Chapter 662 Oregon Laws 2003

AN ACT

HB 2299

Relating to business development tax incentives; creating new provisions; amending ORS 285B.380, 285B.383, 285B.386, 285B.389, 285B.392, 285B.650, 285B.653, 285B.656, 285B.662, 285B.668, 285B.671, 285B.672, 285B.673, 285B.674, 285B.677, 285B.680, 285B.683, 285B.686, 285B.689, 285B.692, 285B.695, 285B.698, 285B.701, 285B.704, 285B.707, 285B.710, 285B.713, 285B.714, 285B.719, 285B.722, 285B.728, 285B.731, 285B.786, 285B.789, 285B.796, 307.110, 307.123, 311.370 and 315.507 and section 3c, chapter 1104, Oregon Laws 1999, and section 2, chapter 432, Oregon Laws 2003 (Enrolled Senate Bill 858); repealing ORS 285B.675, 285B.705, 285B.716, 285B.723, 285B.725 and 285B.726 and section 22, chapter 1015, Oregon Laws 1989, sections 31, 32 and 33, chapter 835, Oregon Laws 1997, sections 4 and 5, chapter 460, Oregon Laws 1999, sections 20 and 26, chapter 1104, Oregon Laws 1999, and section 39e, chapter 883, Oregon Laws 2001; and prescribing an effective date.

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

STRATEGIC INVESTMENT PROGRAM

NOTE: Sections 1 through 6 were deleted by amendment. Subsequent sections were not renumbered.

SECTION 7. ORS 285B.380 is amended to read:

285B.380. As used in ORS [285B.383, 285B.386, 285B.389, 285B.392 and 307.110, unless the context requires otherwise, “eligible project” has the meaning given that term in ORS 285B.323.] 285B.380 to 285B.392:

(1) “Business firm” has the meaning given that term in ORS 285B.650.

(2) “Eligible project” means a project that meets criteria established by the Oregon Economic and Community Development Commission to be exempt from property taxation under ORS 307.123.

(3) “First-source hiring agreement” has the meaning given that term in ORS 285B.650.

(4) “Publicly funded job training provider” has the meaning given that term in ORS 285B.650.

(5) “Rural area” means an area located entirely outside of the urban growth boundary of a city with a population of 30,000 or more, as the urban growth boundary is acknowledged on December 1, 2002.

SECTION 8. ORS 285B.383 is amended to read:

285B.383. (1) [If an eligible project directly benefits a traded sector industry, as defined in ORS 285B.280 (3), and if the total cost of the eligible project exceeds $100 million,] The State of Oregon, acting through the Oregon Economic and Community Development Commission, may determine that [the] real and personal property constituting [the eligible project is eligible for the tax exemption provided in ORS 307.123, and the State of Oregon, acting through the State Treasurer, may authorize and issue revenue bonds in accordance with ORS 285B.320 to 285B.377 to finance the costs of the eligible project.] a project shall receive the tax exemption provided in ORS 307.123 if:

(a) The project is an eligible project;

(b) The project directly benefits a traded sector industry, as defined in ORS 285B.280; and

(c) The total cost of the project equals or exceeds:

(A) $100 million; or

(B) $25 million, if the project is located in a rural area.

(2) Notwithstanding subsection (1) of this section, property may not qualify for the tax exemption under ORS 307.123 if the property:

(a) Was previously owned or leased by the business firm benefitting from the tax exemption; or

(b) Was previously exempt under ORS 307.123 for any period of time.

(3) The State of Oregon, acting through the State Treasurer, may authorize and issue revenue bonds for an eligible project that qualifies for exemption under ORS 307.123 if the project also is eligible for funding through the issuance of revenue bonds under ORS 285B.320 to 285B.377.

[(2) Nothing in this section authorizes the Oregon Economic and Community Development Commission to determine that an existing eligible project is eligible for the tax exemption provided in ORS 307.123.]

[(3)] (4) A business firm that will be benefited by an eligible project shall enter into a first-source hiring agreement with a publicly funded job training provider that will remain in effect until the end of the tax exemption period.

[(4)] (5) If an eligible project is leased or subleased to any person, the lessee shall be required to pay property taxes levied upon or with respect to the leased premises only in accordance with ORS 307.123.

[(5)] (6) For purposes of determining the assessment and taxation of the eligible project in ORS 307.123 and the calculation of the community services fee in ORS 285B.386 (4)(b), [in addition to the requirements set out in ORS 285B.323 (3), the invested cost of all real and personal property to be included in the eligible project shall be established by] the Oregon Economic and Community Development Commission, when it determines that the project is an eligible project, shall:

(a) Describe the real and personal property to be included in the eligible project;

(b) Establish the maximum value of the property subject to exemption; or

(c) Employ a comparable method to define the eligible project.

(7) Property of an eligible project that is currently exempt under ORS 307.123 may remain exempt for any remaining period of exemption allowed under ORS 307.123 upon the property being acquired by a business firm that is different from the business firm that initially benefited from the exemption, if the acquiring firm satisfies all applicable requirements under ORS 285B.380 to 285B.392 and assumes the obligations, conditions, requirements and other terms of the agreement described in ORS 285B.386 (4).

SECTION 9. ORS 285B.386 is amended to read:

285B.386. (1) [The undertaking of any eligible] A determination under ORS 285B.383 (1) by the Oregon Economic and Community Development Commission that a project shall be exempt from property taxation under ORS 307.123 must be requested by official action of the governing body of the county taken at a regular or duly called special meeting thereof by the affirmative vote of a majority of its members.

(2) The governing body of any Oregon county [is encouraged to] shall forward appropriate prospective eligible projects to the Economic and Community Development Department for processing.

(3) For purposes of this section, for projects located on a federally recognized Oregon Indian reservation, the governing body of a county shall be considered to be the governing body of the federally recognized Oregon Indian tribe.

(4) The county [shall] may not make the request [an eligible project to be determined to be eligible for a tax exemption under ORS 307.123] under subsection (1) of this section unless, after a public hearing:

(a) The county and, if the proposed eligible project will be located within a city, the city have [approved the special provisions related to the property tax exemption] entered into an agreement with the business firm, as described in this subsection.

[(b) As consideration for the county requesting determination that the eligible project is eligible for a property tax exemption under ORS 307.123, the business firm that will be benefited by the eligible project enters into an agreement with the county for payment to the county of an annual fee for community services support in an amount equal to 25 percent of the property taxes exempted in each assessment year, but not exceeding $2 million in any year. The fee shall be paid annually during the tax exemption period. For purposes of this paragraph, the property tax exempted in a year shall be calculated as the effective tax rate after any constitutional limits on the taxable portion of the value of the project multiplied by the assessed value of the exempt portion of the project.]

(b) The agreement provides for the payment of a fee by the business firm, as follows:

(A) The fee shall be for community services support that relates to the direct impact of the eligible project on public services.

(B) The fee shall be in an amount equal to 25 percent of the property taxes that would, but for the exemption, be due on the exempt property in each assessment year, but not exceeding $2 million in any year or, if the eligible project is located in a rural area, $500,000 in any year.

(C) The fee shall be paid annually during the tax exemption period, as of a date set forth in the agreement.

(c) The agreement provides for the refunding or crediting of overpayments, for interest on late payments or underpayments and for the manner in which the appeal of the assessed value of the property included in the project will affect the fee.

[(c)] (5) The [applicant has reached] agreement [with the county on] described in subsection (4) of this section may provide for any other requirements related to the project. [The agreement shall include provisions for the date of payment of the fee required under paragraph (b) of this subsection, for refunding or crediting overpayments, for interest on late payments or underpayments and for the manner in which an appeal of the assessed value of the property included in the project will affect the payment of the fee.]

[(5)] (6)(a) The fee collected under subsection (4)(b) of this section shall be distributed by the county based on an agreement [entered into at the time of application between the county and the city, if any, in which the eligible project is located]. The agreement is effective only if:

(A) The county and the city, if any, in which the eligible project is located have entered into the agreement; and

(B) Local taxing districts listed in ORS 198.010 or 198.180 that constitute at least 75 percent of the property tax authority of all local taxing districts listed in ORS 198.010 or 198.180 in the code area in which the eligible project is located have entered into the agreement.

(b) If an effective agreement is not entered into under paragraph (a) of this subsection within three months after the date of the determination by the commission under ORS 285B.383 (1), the commission shall, by official action, establish a formula for distributing the fee collected under subsection (4)(b) of this section.

SECTION 10. ORS 285B.389 is amended to read:

285B.389. (1) The Oregon Economic and Community Development Commission shall collect the fees set forth in subsection (2) of this section from an applicant that seeks to have the real and personal property constituting the eligible project declared eligible for the tax exemption provided in ORS 307.123. The fee may be collected even though the project has not been determined to be eligible for the tax exemption.

(2) The fees described in subsection (1) of this section are as follows:

(a) $10,000, or $5,000 if the project is located in a rural area, upon application to the commission; and

(b) $50,000, or $10,000 if the project is located in a rural area, when the eligible project is determined by the commission to be eligible for the tax exemption provided in ORS 307.123. The commission shall pay 50 percent of this fee to the Department of Revenue for the purpose of administration of ORS 307.123.

[(3) The fees collected under subsection (2) of this section shall be deposited in the Financial Programs Account created by ORS 285A.212.]

SECTION 10a. Section 10 of this 2003 Act (amending ORS 285B.389) is repealed and ORS 285B.389, as amended by section 9, chapter 167, Oregon Laws 2003 (Enrolled Senate Bill 215), is amended to read:

285B.389. (1) The Oregon Economic and Community Development Commission shall collect the fees set forth in subsection (2) of this section from an applicant that seeks to have the real and personal property constituting the eligible project declared eligible for the tax exemption provided in ORS 307.123. The fee may be collected even though the project has not been determined to be eligible for the tax exemption.

(2) The fees described in subsection (1) of this section are as follows:

(a) $10,000, or $5,000 if the project is located in a rural area, upon application to the commission; and

(b) $50,000, or $10,000 if the project is located in a rural area, when the eligible project is determined by the commission to be eligible for the tax exemption provided in ORS 307.123. The commission shall pay 50 percent of this fee to the Department of Revenue for the purpose of administration of ORS 307.123.

(3) The fees collected under subsection (2) of this section shall be deposited in the Oregon Community Development Fund created under ORS 285A.227.

SECTION 10b. The repeal of section 10 of this 2003 Act (amending ORS 285B.389) by section 10a of this 2003 Act and the amendments to ORS 285B.389 by section 10a of this 2003 Act become operative on January 1, 2004.

SECTION 11. ORS 285B.392 is amended to read:

285B.392. Notwithstanding ORS 192.410 to 192.505, the identity of an applicant for an eligible project [designation] determination under ORS 285B.383, the application form submitted to the county governing body and the Oregon Economic and Community Development Commission and the negotiations conducted between the applicant and the county shall be confidential, until the county governing body gives notice of its intent to take official action on the application.

SECTION 11a. ORS 307.110 is amended to read:

307.110. (1) Except as provided in ORS 307.120, all real and personal property of this state or any institution or department thereof or of any county or city, town or other municipal corporation or political subdivision of this state, held under a lease or other interest or estate less than a fee simple, by any person whose real property, if any, is taxable, except employees of the state, municipality or political subdivision as an incident to such employment, shall be subject to assessment and taxation for the assessed or specially assessed value thereof uniformly with real property of nonexempt ownerships.

(2) Each leased or rented premises not exempt under ORS 307.120 and subject to assessment and taxation under this section which is located on property used as an airport and owned by and serving a municipality or port shall be separately assessed and taxed.

(3) Nothing contained in this section shall be construed as subjecting to assessment and taxation any publicly owned property described in subsection (1) of this section that is:

(a) Leased for student housing by a school or college to students attending such a school or college.

(b) Leased to or rented by persons, other than sublessees or subrenters, for agricultural or grazing purposes and for other than a cash rental or a percentage of the crop.

(c) Utilized by persons under a land use permit issued by the Department of Transportation for which the department’s use restrictions are such that only an administrative processing fee is able to be charged.

(d) County fairgrounds and the buildings thereon, in a county holding annual county fairs, managed by the county fair board under ORS 565.230, if utilized, in addition to county fair use, for any of the purposes described in ORS 565.230 (2), or for horse stalls or storage for recreational vehicles or farm machinery or equipment.

(e) The properties and grounds managed and operated by the Oregon State Fair and Exposition Center under ORS 565.015, if utilized, in addition to the purpose of holding the Oregon State Fair, for horse stalls or for storage for recreational vehicles or farm machinery or equipment.

(f) State property that is used by the Oregon University System or the Oregon Health and Science University to provide parking for employees, students or visitors.

(g) Property of a housing authority created under ORS chapter 456 which is leased or rented to persons of lower income for housing pursuant to the public and governmental purposes of the housing authority. For purposes of this paragraph, “persons of lower income” has the meaning given the phrase under ORS 456.055.

(h) Property of a health district if:

(A) The property is leased or rented for the purpose of providing facilities for health care practitioners practicing within the county; and

(B) The county is a frontier rural practice county under rules adopted by the Office of Rural Health.

(4) Property determined to be an eligible project for tax exemption under ORS [285B.383] 285B.380 to 285B.392 and 307.123 that was acquired with revenue bonds issued under ORS 285B.320 to 285B.377 and that is leased by this state, any institution or department thereof or any county, city, town or other municipal corporation or political subdivision of this state to an eligible applicant shall be assessed and taxed in accordance with ORS 307.123. The property’s continued eligibility for taxation and assessment under ORS 307.123 is not affected:

(a) If the eligible applicant retires the bonds prior to the original dates of maturity; or

(b) If any applicable lease or financial agreement is terminated prior to the original date of expiration.

(5) The provisions of law for liens and the payment and collection of taxes levied against real property of nonexempt ownerships shall apply to all real property subject to the provisions of this section. Taxes remaining unpaid upon the termination of a lease or other interest or estate less than a fee simple, shall remain a lien against the real or personal property.

(6) If the state enters into a lease of property with, or grants an interest or other estate less than a fee simple in property to, a person whose real property, if any, is taxable, then within 30 days after the date of the lease, or within 30 days after the date the interest or estate less than a fee simple is created, the state shall file a copy of the lease or other instrument creating or evidencing the interest or estate with the county assessor. This section applies notwithstanding that the property may otherwise be entitled to an exemption under this section, ORS 307.120 or as otherwise provided by law.

SECTION 12. ORS 307.123 is amended to read:

307.123. (1) Except as provided in subsection (3) of this section, real or personal property that the Oregon Economic and Community Development Commission, acting pursuant to ORS 285B.383, has determined is an eligible [for the tax exemption provided in this section,] project under 285B.380 to 285B.392 shall be subject to assessment and taxation as follows:

(a) [The first $100 million in] That portion of the real market value of the eligible project that equals the minimum cost of the project under ORS 285B.383 (1)(c), increased annually for growth at the rate of three percent, shall be taxable at [its] the taxable portion’s assessed value under ORS 308.146. The [first $100 million] taxable portion of real market value, as adjusted, shall be allocated as follows until the entire amount is assigned: first to land, second to buildings, third to real property machinery and equipment and last to personal property.

(b) The remainder of the real market value shall be exempt from taxation for a period of 15 years from the beginning of the tax year after the earliest of the following dates:

(A) The date the property is certified for occupancy or, if no certificate of occupancy is issued, the date the property is used to produce a product for sale; or

(B) The expiration of the exemption for commercial facilities under construction under ORS 307.330.

(2) If the real market value of the property falls below [that set out in] the value determined under subsection (1)(a) of this section, the owner or lessee shall pay taxes only on the assessed value of the property.

(3) Notwithstanding subsection (1) of this section, [no] real or personal property that has received an exemption under ORS 285B.698 [shall] may not be assessed under this section.

(4) The Department of Revenue may adopt [such] rules[,] and prescribe [such] forms[, as] that the department determines are necessary for administration of this section.

(5) The determination by the Oregon Economic and Community Development Commission that a project is an eligible project that may receive a tax exemption under this section shall be conclusive, so long as the property included in the eligible project is constructed and installed in accordance with the application approved by the commission.

(6) Notwithstanding subsection (1) of this section, if the owner or lessee of property exempt under this section fails to pay the fee required under ORS 285B.386 (4)(b) by the end of the tax year in which it is due, the exemption shall be revoked and the property shall be fully taxable for the following tax year and for each subsequent tax year for which the fee remains unpaid. If an unpaid fee is paid after the exemption is revoked, the property shall again be eligible for the exemption provided under this section, beginning with the tax year after the payment is made. Reinstatement of the exemption under this subsection shall not extend the 15-year exemption period provided for in subsection (1)(b) of this section.

SECTION 13. The amendments to ORS 285B.380, 285B.383, 285B.386, 285B.389, 285B.392, 307.110 and 307.123 by sections 7 to 10a, 11, 11a and 12 of this 2003 Act apply to requests for eligible project determinations made on or after the effective date of this 2003 Act and to property tax years beginning on or after July 1, 2003.

ENTERPRISE ZONES

(Definitions)

SECTION 14. ORS 285B.650 is amended to read:

285B.650. As used in ORS 285B.650 to 285B.728, unless the context requires otherwise:

(1) “Assessment date” and “assessment year” have the meanings given those terms in ORS 308.007.

(2) “Authorized business firm” means an eligible business firm that has been authorized under ORS 285B.719.

[(1)] (3) “Business firm” means a person operating or conducting one or more trades or businesses but does not include any governmental agency, municipal corporation or nonprofit corporation.

(4) “County average annual wage” means:

(a) The most recently available average annual covered payroll for the county in which the enterprise zone is located, as determined by the Employment Department; or

(b) If the enterprise zone is located in more than one county, the highest county average annual wage as determined under paragraph (a) of this subsection.

[(2)] (5) “Electronic commerce” means engaging in commercial or retail transactions predominantly over the Internet or a computer network, utilizing the Internet as a platform for transacting business, or facilitating the use of the Internet by other persons for business transactions, and may be further defined by the Economic and Community Development Department by rule.

[(3)] (6) “Eligible business firm” means a firm engaged in an activity described under ORS 285B.707 which may file an application for [precertification] authorization under ORS 285B.719.

[(4)] (7) “Employee” means a person who works more than 32 hours per week, but does not include [persons] a person with a temporary or seasonal [jobs or persons] job or a person hired solely to construct qualified property.

[(5)] (8) “Enterprise zone” means one of the 30 areas designated or terminated and redesignated by order of the Governor under ORS 284.160 (1987 Replacement Part) before October 3, 1989, one of the 17 areas designated by the Director of the Economic and Community Development Department under ORS 285B.653, [areas] a federal enterprise zone area designated under ORS 285B.677 [and areas], an area designated under ORS 285B.689 or a reservation enterprise zone designated under ORS 285B.770.

