified by the district shall be apportioned on the basis of the assessed value used to compute the tax rate for the current tax year, in the proportion that the assessed value of the part of the district lying in each county bears to the assessed value of the whole district. However, if a boundary change affecting the district becomes effective as to the levy being apportioned, an adjustment of the assessed value shall be made so as to reflect the boundary change.

(2) Any assessor who is unable to certify the current assessed value for any joint district lying partially in the county by September 25 shall, with the cooperation of the Department of Revenue, estimate as closely as practicable the assessed value of that district for the purpose of apportioning the ad valorem property taxes of the joint district in the current year as equitably as is possible. The estimate shall be completed and certified to the assessor or assessors of the other counties on the fifth business day after September 25 and shall be used as the basis for the apportionment required by this section.

[(3) Notwithstanding any provision of ORS 321.405 to 321.487, timber shall be considered as though it remained on the tax rolls at the appraised values established pursuant to ORS 321.487, but only for the purpose of apportionment of the levy required by subsection (1) of this section.]

SECTION 95. ORS 310.165 is amended to read:

310.165. (1) For any unit of property partially exempt from tax under ORS 307.250, 307.370, 308.459 or 358.480 to 358.545 or any other law, the assessor shall determine the maximum amount of taxes on property to be imposed on such property under ORS 310.150, by using the lesser of the real market value or the taxable value of the property after the exemption has been applied.

(2) For any land that is specially assessed for ad valorem tax purposes under ORS 308A.050 to 308A.128, 308A.250 to 308A.259, 308A.315, 321.257 to 321.390[, 321.705 to 321.765] or 321.805 to 321.825, the assessor shall determine the maximum amount of taxes on property to be imposed on such property under ORS 310.150 by using the lesser of the real market value or the specially assessed value of the property.

(3) In the case of any unit of property of which a part of the unit is exempt from taxation, and that part may be identified both as to value and physical description, the real market value of the unit shall not include the value of the exempt part of the unit.

(4) If any unit of property described in subsection (1) or (2) of this section for which the maximum amount of taxes imposed has been determined under this section is subject to imposition of additional taxes due to disqualification from special assessment or partial exemption, the determination of the maximum amount of additional taxes that may be imposed due to disqualification shall be made on the basis of the real market value of the property for the year to which the additional taxes relate.

SECTION 96. The amendments to ORS 307.320, 308.236, 308A.056, 308A.250, 308A.377, 308A.700, 308A.703, 308A.706, 308A.709, 308A.712, 308A.718, 308A.724, 308A.730, 308A.733, 308A.743, 310.110 and 310.165 by sections 79 to 95 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 96a. If House Bill 2197 becomes law, section 96 of this 2003 Act is amended to read:

Sec. 96. The amendments to ORS [307.320,] 308.236, [308A.056,] 308A.250, 308A.377, 308A.700, 308A.703, 308A.706, 308A.709, 308A.712, [308A.718,] 308A.724, 308A.730, 308A.733, 308A.743[, 310.110] and 310.165 by sections [79 to 95] 80, 82 to 88, 90 to 93 and 95 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 96b. If House Bill 2197 becomes law, the amendments to ORS 307.320, 308A.056, 308A.718 and 310.110 by sections 79a, 81a, 89 and 94 of this 2003 Act apply to property tax years beginning on or after July 1, 2004.

SECTION 97. ORS 315.104 is amended to read:

315.104. (1) A credit against the taxes otherwise due under ORS chapter 316 (or if the taxpayer is a corporation, under ORS chapter 317 or 318) shall be allowed in an amount equal to 50 percent of reforestation project costs actually paid or incurred to reforest underproductive Oregon forestlands. Such costs include, but are not limited to site preparation, tree planting and other silviculture treatments considered necessary by the State Forester to establish commercial, hardwood or softwood stands on appropriate sites. Subject to subsection (5) of this section:

(a) One-half of the credit shall be taken in the tax year for which the State Forester, after physical inspection of the forestland, issues a preliminary certificate under ORS 315.106 certifying that the land qualifies as underproductive Oregon forestland and that the reforestation project undertaken meets the requirements of this section and the specifications established by the State Forester and the costs appear to be reasonable; and

(b) One-half of the credit shall be taken in the tax year for which the State Forester, after further physical inspection of the land and project, certifies that the new forest is established in accordance with the specifications of the State Forester.

(2) No credit shall be allowed under either subsection (1)(a) or (b) of this section unless written certification containing the following statements accompanies the claim for the credit or is otherwise filed with the Department of Revenue:

(a) A preliminary certificate issued by the State Forester under ORS 315.106 that the land and project meet the preliminary specifications established by the State Forester or that the new forest is established, whichever is applicable at the time.

