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 1186
House Bill 2298
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of House Special Task Force on
Jobs and the Economy)
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.
Modifies requirements business firms need to meet in order to
qualify for small city business development income tax exemption.
Allows business firms locating facilities in certain ports to
qualify for exemption.
Modifies standards by which county average income is measured
for purposes of satisfying certain employment requirements
applicable to enterprise zone property tax exemptions.
Takes effect on 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to taxation; creating new provisions; amending ORS
285B.103, 285B.105, 285B.108, 285B.650, 285B.710, 285B.781 and
285B.789; and prescribing an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 285B.103 is amended to read:
285B.103. As used in ORS 285B.103 to 285B.108:
(1) 'Business firm' has the meaning given that term in ORS
285B.650.
(2) 'County per capita personal income' means the most recently
available county per capita personal income statistics published
by the Bureau of Economic Analysis of the United States
Department of Commerce for a county.
(3) 'County unemployment rate' means the most recently
available unemployment rate for the county, as determined by the
Employment Department.
(4) 'Facility' means the land, real property improvements and
personal property that are used by a business firm to conduct
business operations, and that are the subject of an application
for preliminary certification under ORS 285B.105 or annual
certification under ORS 285B.108.
(5) 'Qualified location' means any area within the
{ - boundaries - } { + urban growth boundary + } of a city
{ - of 10,000 - } { + or port that has 15,000 + } or fewer
residents { + and + } that is located in a county that { + , at
any time within one year before the date of the application for
preliminary certification under ORS 285B.105 + }:
(a) Has a county unemployment rate that is in the highest
quartile of county unemployment rates in this state { - as of
the date of the application for preliminary certification under
ORS 285B.105 - } ; and
(b) Has a county per capita personal income that is in the
lowest { - quartile - } { + third + } of county per capita
personal incomes in this state { - as of the date of the
application for preliminary certification under ORS 285B.105 - }
.
SECTION 2. ORS 285B.105 is amended to read:
285B.105. (1) A business firm seeking the income and corporate
excise tax exemption allowed under ORS 316.778 or 317.391 shall,
before the commencement of construction or installation of
property or improvements at the location for which the exemption
is sought and before the hiring of any employees at that
location, apply to the Economic and Community Development
Department for preliminary certification under this section.
(2) The application shall be on a form prescribed by the
department and shall contain the following information:
(a) The proposed location of the facility;
(b) A description of the property to be constructed, acquired,
installed or leased and that is to comprise the facility upon
being placed in service;
(c) If any property described in paragraph (b) of this
subsection is to be leased, the term of the lease;
(d) The number of full-time, year-round employees the business
firm intends to hire;
(e) The minimum annual average compensation intended to be
given to the employees described in paragraph (d) of this
subsection;
(f) A description of any other business activities of the firm
in this state at the time of application, sufficient for the
department to be able to determine if the proposed facility will
constitute a new business in this state; and
(g) Any other information that the department requires.
(3) An application filed under this section must be accompanied
by a fee in an amount prescribed by the Economic and Community
Development Department by rule. The fee required by the
department may not exceed $500.
(4)(a) When an application is filed under this section, the
department shall send copies of the application to the governing
bodies of the city and county in which the facility is proposed
to be located. { + If the facility is to be located within a
port, the department shall also send a copy of the application to
the governing body of the port. + }
(b) { - The - } { + A + } governing body { - of a city or
county - } { + described in paragraph (a) of this
subsection + } may object to the preliminary certification of a
business firm if the firm would be in competition with an
existing business employing individuals within the city { + ,
port + } or county or would be incompatible with economic growth
standards that the city { + , port + } or county had adopted
prior to the date of application for preliminary certification.
If the governing body of the city { + , port + } or county
decides to object to preliminary certification of the firm, the
governing body shall adopt a resolution stating its objection and
the reason for its objection.
(c) The governing body { - of a city or county - } has 60
days from the date the application is sent to the { - city or
county - } { + governing body + } to object to preliminary
certification. If the objection is not made within the 60-day
period, the city { + , port + } or county shall be deemed to have
agreed to preliminary certification.
(5) When an application is filed under this section, the
department shall review the application and determine whether all
of the following requirements are met:
(a) The proposed facility is to be located at a qualified
location.
(b) The proposed facility is intended to operate as a facility
for at least 10 years following the date the facility becomes
operational.