(9) “Federal enterprise zone” means any discrete area wholly or partially within this state that is designated as an empowerment zone, an enterprise community, a renewal community or some similar designation for purposes of improving the economic and community development of the area.

[(6)] (10) “First-source hiring agreement” means an agreement between [a precertified] an authorized business firm and a publicly funded job training provider whereby the [job training] provider refers qualified candidates to the firm for new jobs and job openings in the firm.

(11) “In service” means being used or occupied or fully ready for use or occupancy for commercial purposes consistent with the intended operations of the business firm as described in the application for authorization.

[(7)] (12) “Modification” means modernization, renovation or remodeling of an existing building, [or] structure or real property machinery or equipment.

(13) “New employees hired by the firm”:

(a) Includes only those employees of an authorized business firm engaged for a majority of their time in eligible operations.

(b) Does not include individuals employed in a job or position that:

(A) Is created and first filled after December 31 of the first tax year in which qualified property of the firm is exempt under ORS 285B.698;

(B) Existed prior to the submission of the relevant application for authorization; or

(C) Is performed primarily at a location outside of the enterprise zone.

[(8)] (14) “Nonurban enterprise zone” means:

(a) An enterprise zone located [outside a regional or metropolitan urban growth boundary] in an area of this state in which an urban enterprise zone could not be located; or

(b) A reservation enterprise zone designated under ORS 285B.770.

[(9) “Precertified business firm” means an eligible business firm whose application for precertification has been approved under ORS 285B.719 and which may apply for a property tax exemption under ORS 285B.722.]

[(10)] (15) “Publicly funded job training provider” includes but is not limited to [community colleges, service providers] a community college, a service provider under the federal Workforce Investment Act Title I-B (29 U.S.C. 2801 et seq.), [and other similar programs] or a similar program.

[(11)] (16) “Qualified business firm” means a business firm described in ORS 285B.704 [whose application for a property tax exemption has been approved under ORS 285B.722], the qualified property of which is exempt from property tax under ORS 285B.698.

[(12)] (17) “Qualified property” means property described under ORS 285B.713.

(18) “Sparsely populated county” means a county with a density of 100 or fewer persons per square mile, based on the most recently available population figure for the county from the Portland State University Center for Population Research and Census.

[(13)] (19) “Sponsor” means:

(a) The city or county, or any combination of cities or counties, that [applied for and] received approval of an enterprise zone under ORS 284.150 and 284.160 (1987 Replacement Part), under ORS 285B.656 and 285B.659, under ORS 285B.677 [or 285B.686] or under ORS 285B.689;

(b) The tribal government, in the case of a reservation enterprise zone; or

(c) A city or county that joined the enterprise zone through a boundary change under ORS 285B.680 (7).

(20) “Tax year” has the meaning given that term in ORS 308.007.

[(14)] (21) “Urban enterprise zone” means an enterprise zone in a metropolitan statistical area, as defined by the most recent federal decennial census, that is located inside a regional or metropolitan urban growth boundary.

(22) “Year” has the meaning given that term in ORS 308.007.

(Duties of Economic and Community

Development Department)

SECTION 15. ORS 285B.668 is amended to read:

285B.668. In addition to any other powers granted by law, for the purpose of administering ORS 285B.650 to 285B.728, the Economic and Community Development Department shall:

(1) Adopt any rules the department considers necessary to administer ORS 285B.650 to 285B.728.

(2) Assist a sponsor of an enterprise zone in its efforts to retain, expand, start or recruit eligible business firms.

(3) Assist an eligible business firm doing business within an enterprise zone to obtain the benefits of applicable incentive or inducement programs authorized by Oregon law.

(4) Take action necessary to participate in the federal enterprise zone program [under] pursuant to ORS 285B.677.

(5) Process sponsor requests for boundary amendments under ORS 285B.680.

(6) Take action necessary to terminate or designate zones under ORS 285B.686 or 285B.689.

(7) Assist in implementing first-source hiring agreements by publicly funded job training providers with [precertified and qualified] authorized business firms and in ensuring compliance with business firm eligibility requirements and with provisions addressing the avoidance of job losses outside of enterprise zones.

(Creation of Enterprise Zone)

SECTION 16. ORS 285B.656 is amended to read:

285B.656. (1) Any city or county may apply to the Director of the Economic and Community Development Department for designation of an area within that city or county as an enterprise zone. With the prior consent of the governing body of the city, a county may apply to the Economic and Community Development Department on behalf of a city for designation of any area within that city as an enterprise zone.

(2) One or more cities and counties may apply to the director for designation of an area situated partly within each city and partly in unincorporated territory within the counties as an enterprise zone.

[(3) Any area proposed for designation as an enterprise zone must consist of a total area of not more than 12 square miles in size with 12 miles or less as the greatest distance between any two points within the zone. The area of the zone shall be calculated by excluding that portion of the zone which lies below the ordinary high water mark of a navigable body of water, and any road, railroad, electric transmission line or pipeline rights of way that connect otherwise unconnected areas of an enterprise zone. Such areas shall not be more than five miles apart.]

[(4)] (3) An application for designation of an enterprise zone shall be in the form and contain such information as the department, by rule, may require. However, the application shall:

(a) Be submitted on behalf of one or more local government units as described in subsections (1) and (2) of this section by [action] resolution of the governing body of each applicant;

(b) Contain a description of the area sought to be designated as an enterprise zone;

(c) Contain information sufficient to allow the department to determine if the criteria established in ORS 285B.662 are met;

(d) State that the applicant will give priority to the use in the proposed enterprise zone of any economic development or job training funds received from the federal government; and

(e) Declare that the applicant will comply with ORS 285B.671 and perform any other duties of the sponsor under ORS 285B.650 to 285B.728.

[(5)] (4) When applying for designation of an enterprise zone within its boundaries under this section, the applicant may include in the application:

(a) Proposals to enhance the level or efficiency of local public services within the proposed enterprise zone including, but not limited to, fire-fighting and police services[.]; and

[(6) When applying for designation of an enterprise zone within its boundaries under this section, the applicant may include in the application]

(b) Proposals for local incentives and local regulatory flexibility to [precertified or qualified] authorized business firms.

[(7)] (5) In the case of joint applications by more than one local government unit, each city or county joining in the application may include proposals for enhanced local public services, local incentives or local regulatory flexibility to be effective within the boundaries of that local government unit.

[(8)] (6) Proposals under subsection [(5), (6) or (7)] (4) or (5) of this section for enhanced local public services, local incentives or local regulatory flexibility included in the application by a city or county for an enterprise zone are binding upon the city or county if an enterprise zone is designated wholly or partly within its boundaries.

[(9) Notwithstanding ORS 285B.716 (1), when applying for designation of an enterprise zone, an applicant may choose to exempt qualified property owned or leased and operated by a business firm as a hotel, motel or destination resort, for any business firm that is precertified in the proposed zone after its designation, if the exemption is requested by resolution of each city or county sponsoring the application.]

SECTION 17. (1) The governing body of a city or county that is seeking enterprise zone designation under ORS 285B.656 may elect to permit a business firm operating a hotel, motel or destination resort to be an eligible business firm with respect to those operations.

(2) The election must be made at the time the application for zone designation under ORS 285B.656 is made or any time thereafter and before the expiration of six months following the date the zone is designated.

(3) The election shall be made by a resolution adopted by the city or county governing body. In order for the election to be effective, the resolution must be submitted to the Economic and Community Development Department and acknowledged by the department.

(4)(a) If more than one city or county is to be the sponsor, the resolution making the election may restrict the area in which a hotel, motel or destination resort may be located in order for the firm to be an eligible business firm with respect to those operations.

(b) The resolution making the restriction described in paragraph (a) of this subsection may only restrict the area of the zone in which a hotel, motel or destination resort may be located to that area of the zone that is located:

(A) Within the boundaries of one or more cities in favor of hotel, motel and destination resort exemption, if the county is not in favor of hotel, motel and destination resort exemption;

(B) Within the unincorporated territory of a county in favor of hotel, motel and destination resort exemption, if one or more cities are not in favor of hotel, motel and destination resort exemption; or

(C) Within the shared territory of a city and county in favor of hotel, motel and destination resort exemption and the unincorporated territory of the county, if one or more other cities are not in favor of hotel, motel and destination resort exemption.

(c) If a restriction is made under this subsection, the restriction may be modified at any time within six months of the date the zone is designated, but may not be modified at any time thereafter.

(5) The sponsor may by resolution revoke an election made under this section. If an election is revoked, the sponsor may not make another election under this section.

SECTION 18. ORS 285B.653 is amended to read:

285B.653. (1) The Director of the Economic and Community Development Department may approve the designation of up to 17 areas as nonurban enterprise zones as provided in ORS 285B.656 and 285B.659.

(2) Areas designated as enterprise zones under this section shall be in addition to the 30 areas designated or redesignated as enterprise zones by order of the Governor under ORS 284.160 (1987 Replacement Part) before October 3, 1989, [and] areas [designated] redesignated under ORS [285B.677 and] 285B.689, [and shall terminate in accordance with ORS 285B.686 (3)] areas designated under ORS 285B.677 and areas designated under ORS 285B.770.

SECTION 19. ORS 285B.677 is amended to read:

285B.677. [(1) As used in this section, “federal enterprise zone” means any discrete area wholly or partially within this state that is designated as an empowerment zone, an enterprise community, a renewal community or some similar designation for purposes of improving the economic and community development of the area.]

[(2)] (1) The Economic and Community Development Department shall be the lead agency for state participation in a federal enterprise zone program. The Director of the Economic and Community Development Department may take action necessary for such participation to the extent allowed by state law.

[(3)] (2) Any area designated as a federal enterprise zone by an agency of the federal government may be designated as a state enterprise zone by the director at the request of a city or county within whose jurisdiction some or all of the federal enterprise zone is located, without regard to any limitation contained in ORS [285B.656 (3) or] 285B.662.

[(4)] (3) The boundary of an existing state enterprise zone may be amended by the director at the request of the sponsor to include the entire area of a federal enterprise zone without regard to [any limitation contained in] ORS 285B.680 (2). A change in the boundary of an existing state enterprise zone under this subsection [shall] does not change the termination date of the enterprise zone under ORS 285B.686 [(3)] (2).

[(5)] (4) A request by a city or county under subsection [(3) or (4)] (2) or (3) of this section shall be in such form and include such information as required by the department, but the request must:

(a) Include a resolution adopted by the governing body of the city or county; and

(b) Provide that all areas within both the federal enterprise zone and the city or county are included in a state enterprise zone.

[(6)] (5) The termination under federal law of a federal enterprise zone [shall] does not affect the existence or dimensions of a state enterprise zone, except when, as determined by the director, the termination is for nonperformance or for violations of federal guidelines.

SECTION 20. ORS 285B.662 is amended to read:

285B.662. (1) A proposed enterprise zone must be located in a local area in which:

[(1)] (a) Fifty percent or more of the households have incomes below 80 percent of the median income of this state, as defined by the most recent federal decennial census;

[(2)] (b) The unemployment rate is at least 2.0 percentage points greater than the comparable unemployment rate for this entire state, as defined by the most recently available data published or officially provided and verified by the United States Government, the Employment Department of this state, the Portland State University Center for Population Research and Census or special studies conducted under a contract with a regional academic institution; or

[(3)] (c) The Economic and Community Development Department determines on a case-by-case basis using evidence provided by the cities or counties applying for designation of the proposed enterprise zone that there exists a level of economic hardship at least as severe as that described in [subsection (1) or (2) of this section] paragraph (a) or (b) of this subsection. Such evidence shall be based on the most recently available data from official sources and may include, but is not limited to, a contemporary decline of the population in the proposed enterprise zone, the percentage of persons in the proposed enterprise zone below the poverty level relative to the percentage of the entire population of this state below the poverty level or the unemployment rate for the county or counties in which the proposed enterprise zone is located.

(2) An enterprise zone must consist of a total area of not more than 12 square miles in size. The area of the zone shall be calculated by excluding that portion of the zone that lies below the ordinary high water mark of a navigable body of water.

(3) Except as provided in subsection (4) of this section:

(a) An enterprise zone must have 12 miles or less as the greatest distance between any two points within the zone; and

(b) Unconnected areas of an enterprise zone may not be more than five miles apart.

(4) Unconnected areas of a nonurban enterprise zone may not be more than 15 miles apart when an unconnected area is entirely within a sparsely populated county, and the zone:

(a) Must have 20 miles or less as the greatest distance between any two points within the zone, if only a portion of the zone is contained within a sparsely populated county; or

(b) Must have 25 miles or less as the greatest distance between any two points within the zone, if the zone is entirely contained within a sparsely populated county.

(5) This section does not apply to the designation or redesignation of a reservation enterprise zone.

(Management of Enterprise Zone)

SECTION 21. ORS 285B.671 is amended to read:

285B.671. (1) The sponsor of an enterprise zone shall:

(a) Appoint a local zone manager. Upon appointment of the local zone manager, the sponsor shall provide written notice thereof to the Economic and Community Development Department, the county assessor and the Department of Revenue.

(b) Provide enhanced local public services, local incentives and local regulatory flexibility included in the application for designation of the enterprise zone or in the resolution under ORS 285B.680 [(6)] (7) to [precertified] authorized or qualified business firms and assist authorized or qualified business firms in using enhanced local public services, local incentives and local regulatory flexibility.

(c) [Process] Review and approve or deny applications [from eligible business firms for precertification] for authorization under ORS 285B.719.

(d) Assist the county assessor in [reviewing tax exemption applications under ORS 285B.722] administering the property tax exemption and in performing other duties assigned to the assessor under ORS 285B.650 to 285B.728.

(e) [Prepare, implement and annually] Maintain, implement and periodically update a plan for marketing the enterprise zone including strategies for retention, expansion, start-up and recruitment of eligible business firms.

(f) Manage the enterprise zone in accordance with ORS 285B.650 to 285B.728.

(g) Identify property available for sale or lease to eligible business firms under ORS 285B.674.

(h) Prepare indices of street addresses, tax lot numbers or other information to facilitate the identification of land inside of an urban enterprise zone.

(i) Provide written notice to the county assessor, the Department of Revenue, the Economic and Community Development Department and any relevant publicly funded job training provider of the conditions and policies adopted or normally sought by the sponsor under section 32, 33 or 34 of this 2003 Act and take the actions necessary to implement and enforce the conditions and policies and any other reasonable requirements imposed pursuant to section 33 or 34 of this 2003 Act.

(j) Conduct, or assist in conducting, annual reporting of enterprise zone activity or effort, if requested by the county assessor or the Economic and Community Development Department.

[(2) A sponsor of an enterprise zone may require that an application for precertification be accompanied by a filing fee of $200 or up to one-tenth of one percent of the value of the proposed investment in qualified property at the time of the precertification.]

[(3)] (2) If more than one city or county sponsors an enterprise zone, [they] the jurisdictions shall act jointly in performing the duties imposed on a sponsor under ORS 285B.650 to 285B.728.

[(4) Notwithstanding ORS 285B.719 (3), the sponsor of an urban enterprise zone may require an eligible business firm seeking precertification under ORS 285B.719 within that zone to satisfy other conditions for precertification that the zone sponsor may impose that are reasonably related to the public purpose of providing opportunities for groups of persons, as defined by the zone sponsor, to obtain employment, including but not limited to provisions for training and procedures for monitoring and verifying compliance with the conditions. Such conditions may be imposed only pursuant to a policy adopted by the zone sponsor that establishes standards for the imposition of the conditions. Conditions imposed by a zone sponsor under this subsection shall be in addition to, and not in lieu of, conditions and requirements imposed under ORS 285B.650 to 285B.728 and shall not affect the duties of the Department of Revenue under ORS 285B.692 or of the county assessor under ORS 285B.695.]

[(5) A sponsor of an enterprise zone that imposes conditions for precertification on eligible business firms under subsection (4) of this section shall submit a written report every four years to the Legislative Assembly concerning the application and effects of such conditions on the eligible businesses within the enterprise zone. A report required by this subsection shall first be submitted to the Seventieth Legislative Assembly.]

SECTION 22. ORS 285B.674 is amended to read:

285B.674. Subject to the requirements of the Oregon Constitution [and any] or any other applicable law, the State of Oregon and municipal corporations that own any real property within an enterprise zone that is zoned for use by eligible businesses and that is not used or designated for some public purpose shall make that real property available for lease or purchase by [precertified or qualified] authorized business firms. Real property shall be leased or sold under this section only upon the condition that [an eligible] the authorized business firm promptly develop the real property for a use [which has been precertified] that is consistent with the use described in the application for authorization under ORS 285B.719.

SECTION 23. ORS 285B.672 is amended to read:

285B.672. (1) A sponsor of an existing enterprise zone may seek to have the zone designated for electronic commerce under this section.

(2) The sponsor shall file an application to have the zone designated for electronic commerce with the Economic and Community Development Department. The application shall be in the form and contain the information that the department by rule may require.

(3) The application shall be accompanied by a copy of a resolution, adopted by the governing body of the sponsor, requesting that the zone be designated for electronic commerce.

(4) The department shall review applications for electronic commerce designation and shall approve no more than four zones for electronic commerce designation. [In approving zones for electronic commerce designation, the department shall strive to approve zones for electronic commerce designation in different geographic areas of this state.]

(5) The sponsor may by resolution revoke an electronic commerce designation made under this section. If an election is revoked, the sponsor may not subsequently seek reinstatement of electronic commerce designation.

SECTION 24. ORS 285B.673 is amended to read:

285B.673. (1) Notwithstanding ORS 285B.672 [and 285B.675], a city shall be designated for electronic commerce if the city:

(a) By resolution of the governing body of the city, declares itself a city designated for electronic commerce;

(b) As of January 1, 2002, has a population of more than 1,500 but less than 2,000;

(c) Is located less than 25 miles from a city with a population of more than 500,000; and

(d) Is located less than 10 miles from a city with a high concentration of high technology firms and with a population that, as of January 1, 2002, does not exceed 85,000.

(2) Only one city may be designated for electronic commerce under this section, and that designation shall be made without consideration of the numeric [or geographic] limitations imposed by ORS 285B.672.

(3)(a) A city does not need to [be a] sponsor [of] an enterprise zone to be designated for electronic commerce under this section.

(b) The governing body of a city designated for electronic commerce under this section does not have to comply with the requirements of ORS [285B.650 to 285B.728, except that] 285B.662, but the governing body must take all actions that are required of a sponsor of a nonurban enterprise zone under ORS 285B.650 to 285B.728 with respect to business firms seeking exemption under ORS 285B.698 [that are required of a sponsor of a nonurban enterprise zone].

(c) A business firm that is [located in] engaged in electronic commerce at a location inside a city designated for electronic commerce under this section and that seeks an exemption under ORS 285B.698 must take all actions required of a qualified business firm under ORS 285B.650 to 285B.728, except that the business firm does not need to be located within an enterprise zone.