(b) A statement by the landowner or person in possession of the land that the land within the project area will be used for the primary purpose of growing and harvesting trees of an acceptable species.

(c) A statement that the landowner or person in possession of the land is aware that maintenance practices, including release, may be needed to insure that a new forest is established and will remain established.

(3) For purposes of this section, reforestation project costs shall not include:

(a) Costs paid or incurred to reforest any forestland that has been commercially logged to the extent that reforestation is required under the Oregon Forest Practices Act, except costs paid or incurred to reforest forestland following a hardwood harvest, conducted for the purposes of converting underproductive forestlands, as determined by administrative rule.

(b) That portion of costs or expenses paid through a federal or state cost share, financial assistance or other incentive program.

(c) Those costs paid or incurred to grow Christmas trees, ornamental trees, shrubs or plants, or[, except as provided under ORS 321.274 or 321.426,] those costs paid or incurred to grow hardwood timber described under ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3).

(d) Any costs paid or incurred to purchase or otherwise acquire the land.

(e) The cost of purchase or other acquisition of tools and equipment with a useful life of more than one year.

(4) To qualify for the credit:

(a) The project must be completed to specifications approved by the State Forester.

(b) The taxpayer’s portion of the project costs must be $500 or more.

(c) The taxpayer must be a private individual, corporation, group, Indian tribe or other native group, association or other nonpublic legal entity owning, purchasing under recorded contract of sale or leasing at least five acres of Oregon commercial forestland.

(5) Any tax credit otherwise allowable under this section which 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, but may not be carried forward for any tax year thereafter. In all cases the taxpayer must be the person who made the investment into the project.

(6) The credit provided by this section shall be in addition to and not in lieu of any depreciation or amortization deduction to which the taxpayer otherwise may be entitled with respect to the reforestation project and the credit shall not affect the computation of basis for the property.

(7) In compliance with ORS 183.310 to 183.550, the Department of Revenue and the State Forestry Department may adopt rules consistent with law for carrying out the provisions of this section.

(8) As used in this section, “underproductive Oregon forestlands” means Oregon commercial forestlands not meeting the minimum stocking standards of the Oregon Forest Practices Act.

(9) If, for any reason other than those specified in subsection (10) of this section, a new forest is not established by the last day of the second taxable year following the taxable year for which the preliminary certificate was issued, the State Forester shall so report to the Department of Revenue. The report filed under this subsection shall be the basis for the department to recover any credit granted under subsection (1)(a) of this section. If, however, the new forest is not established within the time required by this subsection on account of the reasons specified in subsection (10) of this section, any credit allowed under subsections (1)(a) and (5) of this section shall not be recovered but no further credit as provided under subsections (1)(b) and (5) of this section shall be allowed.

(10) Subject to requalification under this section in the manner applicable for the original claim, including obtaining a new preliminary certificate, a taxpayer may claim an additional credit or credits for reestablishing a new planting in the event that the new forest is destroyed by a natural disaster or is not established for reasons beyond the control of the taxpayer, if the measures taken in completing the original or earlier project would normally have resulted in establishing the minimum number of trees per acre anticipated by the project.

(11) Any owner affected by a determination, regarding the reforestation tax credit made by:

(a) The State Forester, except for a denial of a request for a preliminary certificate due to the annual reforestation credit cost limitation calculated under ORS 315.108, may appeal that determination in the manner provided for in ORS 526.475 (1).

(b) The Department of Revenue, may appeal that determination in the manner provided for in ORS 526.475 (2).

SECTION 97a. If House Bill 2197 becomes law, section 97 of this 2003 Act (amending ORS 315.104) is repealed and ORS 315.104, as amended by section 122, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

(3) For purposes of this section, reforestation project costs shall not include:

(b) That portion of costs or expenses paid through a federal or state cost share, financial assistance or other incentive program.

(d) Any costs paid or incurred to purchase or otherwise acquire the land.

(e) The cost of purchase or other acquisition of tools and equipment with a useful life of more than one year.

(4) To qualify for the credit:

(a) The project must be completed to specifications approved by the State Forester.

(b) The taxpayer’s portion of the project costs must be $500 or more.

(7) In compliance with ORS 183.310 to 183.550, the Department of Revenue and the State Forestry Department may adopt rules consistent with law for carrying out the provisions of this section.

(8) As used in this section, “underproductive Oregon forestlands” means Oregon commercial forestlands not meeting the minimum stocking standards of the Oregon Forest Practices Act.

(11) Any owner affected by a determination, regarding the reforestation tax credit made by:

(b) The Department of Revenue, may appeal that determination in the manner provided for in ORS 526.475 (2).

