Chapter 470 Oregon Laws 2005

AN ACT

SB 847

Relating to the single-unit housing property tax exemption; creating new provisions; amending ORS 458.005, 458.010, 458.015, 458.020, 458.025, 458.035, 458.040, 458.045, 458.050, 458.060 and 458.065; and prescribing an effective date.

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

SECTION 1. ORS 458.005 is amended to read:

458.005. As used in ORS 458.005 and 458.015 to 458.065, unless the context requires otherwise:

(1) “Distressed area” means a primarily residential area of a city designated by a city under ORS 458.015 which, by reason of deterioration, inadequate or improper facilities, the existence of unsafe or abandoned structures, including but not limited to a significant number of vacant or abandoned single or multifamily residential units, or any combination of these or similar factors, is detrimental to the safety, health and welfare of the community. [Each city that adopts, by resolution or ordinance, ORS 308.450 to 308.481, shall adopt rules specifying the process for determining the boundaries of a distressed area and for distressed area boundary changes. At no time shall the cumulative land area within the boundaries of distressed areas within a city, determined for purposes of ORS 458.005 and 458.015 to 458.065, exceed 20 percent of the total land area of the city.]

(2) “Governing body” means the city legislative body having jurisdiction over the property for which an exemption may be applied for under ORS 458.005 and 458.015 to 458.065.

(3) “Qualified dwelling unit” means a dwelling unit that, upon completion, has a market value (land and improvements) of no more than 120 percent, or a lesser percentage as adopted by the governing body by resolution, of the median sales price of dwelling units located within the city.

[(3)] (4) “Single-unit housing [unit]” means a newly constructed structure having [only one dwelling unit] one or more dwelling units that:

(a) Is, or will be, at the time that construction is completed, in conformance with all local plans and planning regulations, including special or district-wide plans developed and adopted pursuant to ORS chapters 195, 196, 197 and 227.

(b) Is constructed on or after January 1, 1990, and is completed within two years after application for exemption is approved under ORS 458.040 [or before July 1, 2003, whichever is earlier] or before July 1, 2015, whichever is earlier.

(c) Upon completion, is designed for [habitation] each dwelling unit within the structure to be purchased by and lived in by one person or one family.

[(d) Upon completion, has a market value (land and improvements) of no more than 120 percent, or a lesser percent as adopted by the governing body by resolution, of the median sales price of single family homes located within the city. Prior to January 1 of each year, the governing body shall adopt by resolution the median sales price to be used for purposes of this paragraph during the next calendar year. In determining median sales price the governing body, assisted by the county assessor, shall use the sales data collected under ORS 309.200 in the county in which the greater portion of the taxable assessed value of the city is located for the period ending the prior November 30 relative to single family homes. In addition, the governing body may use data made available by the real estate and construction or other appropriate industry.]

(d) Upon completion, has one or more qualified dwelling units within the single-unit housing.

(e)[(A)] Is not a floating home, as defined in ORS 830.700, or a manufactured structure, as defined in ORS 801.333, [or a floating home, as defined in ORS 830.700] other than a manufactured home described under ORS 197.307 (5)(a) to (f).

[(B) Notwithstanding subparagraph (A) of this paragraph, a “single-unit housing unit” includes a “manufactured home” as described under ORS 197.307 (5)(a) to (f).]

[(4)] (5) “Structure” does not include the land, nor any site development to the land, as both are defined under ORS 307.010.

SECTION 2. ORS 458.005, as amended by section 76a, chapter 655, Oregon Laws 2003, is amended to read:

458.005. As used in ORS 458.005 and 458.015 to 458.065, unless the context requires otherwise:

(2) “Governing body” means the city legislative body having jurisdiction over the property for which an exemption may be applied for under ORS 458.005 and 458.015 to 458.065.

[(3)] (4) “Single-unit housing [unit]” means a newly constructed structure having [only one dwelling unit] one or more dwelling units that:

(c) Upon completion, is designed for [habitation] each dwelling unit within the structure to be purchased by and lived in by one person or one family.

(d) Upon completion, has one or more qualified dwelling units within the single-unit housing.

(e)[(A)] Is not a floating home, as defined in ORS 830.700, or a manufactured structure, as defined in ORS 446.561, [or a floating home, as defined in ORS 830.700] other than a manufactured home described in ORS 197.307 (5)(a) to (f).

[(B) Notwithstanding subparagraph (A) of this paragraph, a “single-unit housing unit” includes a “manufactured home” as described under ORS 197.307 (5)(a) to (f).]

[(4)] (5) “Structure” does not include the land, nor any site development to the land, as both are defined under ORS 307.010.

SECTION 3. ORS 458.010 is amended to read:

458.010. (1) The Legislative Assembly finds it to be in the public interest to stimulate the construction of new [single family residences] single-unit housing in distressed urban areas in this state in order to improve in those areas the general life quality, to promote residential infill development on vacant or underutilized lots, to encourage homeownership and to reverse declining property values.

(2) The Legislative Assembly further finds and declares that the cities of this state be able to establish and design programs to stimulate the construction of new [single family residences] single-unit housing in distressed urban areas by means of a limited property tax exemption, as provided under ORS 458.005 and 458.015 to 458.065.