(d) A business firm described in paragraph (c) of this subsection:

(A) Shall be an eligible business firm, the qualified property of which is exempt from taxation under ORS 285B.698 as if the qualified property were located in an enterprise zone under ORS 285B.672; and

(B) May claim the tax credit under ORS 315.507.

(4) For the purpose of determining the boundaries of a city designated for electronic commerce, “city” includes:

(a) Territory that is annexed into the city, as of the date of the annexation;

(b) Land within the urban growth boundary of the city; and

(c) Territory that is added to the urban growth boundary described in paragraph (b) of this subsection, as of the date the urban growth boundary is extended to such territory.

SECTION 25. ORS 285B.680 is amended to read:

285B.680. (1) The sponsor of an enterprise zone may submit a request to the Economic and Community Development Department to change the boundary of the enterprise zone. A request shall include:

(a) A copy of the resolution of the governing body of the sponsor requesting the change;

(b) If subsection (7) of this section applies, a copy of the resolution described in subsection (7) of this section;

[(b)] (c) A map clearly indicating the existing boundary and the proposed change thereto;

[(c)] (d) A legal description of each area to be withdrawn from or added to the existing enterprise zone; and

[(d)] (e) Other information required by the department.

(2) The amended enterprise zone shall:

(a) Add land zoned for use by eligible business firms[:]

[(A) Which] that has or will have infrastructure facilities,[available; or]

[(B) Where] road access [exists or will be provided], on-sitewater [is or will be available on-site], on-site sewage disposal [is or will be provided on-site] and necessary utility services [are or will be provided];

(b) Continue to include any [precertified or qualified] authorized business firms within the enterprise zone;

(c) Add residential areas or nonresidential areas that are adjacent to residential areas only if the level of economic hardship [therein] in the areas to be added is at least as severe as the conditions that existed at the time the original enterprise zone was designated or that currently exist in the original enterprise zone;

(d) Retain at least 50 percent of the lands in the original enterprise zone; and

[(e) Consist of a total area of not more than 12 square miles in size. The area of the zone shall be calculated by excluding that portion of the zone which lies below the ordinary high water mark of a navigable body of water, and any road, railroad, electric transmission line or pipeline rights of way that connect otherwise unconnected areas of an enterprise zone. Such areas shall not be more than five miles apart; and]

[(f) Have 12 miles or less as the greatest distance between any two points within a zone amended under this section.]

(e) Meet the applicable total area and greatest distance requirements set forth in ORS 285B.662.

(3) If the enterprise zone is a reservation enterprise zone and the land to be added to the zone is not described in ORS 285B.770, the request for a boundary change, and the resulting boundary of the zone, must fully satisfy the provisions of this section.

[(3)] (4) A request under subsection (1) of this section may include a proposal to:

(a) Remove only the land that is residential [areas or land] or not zoned or available for use by eligible business firms; or

(b) Change the name of the enterprise zone.

[(4)] (5) The boundary of an urban enterprise zone [shall] may not be modified to include land located outside a regional or metropolitan urban growth boundary.

[(5)] (6) A request to modify the boundary of a nonurban enterprise zone to include land located outside an urban growth boundary shall satisfy the requirements of subsections (1) and (2) of this section and shall [include such] satisfy any other criteria [as] that the department may adopt by rule.

[(6)] (7) If an area to be added to an enterprise zone is under the jurisdiction of a city or county that is not a sponsor of the enterprise zone, the governing body of that city or county shall submit a resolution requesting the change and [that it] requesting that the city or county become a sponsor. The resolution of the joining city or county shall be submitted jointly with the resolution adopted by the governing body of the existing sponsor. The resolution of the city or county may:

(a) Include a binding proposal for enhanced local public services, local incentives or local regulatory flexibility to be effective within the portion of the enterprise zone to be under the jurisdiction of that city or county; or

(b) Include a restriction described in section 17 (4) of this 2003 Act. A restriction made under this paragraph may be made without regard to the time limitation described in section 17 (4)(c) of this 2003 Act and becomes final on the effective date of the boundary change.

[(7)] (8) The department shall review the request for a boundary change. If the request is incomplete or does not satisfy the requirements of this section, the department shall seek additional information as necessary or shall return the request to the sponsor. If the request is returned, the sponsor may submit a revised request at any time. If the request is complete and does satisfy the requirements of this section, the Director of the Economic and Community Development Department shall order a change in the boundary of an enterprise zone based on the request of the sponsor and specify the effective date of the boundary change, which [shall] may not be earlier than the receipt of a completed request.

[(8)] (9) A change in the boundary of an enterprise zone under this section [shall] does not change the termination date of the enterprise zone under ORS 285B.686 [(3)] (2).

SECTION 26. ORS 285B.683 is amended to read:

285B.683. [(1) Notwithstanding ORS 285B.656 (3) and 285B.680 (2)(e) and (f), a nonurban enterprise zone may be designated under ORS 285B.659 or 285B.689 or have its zone boundary changed under ORS 285B.680 so that:]

[(a) A separate area of the zone may be as far as 15 miles from another area of the zone, when the separate area is entirely contained within a sparsely populated county;]

[(b) The zone may have 20 or fewer miles as the greatest distance between any two points within the zone, when only a portion of the zone is contained within a sparsely populated county; or]

[(c) The zone may have 25 or fewer miles as the greatest distance between any two points within the zone, when the zone is entirely contained within a sparsely populated county or within two or more sparsely populated counties.]

[(2)] (1) If the population density of a county increases to more than 100 persons per square mile, so that the county is no longer a sparsely populated county, any existing nonurban enterprise zone located wholly or partly within that county that was designated or that had its zone boundary changed [under subsection (1) of this section] shall continue to exist with that zone boundary until terminated. [or until] A [subsequent] boundary change under ORS 285B.680 that is subsequent to the date on which the county ceases to be a sparsely populated county may [. However, any subsequent boundary change under ORS 285B.680 shall] not add an area to the zone that:

(a) Is a separate area farther than five miles from the nearest point on the existing boundary;

(b) Increases the distance between the two points in the zone that are the farthest apart; or

(c) Creates a new line of distance to the farthermost opposite point in the zone that is longer than the greatest distance between any two existing points in the zone.

[(3) Subsection (2) of this section does not limit the maximum distance within an enterprise zone to less than what is otherwise specifically allowed under subsection (1) of this section or ORS 285B.677 or 285B.680.]

[(4) Nothing in this section allows an enterprise zone to be more than 12 square miles in total area except as provided under ORS 285B.677.]

[(5) As used in this section, “sparsely populated county” means a county with a density of 100 or fewer persons per square mile, based on the most recently available population figure for the county from the Portland State University Center for Population Research and Census.]

(2) An applicant for designation under ORS 285B.656 or a sponsor requesting a change to a nonurban enterprise zone under ORS 285B.680 in a sparsely populated county may seek a waiver of the distance limitations imposed on the zone under ORS 285B.662 (4). The Director of the Economic and Community Development Department shall grant all or part of the waiver if:

(a) The proposed designation is to be made or the proposed boundary change satisfies all other requirements for a boundary change under ORS 285B.680; and

(b) The director determines, 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 ORS 285B.650 to 285B.728.

(Duties of Property Tax Administrators)

SECTION 27. ORS 285B.692 is amended to read:

285B.692. In addition to any other powers granted by law, for the purposes of ORS [285B.692] 285B.650 to 285B.728, the Department of Revenue shall:

(1) Adopt any rules the Department of Revenue considers necessary to implement ORS 285B.692, 285B.695, 285B.698, 285B.701, 285B.713, 285B.714, 285B.719, 285B.722[, 285B.725] and 285B.728and sections 34a, 37, 43, 44 and 45 of this 2003 Act.

(2) Assist the Economic and Community Development Department, county assessors and the sponsors of enterprise zones in their efforts to [precertify] authorize or qualify eligible business firms.

(3) Assist an eligible business firm proposing to do business within an enterprise zone or doing business within an enterprise zone to obtain the benefits of applicable tax incentive or inducement programs administered or supervised by the Department of Revenue.

(4) Issue and print forms and worksheets to be used by [eligible] business firms [applying for precertification or by precertified business firms applying for a property tax exemption under ORS 285B.719 or 285B.722] to make authorization applications or exemption claims.

[(5) Submit a written report to the Economic and Community Development Department on or before January 15 in each year. The report shall include the number of jobs created and the value of investments in qualified property made by qualified business firms in the current tax year, and other information considered necessary by the Department of Revenue or required by the Economic and Community Development Department.]

SECTION 28. ORS 285B.695 is amended to read:

285B.695. The assessor of a county within which an enterprise zone is located shall:

(1) Assist the sponsor, the local zone manager appointed by the sponsor and [eligible or precertified] business firms in determining whether property will qualify for a property tax exemption under ORS 285B.698 [and 285B.713].

(2) Review and approve or deny applications from eligible business firms for [precertification] authorization under ORS 285B.719.

(3) Process [applications from precertified business firms] claims for property tax exemptions filed under ORS 285B.722 and exempt the qualified property of authorized business firms from ad valorem property taxation in accordance with ORS 285B.650 to 285B.728.

(4) Take action necessary under ORS 285B.728 [if a business firm or property is no longer qualified for the property tax exemption].

(5) Submit a written report to the Department of Revenue on or before [December] July 1 [in] of each assessment year. The report for each enterprise zone, or portion of a zone that is located in the county, shall include the [number of jobs created and the value of investments in qualified property made by qualified business firms in the current tax year, and other information considered necessary by the assessor or required by the Department of Revenue. The assessor shall provide copies of the report to the sponsors of enterprise zones located within the county and as directed by the Department of Revenue.] following information, organized by business firm:

(a) The assessor’s estimate of the assessed value of qualified property that was exempt under ORS 285B.698 for the previous tax year and the taxes that would have been imposed on the qualified property, as entered on the assessment and tax roll under ORS 285B.698 (7).

(b) The annual average number of employees of the firm within the enterprise zone during the previous assessment year, as reported on the exemption claim filed under ORS 285B.722.

(c) The annual average compensation for the previous assessment year of new employees hired by the firm within the enterprise zone, if the firm is subject to the annual compensation requirements of section 34 (3) of this 2003 Act, as reported on the exemption claim filed under ORS 285B.722.

(d) The assessor’s estimate of the assessed value, for the current tax year, of qualified property that was exempt under ORS 285B.698 for the previous tax year and that is not exempt under ORS 285B.698 for the current tax year.

(e) The total investment cost of qualified property first reported on the exemption claim filed under ORS 285B.722 that includes a property schedule submitted by the business firm pursuant to section 43 of this 2003 Act for the current tax year.

(f) The current number of employees of the firm, as reported on the exemption claim filed under ORS 285B.722 and described in paragraph (e) of this subsection.

(g) Any other information the assessor or the Department of Revenue considers appropriate.

(6) Send a copy of a report prepared under subsection (5) of this section to the sponsor of the enterprise zone and to the Economic and Community Development Department.

(Eligible Business Firms)

SECTION 29. ORS 285B.707 is amended to read:

285B.707. (1) [Except as provided in subsections (3) and (4) of this section,] To be an eligible business firm, a business firm must be engaged, or proposing to engage, within the enterprise zone, in the business of providing goods, products or services to [other] businesses or other organizations [, and not to the general public for personal or household use or consumption,] through activities including, but not limited to, manufacturing, assembly, fabrication, processing, shipping or storage.

(2) A business firm is not an eligible business firm if the firm is:

(a) Engaged within the enterprise zone in the business of providing goods, products or services to the general public for personal or household use.

(b) [Businesses] Significantly engaged in a business [activities] activity within the enterprise zone [such as] that consists of retail sales or services, child care, housing, retail food service, health care, tourism, entertainment, financial services, professional services, leasing space to others, property management, construction or other similar activities [are not eligible business firms], even if for another business or organization.

[(3) Notwithstanding subsection (1) or (2) of this section, a business firm that operates a hotel, motel or destination resort is an eligible business firm regardless of the sale of services for personal consumption, if allowed in the enterprise zone under ORS 285B.716.]

[(4)] (3) [Notwithstanding any other provision of this section,] If a business firm described in subsection (2) of this section engages in an activity described in subsection (1) of this section, the business firm is an eligible business firm if the activity is performed at a location that is separate from the activity of the firm that is described in subsection (2) of this section. [For purposes of determining whether a business firm described in this subsection satisfies the requirements of ORS 285B.704, only the operations of the firm that are described in subsection (1) of this section and employees working a majority of their time in those operations shall be considered] Property at the location at which the firm conducts an activity described in subsection (2) of this section may not be exempt under ORS 285B.698.

[(5)] (4) Two or more business firms that otherwise meet the requirements of this section may elect to be treated as one eligible business firm if 100 percent of the equity interest in the business firms is owned by the same person or persons, or if one of the business firms owns 100 percent of the equity interest of the other or others.

[(6)] (5) Notwithstanding [subsection (1) or (2)] subsections (1) to (3) of this section, each of the following business firms is an eligible business firm under subsection (1) of this section:

(a) A business firm engaged in the activity of providing a retail or financial service [is an eligible business firm] within the enterprise zone if:

[(a)] (A) The activity serves customers by responding to orders or requests received only by telephone, computer, the Internet or similar means of telecommunications; and

[(b)] (B) Not less than 90 percent of the customers or orders are located and originate in an area from which long distance telephone charges, in the absence of a toll-free number, would apply if the order were placed by telephone.

[(7) Notwithstanding subsection (1) or (2) of this section,]

(b) A business firm that [makes an investment in qualified property at] operates a facility within the enterprise zone that serves statewide, regional, national or global operations of the firm through administrative, design, financial, management, marketing or other activities [is an eligible business firm], without regard to the relationship of [such] these activities to any otherwise eligible activities within the enterprise zone.[if:]

[(a) In approving the application for precertification, the zone sponsor includes with the application a formal finding that the facility complies with the requirements of this subsection and that the size of the proposed investment, the employment at the facility or the nature of the activities at the facility will significantly enhance the local economy, in relation to the overall purpose and employment of the zone;]

[(b) The actual investment and facility of the firm are consistent with the descriptions presented in the precertification application; and]

[(c) For purposes of ORS 285B.704, all employees at the facility constitute employment of the firm, as defined in ORS 285B.704.]

(c) A business firm that operates a hotel, motel or destination resort in the enterprise zone if the sponsor has elected under section 17 of this 2003 Act to treat a business firm engaged in hotel, motel or destination resort operations in an enterprise zone as an eligible business firm.

[(8)] (d) [Notwithstanding subsection (1) or (2) of this section,] A business firm that is engaged in electronic commerce [is an eligible business firm] if the enterprise zone has been approved for electronic commerce designation under ORS 285B.672.

(Authorization)

SECTION 30. ORS 285B.719 is amended to read:

285B.719. (1)(a) Any eligible business firm [proposing to apply for the tax exemption provided] seeking to have property exempt from property taxation under ORS 285B.698 shall, before the commencement of direct site preparation activities or the construction, addition, modification or installation of qualified property in an enterprise zone, and before the hiring of eligible employees, apply for [precertification with the sponsor of the zone and with the county assessor of the county or counties in which the zone is located] authorization under this section.

(b) The application shall be made on a form prescribed by the Department of Revenue and the Economic and Community Development Department.

(c) The application shall be filed with the sponsor of the zone. A sponsor may require that the application filed with the sponsor be accompanied by a filing fee. If required, the filing fee may not exceed the greater of $200 or one-tenth of one percent of the value of the investment in qualified property that is proposed in the application for authorization. The filing fee may be required for the filing of applications only after the sponsor adopts a policy, consistent with Economic and Community Development Department rules, authorizing the imposition of the filing fee.

(2) The application shall contain the following information:

(a) A description of the nature of the firm’s current and proposed business operations [in] inside the boundary of the enterprise zone;

(b) A description and estimated [cost or] value of the qualified property to be constructed, added, modified or installed [in] inside the boundary of the enterprise zone;

(c) The number of employees of the firm that are employed within the enterprise zone, averaged over the previous 12 months, and an estimate of the number of employees that will be hired by the firm;

(d) A commitment to meet all requirements of ORS 285B.704 and 285B.710, and to verify compliance with these requirements;

(e) A commitment to satisfy all additional conditions for [precertification] authorization that are imposed by the enterprise zone sponsor under [ORS 285B.671 (4)] section 32, 33 or 33a of this 2003 Act or pursuant to an agreement entered into under section 34 of this 2003 Act, and to verify compliance with these additional conditions; [and]

(f) A commitment to renew the application, consistent with section 34a of this 2003 Act, every two years while the zone exists if the firm has not filed a claim under ORS 285B.722 that is based on the application; and

[(f)] (g) Any other information considered necessary by the Department of Revenue and the Economic and Community Development Department.

(3) After an application is submitted to a sponsor, the business firm may revise or amend the application. An amendment or revision may not be made on or after January 1 of the first assessment year for which the qualified property associated with the application is exempt under ORS 285B.698.

(4) If an application for authorization appears to be complete and the proposed investment appears to be eligible for authorization, the sponsor and the business firm shall conduct a preauthorization consultation. The county assessor shall be timely notified and have the option to participate in the consultation. The consultation shall:

(a) Identify issues with the potential to affect compliance with relevant exemption requirements, including but not limited to enterprise zone boundary amendments;

(b) Arrange for methods and procedures to establish and verify compliance with applicable requirements; and

(c) Identify the person who is obligated to notify the county assessor if requirements are not being satisfied.

(5) Upon completion of the consultation, the sponsor shall prepare a written summary of the consultation made under subsection (4) of this section, attach the summary to the application and forward the application to the county assessor of each county in which the zone is located for review by the assessor.

[(3)] (6) Following the preauthorization conference under subsection (4) of this section, the sponsor and the county assessor shall authorize the business firm by approving the application, if the sponsor and county assessor determine that:

(a) The current or proposed operations of the business firm [is] in the enterprise zone result in the firm being eligible under ORS 285B.707; and

(b) [and that] The firm has [committed to meet the requirements of ORS 285B.704, the sponsor and county assessor shall precertify the business firm by approving the application] made the commitments and provided the other information required under subsection (2) of this section.

(7) If the business firm seeking authorization is an eligible business firm described in ORS 285B.707 (5)(b), the sponsor must, as a condition to approving the application, make a formal finding that the business firm is an eligible business firm under ORS 285B.707 and that the size of the proposed investment, the employment at the facility of the firm or the nature of the activities undertaken by the firm within the enterprise zone will significantly enhance the local economy, promote the purposes for which the zone was created and increase employment within the zone.

(8) The approval of both the sponsor and the county assessor under this section shall be prima facie evidence that the [eligible] qualified property of the business firm will [be qualified for] receive the property tax exemption under ORS 285B.698. [Neither the sponsor nor the county assessor shall be liable in any way if the Department of Revenue later determines that a precertified business firm is not qualified for a property tax exemption or if either the county assessor or the Department of Revenue determines that the precertified business firm has not satisfied the requirements of ORS 285B.704.] In approving the application, the sponsor and county assessor shall provide proof of approval as directed by the Economic and Community Development Department.