SECTION 97b. If House Bill 2197 becomes law, the amendments to ORS 315.104 by section 97a of this 2003 Act apply to income and corporate excise tax years beginning on or after January 1, 2004.

SECTION 98. ORS 316.045 is amended to read:

316.045. (1) As used in this section:

(a) “Farming” means:

(A) Raising, harvesting and selling crops;

(B) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(D) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(E) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(F) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(G) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

(H) Any other agricultural or horticultural activity or animal husbandry, or any combination of these activities, except that “farming” does not include growing and harvesting trees of a marketable species other than growing and harvesting cultured Christmas trees or certain hardwood timber described in ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3).

(b) “Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

(2) Notwithstanding ORS 316.037, taxable income that consists of net long-term capital gain shall be subject to tax under this chapter at a rate of five percent if all of the following conditions apply:

(a) The gain is:

(A) Derived from the sale or exchange of capital assets consisting of ownership interests in a corporation, partnership or other entity in which, prior to the sale or exchange, the taxpayer owned at least a 10 percent ownership interest; or

(B) Section 1231 gain.

(b) The property that was sold or exchanged consisted of:

(A) Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

(B) Property that is predominantly used in the trade or business of farming.

(c) The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

(d) The sale or exchange constitutes a substantially complete termination of all of the taxpayer’s ownership interests in a trade or business that is engaged in farming or a substantially complete termination of all of the taxpayer’s ownership interests in property that is employed in the trade or business of farming. Ownership of a farm dwelling or farm homesite does not constitute ownership of property employed in the trade or business of farming.

(3) If the taxpayer has net long-term capital gain derived in part from the sale or exchange of property described in subsection (2)(b) of this section and in part from the sale or exchange of all other property, the net long-term capital gain that is subject to tax under this section shall be determined as follows:

(a) Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

(b) Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

(c) If the amount determined under paragraph (b) of this subsection is a net capital gain, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection.

(d) If the amount determined under paragraph (b) of this subsection is a net capital loss, the gain that is subject to tax under subsection (2) of this section shall be the amount determined under paragraph (a) of this subsection minus the amount determined under paragraph (b) of this subsection.

SECTION 98a. If House Bill 2197 becomes law, section 98 of this 2003 Act (amending ORS 316.045) is repealed and ORS 316.045, as amended by section 123, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

316.045. (1) As used in this section:

(a) “Farming” means:

(A) Raising, harvesting and selling crops;

(B) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(D) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(E) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(F) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(G) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

(b) “Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

(a) The gain is:

(B) Section 1231 gain.

(b) The property that was sold or exchanged consisted of:

(A) Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

(B) Property that is predominantly used in the trade or business of farming.

(c) The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

(a) Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

(b) Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

SECTION 98b. If House Bill 2197 becomes law, the amendments to ORS 316.045 by section 98a of this 2003 Act apply to income and corporate excise tax years beginning on or after January 1, 2004.

SECTION 99. ORS 317.063 is amended to read:

317.063. (1) As used in this section:

(a) “Farming” means:

(A) Raising, harvesting and selling crops;

(B) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(D) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(E) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(F) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(G) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

(b) “Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

(2) Notwithstanding ORS 317.061, taxable income that consists of net long-term capital gain shall be subject to tax under this chapter at a rate of five percent if all of the following conditions apply:

(a) The gain is:

(B) Section 1231 gain.

(b) The property that was sold or exchanged consisted of:

(A) Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

(B) Property that is predominantly used in the trade or business of farming.

(c) The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

(a) Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

(b) Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

SECTION 99a. If House Bill 2197 becomes law, section 99 of this 2003 Act (amending ORS 317.063) is repealed and ORS 317.063, as amended by section 124, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

317.063. (1) As used in this section:

(a) “Farming” means:

(A) Raising, harvesting and selling crops;

(B) Feeding, breeding, managing or selling livestock, poultry, fur-bearing animals or honeybees or the produce thereof;

(D) Stabling or training equines, including but not limited to providing riding lessons, training clinics and schooling shows;

(E) Propagating, cultivating, maintaining or harvesting aquatic species and bird and animal species to the extent allowed by the rules adopted by the State Fish and Wildlife Commission;

(F) On-site constructing and maintaining equipment and facilities used for the activities described in this subsection;

(G) Preparing, storing or disposing of, by marketing or otherwise, the products or by-products raised for human or animal use on land employed in activities described in this subsection; or

(b) “Section 1231 gain” has the meaning given that term in section 1231 of the Internal Revenue Code.

(a) The gain is:

(B) Section 1231 gain.

