72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 560
B-Engrossed
House Bill 2168
Ordered by the Senate August 13
Including House Amendments dated April 16 and Senate Amendments
dated August 13
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Housing and Community Services Department)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Adds qualified assignee as taxpayer that is eligible for tax
credit for financing loan for low-income housing. Applies
{ + tax credit change + } to tax years beginning on or after
January 1, 2003.
{ + Creates General Fund Operating Reserve Fund. Requires
revenues received for biennium that exceed, by one percent or
more, amounts estimated to be received for biennium to be placed
into reserve fund. Returns to taxpayers portion of reserve fund
if reserve fund exceeds, by 10 percent or more, amount of budget
approved by Legislative Assembly for biennium. Becomes operative
on effective date of Senate Joint Resolution 18 (2003). + }
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
291.349, 291.351, 293.701, 305.792 and 317.097; and prescribing
an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 317.097 is amended to read:
317.097. (1) A credit against taxes otherwise due under this
chapter for the taxable year shall be allowed to a lending
institution { + or a qualified assignee + } in an amount equal
to the difference between:
(a) The amount of finance charge charged by the { - lending
institution - } { + taxpayer + } during the taxable year at an
annual rate less than the market rate for a loan { + for housing
construction, development or rehabilitation + } that is made
before January 1, 2010, that complies with the requirements of
this section; and
(b) The amount of finance charge that would have been { +
charged, calculated at the annual rate that would have been + }
charged during the taxable year by the lending institution
{ - for - } { + making + } the loan { + , + } for housing
construction, development or rehabilitation { - measured at the
annual rate charged by the lending institution for nonsubsidized
loans made under like terms and conditions at - } { + if the
loan was not subsidized, determined as of + } the time the loan
for housing construction, development or rehabilitation is made.
(2) The maximum difference between the amounts described in
subsection (1)(a) and (b) of this section { - shall - } { +
may + } not exceed four percent of the average unpaid balance of
the loan during the tax year for which the credit is claimed.
(3) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular year may be carried
forward and offset against the taxpayer's tax liability for the
next succeeding tax year. Any credit remaining unused in
{ - such - } { + 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.
(4) In order to be eligible for the tax credit allowed under
subsection (1) of this section, the loan shall be:
(a) Made to an individual or individuals who own the dwelling,
participate in an owner-occupied community rehabilitation program
and are certified by the local government or its designated agent
as having an income level at the time the loan is made of less
than 80 percent of the area median income; or
(b)(A) Made to a qualified borrower;
(B) Used to finance construction, rehabilitation or development
of housing; and
(C) Accompanied by a written certification by the Housing and
Community Services Department that the:
(i) Housing created by the loan is or will be occupied by
households earning less than 80 percent of the area median
income; and
(ii) Full amount of savings from the reduced interest rate
provided by the { - lending institution - } { + taxpayer + }
is or will be passed on to the tenants in the form of reduced
housing payments, regardless of other subsidies provided to the
housing project.
(5) A loan made to refinance a loan that meets the criteria
stated in subsection (4) of this section shall be treated the
same as a loan that meets the criteria stated in subsection (4)
of this section.
(6) In order to be eligible for the tax credit allowed under
subsection (1) of this section, the loan also shall be
accompanied by a written certification by the Housing and
Community Services Department that:
(a) Specifies the period, as determined by the Housing and
Community Services Department, during which the loan is eligible
for the tax credit under subsection (1) of this section; and
(b) States that the loan is within the limitation imposed by
subsection (7) of this section.
(7)(a) The Housing and Community Services Department may
certify loans that are eligible under subsection (4) of this
section if the total credits attributable to all loans eligible
for credits under subsection (1) of this section and then
outstanding do not exceed $6 million for any year. In making loan
certifications, the Housing and Community Services Department
shall attempt to distribute the tax credits statewide, but shall
concentrate the tax credits in those areas of the state that are
determined by the State Housing Council to have the greatest need
for affordable housing.
(b) The certification under subsection (6) of this section
shall state the period for which the credit will be allowed,
which
{ - shall - } { + may + } not exceed 20 years.
(8) The credit allowed in this section { - shall - } { +
may + } not be affected by { - the applicant's - } { + a
taxpayer's + } receipt of a credit under section 42 of the
Internal Revenue Code (low-income housing tax credit program).