[(4)] (9) If the sponsor or county assessor fails or refuses to [precertify] authorize the business firm, the business firm may appeal to the Oregon Tax Court under ORS 305.404 to 305.560. The business firm shall provide copies of the firm’s appeal to the sponsor, county assessor, the Department of Revenue and the Economic and Community Development Department.

[(5) Notwithstanding the fact that an enterprise zone has terminated under ORS 285B.686 or that a zone boundary has been changed, an eligible business firm that has obtained precertification under this section shall be entitled to a property tax exemption under ORS 285B.698, if, as determined by the Economic and Community Development Department:]

[(a) The firm’s application for precertification has not been withdrawn by the firm or has not expired;]

[(b) The firm completes construction, modification or installation of the qualified property within a reasonable time and without interruption of construction or installation activity; and]

[(c) The firm satisfies all other requirements of ORS 285B.704 and the precertification.]

[(6) If an enterprise zone is terminated under ORS 285B.686, the exemption under ORS 285B.698 shall be granted only if the sponsor and county assessor approve the application for precertification, such that the sponsor, county assessor or both formally granted such approval on or before the effective date of the termination of the zone, and the business firm satisfies subsection (5) of this section. If the sponsor or county assessor refuses or fails to precertify the firm under this subsection, the firm may appeal under subsection (4) of this section and may be granted the exemption.]

[(7)] (10) [Precertification] Authorization under this section [shall] does not ensure that property constructed, added, modified or installed by the [precertified] authorized business firm will receive property tax exemption under ORS 285B.698. The sponsor and the county assessor are not liable in any way if the Department of Revenue or the county assessor later determines that an authorized business firm does not satisfy the requirements for an exemption on qualified property.

[(8) Notwithstanding any other provision of this section, if a business firm satisfies the requirements of ORS 285B.704 and has constructed, modified or installed qualified property eligible for exemption under ORS 285B.698, the precertification requirement of subsection (1) of this section or ORS 285B.722 may be waived as specifically provided by rule or for good cause by the Department of Revenue.]

(11) Notwithstanding subsection (1) of this section, if an eligible business firm has begun or completed the construction, addition, modification or installation of property that meets the qualifications of ORS 285B.713, and the property has not yet been subject to property tax, then, for purposes of ORS 285B.650 to 285B.728, the firm shall be authorized under this section if the firm files an application that is allowed under subsection (12) of this section and is otherwise authorized under this section.

(12) Late submission of an application under this section is allowed if:

(a) A rule permits late submissions of applications under this section; or

(b) The Department of Revenue waives filing deadline requirements under this section. The department shall issue a letter to the eligible business firm and zone sponsor setting forth the waiver under this paragraph.

SECTION 31. ORS 285B.701 is amended to read:

285B.701. (1) The Legislative Assembly finds that the standard procedure for [precertification] authorization in an enterprise zone inappropriately deters development or redevelopment of qualified buildings on speculation for subsequent sale or lease to eligible business firms.

(2) Notwithstanding ORS 285B.719 (1), a new building or structure or an addition to or modification of an existing building or structure may qualify for the exemption allowed under ORS 285B.698 [or 285B.710] if the qualified property is leased or sold by an unrelated party to one or more [precertified] authorized business firms after commencement of the construction, addition or modification but prior to use or occupancy of the qualified property.

(3) [For purposes of ORS 285B.722,] A business firm [shall] may not be considered [precertified] authorized and is not qualified for the exemption allowed under ORS 285B.698 [or 285B.710] if the county assessor discovers prior to initially granting the exemption that the application for [precertification] authorization was not submitted by the business firm in a timely manner in accordance with ORS 285B.719 [(1)], except as allowed under subsection (2) of this section or ORS 285B.719 [(8)] (11) and (12).

(4) Records, communications or information submitted to a public body by a business firm for purposes of ORS 285B.650 to 285B.728 that identify a particular qualified property, that reveal investment plans prior to [precertification] authorization, that include the compensation the firm provides to firm employees, that are described in ORS 192.502 (16) or that are submitted under [ORS 285B.728] section 43 or 45 of this 2003 Act are exempt from disclosure under ORS 192.410 to 192.505 and, as appropriate, shall be shared among the county assessor, the zone sponsor, the Department of Revenue and the Economic and Community Development Department.

SECTION 32. (1) The sponsor of an urban enterprise zone may require an eligible business firm seeking authorization under ORS 285B.719 to satisfy other conditions in order for the firm to be authorized.

(2) The conditions that a sponsor may impose under this section must be reasonably related to the public purpose of providing opportunities for groups of persons, as defined by the sponsor, to obtain employment, including but not limited to providing training to these groups of persons.

(3) The sponsor may establish procedures for monitoring and verifying compliance with conditions imposed on the firm under this section and require the firm to agree to the procedures as a condition to authorizing the firm.

(4) Conditions established under this section may be imposed on a firm only if the sponsor has adopted a policy that establishes standards for the imposition of the conditions.

(5) Conditions imposed by a sponsor under this section shall be in addition to, and not in lieu of, conditions and requirements imposed under ORS 285B.650 to 285B.728 or pursuant to an agreement entered into under section 34 of this 2003 Act and do not affect the duties of the Department of Revenue or of the county assessor under ORS 285B.650 to 285B.728.

(6) A sponsor of an urban enterprise zone that imposes conditions for authorization on eligible business firms under this section shall submit a written report every four years to the Legislative Assembly concerning the application and effects of the conditions on business firms within the enterprise zone.

SECTION 33. For purposes of ORS 285B.704 (2):

(1) The sponsor of an enterprise zone, at the time authorization is sought by a business firm under ORS 285B.719, shall establish a minimum number of employees the firm must maintain in the enterprise zone throughout the exemption period.

(2) The sponsor, at the time authorization is sought by a business firm under ORS 285B.719, may establish other reasonable conditions with which the firm must comply in order for qualified property of the firm to be exempt under ORS 285B.698.

(3) Employment requirements and other conditions established by the sponsor under this section shall be set forth in a resolution adopted by the governing body of the sponsor at the time the sponsor approves the application of the business firm for authorization under ORS 285B.719.

(4) A resolution adopted pursuant to this section may be modified at the request of the business firm at any time prior to the start of the first tax year for which an exemption under ORS 285B.698 is claimed.

SECTION 33a. The requirements of ORS 285B.704 (2)(b)(B) are met if the qualified business firm does all of the following:

(1) The firm demonstrates at least a 10 percent increase in productivity no later than 18 months following January 1 of the first assessment year for which an exemption under ORS 285B.698 is claimed. Unless further specified by the sponsor of the enterprise zone through the resolution adopted under section 33 of this 2003 Act:

(a) The increase must be in business operations of the firm that are using qualified property receiving the exemption;

(b) Productivity is measured by dividing physical units or quantity of output by the number of labor hours engaged in the operations that produced the physical units or quantity of output; and

(c) The base level of productivity shall be established over a minimum 12-month period preceding the date on which the qualified property is placed in service.

(2) The firm maintains or exceeds the 10 percent increase in productivity under subsection (1) of this section as an annual average rate for each subsequent assessment year during the remainder of the exemption period.

(3) On or before April 1 of each of the first three assessment years for which an exemption is claimed, the firm deposits into an account established by the sponsor an amount equal to 25 percent of the estimated tax savings arising from the exemption for that year. The sponsor may adopt additional specifications or requirements applicable to this subsection in the resolution the sponsor adopts under section 33 of this 2003 Act. Consistent with this subsection and any additional specifications or requirements adopted by the sponsor:

(a) For up to 30 months following the relevant April 1 date for which a deposit is made, the firm may draw from the account amounts equal to any expense incurred for training or retraining employees to promote or facilitate productivity increases under this section, except that the total amount withdrawn from the account for that deposit may not exceed $3,500 per trained employee;

(b) Any amount attributable to the deposit that remains in the account after the 30-month period in which firm withdrawals may be made under paragraph (a) of this subsection shall be transferred to a special fund for use by local publicly funded job training providers; and

(c) No more than 18 months after the deposit, the estimated tax savings on which the deposit was based shall be reconciled with the actual tax savings arising from the exemption. The reconciliation shall be accomplished by the firm immediately making a further deposit into the account to cover any shortfall or by being reimbursed from the account for any surplus. A deposit or reimbursement made pursuant to this paragraph does not affect withdrawals or transfers that occur as a result of paragraph (a) or (b) of this subsection.

SECTION 34. (1) An eligible business firm seeking authorization under ORS 285B.719 and the sponsor of the enterprise zone in which the firm intends to invest may enter into a written agreement to extend the period during which the qualified property is exempt from taxation under ORS 285B.698 if the firm complies with the terms of the agreement.

(2) The period for which the qualified property is to continue to be exempt must be set forth in the agreement and may not exceed two additional tax years.

(3) In order for an agreement under this section to extend the period of exemption, the agreement must be executed on or before the date on which the firm is authorized, and:

(a) If the enterprise zone is a nonurban enterprise zone or an urban enterprise zone located inside a metropolitan statistical area of fewer than 400,000 residents, the agreement must require that the firm meet both of the following:

(A) Annually compensate all new employees hired by the firm at an average rate of not less than 150 percent of the county average annual wage for each assessment year during the tax exemption period, as determined at the time of authorization.

(B) Any additional requirement that the sponsor may reasonably request.

(b) If the enterprise zone is an urban enterprise zone located inside a metropolitan statistical area of 400,000 residents or more, the agreement must require that the firm meet any additional requirement the sponsor may reasonably require.

(4) If a firm enters into an agreement under this section that includes a compensation requirement under subsection (3)(a)(A) of this section and the firm subsequently submits one or more statements of continued intent under section 34a of this 2003 Act, notwithstanding the terms of the agreement made under this section, for each statement of continued intent submitted, the county average annual wage under subsection (3)(a)(A) of this section shall be adjusted to a level that is current with the statement.

SECTION 34a. (1) In the case of an authorized business firm that has not yet claimed the exemption under ORS 285B.698 on qualified property:

(a) After the January 1, but on or before the April 1, that first occurs more than two years after the application for authorization is approved, an authorized business firm shall submit a written statement to both the sponsor and the county assessor attesting to the firm’s continued intent to complete the proposed investment and seek the enterprise zone exemption. The statement may include significant changes to the descriptions and estimates of anticipated qualified property or employment. If the firm is subject to a compensation requirement under section 34 (3)(a)(A) of this 2003 Act, the statement shall acknowledge that the applicable county average annual wage in the agreement is updated to equal the level that is current with the statement.

(b) Every two years after the submission of a statement described in paragraph (a) of this subsection, the firm shall submit another such statement. The statement must be submitted after January 1, but on or before April 1 of that year.

(2) If the firm fails to submit a statement required under subsection (1) of this section, the authorization of the firm shall be considered inactive. An inactive authorized business firm may claim the exemption under ORS 285B.698 only as provided under subsection (3) of this section.

(3)(a) An inactive authorized business firm may file an exemption claim under ORS 285B.722 only if the claim includes a filing fee equal to the greater of $200 or one-tenth of one percent of the real market value of the qualified property listed in the property schedule that is filed with the claim.

(b) The filing fee required under this subsection is in addition to and not in lieu of any other required filing fee.

(c) An exemption under ORS 285B.698 may not be granted if the filing fee does not accompany the claim.

(d) The real market value of the property used to determine the filing fee under this subsection may be appealed in the same time and manner as other determinations of value made by the assessor are appealed.

(e) Any filing fee collected under this subsection shall be deposited to the county general fund.

(4) If an inactive authorized business firm is subject to a compensation requirement under section 34 (3)(a)(A) of this 2003 Act and files a claim for exemption under ORS 285B.722 in the manner prescribed in subsection (3) of this section, notwithstanding the terms of the agreement executed under section 34 of this 2003 Act, the applicable county average annual wage shall be updated to equal the level that is current with the date of the filing of the claim.

(5) This section applies only until the enterprise zone is terminated. Following zone termination, ORS 285B.686 applies.

(Construction-in-Process Exemption)

SECTION 34b. (1) Property shall be exempt from ad valorem property taxation under this section if:

(a) The property is located in an enterprise zone;

(b) The property is owned or leased by an authorized business firm or the business firm is contractually obligated to own or lease the property upon the property’s being placed in service;

(c) The property is or, upon completion of the construction, addition, modification or installation of the property, will be qualified property;

(d) The authorization of the business firm remains active under ORS 285B.719 or section 34a of this 2003 Act;

(e) The property has not been subject to exemption under ORS 307.330 at the location;

(f) The property is not and will not be centrally assessed under ORS 308.505 to 308.665;

(g) The property is not to be operated as all or a part of a hotel, motel or destination resort; and

(h) There is no known reason to conclude that the property or the firm will not satisfy any applicable requirements for the property to be exempt under ORS 285B.698 upon being placed in service.

(2) Property may be exempt under this section for no more than two tax years, which must be consecutive.

(3) In determining whether property is exempt under this section, the county assessor:

(a) Shall adhere to the same procedures as apply under ORS 285B.698 (6) and (7); and

(b) May require the submission of additional evidence by the authorized business firm or zone sponsor showing that the property qualifies for exemption under this section. If required, the additional evidence must be submitted on or before April 1 of the assessment year.

(4) The exemption under this section does not depend on the property or the authorized business firm receiving the exemption under ORS 285B.698 or satisfying requirements applicable to the exemption under ORS 285B.698.

(5) A year in which property is exempt under this section shall be considered a year in which the property is exempt under ORS 307.330 for purposes of determining the maximum number of years for which the property may be exempt under this section or ORS 307.330.

SECTION 34c. Section 34b of this 2003 Act applies to tax years beginning on or after July 1, 2003.

(Property Tax Exemption)

SECTION 35. ORS 285B.698 is amended to read:

285B.698. [(1) Upon compliance with ORS 285B.722, qualified property of a qualified business firm shall be exempt from ad valorem property taxation, if:]

[(a) The qualified property was constructed, added to, modified or installed in furtherance of the production of income;]

[(b) The property or portion of the property for which exemption is sought was in use or occupancy no later than April 1 of the assessment year for which exemption is sought;]

[(c) The total cost of all of the qualified property for which application for exemption is made was at least $25,000; and]

[(d) The property satisfies the requirements of ORS 285B.713.]

[(2) The exemption allowed under this section shall be allowed only for property that is owned or leased by a qualified business firm that satisfies the requirements of ORS 285B.704. If the property is leased by a qualified business firm, the qualified business firm must be required by the terms of the lease to pay or compensate the owner for the entire amount of property taxes assessed against the leased property during the lease term.]

(1) Property of an authorized business firm is exempt from ad valorem property taxation if:

(a) The property is qualified property under ORS 285B.713;

(b) The firm meets the qualifications under ORS 285B.704; and

(c) The firm has entered into a first-source hiring agreement under ORS 285B.710.

[(3)(a)] (2)(a) The exemption allowed under this section [shall first apply to the assessment year immediately following completion of the construction, addition, modification or installation of] applies to the first tax year for which, as of January 1 preceding the tax year, the qualified property is in service. The exemption shall continue for the next two succeeding [assessment] tax years if the property continues to be owned or leased by the [qualified] business firm and located in the enterprise zone.

(b) The property may be exempt from property taxation under this section for up to two additional tax years consecutively following the tax years described in paragraph (a) of this subsection, if authorized by the written agreement entered into by the firm and the sponsor under section 34 of this 2003 Act.

[(b)] (c) If qualified property of a qualified business firm is sold or leased to an eligible business firm in the enterprise zone during the period [of abatement] the property is exempt under this section, the purchasing or leasing firm is eligible to continue the exemption of the selling or leasing firm for the balance of the [abatement] exemption period, but only if any effects on employment within the zone that result from the sale or lease do not constitute substantial curtailment under [ORS 285B.728 (3)] section 40 of this 2003 Act.

[(4)] (3)(a) The exemption allowed under this section shall be 100 percent of the assessed value of the qualified property in each of the tax years for which the exemption is available.

(b) Notwithstanding paragraph (a) of this subsection:

(A) If the qualified property is an addition to or modification of an existing building or structure, the exemption shall be measured by the increase in value, if any, attributable to the addition or modification.

(B) If the qualified property is an item of reconditioned, refurbished, retrofitted or upgraded real property machinery or equipment, the exemption shall be measured by the increase in the value of the item that is attributable to the reconditioning, refurbishment, retrofitting or upgrade.

[(5)(a)] (4)(a) [No exemption shall] An exemption may not be granted under this section for qualified property assessed for property tax purposes in the county in which the [zone] property is located on or before the effective date of the:

(A) Designation of the zone; or

(B) Approval of a boundary change for the zone if the property is located in an area added to the zone.

(b) [No exemption shall] An exemption may not be granted for qualified property constructed, added [to], modified or installed in the zone or in the process of construction, addition, modification or installation in the zone on or before the effective date of the:

(A) Designation of the zone; or

(B) Approval of a boundary change for the zone if the property is located in an area added to the zone.

(c) [No exemption shall] An exemption may not be granted for any qualified property that was in [use or occupancy] service within the zone for more than 12 months by [December 31 preceding] January 1 of the first assessment year for which an [application for] exemption claim is made.

(d) [No exemption shall] An exemption may not be granted for any qualified property unless the property [was] is in use or occupancy [in the assessment] before July 1 of the year immediately following the year during which the completion of the construction, addition, modification or installation occurred.

(e) Except as provided in [ORS 285B.719 (6), no exemption shall] ORS 285B.686, an exemption may not be granted for qualified property constructed, added, modified or installed after termination of an enterprise zone.

[(6) A qualified business firm may apply for a tax exemption for additional qualified property initially occupied or used during or after the first year in which a tax exemption for the firm’s initial investment in qualified property was approved if the firm meets the applicable requirements of this section and ORS 285B.701, 285B.704, 285B.707, 285B.710, 285B.713, 285B.716, 285B.719 and 285B.722.]

(5) Property is not required to have been exempt under section 34b of this 2003 Act in order to be exempt under this section.

(6) The county assessor shall notify the business firm in writing whenever property is denied an exemption under this section. The denial of exemption may be appealed to the Oregon Tax Court under ORS 305.404 to 305.560.

(7) For each tax year that the property is exempt from taxation, the assessor shall:

(a) Enter on the assessment roll, as a notation, the assessed value of the property as if it were not exempt under this section.

(b) Enter on the assessment roll, as a notation, the amount of additional taxes that would be due if the property were not exempt.

(c) Indicate on the assessment roll that the property is exempt and is subject to potential additional taxes as provided in ORS 285B.728, by adding the notation “enterprise zone exemption (potential additional tax).”