(b) The property that was sold or exchanged consisted of:

(A) Ownership interests in a corporation, partnership or other entity that is engaged in the trade or business of farming; or

(B) Property that is predominantly used in the trade or business of farming.

(c) The sale or exchange is to a person who is not related to the taxpayer under section 267 of the Internal Revenue Code.

(a) Compute the net long-term capital gain derived from all property described in subsection (2)(b) of this section that was sold or exchanged during the tax year.

(b) Compute the net capital gain or loss from the sale or exchange of all other property during the tax year.

SECTION 99b. If House Bill 2197 becomes law, the amendments to ORS 317.063 by section 99a of this 2003 Act apply to income and corporate excise tax years beginning on or after January 1, 2004.

SECTION 100. ORS 321.005 is amended to read:

321.005. As used in ORS 321.005 to 321.185, 321.560 to 321.600 and 477.440 to 477.460, unless the context requires otherwise:

(1) “Board” means the State Board of Forestry.

(2) “Protected forestlands” means those lands which are protected from the starting or spread of fire thereon or therefrom by:

(a) The State Forester, with the approval of the board;

(b) The United States of America through contract with the State Forester;

(d) Any forest protective agency, described in paragraph (c) of this subsection, under an agreement with the United States of America wherein such agency agrees to protect specific federal forestlands and, in return, the United States of America agrees to protect specific lands of such agency.

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

(4) “Committee” means the Emergency Fire Cost Committee.

(5) “Forestland” means any land producing forest products.

(6) “Forest products” means products from harvested timber, but does not include products from short rotation fiber grown under agricultural conditions as described in ORS 321.267 [(1)(e)] (3) or 321.415 [(5)] (3), western juniper or products from harvested western juniper.

(7) “Harvest” means the point at which timber that has been cut, severed, or removed for purposes of sale or use is first measured in the ordinary course of business as determined by reference to common practice in the timber industry.

(8) “Merchantable stand of timber” means any stand on forestlands containing living or dead timber which is being or can be harvested.

(9) “Taxpayer” means the owner of timber at time of harvest.

(10) “Taxes” means the taxes provided for in ORS 321.015.

(11) “Owner of timber” means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature holding title to harvested timber by virtue of:

(a) An instrument of conveyance;

(b) The harvesting of the timber; or

(12) “Timber” means all logs which can be measured in board feet and other forest products as determined by department rule.

SECTION 100a. If House Bill 2197 becomes law, section 100 of this 2003 Act (amending ORS 321.005) is repealed and ORS 321.005, as amended by section 125, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is amended to read:

321.005. As used in ORS 321.005 to 321.185, 321.560 to 321.600 and 477.440 to 477.460, unless the context requires otherwise:

(1) “Board” means the State Board of Forestry.

(2) “Protected forestlands” means those lands which are protected from the starting or spread of fire thereon or therefrom by:

(a) The State Forester, with the approval of the board;

(b) The United States of America through contract with the State Forester;

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

(4) “Committee” means the Emergency Fire Cost Committee.

(5) “Forestland” means any land producing forest products.

(6) “Forest products” means products from harvested timber, but does not include products from short rotation fiber grown under agricultural conditions as described in ORS 321.267 [(1)(d)] (3) or 321.415 [(5)] (3), western juniper or products from harvested western juniper.

(8) “Merchantable stand of timber” means any stand on forestlands containing living or dead timber which is being or can be harvested.

(9) “Taxpayer” means the owner of timber at time of harvest.

(10) “Taxes” means the taxes provided for in ORS 321.015.

(11) “Owner of timber” means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature holding title to harvested timber by virtue of:

(a) An instrument of conveyance;

(b) The harvesting of the timber; or

(12) “Timber” means all logs which can be measured in board feet and other forest products as determined by department rule.

SECTION 100b. If House Bill 2197 becomes law, the amendments to ORS 321.005 by section 100a of this 2003 Act apply to forest products harvest tax reporting periods beginning on or after January 1, 2004.

SECTION 101. ORS 321.991 is amended to read:

321.991. [(1)] Violation of any provision of ORS 321.005 to 321.185 and 321.560 to 321.600 is punishable, upon conviction, by a fine not exceeding $1,000 or by imprisonment in the county jail for not exceeding one year, or by both.

[(2) Violation of ORS 321.730 (7) is punishable, upon conviction, by a fine of not more than $500 or by imprisonment in the county jail for not more than three months, or both. Justice courts shall have concurrent jurisdiction with the circuit court of all prosecutions for violations of ORS 321.730 (7).]