(c) The business firm intends to hire at least { - 10 - }
{ + five + } employees for full-time, year-round employment at
a minimum annual compensation of:
(A) 150 percent of the county per capita personal income of the
county in which the facility is to be located as of the date of
the application for preliminary certification; or
(B) 100 percent of the county per capita personal income of the
county in which the facility is to be located as of the date of
the application for preliminary certification and also provide
health insurance coverage that at least equals the benefits
provided to employees of the city or county in which the facility
is to be located.
(d) The business operations of the business firm that are to be
conducted at the facility constitute a new business that the firm
does not operate at another location in this state.
(e) The business operations of the business firm will not
compete with existing businesses in the city { + , port + } or
county in which the facility is to be located.
(6) If the department determines that the proposed facility, if
completed as described in the application, will meet the criteria
set forth in subsection (5) of this section and the governing
body of the city { + , port + } or county has not objected to
preliminary certification of the firm, the department shall issue
a preliminary certification to the firm.
(7) If the department determines that the proposed facility, as
set forth in the application, does not meet the requirements for
preliminary certification under this section, the department may
not issue a preliminary certification. The applicant may appeal
the decision to not issue a preliminary certification in the
manner of a contested case under ORS 183.310 to 183.550. No
appeal may be made if the reason for not issuing a preliminary
certification is the objection of the governing body { - of the
city or county - } under subsection (4) of this section.
SECTION 3. ORS 285B.108 is amended to read:
285B.108. (1) Following completion of the construction,
acquisition or lease of the facility and the hiring of employees
to conduct business operations at the facility and the
commencement of operations at the facility, a business firm that
obtained preliminary certification under ORS 285B.105 shall apply
for annual certification under this section.
(2) The application shall be filed with the Economic and
Community Development Department on or before 30 days after the
end of the income or corporate excise tax year of the business
firm.
(3) The application shall contain the following information:
(a) A description of the business operations conducted at the
facility;
(b) The date business operations commenced at the facility;
(c) The number of full-time, year-round employees employed by
the business firm at the facility;
(d) A schedule of the annual compensation paid to the
employees; and
(e) Any other information required by the department.
(4) An application filed under this section must be accompanied
by a fee in an amount prescribed by the Economic and Community
Development Department by rule. The fee required by the
department may not exceed $100.
(5) The department shall review a business firm's application
and approve the application if:
(a) The business operations of the firm at the facility
commenced within 10 years before the date of application for
annual certification;
(b) The facility and the business operations actually conducted
at the facility are reasonably similar to the proposed facility
and proposed operations described in the application for
preliminary certification; and
(c) The business firm has met the employment and minimum
compensation requirements described in ORS 285B.105 (5)(c).
(6) In the case of the first application for annual
certification filed by a business firm under this section, the
department may approve the application only if, in addition to
the requirements under subsection (5) of this section, business
operations commenced at the facility within six months following
the date of preliminary certification under ORS 285B.105.
(7) The department may consult with the city { + , port + } or
county in determining whether to approve or disapprove an
application under this section.
(8) If the department { - determines to approve - }
{ + approves + } an application, it shall issue an annual
certification to the business firm.
(9) If the department { - determines to disapprove - }
{ + disapproves + } an application, the business firm or any
owner of the business firm may not be allowed the exemption
described in ORS 316.778 or 317.391 for the tax year for which
the annual certification was sought or for any subsequent tax
year.
(10) The decision of the department to disapprove an
application under this section may be appealed in the manner of a
contested case under ORS 183.310 to 183.550.
(11) An annual certification may not be issued under this
section for a tax year that is more than 10 years following the
year business operations at the facility are commenced.
(12) The department must { - determine to - } approve or
disapprove an application under this section within 30 days of
the date the application is filed.
SECTION 4. { + The amendments to ORS 285B.103, 285B.105 and
285B.108 by sections 1 to 3 of this 2003 Act apply to
applications for preliminary certification and applications for
annual certification filed on or after the effective date of this
2003 Act. + }
SECTION 5. ORS 285B.650 is amended to read:
285B.650. As used in ORS 285B.650 to 285B.728, unless the
context requires otherwise:
(1) '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. { +
(2) 'County per capita personal income' means the most recently
available per capita personal income statistics published by the
Bureau of Economic Analysis of the United States Department of
Commerce for a county. + }
{ - (2) - } { + (3) + } '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) - } { + (4) + } 'Eligible business firm' means a
firm engaged in an activity described under ORS 285B.707 which
may file an application for precertification under ORS 285B.719.