(Qualified Property)

SECTION 36. ORS 285B.713 is amended to read:

285B.713. [(1) The property tax exemption provided under ORS 285B.698 shall be available only for qualified property of a qualified business firm.]

[(2)] (1) The following [kinds] types of property are qualified for [the] exemption [allowed] under ORS 285B.698:

(a) A [new] newly constructed building or structure [with a cost of $25,000 or more].

(b) [An] A new addition to or modification of an existing building or structure. [The total cost of qualifying additions or modifications to an existing building or structure shall be at least $25,000 in one assessment year. In order to satisfy the minimum investment requirement, the cost of two or more additions or modifications made in one assessment year to a single building or structure may be aggregated.]

(c) Any real property machinery or equipment or personal property, whether new, used or reconditioned, that is installed on property that is owned or leased by an authorized business firm, and:

(A) Newly purchased[,] or leased by the firm, unless the property is described in ORS 285B.698 (4)(a); or

(B) Newly transferred into the enterprise zone from outside the county within which the [zone] site of the firm is located and installed [in property owned or leased by a qualified business firm].

[(d) Any single item of personal property machinery or equipment, whether new, used or reconditioned, that is newly purchased, leased or transferred into the enterprise zone from outside the county within which the zone is located and installed in property owned or leased by a qualified business firm and:]

[(A) That has a cost of at least $1,000 if the property is used exclusively for producing tangible goods or is used in electronic commerce in a zone approved for electronic commerce designation under ORS 285B.672; or]

[(B) That has a cost of at least $50,000.]

[(e) A new building and associated structures owned by a governmental body that are leased to one or more qualified business firms.]

[(f) Any property otherwise described in this section that is owned or leased and operated by a business firm operating a hotel, motel or destination resort, to the extent that the property is located on the same site as the hotel, motel or destination resort and is used primarily to serve overnight guests of the hotel, motel or destination resort. For purposes of this paragraph, property is primarily used to serve guests if at least 50 percent of any receipts from such use are paid by guests.]

[(g) Any property otherwise described in this section that is owned or leased and operated by a business firm described in ORS 285B.707 (4), to the extent that the property is used exclusively in an activity described in ORS 285B.707 (1).]

[(h)] (d) Any property otherwise described in this section that is owned or leased and operated by a business firm that is engaged in electronic commerce, if the enterprise zone in which the property is located is a zone approved for electronic commerce designation under ORS 285B.672.

(2) Property described in subsection (1) of this section is qualified under this section only if:

(a) The property meets or exceeds the minimum cost requirements established under section 37 of this 2003 Act;

(b) The property satisfies applicable usage, lease or location requirements established under section 37 of this 2003 Act;

(c) The property was constructed, added, modified or installed to further the production of income;

(d) The property is owned or leased by an authorized business firm;

(e) The location of the property corresponds to the location as set forth in the application for authorization of the business firm and consists of a single site or multiple sites adjacent to or having comparable proximity to each other, within the boundaries of the enterprise zone;

(f) The property is the same general type of property as described in the application for authorization; and

(g) In the case of an eligible business firm described in ORS 285B.707 (5)(b), the actual investment at the facility of the firm is consistent with the description set forth in the application for authorization.

(3) Notwithstanding subsection (1) of this section, the following property is not qualified for exemption under ORS 285B.698:

(a) Land.

[(b) Self-propelled motorized vehicles.]

[(c) Property excluded under ORS 285B.698 (5).]

(b) Property that was not in use or occupancy for more than a 180-day period that ends during the preceding assessment year.

(c) On-site developments that, consistent with ORS 307.010, are assessed as land.

(d) Noninventory supplies, including but not limited to lubricants.

(e) Any operator-driven item of machinery or equipment or any vehicle, if the item or vehicle moves by internal motorized power. An item or vehicle described in this paragraph includes but is not limited to an item or vehicle that moves within an enclosed space.

(f) Any device or rolling stock that is pulled, pushed or carried by a vehicle that is suitable as a mode of transportation beyond the enterprise zone boundary.

(4) Subsection (3)(b) of this section does not apply to the first assessment year for which the property is exempt under ORS 285B.698.

(5) For purposes of this section and ORS 285B.698, property includes any portion or incremental unit of property that is newly constructed or installed, or that is a new addition to or modification of an existing building or structure.

SECTION 37. (1) In order for property to be qualified property under ORS 285B.713, the property must cost:

(a) $50,000 or more, in the case of:

(A) All real property that is concurrently exempt at the location; or

(B) An item of personal property that is not described in paragraph (b) of this subsection.

(b) $1,000 or more, in the case of an item of personal property that is used:

(A) Exclusively in the production of tangible goods; or

(B) In electronic commerce in an enterprise zone approved for electronic commerce designation under ORS 285B.672.

(2) The estimated cost of property set forth in an application for authorization under ORS 285B.719 shall be disregarded for purposes of determining if property is qualified property.

(3) Property that is leased by the authorized business firm may be qualified property under ORS 285B.713 only if the terms of the lease provide:

(a) During the term of the lease, that the authorized business firm is to compensate the owner of the leased property for all property taxes assessed against the leased property or that the firm is to pay these taxes; and

(b) That the term of the lease begins on or before the start of the first tax year for which the property is exempt and ends on or after the last day of the last tax year for which the property is exempt.

(4) In order for property that is owned or leased by an authorized business firm operating a hotel, motel or destination resort to be qualified property under ORS 285B.713, the property must be:

(a) Located and in service in an enterprise zone for which the sponsor has elected under section 17 of this 2003 Act to treat a business firm engaged in hotel, motel or destination resort operations as an eligible business firm;

(b) Located at the same site as the hotel, motel or destination resort or in close proximity to that site; and

(c) Used primarily to serve overnight guests of the hotel, motel or destination resort. Property is used primarily to serve overnight guests if at least 50 percent of any receipts from use of the property are paid by overnight guests.

(5) In order for property owned or leased and operated by a business firm engaged in electronic commerce in a city designated for electronic commerce under ORS 285B.673 to be qualified property, the property otherwise qualified under this section and the applicable electronic commerce operations of the firm must be located in that city.

(6)(a) As used in this section, “item of personal property” includes an integrated system consisting of various components.

(b) Consistent with paragraph (a) of this subsection, the Department of Revenue may by rule further define what constitutes an item of personal property for purposes of this section.

SECTION 38. ORS 285B.714 is amended to read:

285B.714. (1) [If an eligible business firm completes the refurbishing, retrofitting or upgrading of real property, machinery or equipment that is located within the enterprise zone, but was idle during the 18 months immediately preceding the first assessment year for which application for an enterprise zone tax exemption is made with respect to the property, the] Notwithstanding ORS 285B.713 (1)(c), an item of reconditioned, refurbished, retrofitted or upgraded real property[,] machinery or equipment that is owned or leased by an authorized business firm is qualified property under ORS 285B.713 [and potentially subject to enterprise zone tax exemption for all of the property’s value] if [the following requirements are satisfied]:

(a) The real property machinery or equipment is idle:

(A) At the time of application for authorization; and

(B) For a period of at least 18 consecutive months before or after the time of application for authorization but preceding the first assessment year of the exemption;

[(a)] (b) Prior to the period of idleness, the property was in use within the enterprise zone or elsewhere in the county for at least 12 consecutive months;

[(b)] (c) The reconditioning, refurbishing, retrofitting or upgrading of the property [involved an investment of at least $3 million] costs at least $50,000 and is completed in the year immediately preceding the first assessment year in which the property is exempt under ORS 285B.698; and

[(c) As a result of refurbishing, retrofitting or upgrading the property, the value of the property is at least $25 million higher than the assessed value for the tax year prior to the first tax year of the enterprise zone tax exemption.]

(d) The business firm applies for authorization before reconditioning, refurbishment, retrofitting or upgrading commences.

(2) The reconditioning, refurbishing, retrofitting or upgrading of an item of real property[,] machinery or equipment described in subsection (1) of this section is a modification [of property for purposes of ORS 285B.650 to 285B.728] and the extent of the exemption under ORS 285B.698 shall be determined as provided in ORS 285B.698 (3)(b)(B).

(3) ORS 285B.698 [(5)] (4)(a) to (c) does not apply to qualified property described in subsection (1) of this section.

[(4) ORS 285B.704 (1)(d) does not apply to a business firm applying for or claiming an enterprise zone tax exemption for qualified property described in subsection (1) of this section if the provisions of ORS 285B.704 (2)(b) for zone sponsor approval by resolution of the local governing body or bodies are satisfied.]

SECTION 38a. Notwithstanding ORS 285B.714, if an authorized business firm files a claim for exemption under ORS 285B.698 prior to April 1, 2004, at the option of the business firm, all of the following apply in lieu of ORS 285B.714:

(1) If the firm completes the reconditioning, refurbishing, retrofitting or upgrading of real property machinery or equipment that is described in ORS 285B.714 (1), the reconditioned, refurbished, retrofitted or upgraded real property machinery or equipment is qualified property under ORS 285B.713 (2001 Edition) and potentially subject to enterprise zone tax exemption for all of the property’s value if the following requirements are satisfied:

(a) Prior to the period of idleness, the property was in use within the enterprise zone for at least 12 consecutive months;

(b) The reconditioning, refurbishing, retrofitting or upgrading of the property involved an investment of at least $3 million; and

(c) As a result of reconditioning, refurbishing, retrofitting or upgrading the property, the value of the property is at least $25 million more than the assessed value for the tax year prior to the first tax year of the enterprise zone tax exemption.

(2) The reconditioning, refurbishing, retrofitting or upgrading of real property machinery or equipment described in subsection (1) of this section is a modification of property for purposes of ORS 285B.650 to 285B.728.

(3) ORS 285B.698 (4)(a) to (c) does not apply to qualified property described in subsection (1) of this section.

(4) ORS 285B.704 (1)(c) does not apply to a business firm applying for or claiming an enterprise zone tax exemption for qualified property described in subsection (1) of this section if the provisions of section 33 of this 2003 Act for sponsor approval by resolution of the local governing body or bodies are satisfied.

(Firm and Employment Qualifications)

SECTION 39. ORS 285B.704 is amended to read:

285B.704. [(1) A business firm is qualified to receive a property tax exemption under ORS 285B.698 for its qualified property only if:]

[(a) The firm is an eligible business firm described in ORS 285B.707;]

[(b) The firm has business operations located inside the enterprise zone;]

[(c) The firm owns or leases qualified property located inside the enterprise zone;]

[(d) The employment of the firm, no later than April 1 following the assessment year in which the investment in qualified property was completed, is not less than 110 percent of the average annual employment of the firm, calculated over the 12 months preceding the date of application for precertification;]

[(e) The firm hired at least one new employee to work within the enterprise zone, under paragraph (d) of this subsection, after precertification and no later than April 1 following the assessment year in which the investment in qualified property was completed;]

[(f) The firm satisfies the hiring requirements of ORS 285B.710 (1);]

(1) The qualified property of an authorized business firm may be exempt from property taxation under ORS 285B.698 only if the firm meets the following qualifications:

(a) The firm is an eligible business firm engaged in eligible business operations under ORS 285B.707 that are located inside the enterprise zone;

(b) The firm owns or leases qualified property that is located inside the enterprise zone;

(c) The employment of the firm, no later than the date the exemption is claimed under ORS 285B.722 or April 1 following the year in which the investment in qualified property is made, whichever is earlier, is not less than the greater of:

(A) 110 percent of the annual average employment of the firm; or

(B) The annual average employment of the firm plus one employee;

[(g)] (d) The firm [did] does not diminish employment outside the enterprise zone [under subsection (4)] as described in subsections (4) and (5) of this section;

[(h)] (e) The firm [did] does not substantially curtail [employment] operations within the enterprise zone as described in [ORS 285B.728] section 40 of this 2003 Act; and

[(i)] (f) The firm complies in all material respects with local, Oregon and federal laws applicable to the firm’s operations inside the enterprise zone since the application for [precertification] authorization and throughout the period of exemption, as prescribed by rule.[; and]

[(j) The firm complies with all additional conditions for precertification imposed by an enterprise zone sponsor under ORS 285B.671 (4).]

(2)[(a)] Notwithstanding subsection [(1)(d), (e) or (h)] (1)(c) or (e) of this section, an eligible business firm [is a qualified business firm if it] may meet the qualifications of this section if the firm has satisfied the following requirements:

(a) The firm is authorized subject to section 33 of this 2003 Act and the firm satisfies those requirements; and

(b)(A) The firm completes an investment of $25 million or more in qualified property; or

(B) The firm fulfills the requirements of section 33a of this 2003 Act and the employment of the firm does not decrease below the annual average employment of the firm. [, on or before December 31 preceding the first assessment year for which the exemption is being sought, with less than a 10 percent increase in employment of the firm but without loss of employment of the firm.]

[(b) Approval to extend the property tax benefit to the eligible business firm under this subsection shall be documented by resolution of the governing body of the sponsor. The resolution shall specify the minimum percentage increase in employment that the eligible business firm must maintain to be a qualified business firm throughout the exemption period. The resolution may include other conditions for the firm to be a qualified business firm. At the request of the eligible business firm, the sponsor may modify the resolution prior to the initial filing by the firm for the property tax exemption. A copy of the resolution shall be attached to the final applications for precertification and for the property tax exemption.]

[(3)(a) Notwithstanding subsection (1)(d), (e) or (h) of this section, with the approval of the sponsor of the enterprise zone, an eligible business firm is a qualified business firm if it completes an investment of $25 million or more in qualified property, on or before December 31 preceding the first assessment year for which the exemption is being sought, with a loss of employment of the firm.]

[(b) Approval to extend the property tax benefit to the eligible business firm under this subsection shall be documented by resolution of the governing body of the sponsor. The resolution shall specify the minimum number of employees that the firm must retain for the eligible business firm to be a qualified business firm throughout the exemption period. The resolution may include other conditions for the firm to be a qualified business firm. At the request of the eligible business firm, the sponsor may modify the resolution prior to the firm’s initial filing for the property tax exemption. A copy of the resolution shall be attached to the firm’s applications for precertification and for the property tax exemption.]

(3) An authorized business firm that engages in both eligible and ineligible operations in an enterprise zone and is an eligible business firm because of ORS 285B.707 (3) meets the qualifications of this section if:

(a) The eligible operations of the firm under ORS 285B.707 meet the qualifications of this section; and

(b) The employees of the firm work a majority of their time in eligible operations within the enterprise zone.

(4) [Notwithstanding subsections (1) to (3) of this section,] A business firm [is not qualified to receive a property tax exemption] does not meet the qualifications of this section if the firm or any other firm under common control closes or permanently curtails operations in another part of the state more than 30 miles from the nearest boundary of the enterprise zone in which the firm seeks a property tax exemption. This subsection applies to the transfer of any of the business firm’s operations to an enterprise zone from another part of the state, if the closure or permanent curtailment in the other part of the state diminished employment in the county and more local labor markets after [precertification] authorization and [before the initial application for the exemption] on or before December 31 of the first tax year for which any qualified property of the firm in that zone would otherwise be exempt under ORS 285B.698.

(5) An [eligible] authorized business firm that moves any of its employees from a site or sites within 30 miles from the nearest boundary of the enterprise zone after [precertification and before the initial application for the exemption may qualify to receive a property tax exemption only] authorization may meet the qualifications under this section if the employment of the firm has been increased within the zone and at the site or sites from which the employees were transferred, no later than April 1 [following the assessment year in which the investment in qualified property was completed] preceding the first tax year for which qualified property of the firm is exempt under ORS 285B.698, to not less than 110 percent of the [average] annual average employment of the firm within the zone and the site or sites from which the employees were transferred, calculated over the 12 months preceding the date of application for [precertification] authorization.

(6) For purposes of subsection (1)(f) of this section, the Economic and Community Development Department shall adopt rules that define the effect of noncompliance on an eligible business firm’s continuing exemption in an enterprise zone and that indicate what is necessary to establish the noncompliance in terms of materiality of the relevant violation, the finality of applicable legal or regulatory proceedings and judgments involving the firm, the failure by the firm to perform or submit to remedial or curative actions and similar factors.

[(6)] (7) As used in this section:

(a) “Annual average employment of the firm” means the average employment of the firm, calculated over the 12 months preceding the date of application for authorization. [and]

(b) Except as provided in subsection (5) of this section, “employment of the firm” means:

(A) The number of employees working for the firm a majority of their time in eligible operations at locations within the enterprise zone; or

(B) In the case of a firm described in ORS 285B.707 (5)(b), the number of employees working a majority of their time at the facility in the enterprise zone for which authorization was obtained.

SECTION 39a. If Senate Bill 858 becomes law, section 2, chapter 432, Oregon Laws 2003 (Enrolled Senate Bill 858), is amended to read:

Sec. 2. (1) Notwithstanding ORS 285B.704 [(1)(d), (e) or (h) or (3)] (1)(c) or (e) or (2), an eligible business firm is a qualified business firm if:

(a) The firm completes an investment of $20 million or more in qualified property on or before December 31 preceding the first assessment year for which exemption under ORS 285B.698 is sought;

(b) The zone sponsor approves the extension of property tax benefits to the firm; and

(c) The firm was precertified on or after January 1, 2000, and before January 1, 2001.

(2) The approval of the zone sponsor to extend property tax benefits to the firm shall be documented by resolution of the governing body of the sponsor. The resolution may:

(a) Modify or waive minimum employment requirements specified in a prior resolution adopted by the sponsor under ORS 285B.704 [(3)] (2); and

(b) Specify application to past, current or future tax years.

(3) A resolution described in subsection (2) of this section must be adopted by the governing body of the zone sponsor on or before June 30, 2004.

(4) An eligible business firm that satisfies the requirements of subsection (1) of this section shall be deemed to satisfy the requirements of ORS 285B.704.

(5) Upon satisfying the requirements of subsection (1) of this section, the qualified property of the business firm shall be exempt from tax for the years specified in the resolution of the zone sponsor and in which the qualified property of the firm meets the requirements for exemption under ORS 285B.698.

SECTION 40. (1) For purposes of ORS 285B.698, 285B.704 and 285B.728, operations of a business firm are substantially curtailed when:

(a) The number of employees of the firm within the enterprise zone is reduced by more than 85 percent from the highest number of employees of the firm within the enterprise zone;

(b) The number of employees of a firm within the enterprise zone has been reduced by more than 50 percent from the highest number of employees of the firm within the enterprise zone for a period of time that is equal to or more than nine months; or

(c) The annual average number of employees within the enterprise zone during the first assessment year for which the exemption under ORS 285B.698 is granted, or any subsequent year in which an exemption is claimed, is reduced below the greater of:

(A) The annual average number of employees of the business firm within the enterprise zone, averaged over the 12 months preceding the date of the application for authorization, plus one employee; or

(B) 110 percent of the annual average number of employees of the firm within the enterprise zone, averaged over the 12 months preceding the date of the application for authorization.