SECTION 102. ORS 215.720 is amended to read:

215.720. (1) A dwelling authorized under ORS 215.705 may be allowed on land zoned for forest use under a goal protecting forestland only if:

(a) The tract on which the dwelling will be sited is in western Oregon, as defined in ORS 321.257, and is composed of soils not capable of producing 5,000 cubic feet per year of commercial tree species and is located within 1,500 feet of a public road as defined under ORS 368.001. The road shall be maintained and either paved or surfaced with rock and shall not be:

(A) A United States Bureau of Land Management road; or

(B) A United States Forest Service road unless the road is paved to a minimum width of 18 feet, there is at least one defined lane in each direction and a maintenance agreement exists between the United States Forest Service and landowners adjacent to the road, a local government or a state agency.

(b) The tract on which the dwelling will be sited is in eastern Oregon, as defined in ORS [321.405] 321.805, and is composed of soils not capable of producing 4,000 cubic feet per year of commercial tree species and is located within 1,500 feet of a public road as defined under ORS 368.001. The road shall be maintained and either paved or surfaced with rock and shall not be:

(A) A United States Bureau of Land Management road; or

(2) For purposes of this section, “commercial tree species” means trees recognized under rules adopted under ORS 527.715 for commercial production.

(3) No dwelling other than those described in this section and ORS 215.740, 215.750 and 215.755 may be sited on land zoned for forest use under a land use planning goal protecting forestland.

SECTION 103. ORS 215.730 is amended to read:

215.730. (1) A local government shall require as a condition of approval of a single-family dwelling allowed under ORS 215.705 on lands zoned forestland that:

(a)(A) If the lot or parcel is more than 30 acres in eastern Oregon as defined in ORS [321.405] 321.805, the property owner submits a stocking survey report to the assessor and the assessor verifies that the minimum stocking requirements adopted under ORS 527.610 to 527.770 have been met; or

(B) If the lot or parcel is more than 10 acres in western Oregon as defined in ORS 321.257, the property owner submits a stocking survey report to the assessor and the assessor verifies that the minimum stocking requirements adopted under ORS 527.610 to 527.770 have been met.

(b) The dwelling meets the following requirements:

(A) The dwelling has a fire retardant roof.

(B) The dwelling will not be sited on a slope of greater than 40 percent.

(C) Evidence is provided that the domestic water supply is from a source authorized by the Water Resources Department and not from a Class II stream as designated by the State Board of Forestry.

(D) The dwelling is located upon a parcel within a fire protection district or is provided with residential fire protection by contract.

(E) If the dwelling is not within a fire protection district, the applicant provides evidence that the applicant has asked to be included in the nearest such district.

(F) If the dwelling has a chimney or chimneys, each chimney has a spark arrester.

(G) The owner provides and maintains primary fuel-free break and secondary break areas on land surrounding the dwelling that is owned or controlled by the owner.

(2)(a) If a governing body determines that meeting the requirement of subsection (1)(b)(D) of this section would be impracticable, the governing body may provide an alternative means for protecting the dwelling from fire hazards. The means selected may include a fire sprinkling system, on-site equipment and water storage or other methods that are reasonable, given the site conditions.

(b) If a water supply is required under this subsection, it shall be a swimming pool, pond, lake or similar body of water that at all times contains at least 4,000 gallons or a stream that has a minimum flow of at least one cubic foot per second. Road access shall be provided to within 15 feet of the water’s edge for fire-fighting pumping units, and the road access shall accommodate a turnaround for fire-fighting equipment.

SECTION 104. ORS 310.147 is amended to read:

310.147. (1) Each year, the county assessor shall establish a system of code areas, identified by code numbers, which shall represent all of the various combinations of taxing districts, or tax zones of taxing districts in which district taxes differ, as of July 1 of that year in which a piece of property was located in the county on January 1 of that year.

(2) The assessor shall compute a tentative consolidated ad valorem property tax rate for each code area. The tentative consolidated ad valorem property tax rate for the code area shall be determined for each category under ORS 310.150. The tentative consolidated ad valorem property tax rate for each category for the code area shall be the sum of the category rates determined under ORS 310.090 for each taxing district in the code area [as further modified by ORS 310.108].

(3)(a) The assessor shall compute the consolidated category rate for each category under ORS 310.150 using the ad valorem property taxes to be imposed on each property after adjustment under ORS 310.150. In the case of the exempt bonded indebtedness category, the tentative consolidated category rate for the code area shall be the consolidated category rate for the code area.

(b) The total consolidated rate for the code area shall equal the sum of the consolidated rates for each category determined under paragraph (a) of this subsection after adjustment under ORS 310.150.