{ - (4) - } { + (5) + } 'Employee' means a person who works
more than 32 hours per week, but does not include persons with
temporary or seasonal jobs or persons hired solely to construct
qualified property.
{ - (5) - } { + (6) + } '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 designated under ORS 285B.677 and areas
designated under ORS 285B.689.
{ - (6) - } { + (7) + } 'First-source hiring agreement'
means an agreement between a precertified 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.
{ - (7) - } { + (8) + } 'Modification' means modernization,
renovation or remodeling of an existing building or structure.
{ - (8) - } { + (9) + } 'Nonurban enterprise zone' means an
enterprise zone located outside a regional or metropolitan urban
growth boundary.
{ - (9) - } { + (10) + } '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) - } { + (11) + } 'Publicly funded job training
provider ' includes but is not limited to community colleges,
service providers under the federal Workforce Investment Act
Title I-B (29 U.S.C. 2801 et seq.), and other similar programs.
{ - (11) - } { + (12) + } '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.
{ - (12) - } { + (13) + } 'Qualified property' means
property described under ORS 285B.713.
{ - (13) - } { + (14) + } 'Sponsor' means the city or
county 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.
{ - (14) - } { + (15) + } 'Urban enterprise zone' means an
enterprise zone in a metropolitan statistical area, as defined by
the most recent federal decennial census, located inside a
regional or metropolitan urban growth boundary.
SECTION 6. ORS 285B.710 is amended to read:
285B.710. (1) 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.
(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 - } { + county per capita
personal income + } 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 - } { + per capita personal income + }
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 - } { + county per capita
personal income + } 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 - } { + per capita personal income + }
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.
SECTION 7. { + The amendments to ORS 285B.650 and 285B.710 by
sections 5 and 6 of this 2003 Act apply to business firms seeking
precertification under ORS 285B.719 on or after the effective
date of this 2003 Act. + }
SECTION 8. ORS 285B.781 is amended to read:
285B.781. As used in ORS 285B.781 to 285B.796:
(1) 'Business firm' has the meaning given that term in ORS
285B.650.
(2) 'Certified business firm' means a business firm that has
been certified under ORS 285B.783.
{ + (3) 'County per capita personal income' has the meaning
given that term in ORS 285B.650. + }
{ - (3) - } { + (4) + } 'County with chronically low income
or chronic unemployment' means, based on the most recently
revised annual average unemployment rate or annual
{ + county + } per capita { + personal + } income levels
available, a county in which:
(a) The median ratio of the { + county + } per capita personal
income
{ - of the county - } to the equivalent annual personal income
figure of the entire United States for each year, as reported by
the Bureau of Economic Analysis of the United States Department
of Commerce, is equal to or less than 0.75 over the last 10
years;
(b) Both of the following criteria are satisfied:
(A) The median ratio of the unemployment rate of the county to
the equivalent rate of the entire United States for each year is
at least 1.3 over the last 20 years or over the last 10 years;
and
(B) The current unemployment rate of the county is at least one
percentage point higher than the unemployment rate of the county
for the immediately prior year or at least 50 percent higher than
the current unemployment rate of this state; or
(c) The population of the county has experienced a negative net
migration, irrespective of natural population change, since the
most recent federal decennial census occurring three or more
years prior to the current estimated population figure for the
county, based on available population statistics.
{ - (4) - } { + (5) + } 'Facility' means the land, real
property improvements and personal property that are used:
(a) At a location in a nonurban enterprise zone that is
identified in the application for certification under ORS
285B.783; and
(b) In those business operations of the business firm that are
the subject of the application for certification under ORS
285B.783.
{ - (5) - } { + (6) + } 'Nonurban enterprise zone' has the
meaning given that term in ORS 285B.650.
SECTION 9. 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 - } { + county per capita personal
income for + } 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 - } { + county per capita personal income for + } 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
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 10. { + The amendments to ORS 285B.781 and 285B.789 by
sections 8 and 9 of this 2003 Act apply to business firms seeking
certification under ORS 285B.783 on or after the effective date
of this 2003 Act. + }
SECTION 11. { + 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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