(2) For the purposes of this section:

(a) The number of employees of a firm within the enterprise zone is the employment of the firm, as defined in ORS 285B.704, on the earlier of the date a claim for exemption is filed under ORS 285B.722 or April 1, of each assessment year for which an exemption under ORS 285B.698 is claimed, and for the year immediately following the last assessment year for which an exemption is claimed.

(b) Except as specified in subsection (1)(c) of this section, the annual average number of employees of the firm is the number of firm employees within the enterprise zone averaged over each assessment year in which an exemption under ORS 285B.698 is allowed, using employment figures for no fewer than four equivalent periods during the year.

(c) For the first assessment year for which an authorized business firm that qualifies under ORS 285B.704 (5) claims an exemption under ORS 285B.698, substantial curtailment under subsection (1)(a) or (c) of this section shall be determined by:

(A) Combining the number of employees of the firm within the enterprise zone and the number of employees at all other sites of the firm within the area described in ORS 285B.704 (5); and

(B) Combining the annual average number of employees of the firm within the enterprise zone with the annual average number of employees at any other site of the firm from which employees were transferred into the enterprise zone.

SECTION 41. ORS 285B.710 is amended to read:

285B.710. (1) The qualified property of an authorized business firm may be exempt from property tax under ORS 285B.698 only if the firm enters [A precertified business firm shall enter] into a first-source hiring agreement [with a publicly funded job training provider] for the period of property tax exemption. The agreement must be executed prior to the assessment date for the first tax year for which qualified property of the firm is exempt under ORS 285B.698 and must expire no sooner than December 31 of the final year of the exemption.

[(2) If a qualified business firm is located in an urban enterprise zone inside a metropolitan statistical area with fewer than 400,000 residents, all new employees hired by the firm must meet all additional conditions imposed under ORS 285B.671 (4).]

[(3) Notwithstanding ORS 285B.698 (3)(a), if a firm is located in an urban enterprise zone situated inside a metropolitan statistical area of less than 400,000 residents, the sponsor may set a period of abatement of up to five consecutive assessment years if the qualified business firm agrees with the sponsor, in writing, at the time of precertification:]

[(a) To annually compensate all new employees hired by the firm at an average rate of not less than 150 percent of the county’s average annual wage until the end of the tax exemption period. If the zone is in more than one county, the county with the highest average annual wage shall be used; and]

[(b) To meet any additional requirements that the zone sponsor may reasonably request.]

[(4) Notwithstanding ORS 285B.698 (3)(a), if an urban enterprise zone is located inside a metropolitan statistical area with more than 400,000 residents, the sponsor may set a longer period of abatement that does not exceed five consecutive assessment years if the qualified business firm agrees with the sponsor, in writing at the time of precertification, to meet any additional requirements that the zone sponsor may reasonably request.]

[(5) If a firm is located in an urban enterprise zone situated inside a metropolitan statistical area of more than 400,000 residents, all new employees hired by the firm must meet all additional conditions imposed under ORS 285B.671 (4).]

[(6) Notwithstanding ORS 285B.698 (3)(a), if a firm is located in a nonurban enterprise zone, the sponsor may set a period of abatement up to five consecutive assessment years if the qualified business firm agrees with the sponsor, in writing, at the time of precertification:]

[(a) To annually compensate all new employees hired by the firm at an average rate of not less than 150 percent of the county’s average annual wage until the end of the tax exemption period. If the zone is in more than one county, the county with the highest average annual wage shall be used; and]

[(b) To meet any additional requirements which the zone sponsor may reasonably request.]

[(7) As used in this section, “new employees hired by the firm” includes only those employees engaged for a majority of their time in eligible operations. The term does not include individuals employed in a job or position that:]

[(a) Is filled for the first time after June 30 of the first tax year of the exemption;]

[(b) Existed prior to the submission of the relevant application for precertification; or]

[(c) Is performed primarily at locations outside the enterprise zone.]

(2)(a) If a firm has not entered into a first-source hiring agreement when qualified property of the firm is first placed in service, as of April 1 preceding the first tax year for which the authorized business firm claims an exemption for qualified property under ORS 285B.698, the sponsor shall inform the county assessor that an agreement under this section has not been executed.

(b) A publicly funded job training provider having knowledge of the date when qualified property of the firm is first placed in service may also inform the county assessor that an agreement under this section has not been executed.

(3) In accordance with rules adopted by the Economic and Community Development Department, the Director of the Economic and Community Development Department may waive the requirements of subsection (1) of this section for an authorized business firm. The rules adopted by the department shall provide for a waiver under this subsection when the director finds that:

(a) The business firm is unable to employ persons referred under the agreement; or

(b) The waiver would further the goals and purposes of applicable state policies.

(Exemption Claim and Verification Procedures)

SECTION 42. ORS 285B.722 is amended to read:

285B.722. (1)(a) After January 1 and [no later than] on or before April 1 of the assessment year immediately following the year in which [completion of construction or modification or the installation of] qualified property in an enterprise zone is placed in service, and of each assessment year thereafter for which an exemption is sought, [a precertified] an authorized business firm may [apply for] file a claim for the exemption allowed under ORS 285B.698.

(b) The [application] claim shall be made [on] by completing a form prescribed by the Department of Revenue and [shall be filed] by filing the form with the county assessor. [If the property for which exemption is sought is leased by the business firm, the application shall be made by both the owner and the lessee of the property.] The firm shall furnish a copy of the claim to the sponsor.

(c) The firm shall also file a form described in this subsection after the final assessment year of the exemption period.

(2) [An application] A claim filed under this section shall contain all of the following:

(a) A statement that:

(A) The business firm satisfies the requirements of ORS 285B.704 as a qualified business firm; and

(B) The business firm has been [precertified] authorized by the enterprise zone sponsor and the county assessor and has satisfied any commitments made in the firm’s application for authorization or made as a condition of authorization. The date the application for authorization was submitted and approved shall be set forth in the statement.

(b) A statement confirming the continued eligibility of the firm under ORS 285B.707 or explaining any change in eligibility.

(c) A schedule setting forth the following employment data:

(A) The number of employees of the firm within the enterprise zone on the date the claim is filed under this section or April 1, whichever is earlier;

(B) The annual average number of employees of the firm within the enterprise zone during the preceding assessment year; and

(C) The annual average number of employees of the firm within the enterprise zone, averaged over the 12-month period preceding the date of the application for authorization.

(d) The annual average compensation for the previous assessment year of new employees hired by the firm within the enterprise zone, but only if:

(A) The firm is subject to annual compensation requirements under section 34 of this 2003 Act; and

(B) The claim is filed for a year that is not the first year for which a claim is filed under this section.

(e) Any attachments required under section 43 of this 2003 Act.

(f) For any qualified property listed on a property schedule included in a claim filed for a previous assessment year and that continues to be exempt for the current assessment year:

(A) Confirmation that there has been no change in the ownership, lease, location, disposition, operation, use or occupancy of the property; or

(B) In the case of a change in the ownership, lease, location, disposition, operation, use or occupancy of the property, an explanation of the change.

[(b)] (g) Any other information required by the Department of Revenue.

(3) The business firm shall be prepared to verify [the dates on which its application for precertification was submitted and approved] any information set forth in a claim filed under this section. The statement made pursuant to subsection (2)(a) of this section shall be prima facie evidence that the firm is a qualified business firm.

(4) If the assessor determines the property for which exemption is sought satisfies the requirements of ORS 285B.698, the assessor shall grant the exemption for the tax year beginning July 1. [Thereafter, for each assessment year that the property is exempt from taxation, the assessor shall:]

[(a) Enter on the assessment roll, as a notation, the assessed value of the property as if it were not exempt under ORS 285B.698.]

[(b) Enter on the assessment and the tax roll, as a notation, the amount of additional taxes that would be due if the property were not exempt.]

[(c) Indicate on the assessment and tax roll that the property is exempt and is subject to potential additional taxes as provided in ORS 285B.728, by adding the notation “enterprise zone exemption (potential additional tax).”]

[(5) If the assessor denies an exemption applied for under this section, the business firm may appeal the denial to the Oregon Tax Court under ORS 305.404 to 305.560.]

[(6)] (5) The assessor shall provide copies of each claim for exemption [application] filed under this section [to the enterprise zone sponsor and] as directed by the Department of Revenue.

[(7)] (6) If [an application required by subsection (1) of this section] a claim for exemption relates to principal or secondary industrial property as defined by ORS 306.126 and is filed with the Department of Revenue within the time required by subsection (1) of this section, the [application] claim shall be deemed timely filed with the assessor. The Department of Revenue shall send a copy of the filed claim to the assessor.

(7)(a) Notwithstanding subsection (1) of this section, a claim may be filed under this section on or before June 1 of the assessment year if:

(A) The claim includes qualified property that, pursuant to section 43 of this 2003 Act, is required to be listed on a property schedule included with the claim form because the year for which the claim is being filed is the first year for which the property is exempt under ORS 285B.698; and

(B) The claim is accompanied by a late filing fee equal to the greater of $200 or one-tenth of one percent of the real market value of the qualified property listed on the property schedule accompanying the claim.

(b) An exemption may not be granted pursuant to a claim filed under this subsection if the claim is not accompanied by the late filing fee.

(8)(a) Notwithstanding subsection (1) of this section, a claim may be filed under this section on or before August 31 of the assessment year if:

(A) The claim does not include qualified property that, pursuant to section 43 of this 2003 Act, is required to be listed on a property schedule included with the claim; and

(B) The claim is accompanied by a late filing fee equal to the greater of:

(i) $200; or

(ii) One-fiftieth of one percent of the real market value of the qualified property of the business firm multiplied by the number of 30-day periods from April 1 of the assessment year until the date the claim is filed. A period of less than 30 days shall constitute a 30-day period for purposes of this subparagraph.

(b) An exemption may not be granted pursuant to a claim filed under this subsection if the claim is not accompanied by the late filing fee.

(9) The value of the property used to determine the late filing fees under this section is appealable in the same manner as other determinations of value by the county assessor are appealable.

(10)(a) Notwithstanding subsection (1) of this section, a claim may be filed under this section on or before April 1 following the assessment year after the year in which the qualified property was placed in service.

(b) If a claim filed under this subsection is approved by the county assessor, the qualified property shall be exempt from property taxation only for those tax years that begin after the date the claim was filed under this subsection and for which the property otherwise qualifies for exemption under ORS 285B.650 to 285B.728.

(11) Any filing fee collected under this section shall be deposited to the county general fund.

(12) A claim may be filed under this section as of the dates prescribed in subsections (7), (8) and (10) of this section, regardless of any grounds for hardship under ORS 307.475.

SECTION 43. (1) An exemption claim filed under ORS 285B.722 must, when applicable, include a sponsor’s addendum setting forth any information required by the sponsor of the enterprise zone pursuant to ORS 285B.719 (5) or section 32, 33 or 34 of this 2003 Act.

(2) For the first tax year for which qualified property is exempt under ORS 285B.698, the claim filed under ORS 285B.722 must include a property schedule listing the qualified property.

(3)(a) The business firm is required to include the property schedule described in subsection (2) of this section with a claim filed under ORS 285B.722 only once for any item of qualified property. The firm shall include additional property schedules with subsequent claims in order to claim exemption of additional qualified property that is pursuant to the same application for authorization.

(b) The firm may not file an additional property schedule to claim an exemption for additional qualified property for a tax year that is more than two years after the first tax year for which any qualified property of the firm was exempt under ORS 285B.698, except pursuant to another authorization application.

(4) The property schedule shall be set forth on a form prescribed by the Department of Revenue and shall contain:

(a) A list of all qualified property that satisfies all requirements for exemption under ORS 285B.698 for the tax year for which the exemption is being claimed and that has not been exempt under ORS 285B.698 for a previous tax year;

(b) For each item of property described in paragraph (a) of this subsection, the cost of the property and the date the property was placed in service;

(c) Any information needed to determine compliance with any applicable requirements under ORS 285B.713 or 285B.714 or section 37 of this 2003 Act;

(d) In the case of qualified property that is leased by the business firm, a signature on the property schedule or other evidence that the enterprise zone exemption is acknowledged by the owner of the leased property; and

(e) Any other information required by the Department of Revenue.

(5) The county assessor may allow the business firm to amend the property schedule to include any other item of qualified property described in subsection (2) of this section that was not listed on the original property schedule included in the claim filed for the assessment year. An amendment to the property schedule may not be made after June 1 of the assessment year.

SECTION 44. (1) In granting or denying an exemption under ORS 285B.698, the county assessor may:

(a) Reasonably rely on information set forth in the exemption claim filed under ORS 285B.722; and

(b) Request and be given assistance from the sponsor before making certain determinations, including but not limited to:

(A) Determining if the exemption is being claimed by a qualified business firm under ORS 285B.704;

(B) Determining the extent to which qualified property is used by persons other than the qualified business firm or is used for business activities that may not be conducted in an enterprise zone by an eligible business firm under ORS 285B.707; or

(C) Determining if the use, leasing or location of qualified property satisfies applicable requirements under ORS 285B.713 or 285B.714 or section 37 of this 2003 Act.

(2) The county assessor is not responsible for determining if the firm has satisfied any requirement established by the sponsor under ORS 285B.719 or section 32, 33, 33a or 34 of this 2003 Act.

(3) If a business firm fails to timely file an exemption claim under ORS 285B.722:

(a) The assessor or the sponsor may use the authority granted to the assessor under section 45 of this 2003 Act; or

(b) The assessor may deny the exemption under ORS 285B.698 for the current tax year or for any future tax year for which the property would otherwise qualify for exemption under ORS 285B.698.

(4) If the sponsor or the assessor has reason to question the accuracy or veracity of any information contained in a claim filed under ORS 285B.722, the sponsor or the assessor may use the authority provided under section 45 of this 2003 Act.

(5) If any information submitted by a business firm under ORS 285B.722 indicates that the firm is no longer in compliance with any requirements that apply to the firm or the qualified property of the firm, the information shall be considered notice for purposes of ORS 285B.728.

(6) The county assessor shall make reasonable and timely efforts to notify an authorized business firm that is seeking or receiving an exemption under ORS 285B.698 of the filing requirements under ORS 285B.722, but the county assessor and the Department of Revenue are not under any obligation other than as otherwise provided in ORS 285B.650 to 285B.728 to seek or receive information about the continued entitlement of property to an exemption under ORS 285B.698.

(7) The sponsor is primarily responsible for assisting a business firm in timely filing claims under ORS 285B.722. If the sponsor, or a local zone manager designated by the sponsor, does not receive a copy of the claim as required under ORS 285B.722 by the time the claim is required to be filed under ORS 285B.722, the sponsor or manager shall immediately contact the assessor for taking action under subsection (3) of this section.

SECTION 45. (1) The county assessor is at all times authorized to demand reports by registered or certified mail from owners or lessees of qualified property concerning the use of the qualified property and the employment status of the qualified business firm for purposes of ORS 285B.650 to 285B.728. If, after 60 days’ notice in writing by registered or certified mail, the owner or lessee fails to comply with this demand, the assessor may disqualify the property under ORS 285B.728, giving written notice of the disqualification to the Department of Revenue and the owner or lessee of the qualified property.

(2) The assessor is under no obligation to verify compliance by a qualified business firm with requirements imposed on the firm by the sponsor under section 32, 33, 33a or 34 of this 2003 Act.

(3) The sponsor of an enterprise zone may initiate procedures in order to verify compliance by qualified business firms with requirements imposed under ORS 285B.650 to 285B.728. The procedures may include written requests to the assessor by the local zone manager or an executive official of the sponsor that the assessor exercise authority under this section for a particular qualified business firm.

(Disqualification from Exemption)

SECTION 46. ORS 285B.728 is amended to read:

285B.728. (1) The county assessor of any county in which an enterprise zone is situated [and] or the sponsor shall be notified in writing by the qualified business firm or by the owner of the qualified property leased by the qualified business firm not later than July 1 following the assessment year for which the exemption is claimed [but] and in which one of the following events occurs:

(a) Property granted exemption from taxation under ORS [285B.722] 285B.698 is sold, exchanged, transported or otherwise disposed of for use outside the enterprise zone or for use by an ineligible business firm;

(b) [A] The qualified business firm closes or [substantially curtails the operation of the trade or business in which property granted exemption from taxation under ORS 285B.722 is used, except as allowed by the zone sponsor] so reduces eligible operations that the reduction constitutes a substantial curtailment of operations under section 40 of this 2003 Act, unless a substantial curtailment of operations is permitted under ORS 285B.704 (2) [or (3)];

(c) [A] The qualified business firm fails to meet any of the [requirements of] qualifications required under ORS 285B.704 [(2)(b) or (3)(b)];

(d) [A] The qualified business firm fails to meet any [of the requirements of ORS 285B.710 (2), (3) or (6)] condition that the firm is required to satisfy under section 32, 33 or 33a of this 2003 Act or any term of an agreement entered into with the sponsor under section 34 of this 2003 Act with which the firm had agreed to comply;

(e) [A] The qualified business firm [fails to meet any of the requirements of ORS 285B.710 (4) or (5)] uses the property to conduct activities in the enterprise zone that are not eligible activities; or

(f) [A qualified business firm or the applicable activity or operation of the firm fails to meet any of the requirements of ORS 285B.707 or 285B.713 (2)(f) or (g) after it has received a property tax exemption for its qualified] Property of the qualified business firm for which exemption under ORS 285B.698 is claimed ceases to be qualified property under ORS 285B.713.

(2) If the sponsor receives written notice under subsection (1) of this section, the sponsor shall immediately send a copy of the notice to the county assessor of the county in which the enterprise zone is situated.

[(2)(a)] (3)(a) When an assessor receives written notice under subsection (1) or (2) of this section, the assessor shall disqualify the property for the assessment year following the disqualifying event and 100 percent of the additional taxes calculated under ORS [285B.722] 285B.698 shall be assessed against the property for each year for which the property had been granted exemption under ORS 285B.698.

(b) Notwithstanding paragraph (a) of this subsection, if a qualified business firm fails to meet any of the requirements [in ORS 285B.710 (3), (4) or (6)] of an agreement entered into by the firm under section 34 of this 2003 Act during the exemption, but meets [the] all other applicable requirements [of ORS 285B.698] under ORS 285B.650 to 285B.728 during the first three years of the exemption, the qualified property of the firm may not be disqualified during the first three years of exemption for failure to comply with the requirements of the agreement entered into under section 34 of this 2003 Act [qualified business firm is entitled to receive the property tax exemption allowed under ORS 285B.698 (3)].

(c) The additional taxes assessed under this subsection shall be reduced by the amount, if any, paid by the qualified business firm to the sponsor under subsection (6) of this section for the same property.