(4) The assessor shall indicate on the assessment roll the code area number for each item of property assessed. In addition, the assessor shall compile in duplicate a list of all code areas and their numbers and identify for each area the names of each taxing district in the area, the rate, after adjustment under ORS 310.150, for each item of the taxing district reported on the notice filed under ORS 310.060, the total rate for each taxing district and by category as described in ORS 310.150 and the total consolidated rate for the code area. The list shall constitute a part of the certificate prepared under ORS 311.105, to be delivered to the county clerk and to the tax collector.

SECTION 105. The amendments to ORS 310.147 by section 104 of this 2003 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 105a. If House Bill 2197 becomes law, section 105 of this 2003 Act is amended to read:

Sec. 105. The amendments to ORS 310.147 by section 104 of this 2003 Act apply to property tax years beginning on or after July 1, [2003] 2004.

SECTION 106. ORS 457.010 is amended to read:

457.010. As used in this chapter, unless the context requires otherwise:

(1) “Blighted areas” means areas that, by reason of deterioration, faulty planning, inadequate or improper facilities, deleterious land use or the existence of unsafe structures, or any combination of these factors, are detrimental to the safety, health or welfare of the community. A blighted area is characterized by the existence of one or more of the following conditions:

(a) The existence of buildings and structures, used or intended to be used for living, commercial, industrial or other purposes, or any combination of those uses, that are unfit or unsafe to occupy for those purposes because of any one or a combination of the following conditions:

(A) Defective design and quality of physical construction;

(B) Faulty interior arrangement and exterior spacing;

(D) Inadequate provision for ventilation, light, sanitation, open spaces and recreation facilities; or

(E) Obsolescence, deterioration, dilapidation, mixed character or shifting of uses;

(b) An economic dislocation, deterioration or disuse of property resulting from faulty planning;

(c) The division or subdivision and sale of property or lots of irregular form and shape and inadequate size or dimensions for property usefulness and development;

(d) The laying out of property or lots in disregard of contours, drainage and other physical characteristics of the terrain and surrounding conditions;

(e) The existence of inadequate streets and other rights of way, open spaces and utilities;

(f) The existence of property or lots or other areas that are subject to inundation by water;

(g) A prevalence of depreciated values, impaired investments and social and economic maladjustments to such an extent that the capacity to pay taxes is reduced and tax receipts are inadequate for the cost of public services rendered;

(h) A growing or total lack of proper utilization of areas, resulting in a stagnant and unproductive condition of land potentially useful and valuable for contributing to the public health, safety and welfare; or

(i) A loss of population and reduction of proper utilization of the area, resulting in its further deterioration and added costs to the taxpayer for the creation of new public facilities and services elsewhere.

(2) “Certified statement” means the statement prepared and filed pursuant to ORS 457.430 or an amendment to the certified statement prepared and filed pursuant to ORS 457.430.

(3) “City” means any incorporated city.

(4) “Consolidated billing tax rate” means:

(a) If the urban renewal plan is an existing urban renewal plan (other than an existing urban renewal plan designated as an Option Three plan under ORS 457.435 (2)(c)) or an urban renewal plan adopted on or after October 6, 2001, the total of all district tax rates used to extend taxes after any adjustment to reflect tax offsets under ORS 310.105 [and 310.108], but does not include any rate derived from:

(A) Any urban renewal special levy under ORS 457.435;

(B) A local option tax, as defined in ORS 280.040, that is approved by taxing district electors after October 6, 2001; or

(C) A tax pledged to repay exempt bonded indebtedness (other than exempt bonded indebtedness used to fund local government pension and disability plan obligations that, until funded by the exempt bonded indebtedness, were described in section 11 (5), Article XI of the Oregon Constitution), as defined in ORS 310.140, that is approved by taxing district electors after October 6, 2001; and

(b) In the case of all other urban renewal plans, the total of all district ad valorem property tax rates used to extend taxes after any adjustments to reflect tax offsets under ORS 310.105 [and 310.108], except that “consolidated billing tax rate” does not include any urban renewal special levy rate under ORS 457.435.

(5)(a) “Existing urban renewal plan” means an urban renewal plan that provides for a division of ad valorem property taxes as described under ORS 457.420 to 457.460 adopted by ordinance before December 6, 1996, that:

(A) Except for an amendment made on account of ORS 457.190 (3) and subject to paragraph (b) of this subsection, is not changed by substantial amendment, as described in ORS 457.085 (2)(i)(A) or (B), on or after December 6, 1996; and

(B) For tax years beginning on or after July 1, 1998, includes the limit on indebtedness as described in ORS 457.190 (3).

