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 564
House Bill 2171
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 as
introduced.
Adds predevelopment as costs eligible for tax credit for
financing loan for low-income housing. Increases yearly cap for
total amount attributable to all outstanding tax credits for all
eligible loans.
Applies to tax years beginning on or after January 1, 2003.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
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 in an amount equal to the difference between:
(a) The amount of finance charge charged by the lending
institution during the taxable year at an annual rate less than
the market rate for a loan 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
during the taxable year by the lending institution for the loan
for housing { + predevelopment, + } construction, development or
rehabilitation measured at the annual rate charged by the lending
institution for nonsubsidized loans made under like terms and
conditions at the time the loan for housing
{ + predevelopment, + } { + + } 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 { + predevelopment, + } construction,
{ - rehabilitation or - } development { + or
rehabilitation + } of housing; and
(C) Accompanied by a written certification by the Housing and
Community Services Department that { - the - } :
(i) { + The + } housing created by the loan is or will be
occupied by households earning less than 80 percent of the area
median income;
{ - and - }
(ii) { + Except as provided in subsection (7)(b) of this
section, the + } full amount of savings from the reduced interest
rate provided by the lending institution 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 { + ; and
(iii) If loan proceeds are used in part to finance costs
claimed by the taxpayer as predevelopment, the costs meet the
definition of predevelopment in subsection (10) of this section
and are within the limitation applicable to predevelopment
imposed by subsection (7) of this section + }.
(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 { + allowed + } 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 - } { + $8.2 + } million for
any year { + , of which no more than $200,000 for any year shall
be available for tax credits attributable to outstanding loans
that are used to finance predevelopment and that are eligible for
a tax credit allowed under subsection (1) of this section + }. 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) For loans used to finance predevelopment, the amount
of savings from the reduced interest rate provided by the lending
institution is not required to be passed on to the tenants in the
form of reduced housing payments. + }
{ - (b) - } { + (c) + } 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 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 qualified assignee with or
without the 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.
(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) 'Predevelopment' means costs related to preparations
for the construction, development or rehabilitation of housing,
including but not limited to costs for appraisals, permits,
architectural plans and land acquisition. + }
{ - (d) - } { + (e) + } 'Qualified assignee' means any
investor participating in the secondary market for real estate
loans.
{ - (e) - } { + (f) + } '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) - } { + (g) + } '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 shall file an annual statement
with the Housing and Community Services Department, specifying
that it 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. { + 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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