(9) A loan meeting the requirements of subsections (4) and (6)
of this section may be sold to a { + lending institution or
a + } qualified assignee with or without the { + original + }
lending institution's retaining servicing of the loan so long as
a designated lending institution maintains records annually
verified by a loan servicer that establish the amount of tax
credit earned by the taxpayer throughout each year of
eligibility.
(10) As used in this section:
(a) 'Annual rate' means the yearly interest rate specified on
the note, and not the annual percentage rate, if any, disclosed
to the applicant to comply with the federal Truth in Lending Act.
(b) 'Finance charge' means the total of all interests, loan
fees and other charges related to the cost of obtaining credit
and includes any interest on any loan fees financed by the
{ - lending institution - } { + taxpayer + }.
(c) 'Lending institution' means any insured institution, as
that term is defined in ORS 706.008, or any mortgage banking
company that maintains an office in this state. 'Lending
institution' also includes any community development corporation
that is organized under the Oregon Nonprofit Corporation Law.
(d) 'Qualified assignee' means any investor participating in
the secondary market for real estate loans.
(e) 'Qualified borrower' means any borrower that is a
sponsoring entity that has a controlling interest in the real
property that is financed by the loan described in subsection (4)
of this section. Such a controlling interest includes, but is not
limited to, a controlling interest in the general partner of a
limited partnership that owns the real property.
(f) 'Sponsoring entity' means a nonprofit corporation, state
governmental entity, local unit of government as defined in ORS
466.706, housing authority or any person as defined in ORS
174.100, including, but not limited to, an employer making
housing available to low-income employees and other low-income
persons, provided that the person has agreed to restrictive
covenants imposed by a nonprofit corporation, state governmental
entity, local unit of government or housing authority.
(11) Notwithstanding any other provision of law, a lending
institution that is a community development corporation organized
under the Oregon Nonprofit Corporation Law may transfer any part
or all of any tax credit arising under subsection (1) of this
section to one or more other lending institutions that are
stockholders or members of the community development corporation
or that otherwise participate through the community development
corporation in the making of one or more loans that generate the
tax credit under subsection (1) of this section.
(12) The { - lending institution - } { + taxpayer claiming
a tax credit allowed under subsection (1) of this section for a
tax year + } shall file an annual statement { + for that tax
year + } with the Housing and Community Services Department,
specifying that { - it - } { + the taxpayer + } has conformed
with all requirements imposed by law to qualify for this tax
credit.
(13) The Housing and Community Services Department and the
Department of Revenue may adopt rules to carry out the provisions
of this section.
SECTION 2. { + The amendments to ORS 317.097 by section 1 of
this 2003 Act apply to tax credits first claimed in tax years
beginning on or after January 1, 2003. + }
SECTION 3. { + (1) The General Fund Operating Reserve Fund is
established in the State Treasury, separate and distinct from the
General Fund. Moneys in the General Fund Operating Reserve Fund
shall be invested as provided in ORS 293.701 to 293.790. Interest
and other earnings of the General Fund Operating Reserve Fund
shall be credited to the reserve fund.
(2) The General Fund Operating Reserve Fund consists of moneys
deposited in the reserve fund under ORS 291.349 and any interest
earned by the reserve fund.
(3) The Legislative Assembly may enact legislation to
appropriate or transfer any portion of the reserve fund for
general government expenditures only when an appropriation or
transfer is permitted under section 14 (9), Article IX of the
Oregon Constitution. + }
SECTION 4. ORS 291.349 is amended to read:
291.349. (1) As soon as practicable after adjournment sine die
of the regular session of the Legislative Assembly, the Oregon
Department of Administrative Services shall report to the
Emergency Board the estimate as of July 1 of the first year of
the biennium of General Fund and State Lottery Fund revenues that
will be received by the state during that biennium. The Oregon
Department of Administrative Services shall base its estimate on
the last forecast given to the Legislative Assembly before
adjournment sine die of the regular session on which the printed,
adopted budget prepared in the Oregon Department of
Administrative Services is based, adjusted only insofar as
necessary to reflect changes in laws adopted at that session. The
report shall contain the estimated revenues from corporate income
and excise taxes separately from the estimated revenues from
other General Fund sources. The Oregon Department of
Administrative Services may revise the estimate if necessary
following adjournment sine die of any special or emergency
session of the Legislative Assembly but any revision does not
affect the basis of the computation described in subsection
{ - (3) or (4) - } { + (5)(c) or (d) + } of this section.