(b) If, on or after July 1, 1998, the maximum limit on indebtedness (adopted by ordinance before July 1, 1998, pursuant to ORS 457.190) of an existing urban renewal plan is changed by substantial amendment, then “indebtedness issued or incurred to carry out the existing urban renewal plan” for purposes of ORS 457.435 includes only the indebtedness within the indebtedness limit adopted by ordinance under ORS 457.190 (3)(c) before July 1, 1998.

(6) “Fiscal year” means the fiscal year commencing on July 1 and closing on June 30.

(7) “Governing body of a municipality” means, in the case of a city, the common council or other legislative body thereof, and, in the case of a county, the board of county commissioners or other legislative body thereof.

(8) “Housing authority” or “authority” means any housing authority established pursuant to the Housing Authorities Law.

(9) “Increment” means that part of the assessed value of a taxing district attributable to any increase in the assessed value of the property located in an urban renewal area, or portion thereof, over the assessed value specified in the certified statement.

(10) “Maximum indebtedness” means the amount of the principal of indebtedness included in a plan pursuant to ORS 457.190 and does not include indebtedness incurred to refund or refinance existing indebtedness.

(11) “Municipality” means any county or any city in this state. “The municipality” means the municipality for which a particular urban renewal agency is created.

(12) “Taxing body” or “taxing district” means the state, city, county or any other taxing unit which has the power to levy a tax.

(13) “Urban renewal agency” or “agency” means an urban renewal agency created under ORS 457.035 and 457.045.

(14) “Urban renewal area” means a blighted area included in an urban renewal plan or an area included in an urban renewal plan under ORS 457.160.

(15) “Urban renewal project” or “project” means any work or undertaking carried out under ORS 457.170 in an urban renewal area.

(16) “Urban renewal plan” or “plan” means a plan, as it exists or is changed or modified from time to time for one or more urban renewal areas, as provided in ORS 457.085, 457.095, 457.105, 457.115, 457.120, 457.125, 457.135 and 457.220.

SECTION 106a. If House Bill 2197 becomes law, the amendments to ORS 457.010 by section 106 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 107. Section 1, chapter 728, Oregon Laws 1997, as amended by section 1, chapter 216, Oregon Laws 1999, section 2, chapter 467, Oregon Laws 2001, and section 5, chapter 544, Oregon Laws 2001, is amended to read:

Sec. 1. (1) Notwithstanding ORS 215.283, a guest ranch may be established in conjunction with an existing and continuing livestock operation, using accepted livestock practices, that qualifies as a farm use under ORS 215.203 in any area zoned for exclusive farm use in eastern Oregon.

(2) A guest ranch established under this section shall meet the following conditions:

(a) Except as provided in paragraph (d) of this subsection, the lodge, bunkhouses or cottages cumulatively shall:

(A) Include not less than four nor more than 10 overnight guest rooms exclusive of kitchen areas, rest rooms, storage and other shared indoor facilities; and

(B) Not exceed a total of 12,000 square feet in floor area.

(b) The guest ranch shall be located on a lawfully created parcel:

(A) That is at least 160 acres;

(B) That is the parcel containing the dwelling of the person conducting the livestock operation; and

(c) The guest ranch may be sited on any portion of a lot or parcel if the majority of the lot or parcel is more than 10 air miles from an urban growth boundary containing a population greater than 5,000, regardless of whether any other portion of the lot or parcel is within 10 miles of the urban growth boundary. The guest ranch shall be deemed to comply with this paragraph if it is located within the range set by the standard margin of error on the county’s map used to determine the distance from an urban growth boundary.

(d) For each doubling of the initial 160 acres required under paragraph (b) of this subsection, up to five additional overnight guest rooms and 3,000 square feet of floor area may be added to the guest ranch for a total of not more than 25 guest rooms and 21,000 square feet of floor area.

(3) A guest ranch may provide recreational activities that can be provided in conjunction with the livestock operation’s natural setting, including but not limited to hunting, fishing, hiking, biking, horseback riding, camping or swimming. Intensively developed recreational facilities, such as golf courses as identified in ORS 215.283, shall not be allowed. A campground as described in ORS 215.283 (2)(c) shall not be allowed in conjunction with a guest ranch, and a guest ranch shall not be allowed in conjunction with an existing golf course under ORS 215.283 (2)(f) or with an existing campground under ORS 215.283 (2)(c).

(4) Food services shall be incidental to the operation of the guest ranch and shall be provided only for the guests of the guest ranch. The cost of meals provided to the guests shall be included as part of the fee to visit or stay at the guest ranch. The sale of individual meals to persons who are not guests of the guest ranch shall not be allowed.

(5) Approval of a guest ranch shall be subject to the provisions of ORS 215.296 (1) and (2) and other approval or siting standards of the county.