[(3) For the purposes of ORS 285B.704 and this section, operation of a business firm shall be considered to be substantially curtailed when:]

[(a) The number of employees within the enterprise zone is reduced at the end of an assessment year by more than 85 percent from the highest number of such employees at the end of any assessment year during which the business firm received a property tax exemption under ORS 285B.698 or 285B.710;]

[(b) The number of employees within the enterprise zone at the end of an assessment year has been reduced for a period longer than one year by more than 50 percent from the highest number of such employees at the end of any assessment year during which the firm was receiving a property tax exemption under ORS 285B.698 or 285B.710; or]

[(c) The average annual number of employees within the enterprise zone is reduced at the end of the first assessment year of exemption and any subsequent qualifying years below 110 percent of the average annual number of employees at facilities of the firm located within the enterprise zone on the date of application for precertification.]

(4) If the qualified business firm or owner fails to give the notice on time or at all as required by subsection (1) of this section, upon discovering the property no longer qualifies for the exemption due to a circumstance described in [subsections (1) and (3)] subsection (1) of this section, the assessor shall:

(a) Disqualify the property from exemption;

[(a)] (b) Compute the amount of taxes described in subsection [(2)] (3) of this section as though notice had been given, and [shall] add to that amount an additional penalty equal to 20 percent of the total amount so computed; and

[(b)] (c) Add the property to the assessment and tax roll without the exemption as if the notice had been given.

(5) The amount determined to be due under subsections [(2)] (3) and (4) of this section:

(a) May be paid to the tax collector before completion of the next general property tax roll pursuant to ORS 311.370; and

(b) Shall be added to the tax extended against the property on the next general property tax roll to be collected and distributed in the same manner as the remainder of the property taxes.

(6)(a) Notwithstanding subsections [(2)] (3) and (5) of this section, [when] if an assessor [and] or sponsor [receive] receives notice from a business firm under subsection (1)(b), (c)[,] or (d) [or (e)] of this section and the qualified business firm has not closed its operations, the qualified business firm shall pay the sponsor an amount equal to the property taxes for the qualified property in the assessment year for which the exemption is claimed in lieu of the amounts otherwise due under subsection (3) of this section.

(b) Moneys collected under paragraph (a) of this subsection shall be used by the sponsor to benefit the residents of the enterprise zone and for the development of jobs, skills and training for residents of the enterprise zone and the zone’s immediate vicinity.

(c) This subsection applies only to the first notice given by the business firm under subsection (1)(b), (c)[,] or (d) [or (e)] of this section [or for the second notice under subsection (1)(b), (c), (d) or (e) of this section in the case of the final year of an exemption lasting a total of five consecutive years under ORS 285B.710].

(d) If the sponsor does not receive the full amount to be paid by the qualified business firm under paragraph (a) of this subsection, the assessor shall disqualify the property [under subsections (2) and (5) of] and impose the entire amount of additional taxes as prescribed under subsection (3) of this section.

[(7) The assessor is at all times authorized to demand by registered or certified mail reports from owners or lessees concerning the use of the qualified property and the employment status of the qualified business firm for purposes of this section. If the owner or lessee fails after 60 days’ notice in writing by certified mail to comply with such demand, the assessor may disqualify the exemption in accordance with subsection (2) of this section, giving written notice of the disqualification to the Department of Revenue and the owners or lessees of the qualified property.]

[(8) The assessor is under no obligation to verify compliance by qualified business firms with requirements imposed under ORS 285B.710 (2), (3)(b), (4), (5) or (6)(b).]

[(9) The sponsor of an enterprise zone may initiate procedures in order to verify compliance by qualified business firms with requirements imposed under ORS 285B.692 to 285B.728. The procedures may include written requests to the assessor by the local zone manager or an executive official of the sponsoring jurisdiction in which the qualified business firm is located that the assessor exercise authority under subsection (7) of this section for a particular qualified business firm.]

[(10)] (7) An assessor may not [impose the property taxes and penalties specified in subsection (4) of] disqualify property under this section for failure by a qualified business firm or an owner of qualified property leased by the qualified business firm to notify the assessor or the enterprise zone sponsor that the qualified business firm does not meet requirements under [ORS 285B.710 (2), (3)(b), (4), (5) or (6)(b)] section 32, 33, 33a or 34 of this 2003 Act, without having received written communication from the [zone] sponsor that demonstrates that the qualified business firm does not meet [such] the requirements.

[(11)] (8) Additional taxes collected under this section shall be deemed to have been imposed in the year to which the additional taxes relate.

(9) If property is disqualified from exemption under this section, the assessor shall notify the qualified business firm, and the owner of any qualified property that is leased by the firm, of the disqualification. The notification shall be made in writing. The assessor shall provide copies of the disqualification to the sponsor, the Department of Revenue and the Economic and Community Development Department. The decision of the assessor to disqualify property under this section may be appealed to the Oregon Tax Court under ORS 305.404 to 305.560.

(Termination of Enterprise Zone)

SECTION 47. ORS 285B.686 is amended to read:

285B.686. [(1) Enterprise zones designated under ORS 284.110 to 284.260 (1987 Replacement Part) by order of the Governor before October 3, 1989, are declared valid and shall continue to exist until terminated under this section.]

[(2)] (1) When the termination of an enterprise zone occurs under this section:

(a) The termination of the enterprise zone [shall] does not affect:

(A) The continuation of a qualified business firm’s property tax exemption [for which the firm qualified] first allowed before the effective date of the termination of the enterprise zone[.]; or

(B) The ability of an authorized business firm to claim exemption under ORS 285B.698 if:

(i) The authorization application of the firm was filed with the sponsor before the effective date of the termination of the zone;

(ii) The firm remains authorized at the time the exemption is claimed;

(iii) The firm completes construction, addition, modification or installation of the qualified property within a reasonable time and without interruption of construction, addition, modification or installation activity; and

(iv) The property meets all other applicable requirements for exemption under ORS 285B.698.

(b) [Notwithstanding ORS 285B.698 (5)(e) and 285B.719 (6),] A business firm that is currently [precertified] authorized or qualified in the enterprise zone shall be allowed until 10 years after the effective date of the termination of the enterprise zone to apply for [precertification] authorization under ORS 285B.719 and to subsequently [for property tax exemptions under ORS 285B.722] claim the exemption for any qualified property that is [located] constructed, added, modified or installed inside the former enterprise zone boundaries, as those boundaries existed at the time of termination, and entirely outside of the boundaries of any current enterprise zone. Construction, addition, modification or [installment] installation of qualified property must commence prior to the end of [an exemption of the precertified or qualified business firm under ORS 285B.698 or 285B.710] the final tax year in which qualified property of the firm is exempt under ORS 285B.698 and must be completed [in accordance with ORS 285B.719 (5)(b) and (c)] within a reasonable time and without interruption of construction, addition, modification or installation activity. The property must meet all other applicable requirements for exemption under ORS 285B.698. [The precertified or qualified business firm must comply with the requirements under ORS 285B.692 to 285B.728 in effect at the time of the termination of the enterprise zone.]

(c) Disqualification under ORS 285B.728 of [an entire property tax exemption] all exempt property of the business firm after the effective date of the termination of the enterprise zone shall prohibit and terminate all [precertifications and qualifying property tax exemptions] authorizations sought or obtained by the business firm that would not otherwise be allowed except for paragraph (b) of this subsection. Disqualification under ORS 285B.728 of all exempt property of the business firm on or after the effective date of the termination of the enterprise zone shall cause the assessor to deny any claim for exemption under ORS 285B.698 of qualified property of the business firm made in a subsequent tax year. [Such termination shall not result in repayment of property taxes exempted before the tax year in which the disqualification takes effect.]

[(3)] (2) An enterprise zone [previously designated by order of the Governor or] designated by the Director of the Economic and Community Development Department under ORS 285B.653, 285B.677 or 285B.689 shall terminate when 10 years plus that number of days necessary to delay the date of termination to the June 30 next following have elapsed since the enterprise zone was originally designated [by order of the Governor or the director].

[(4)] (3) An enterprise zone designated by the director under ORS 285B.653, 285B.677 and 285B.689 shall terminate prior to the time specified in subsection [(3)] (2) of this section only as provided in [subsection (5) or] subsections (4) to (6) of this section.

[(5)] (4) The governing body of the sponsor may submit a resolution requesting termination of the enterprise zone to the Economic and Community Development Department. The sponsor shall provide copies of the resolution to the county assessor and the Department of Revenue. After receipt of the request, the director shall order termination of the enterprise zone and shall specify the effective date of [such] the termination.

[(6)] (5) If a sponsor is unable or unwilling to carry out its responsibilities under ORS 285B.671, the director shall order termination of the enterprise zone and shall specify the effective date of [such] the termination. However, in the case of failure to provide enhanced local public services, local incentives or local regulatory flexibility included in the application for designation as an enterprise zone or in the resolution under ORS 285B.680 [(6)] (7), termination is not required if the sponsor provides to authorized or qualified business firms new enhanced local public services, local incentives or local regulatory flexibility that [have similar] is of comparable value, [as determined by the department, to precertified or qualified business firms] or makes reasonable corrections of shortcomings in existing local incentives. A sponsor may reduce the time within which it will provide enhanced local public services, local incentives and local regulatory flexibility to a time period equal to the amount of time allowed for an exemption under ORS 285B.698 [or 285B.710,] without causing termination under this section.

(6) An enterprise zone designated on or after January 1, 2004, shall terminate if no qualified business firm has located within the zone by December 31 following the date that is six years after the date the zone was designated.

(7) A reservation enterprise zone designated under ORS 285B.770 shall terminate in accordance with subsection (2) of this section, but may be redesignated at any time under ORS 285B.770.

SECTION 48. ORS 285B.689 is amended to read:

285B.689. (1) Within a reasonable period of time prior to the termination of enterprise zones under ORS 285B.686 [(3)] (2), the Director of the Economic and Community Development Department shall competitively designate the same number of enterprise zones effective immediately after termination of the previous enterprise zones. The determination by the director as to the areas designated as enterprise zones shall be final.

(2) When an enterprise zone is terminated under ORS 285B.686 (4) to [(5) or] (6), the director may competitively designate a new enterprise zone. The sponsor of the enterprise zone terminated under ORS 285B.686 (4) or (5) [or (6)] is not eligible to apply for a new enterprise zone, except for a county government when the terminated zone was also jointly sponsored by one or more cities.

(3) Sponsors of existing enterprise zones [are eligible to] that are due to terminate may reapply for designation under subsection (1) of this section.

(4) Any city or county may apply to the director for designation of an enterprise zone in accordance with the criteria set forth in ORS 285B.656 and 285B.662. In addition, the Economic and Community Development Department by rule shall determine the minimum level of economic hardship in any area to be included within an enterprise zone, any other criteria necessary to evaluate the need for the enterprise zone and the potential for accomplishing the purposes of ORS 285B.650 to 285B.728.

(5) All enterprise zones designated under this section shall terminate in accordance with ORS 285B.686 [(3)] (2).

(6) When the director designates enterprise zones under this section, there is no limit on the relative number of urban or nonurban enterprise zones designated.

(7) The director may determine when to accept applications for any enterprise zone that terminates under subsection (2) of this section or is not designated under subsection (1) of this section for lack of qualified applicants.

(Sunset Date)

SECTION 49. (1) Notwithstanding any other provision of ORS 285B.650 to 285B.728:

(a) An area may not be designated as an enterprise zone after June 30, 2009;

(b) A business firm may not obtain authorization under ORS 285B.719 after June 30, 2009; and

(c) An enterprise zone, except for a reservation enterprise zone, that is in existence on June 29, 2009, is terminated on June 30, 2009.

(2) Notwithstanding subsection (1) of this section:

(a) A reservation enterprise zone may be designated under ORS 285B.770 after June 30, 2009; and

(b) A business firm may obtain authorization under ORS 285B.719 after June 30, 2009:

(A) If located in a reservation enterprise zone; or

(B) As allowed under ORS 285B.686 (1)(b).

(Miscellaneous)

SECTION 50. ORS 285B.731 is amended to read:

285B.731. ORS 285B.650 to 285B.728 shall be known and may be cited as the Oregon Enterprise Zone Act [of 1989].

SECTION 51. ORS 311.370 is amended to read:

311.370. (1)(a) For all taxes, penalties and other charges collected by the tax collector under, including, but not limited to, ORS 92.095, 100.110, 285B.650 to 285B.728, 308.260, 308.865, 308A.119, 308A.324, 308A.700 to 308A.733, 311.165, 311.206, 311.229, 311.405 (4) or (5), 311.415, 311.465, 354.690, 358.525 and 454.225, the tax collector shall issue receipts similar in form to the receipts issued on payment of taxes regularly charged on the tax roll.

(b) The assessor shall enter all assessments of property to which paragraph (a) of this subsection applies in the assessment roll and shall make proper entries showing the extension of the taxes in the usual manner and as though no payment to the tax collector had been made.

(2) Upon receipt thereof, the tax collector shall deposit with the county treasurer all money collected by the tax collector under subsection (1) of this section. The county treasurer shall issue to the tax collector duplicate receipts for the money and shall hold it in a special account in the name of the tax collector.

(3) Upon delivery of the assessment roll pursuant to ORS 311.115, the tax collector shall post the payments evidenced by the receipts, and the amount of any underpayment or overpayment. The tax collector shall then make a statement to the county treasurer which shall specify the amount to be retained in the special account to make the refunds required under subsection (4) of this section. The tax collector shall direct the county treasurer to transfer the balance in the special account to the unsegregated tax collections account described in ORS 311.385.

(4) Any sum collected by the tax collector that exceeds the amount extended on the tax roll as provided in subsection (1)(b) of this section by $5 or more shall be refunded to the taxpayer by the county treasurer upon receiving instructions for doing so from the tax collector. If an amount remains that cannot be refunded by June 30 of the next calendar year, the tax collector shall instruct the treasurer to transfer the amount to the unsegregated tax collections account described in ORS 311.385.

(5) If a sum less than the tax charged on the tax roll has been collected, the deficiency shall be canceled by the tax collector if such sum is $5 or less, and the tax collector shall note upon the tax roll opposite the appropriate account, “Tax deficiency canceled pursuant to ORS 311.370.” Otherwise, the deficiency shall be collected as provided by law.

(6) If an appeal that is perfected under ORS 311.467 for taxes collected under ORS 311.465 results in a refund under ORS 311.806, the reimbursement for the refund to the unsegregated tax collections account shall be made from the account provided for in subsection (2) of this section.

SECTION 51a. Section 3c, chapter 1104, Oregon Laws 1999, is amended to read:

Sec. 3c. (1) If an eligible business firm completes an investment of $25 million or more in the enterprise zone in qualified property confined entirely within an established operating division of the firm that would be an eligible business firm if it were separately incorporated, the firm may elect to have the division treated as a separate eligible business firm for purposes of applicable requirements under ORS [285B.692] 285B.650to 285B.728. The election described in this subsection may only be made with respect to an [application for the exemption of qualified property] exemption claim filed under ORS 285B.722 that was filed on or before January 1, 1999.

(2) For purposes of ORS 285B.704 (2) [or (3)], if the eligible business firm makes a total investment in the enterprise zone of $50 million or more in qualified property [that initially qualifies for] over a period of not more than three consecutive years, the governing body of the sponsor may also provide for one or more of the following as documented in the resolution under [ORS 285B.704] section 33 of this 2003 Act:

(a) That, notwithstanding ORS 285B.701 (3) or 285B.719 (1), this subsection and the application for [precertification] authorization includes qualified property in the zone, for which construction, addition, modification or installation commenced prior to the application, if the firm is [precertified] authorized prior to use or occupancy of the qualified property;

(b) That the exemption shall be granted without regard to the cost of any portion of the investment that initially qualifies in any single year; or

(c) That the firm is not bound by any election under subsection (1) of this section or ORS 285B.707 [(5)] (4) in effect at the time at which the zone terminated, in the case of [a precertification] an authorization and exemption that is otherwise allowed under ORS 285B.686 [(2)] (1).

SECTION 51b. Section 3c, chapter 1104, Oregon Laws 1999, as amended by section 51a of this 2003 Act, is amended to read:

Sec. 3c. (1) If an eligible business firm completes an investment of $25 million or more in the enterprise zone in qualified property confined entirely within an established operating division of the firm that would be an eligible business firm if it were separately incorporated, the firm may elect to have the division treated as a separate eligible business firm for purposes of applicable requirements under ORS 285B.650 to 285B.728. The election described in this subsection may only be made with respect to an exemption claim filed under ORS 285B.722 that was filed on or before January 1, 1999.

(2) For purposes of ORS 285B.704 (2), if the eligible business firm makes a total investment in the enterprise zone of $50 million or more in qualified property over a period of not more than three consecutive years, the governing body of the sponsor may also provide for one or more of the following as documented in the resolution under section 33 of this 2003 Act:

(a) That, notwithstanding ORS 285B.701 (3) or 285B.719 (1), this subsection and the application for authorization includes qualified property in the zone, for which construction, addition, modification or installation commenced prior to the application, if the firm is authorized prior to use or occupancy of the qualified property;

(b) That the exemption shall be granted without regard to the cost of any portion of the investment that initially qualifies in any single year; or

(c) That the firm is not bound by any election under subsection (1) of this section or ORS 285B.707 (4) in effect at the time at which the zone terminated, in the case of an authorization and exemption that is otherwise allowed under ORS 285B.686 (1).

(3) Notwithstanding ORS 285B.704 (1)(c) or (e) or 285B.728 (1)(b), an authorized business firm shall qualify or continue to qualify for the exemption under ORS 285B.698 if the following requirements are satisfied:

(a) The firm’s application for authorization was approved on or after January 1, 1999, and before January 1, 2002;

(b) The firm completed an investment in qualified property on or before December 31 preceding the first assessment year of the exemption, and the investment did not exceed $15 million;

(c) The firm files a timely claim for the exemption under ORS 285B.722 or gives timely written notice under ORS 285B.728;

(d) The zone sponsor adopts a resolution on or before December 31, 2003, that approves the qualification or continued qualification of the firm under this subsection; and

(e) The firm makes a payment as provided in ORS 285B.728 (6) following adoption of the resolution. Notwithstanding ORS 285B.728 (6)(b) and (c), a payment made under this paragraph shall be distributed to all local taxing districts having territory in the code area in the enterprise zone in the same proportion as property tax revenues are distributed.

SECTION 51c. The amendments to section 3c, chapter 1104, Oregon Laws 1999, by section 51b of this 2003 Act apply to tax years beginning on or after July 1, 2003.

SECTION 52. Sections 17, 32, 33, 33a, 34, 34a, 34b, 37, 38a, 40, 43, 44 and 45 of this 2003 Act are added to and made a part of ORS 285B.650 to 285B.728.

SECTION 53. The enactments and amendments of statutes and laws by sections 14 to 34a and 35 to 51 of this 2003 Act apply to enterprise zone designation, management and termination on or after the effective date of this 2003 Act, to administration of ORS 285B.650 to 285B.728 on or after the effective date of this 2003 Act, to applications for authorization made on or after the effective date of this 2003 Act and to claims for exemption filed for tax years beginning on or after July 1, 2004.