(2) As soon as practicable after the end of the biennium, the
Oregon Department of Administrative Services shall report to the
Emergency Board, or the Legislative Assembly if it is in session,
the amount of General Fund revenues collected as of the last June
30 of the preceding biennium. The report shall contain the
collections from corporate income and excise taxes separately
from collections from other sources.
(3) If the revenues received from the corporate income and
excise taxes during the biennium exceed the amounts estimated to
be received from such taxes for the biennium, as estimated after
adjournment sine die of the regular session, { - by two percent
or more, the total amount of that excess shall be credited to
corporate income and excise taxpayers in a percentage amount of
corporate excise and income tax liability as determined under
subsection (5) of this section. However, no credit shall be
allowed against tax liability imposed by ORS 317.090. - } { +
the amount of revenues received that exceeds by one percent or
more the amount estimated to be received shall be deposited in
the General Fund Operating Reserve Fund established under section
3 of this 2003 Act. + }
(4) If the revenues received from General Fund revenue sources,
exclusive of those described in subsection (3) of this section,
during the biennium exceed the amounts estimated to be received
from such sources for the biennium, as estimated after
adjournment sine die of the regular session, { - by two percent
or more, there shall be refunded from personal income tax
revenues an amount equal to the total amount of that excess,
reduced by the cost certified by the Department of Revenue under
ORS 291.351 as being allocable to payments described under this
subsection. The excess amount to be refunded shall be paid to
personal income taxpayers in a percentage amount of prior year
personal income tax liability as determined under subsection (6)
of this section. - } { + the amount of revenues received that
exceeds by one percent or more the amount estimated to be
received shall be deposited in the General Fund Operating Reserve
Fund established under section 3 of this 2003 Act.
(5)(a) If the amount of the reserve fund exceeds 10 percent of
the amount of the General Fund budget approved at the regular
session of the Legislative Assembly for that biennium, the total
amount of the excess shall be returned to corporate income and
excise taxpayers and to personal income taxpayers in proportion
to the amounts contributed to the reserve fund for the previous
biennium under subsections (3) and (4) of this section.
(b) Notwithstanding paragraph (a) of this subsection, the
Legislative Assembly, by a two-thirds majority vote of all
members elected to each house, may enact legislation to prevent a
return of all or a portion of excess revenues to taxpayers.
(c) If an amount is returned to corporate income and excise
taxpayers under this subsection, the total amount that is
returned shall be credited in a percentage amount of corporate
excise and income tax liability as determined under subsection
(6) of this section. However, no credit shall be allowed against
tax liability imposed by ORS 317.090.
(d) If an amount is returned to personal income taxpayers under
this subsection, the total amount that is returned shall be
refunded from personal income tax revenues in an amount equal to
the total amount that is returned, reduced by the cost certified
by the Department of Revenue under ORS 291.351 as being allocable
to payments described under this paragraph. The amount to be
refunded shall be paid to personal income taxpayers in a
percentage amount of prior year personal income tax liability as
determined under subsection (7) of this section. + }
{ - (5) - } { + (6) + } If there is an { - excess - }
{ + amount + } to be credited under subsection { - (3) - }
{ + (5)(c) + } of this section, on or before October 1,
following the end of each biennium, the Oregon Department of
Administrative Services shall determine and certify to the
Department of Revenue the percentage amount of credit for
purposes of subsection { - (3) - } { + (5)(c) + } of this
section. The percentage amount determined shall be a percentage
amount to the nearest one-tenth of a percent that will distribute
the { - excess - } { + amount + } to be credited to corporate
excise and income taxpayers for { - taxable - } { + tax + }
years beginning in the calendar year during which the
{ - excess - } { + amount to be returned + }is determined.
The credit shall be computed after the allowance of any other
credit or offset against tax liability allowed or allowable under
any provision of law of this state, and before the application of
estimated tax payments, withholding or other advance tax
payments.