(6) As used in this section:

(a) “Eastern Oregon” shall have the meaning provided in ORS [321.405] 321.805.

(b) “Guest ranch” means a facility for overnight lodging incidental and accessory to an existing livestock operation that qualifies as a farm use under ORS 215.203. Guest ranch facilities may include a lodge, bunkhouse or cottage accommodations as well as passive recreational activities and food services as set forth in subsections (2) to (4) of this section.

SECTION 108. Section 109 of this 2003 Act is added to and made a part of sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197).

SECTION 109. (1) Notwithstanding section 6 (1)(a), chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), if the sale or transfer of small tract forestland is to a person who, following the date of the sale or transfer, does not own or hold in common ownership less than 10 acres or 5,000 acres or more of forestland in Oregon, the sold or transferred forestland may remain small tract forestland, if:

(a) Within 30 days of the recorded date of the sale or transfer, the purchaser or transferee has applied for continued qualification of the small tract forestland;

(b) The purchaser or transferee is otherwise eligible to be an owner of small tract forestland under sections 1 to 14, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197); and

(c) Any forestland owned or held in common ownership by the purchaser or transferee that is a contiguous parcel to the purchased or transferred forestland is:

(A) Qualified as small tract forestland or is the subject of an application for qualification under section 3, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197); or

(B) Included as part of the application for continued qualification filed under this section, and the additional information required in an application for qualification of small tract forestland under section 3, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), is included in the application for continued qualification filed under this section.

(2)(a) A purchaser or transferee described in subsection (1) of this section shall apply for continued qualification to the county assessor of the county in which the forestland that is the subject of the sale or transfer is located. If the forestland is located in more than one county, the purchaser or transferee shall apply for continued qualification to the county assessor of each county in which the forestland is located.

(b) The application shall be on a form prescribed by the Department of Revenue and supplied by the county assessor that contains:

(A) The name and address of the seller or transferor of the small tract forestland;

(B) The name, address and taxpayer identification number of the purchaser or transferee of the small tract forestland;

(C) A statement listing the county and containing a description sufficient to identify the location of the small tract forestland being purchased or transferred;

(D) A statement listing the county and containing a description sufficient to identify the location of all parcels of land owned or held in common ownership by the purchaser or transferee that are contiguous to the small tract forestland that is being purchased or transferred;

(E) The total acreage of Oregon forestland owned or held in common ownership by the purchaser or transferee;

(F) A statement that the applicant is aware of the potential tax liability that arises under ORS 308A.703 and section 31, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197);

(G) An affirmation that the statements contained in the application are true; and

(H) Any other relevant information the department may prescribe.

(3) The assessor shall review the application and grant the continued qualification of the land as small tract forestland following the sale or transfer if the purchaser or transferee satisfies the requirements of subsection (1) of this section.

(4)(a) If the purchase or transfer occurred prior to July 1 of the assessment year, the assessor shall process the application for continued qualification for the tax year beginning that July 1.

(b) If the purchase or transfer occurred on or after July 1 of the assessment year, the assessor shall process the application for continued qualification for the tax year beginning the next succeeding July 1.

(c) An application for continued qualification shall be deemed approved unless, within three months of the date the application was made or before August 15 of the year in which the application was filed, whichever is later, the county assessor notifies the purchaser or transferee in writing that the application has been wholly or partially denied.

(5) A purchaser or transferee may appeal the decision of the county assessor to wholly or partially deny an application for continued qualification to the tax court in the time and manner prescribed under ORS 305.404 to 305.560.

(6) In the case of an application for continued qualification that is approved by the county assessor, the assessor shall send a written notification of the approval and a copy of the application to the department.

(7) For purposes of computing additional taxes under section 31, chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197), upon a subsequent disqualification of small tract forestland that is granted continued qualification under this section, the small tract forestland is considered to have been subject to small tract forestland assessment without interruption from the period before the sale or transfer to the date of subsequent disqualification from small tract forestland assessment.

SECTION 110. Section 109 of this 2003 Act applies to property tax years beginning on or after July 1, 2004.

SECTION 111. Sections 108 to 110 of this 2003 Act do not become operative unless House Bill 2197 becomes law. Sections 108 to 110 of this 2003 Act become operative on the effective date of chapter 454, Oregon Laws 2003 (Enrolled House Bill 2197).

CAPTIONS

SECTION 112. The unit captions used in this 2003 Act are provided only for the convenience of the reader and do not become a part of the statutory law of this state or express any legislative intent in the enactment of this 2003 Act.

EFFECTIVE DATE

SECTION 113. 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 July 29, 2003

Filed in the office of Secretary of State July 29, 2003

Effective date November 26, 2003

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