SECTION 53a. If Senate Bill 858 becomes law, section 53 of this 2003 Act is amended to read:

Sec. 53. The enactments and amendments of statutes and laws by sections 14 to 34a, [and] 35 to 39 and 40 to 51 of this 2003 Act apply to enterprise zone designation, management and termination on or after the effective date of this 2003 Act, to administration of ORS 285B.650 to 285B.728 on or after the effective date of this 2003 Act, to applications for authorization made on or after the effective date of this 2003 Act and to claims for exemption filed for tax years beginning on or after July 1, 2004.

SECTION 54. A business firm that is a precertified business firm under ORS 285B.650 to 285B.728 prior to the effective date of this 2003 Act shall constitute an authorized business firm under ORS 285B.650 to 285B.728 and for purposes of ORS 315.507. An application for precertification submitted under ORS 285B.719 prior to the effective date of this 2003 Act that has not been approved as of the effective date of this 2003 Act shall constitute an application for authorization under ORS 285B.719. An application for exemption filed under ORS 285B.722 prior to the effective date of this 2003 Act shall be considered an exemption claim.

SECTION 55. ORS 285B.675, 285B.705, 285B.716, 285B.723, 285B.725 and 285B.726 and section 22, chapter 1015, Oregon Laws 1989, sections 31, 32 and 33, chapter 835, Oregon Laws 1997, sections 4 and 5, chapter 460, Oregon Laws 1999, sections 20 and 26, chapter 1104, Oregon Laws 1999, and section 39e, chapter 883, Oregon Laws 2001, are repealed.

SECTION 55a. Notwithstanding section 76, chapter 621, Oregon Laws 2003 (Enrolled House Bill 2188) (amending section 4, chapter 460, Oregon Laws 1999), if House Bill 2188 becomes law, section 4, chapter 460, Oregon Laws 1999, is repealed.

SECTION 56. (1) The repeal of ORS 285B.716 by section 55 of this 2003 Act does not affect the property tax exemption of qualified property of a business firm operating a hotel, motel or destination resort in an enterprise zone in which the business firm is eligible under ORS 285B.716 prior to the effective date of this 2003 Act, and any such enterprise zone shall be treated as one for which the sponsor has elected under section 17 of this 2003 Act to treat a business firm engaged in hotel, motel or destination resort operations as an eligible business firm.

(2) The repeal of ORS 285B.726 by section 55 of this 2003 Act does not affect the property tax exemption of qualified property of a business firm that is exempt pursuant to an application for exemption filed before the effective date of this 2003 Act.

(3) The repeal of section 4, chapter 460, Oregon Laws 1999, by section 55 of this 2003 Act does not affect the 10 additional enterprise zones designated under ORS 285B.653 in accordance with section 4 (1) to (3), chapter 460, Oregon Laws 1999.

LONG-TERM TAX EXEMPTION

FOR QUALIFIED FACILITIES

IN NONURBAN ENTERPRISE ZONE

SECTION 56a. ORS 285B.786 is amended to read:

285B.786. (1) A facility of a certified business firm is exempt from ad valorem property taxation:

(a) For the first tax year following the calendar year in which the business firm is certified under ORS 285B.783 or after which construction or reconstruction of the facility commences, whichever event occurs later;

(b) For each subsequent tax year in which the facility is not yet in service as of the assessment date; and

(c) For a period of at least seven consecutive tax years but not more than 15 consecutive tax years, as provided in the written agreement between the business firm and the nonurban enterprise zone sponsor under ORS 285B.783 (3)(c), if the facility satisfies the requirements of ORS 285B.789. The period described in this paragraph shall commence as of the first tax year in which the facility is in service as of the assessment date.

(2) An exemption under this section may not be allowed for real or personal property that has received a property tax exemption under section 34b of this 2003 Act or ORS 285B.698.

(3) For each tax year that the facility is exempt from taxation under this section, the county assessor shall:

(a) Enter on the assessment and tax roll, as a notation, the real market value and assessed value of the facility.

(b) Enter on the assessment and tax roll, as a notation, the amount of tax that would be due if the facility were not exempt.

(c) Indicate on the assessment and tax roll that the property is exempt and is subject to potential additional taxes as provided in ORS 285B.793 by adding the notation “enterprise zone exemption (potential additional tax).”

(4) The amount determined under subsection (3)(b) of this section and the name of the business firm shall be reported to the Department of Revenue on or before December 31 of each tax year so that the department may compute the distributions described in ORS 317.131.

(5) The following property may not be exempt from property taxation under this section:

(a) Land.

(b) Any property that existed at the facility on an assessment date before the assessment date for the first tax year for which property of the firm is exempt under this section.

SECTION 56b. The amendments to ORS 285B.786 by section 56a of this 2003 Act apply to the property of business firms certified on or after the effective date of this 2003 Act.

SECTION 57. ORS 285B.789 is amended to read:

285B.789. In order for a facility of a business firm to continue to be exempt from ad valorem property taxation under ORS 285B.786 for a tax year following the first assessment date on which the facility is in service, all of the conditions of any one of the alternative subsections in this section must be met:

(1) In order for the exemption under ORS 285B.786 (1)(c) to be allowable pursuant to this subsection:

(a) By the end of the calendar year in which the facility is placed in service, the total cost of the facility exceeds the lesser of $25 million or one percent of the real market value of all nonexempt taxable property in the county in which the facility is located, as determined for the assessment year in which the business firm is certified (and rounded to the nearest $10 million of such value);

(b) The business firm hires or will hire at least 75 full-time employees at the facility by the end of the fifth calendar year following the year in which the facility is placed in service; and

(c) The annual average compensation for employees, based on payroll, at the business firm’s facility is at least 150 percent of the average wage in the county in which the facility is located. This requirement may be initially met in any year during the first five years after the year in which operation of the facility begins, and thereafter is met if the annual average compensation at the facility for the year exceeds the average wage in the county for the year in which the requirement is initially met.

(2) In order for the exemption under ORS 285B.786 (1)(c) to be allowable pursuant to this subsection:

(a) The facility meets the total cost requirements set forth in subsection (1)(a) of this section;

(b) The business firm meets the annual average compensation requirements set forth in subsection (1)(c) of this section; and

(c)(A) The business firm hires or will hire at least 10 full-time employees at the facility by the end of the third calendar year following the year in which the facility is placed in service, and at the time that the business firm is certified, the location of the facility is in a county with a population of 10,000 or fewer; or

(B) The business firm hires or will hire at least 35 full-time employees at the facility by the end of the third calendar year following the year in which the facility is placed in service, and at the time that the business firm is certified, the location of the facility is in a county with a population of 40,000 or fewer.

(3) In order for the exemption under ORS 285B.786 (1)(c) to be allowable pursuant to this subsection:

(a) By the end of the calendar year in which the facility is placed in service, the total cost of the facility exceeds the lesser of $12.5 million or one-half of one percent of the real market value of all nonexempt taxable property in the county in which the facility is located, as determined for the assessment year in which the business firm is certified (and rounded to the nearest $10 million of such value);

(b) At the time that the business firm is certified, the location of the facility is 10 or more miles from Interstate Highway 5, as measured between the two closest points between the facility site and anywhere along that interstate highway;

(c) The business firm meets the annual average compensation requirements set forth in subsection (1)(c) of this section; and

(d)(A) The business firm hires or will hire at least 50 full-time employees at the facility by the end of the third calendar year following the year in which the facility is placed in service; or

(B) The business firm satisfies the requirements of subsection (2)(c)(A) or (B) of this section.

(4) In order for the exemption under ORS 285B.786 (1)(c) to be allowable pursuant to this subsection:

(a) Within three years either before or after the property tax year in which the facility is placed in service, the business firm places one or more other facilities in the same or another enterprise zone for which the business firm is certified and otherwise meets the requirements of ORS 285B.781 to 285B.796;

(b) The total cost of all facilities of the business firm exceeds $25 million by the end of the calendar year in which the last such facility is placed in service;

(c) The business firm meets the annual average compensation requirements set forth in subsection (1)(c) of this section independently for each facility of the firm; and

(d) The business firm hires or will hire a total of at least 100 full-time employees at all of the firm’s facilities by the end of the fifth calendar year following the year in which the first such facility is placed in service.

SECTION 58. The amendments to ORS 285B.789 by section 57 of this 2003 Act apply to tax years beginning on or after July 1, 2004.

SECTION 59. ORS 285B.796 is amended to read:

285B.796. In order for a taxpayer to claim the property tax exemption under ORS 285B.786 or a corporate excise or income tax credit under ORS 317.124:

(1) The written agreement between the business firm and the nonurban enterprise zone sponsor that is required under ORS 285B.783 (3)(c) must be entered into prior to the termination of the enterprise zone under ORS 285B.686; and

(2) The business firm must obtain certification under ORS 285B.783 on or before December 31, [2004] 2006.

SECTION 60. ORS 285B.781 to 285B.796 are added to and made a part of ORS chapter 285B.

NOTE: Sections 61 through 63 were deleted by amendment. Subsequent sections were not renumbered.

ELECTRONIC COMMERCE INVESTMENTS

SECTION 64. ORS 315.507, as amended by section 1, chapter 65, Oregon Laws 2003 (Enrolled House Bill 2622), is amended to read:

315.507. (1) A credit against the taxes that are otherwise due under ORS chapter 316 or, if the taxpayer is a corporation, under ORS chapter 317 or 318, shall be allowed to a taxpayer that is:

(a) A business firm engaged or preparing to engage in electronic commerce in an enterprise zone that has been approved for electronic commerce designation under ORS 285B.672; or

(b) A business firm engaged or preparing to engage in electronic commerce in a city that has been designated for electronic commerce under ORS 285B.673.

(2) The credit shall equal 25 percent of the investments made by the business firm in capital assets:

(a) Located in the area designated for electronic commerce;

(b) Used or constructed, installed or otherwise prepared for use in electronic commerce operations within the area designated for electronic commerce that are related to electronic commerce sales, customer service, order fulfillment, broadband infrastructure or other electronic commerce operations; and

(c)(A) During the period that commences when the firm becomes [a precertified] an authorized business firm under ORS 285B.719 and ends on the last day of the income or corporate excise tax year in which begins the first property tax year in which qualified property of the firm used in eligible electronic commerce activities is exempt from property taxation under ORS 285B.698; or

(B) During any income or corporate excise tax year in which begins a property tax year in which qualified property of the firm used in eligible electronic commerce operations is exempt from property taxation under ORS 285B.698.

(3) Except as provided in subsection (5) of this section, the credit must be claimed for the income or corporate excise tax year that is:

(a) The year in which the investment for which a credit is being claimed is made; and

(b) A year, all or part of which is described in subsection (2)(c) of this section.

(4) A credit allowed under this section for any one tax year may not exceed the lesser of $2 million or the tax liability of the taxpayer.

(5) Any tax credit otherwise allowable under this section that is not used by the taxpayer in a particular year may be carried forward and offset against the taxpayer’s tax liability for the next succeeding tax year. Any credit remaining unused in the next succeeding tax year may be carried forward and used in the second succeeding tax year, and likewise any credit not used in that second succeeding tax year may be carried forward and used in the third succeeding tax year, and any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, but may not be carried forward for any tax year thereafter.

(6) The credit allowed under this section is not in lieu of any depreciation or amortization deduction to which the taxpayer otherwise may be entitled under ORS chapter 316, 317 or 318 for the tax year.

(7) The taxpayer’s adjusted basis for determining gain or loss may not be further decreased by any amount of credit allowed under this section.

(8)(a) A nonresident shall be allowed the credit under this section in the proportion provided in ORS 316.117.

(b) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed under this section shall be determined in a manner consistent with ORS 316.117.

(c) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer’s taxable year under ORS 314.440, the credit allowed under this section shall be prorated or computed in a manner consistent with ORS 314.085.

(9) As used in this section, “authorized business firm,” “business firm,” “electronic commerce[,]” [“precertified business firm”] and “qualified property” have the meanings given those terms in ORS 285B.650.

SECTION 65. (1) A taxpayer who has claimed a credit under ORS 315.507 shall maintain records sufficient to show:

(a) That within three years following the year in which a credit was claimed under ORS 315.507, property owned or operated by the taxpayer and used in electronic commerce operations was exempt from property taxation under ORS 285B.698; and

(b) That at no time was property described in paragraph (a) of this subsection disqualified from exemption pursuant to ORS 285B.728.

(2) The taxpayer shall provide these records to the Department of Revenue if requested by the department.

(3) The taxpayer shall maintain the records described in this section for at least five years following the last tax year for which the taxpayer claims any credit under ORS 315.507.

(4) If property owned or operated by the taxpayer is not both used in electronic commerce operations in an area designated for electronic commerce and exempt from property taxation under ORS 285B.698 within three years following the year in which a credit is first claimed under ORS 315.507, the department shall disallow the credit for the current or any prior tax year and collect any taxes that were not paid as a result of application of the credit.

(5) If property owned or operated by the taxpayer, used in electronic commerce operations in an area designated for electronic commerce and exempt from property taxation under ORS 285B.698 is disqualified from exemption under ORS 285B.728, the department shall disallow the credit for the current or any prior tax year and collect any taxes that were not paid as a result of application of the credit.

(6) For purposes of collecting taxes due under subsection (4) or (5) of this section, the department shall have the benefit of all laws of this state pertaining to the collection of income and corporate excise taxes. No assessment of these taxes shall be necessary and no statute of limitations shall preclude the collection of these taxes.

SECTION 66. Section 65 of this 2003 Act is added to and made a part of ORS chapter 315.

SECTION 67. Section 65 of this 2003 Act and the amendments to ORS 315.507 by section 64 of this 2003 Act apply to tax years beginning on or after January 1, 2002.

RURAL RENEWABLE ENERGY

DEVELOPMENT ZONES

SECTION 68. Sections 69 to 75 of this 2003 Act are added to and made a part of ORS chapter 285B.

SECTION 69. As used in sections 69 to 75 of this 2003 Act:

(1) “Applicant” means the city, county or group of counties applying for designation of territory as a rural renewable energy development zone.

(2) “Renewable energy” means electricity that is generated through use of a renewable energy resource, as defined in ORS 469.185.

(3) “Rural county” means a sparsely populated county, as defined in ORS 285B.683.

SECTION 70. (1) A rural county, a city in a rural county or a combination of contiguous rural counties may apply to the Director of the Economic and Community Development Department for designation of the entire territory of the applicant as a rural renewable energy development zone.

(2) An application for designation of a rural renewable energy development zone shall be in such form and shall contain such information as the Economic and Community Development Department prescribes by rule. The application shall include a copy of the resolution of the governing body of each city or rural county that constitutes the applicant that states that the city or county seeks rural renewable energy development zone designation.

(3) The director shall approve designation of the territory of the applicant as a rural renewable energy development zone if:

(a) The area consists of territory in a rural county or is two or more contiguous rural counties; and

(b) The area would qualify for enterprise zone designation, without regard to any applicable numerical limitation on enterprise zones or to ORS 285B.662.

(4)(a) The designation of an area as a rural renewable energy development zone authorizes the exemption of up to $100 million in real market value of property described in section 72 of this 2003 Act that meets the requirements for exemption under section 73 of this 2003 Act.

(b) An applicant may seek subsequent additional designations under this section. An application for additional designation shall be made in the same manner as an application for initial designation, and shall be approved by the director if the application for additional designation meets the qualifications for designation under subsection (3) of this section.

(c) Each additional designation approved under this section authorizes the exemption of an additional $100 million in real market value of property described in section 72 of this 2003 Act that meets the requirements for exemption under section 73 of this 2003 Act.

(5) If an application for designation was made by one city or county, that city or county shall serve as sponsor of the rural renewable energy development zone. If the application for designation was made by two or more rural counties, the application shall identify which county shall serve as the sponsor of the zone.

SECTION 71. (1) Following designation of a rural renewable energy development zone, an eligible business firm seeking an exemption under section 73 of this 2003 Act may apply for authorization under ORS 285B.719.

(2) The firm shall include a written description of the locations, extent and expected real market value of the proposed renewable energy development project.

(3) The firm shall be authorized if the firm would otherwise be authorized under ORS 285B.719, but the authorization is limited to investments in the renewable energy development project described in the application submitted by the firm.

SECTION 72. Property shall qualify for exemption under section 73 of this 2003 Act if the property meets all of the following requirements:

(1) The property constitutes all or a part of a facility used to generate renewable energy or is used to support or maintain a renewable energy facility;

(2) The property is newly constructed or installed in the rural renewable energy development zone; and

(3) The property meets all other requirements for qualification under ORS 285B.713.

SECTION 73. (1) Property of an authorized business firm is exempt from ad valorem property taxation if:

(a) The property is qualified property under section 72 of this 2003 Act;

(b) The firm meets the qualifications under ORS 285B.704; and

(c) The firm has entered into a first-source hiring agreement under ORS 285B.710.

(2)(a) Property described in subsection (1) of this section is exempt from ad valorem property taxation only to the extent the real market value of the property, when added to the real market value of all other property in the rural renewable energy development zone that has received an exemption under this section, is less than the exemption authorization level established for the zone under section 70 (4) of this 2003 Act.

(b) For purposes of this subsection, real market value shall be determined as of the assessment date for the first year that property is exempt under this section.

(3) The exemption allowed under this section applies to the first tax year for which, as of January 1 preceding the tax year, the qualified property is in service. The exemption shall continue for the next two succeeding tax years if the property continues to be owned or leased by the business firm, operated to generate renewable energy or to support or maintain renewable energy facilities, and located in the rural renewable energy development zone.

(4)(a) The property may be exempt from property taxation under this section for up to two additional tax years consecutively following the tax years described in subsection (3) of this section if authorized by a written agreement entered into by the firm and the sponsor under section 34 of this 2003 Act.

(b) Notwithstanding section 34 of this 2003 Act, a contiguous county that applied for a rural renewable energy development zone designation may elect to not participate in a two-year extension of the exemption under this subsection. The election shall be made by resolution of the governing body of the contiguous county on or before execution of the written agreement between the firm and the sponsor under section 34 of this 2003 Act.

SECTION 74. Except where inconsistent with the provisions of sections 69 to 75 of this 2003 Act, the provisions of ORS 285B.650 to 285B.728 apply to rural renewable energy development zones as if rural renewable energy development zones were enterprise zones, and to the exemption or disqualification from exemption of property located in rural renewable energy development zones.

SECTION 75. The Economic and Community Development Department may adopt rules for implementing and administering sections 69 to 75 of this 2003 Act, including rules that define terms.

CAPTIONS

SECTION 76. 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 77. 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 August 14, 2003

Filed in the office of Secretary of State August 15, 2003

Effective date November 26, 2003

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