{ - (6)(a) - } { + (7)(a) + } If there is an
{ - excess - } { + amount + } to be refunded under subsection
{ - (4) - } { + (5)(d) + } of this section, on or before
September 15, following the end of each biennium, the Oregon
Department of Administrative Services shall determine and certify
to the Department of Revenue the percentage amount of refund
payment for purposes of subsection { - (4) - } { + (5)(d) + }
of this section. The percentage amount so determined shall be a
percentage amount to the nearest one-hundredth of a percent that
will distribute the
{ - excess - } { + amount + } to be refunded to personal
income taxpayers under subsection { - (4) - } { + (5)(d) + }
of this section. The percentage amount shall equal the amount
distributed under subsection { - (4) - } { + (5)(d) + } of
this section divided by the estimated total personal income tax
liability for all personal income taxpayers for tax years
beginning in the calendar year immediately preceding the calendar
year in which the { - excess - } { + amount to be
returned + } is determined.
(b) The Department of Revenue shall multiply the percentage
amount determined under paragraph (a) of this subsection by the
total amount of a personal income taxpayer's tax liability for
the tax year beginning in the calendar year immediately preceding
the calendar year in which the { - excess - } { + amount to
be returned + } is determined in order to calculate the amount of
the refund to be made to the taxpayer.
(c) The refund described under this subsection shall be subject
to the rules allowing setoff of refunds or sums due debtors of
this state under ORS 293.250.
(d) The refund described under this subsection shall be mailed
by the Department of Revenue to personal income taxpayers
eligible for the payment on or before December 1 following the
end of the biennium for which the payment described under this
subsection is being made.
(e) Notwithstanding paragraph (d) of this subsection, the
Department of Revenue shall mail the refund at the earliest date
of practicable convenience in the case of a return:
(A) For a tax year beginning in the calendar year immediately
preceding the calendar year in which the { - excess - } { +
amount to be returned + } is determined for which refund is being
made; and
(B) That is first filed on or after August 15 after the end of
the biennium.
{ - (7) - } { + (8) + } No refund shall be made to a
taxpayer if, after making the calculation described under
subsection { - (6) - } { + (7) + } of this section, the
amount calculated is less than $1.
SECTION 5. ORS 291.351 is amended to read:
291.351. If, based on the report made under ORS 291.349 (2),
refund will be made under ORS 291.349 { - (4) - } { +
(5)(d) + }, the Department of Revenue shall certify the costs
that are incurred in calculating and making the refunds under ORS
291.349 { - (4) - } { + (5)(d) + }. Costs shall be certified
by the department within 15 days of the date the report under ORS
291.349 (2) is made. As used in this section, 'costs' means and
is limited to those costs that, absent the requirement of making
a refund under ORS 291.349 { - (4) - } { + (5)(d) + }, would
not be incurred by the department.
SECTION 6. ORS 305.792 is amended to read:
305.792. (1) The Department of Revenue shall cause a checkoff
box to be printed on the personal income and corporate income or
excise tax returns for the appropriate tax year, by which a
taxpayer may indicate that a surplus refund payment or credit
that the taxpayer may otherwise be entitled to under ORS 291.349
shall instead be used for funding education.
(2)(a) A personal income taxpayer may elect to donate a surplus
refund payment to be made under ORS 291.349 to public elementary
and secondary school education. The taxpayer may make the
election by checking the appropriate checkoff box on the
taxpayer's return indicating the taxpayer's intention to donate
the surplus refund payment to public elementary and secondary
education.
(b) Once made, the election is irrevocable for any surplus
refund payments received until a subsequent return is filed for a
later tax year, and on which the checkoff box is not checked.
(3)(a) A corporate excise or income taxpayer may elect to not
claim a surplus refund credit that the taxpayer would otherwise
be entitled to pursuant to ORS 291.349, in order to achieve a
corresponding transfer of such moneys from the General Fund to
the State School Fund for the support of public elementary and
secondary school education. The taxpayer may make the election by
checking the appropriate checkoff box on the taxpayer's return
and by not using the surplus refund credit percentage to reduce
the taxpayer's tax liability.
(b) A taxpayer that checks the appropriate checkoff box
indicating that the credit will not be claimed but that
nevertheless claims the credit in determining the taxpayer's tax
liability shall be considered to have not made the election under
this subsection.
(c) The election to not claim a credit under this subsection
may not be revoked by filing an amended return.
(4) After the determination that surplus refund payments are to
be made under ORS 291.349 { - (4) and (6) - } { + (5)(d) and
(7) + }, the department shall determine the total amount of such
payments for which an election to donate to public elementary and
secondary education has been made and shall certify this amount
to the State Treasurer. Following the department's certification
to the State Treasurer, an election to donate that biennium's
surplus refund payments under subsection (2) of this section is
irrevocable.
(5) Following the determination to credit corporate income and
excise taxes pursuant to ORS 291.349 { - (3) and (5) - } { +
(5)(c) and (6) + }, the department shall annually certify the
total amount of allowable credits that have not been claimed
pursuant to an election made under subsection (3) of this
section. The certification shall be made on or before December 31
of each year, until the tax year for which the credit would
otherwise be claimed becomes a closed tax year.
SECTION 7. { + The amendments to ORS 291.349, 291.351 and
305.792 by sections 4 to 6 of this 2003 Act apply to biennia
beginning on or after July 1, 2003. + }
SECTION 8. ORS 293.701, as amended by section 9, chapter 6,
Oregon Laws 2002 (third special session), is amended to read:
293.701. As used in ORS 293.701 to 293.820, unless the context
requires otherwise:
(1) 'Council' means the Oregon Investment Council.
(2) 'Investment funds' means:
(a) Public Employees Retirement Fund referred to in ORS
238.660;
(b) Industrial Accident Fund referred to in ORS 656.632;
(c) Consumer and Business Services Fund referred to in ORS
705.145;
(d) Employment Department Special Administrative Fund referred
to in ORS 657.822;
(e) Insurance Fund referred to in ORS 278.425;
(f) Funds under the control and administration of the Division
of State Lands;
(g) Oregon Student Assistance Fund referred to in ORS 348.570;
(h) Moneys made available to the Commission for the Blind under
ORS 346.270 and 346.540 or rules adopted thereunder;
(i) Forest rehabilitation bonds sinking fund referred to in ORS
530.280;
(j) Oregon War Veterans' Fund referred to in ORS 407.495;
(k) Oregon War Veterans' Bond Sinking Account referred to in
ORS 407.515;
(L) World War II Veterans' Compensation Fund;
(m) World War II Veterans' Bond Sinking Fund;
(n) Savings and loan association funds in the hands of the
Director of the Department of Consumer and Business Services;
(o) Funds in the hands of the State Treasurer that are not
required to meet current demands;
(p) State funds that are not subject to the control and
administration of officers or bodies specifically designated by
law;
(q) Funds derived from the sale of state bonds;
(r) Social Security Revolving Account referred to in ORS
237.490;
(s) Investment funds of the State Board of Higher Education
lawfully available for investment or reinvestment;
(t) Local Government Employer Benefit Trust Fund referred to in
ORS 657.513;
(u) Elderly and Disabled Special Transportation Fund
established by ORS 391.800;
(v) Education Stability Fund established by ORS 348.696;
(w) Deferred Compensation Fund established under ORS 243.411;
{ - and - }
(x) Trust for Cultural Development Account established under
ORS 359.405 { - . - } { + ; and
(y) General Fund Operating Reserve Fund established under
section 3 of this 2003 Act. + }
(3) 'Investment officer' means the State Treasurer in the
capacity as investment officer for the council.
SECTION 9. { + Sections 3 and 7 of this 2003 Act and the
amendments to ORS 291.349, 291.351, 293.701 and 305.792 by
sections 4 to 6 and 8 of this 2003 Act do not become operative
unless the amendment to the Oregon Constitution proposed by
Senate Joint Resolution 18 (2003) is approved by the people at
the next regular general election held throughout this state.
Sections 3 and 7 of this 2003 Act and the amendments to ORS
291.349, 291.351, 293.701 and 305.792 by sections 4 to 6 and 8 of
this 2003 Act become operative on the effective date of Senate
Joint Resolution 18 (2003). + }
SECTION 10. { + 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. + }
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