SECTION 4. ORS 458.015 is amended to read:

458.015. (1)(a) ORS 458.005 and 458.015 to 458.065 apply to single-unit housing [units] located within the jurisdiction of a governing body [which] that adopts, by resolution or ordinance, ORS 458.005 and 458.015 to 458.065. Except as provided in subsection (2) of this section, the exemption provided by ORS 458.005 and 458.015 to 458.065 applies only to the tax levy of a governing body [which] that adopts ORS 458.005 and 458.015 to 458.065.

(b) Each governing body that adopts, by resolution or ordinance, ORS 458.005 and 458.015 to 458.065 shall adopt rules specifying the process for determining the boundaries of a distressed area and for distressed area boundary changes. The cumulative land area within the boundaries of distressed areas within a city, determined for purposes of ORS 458.005 and 458.015 to 458.065, may not exceed 20 percent of the total land area of the city.

(2) The tax exemption provided under ORS 458.005 and 458.015 to 458.065 [shall apply] applies to the tax levy of all taxing units when upon request of the city that has adopted ORS 458.005 and 458.015 to 458.065, the rates of taxation of taxing units whose governing bodies agree by resolution to the policy of providing tax exemptions for single-unit housing [units] as described in ORS 458.005 and 458.015 to 458.065, when combined with the rate of taxation of the city, equal 51 percent or more of the total combined rate of taxation levied on the property which is tax exempt under ORS 458.005 and 458.015 to 458.065.

(3) The city shall designate one or more distressed areas, located within the territorial boundaries of the city, within which the city proposes to allow exemptions under ORS 458.005 and 458.015 to 458.065.

(4) The city shall adopt standards and guidelines to be utilized in considering applications and making the determinations required under ORS 458.005 and 458.015 to 458.065, including but not limited to:

(a) Standards and guidelines for designating a distressed area, including but not limited to the probability of revitalization in the area without the assistance of the property tax exemption provided under ORS 458.005 and 458.015 to 458.065.

(b) Design elements for construction of the single-unit housing proposed to be exempt.

SECTION 5. Prior to January 1 of each assessment year, the governing body of a city that adopts ORS 458.005 and 458.015 to 458.065 shall adopt by resolution the median sales price to be used for purposes of determining if dwelling units are qualified under ORS 458.005 and 458.015 to 458.065. In determining the median sales price, the governing body, assisted by the county assessor, shall use the sales data collected under ORS 309.200 in the county in which the greater portion of the taxable assessed value of single-unit housing in the city is located, as of the period ending the prior November 30.

SECTION 6. ORS 458.020 is amended to read:

458.020. Each qualified dwelling unit of [A] single-unit housing [unit which] that qualifies for exemption under ORS 458.005 and 458.015 to 458.065 shall be exempt from ad valorem taxation for no more than 10 successive tax years beginning [January 1 of the assessment year in which the application is approved] July 1 of the first tax year following approval of the application under ORS 458.040, as determined under rules adopted by the Department of Revenue. The exemption provided by this section shall be in addition to any other exemption provided by law for the property. However, the amount of assessed value exempted under this section [shall] may not exceed the real market value of the structure determined as of the date that the property is inspected for purposes of making a determination under ORS 458.040.

SECTION 7. ORS 458.025 is amended to read:

458.025. (1) Any owner desiring an exemption under ORS 458.005 and 458.015 to 458.065 shall first apply to the city on forms supplied by the city.

(2) The application shall describe the property for which an exemption is requested, set forth the grounds for the exemption and be verified by oath or affirmation of the applicant.

[(3) Application shall be made on or before September 1 of the calendar year immediately preceding the first year for which exemption is requested, and shall be accompanied by the application fee required under ORS 458.040.]

[(4)] (3) The city may permit the applicant to revise an application made under this section prior to final action by the city.

SECTION 8. ORS 458.035 is amended to read:

458.035. The city may approve an application made under ORS 458.025 if it finds that:

(1) The proposed construction will be located in a distressed area.

(2) The proposed construction will [result in a structure that meets the definition of] constitute single-unit housing [unit].

(3) The owner has agreed to include [in the construction as a part of the single unit] the design elements [developed] adopted under ORS 458.015 (4) in the construction.

(4) The construction will result in public benefits beyond the period of exemption.

SECTION 9. ORS 458.040 is amended to read:

458.040. (1) The city shall approve or deny an application filed under ORS 458.025 within 180 days after receipt of the application. An application not acted upon within 180 days shall be deemed approved.

(2) Final action upon an application by the city shall be in the form of an ordinance or resolution that shall contain the owner’s name and address, a description of the [subject single-unit housing unit,] structure that is the subject of the application that includes either the legal description of the property or the assessor’s property account number and the specific conditions upon which the approval of the application is based.

(3) On or before April 1 following approval, the city shall file with the county assessor and send to the owner at the last-known address of the owner a copy of the ordinance or resolution approving [or disapproving] the application. The copy shall contain or be accompanied by a notice explaining the grounds for possible termination of the exemption prior to the end of the exemption period or thereafter, and the effects of termination. In addition, the city shall file with the county assessor on or before April 1 a document listing the same information otherwise required to be in an ordinance or resolution under subsection (2) of this section, as to each application deemed approved under subsection (1) of this section.

(4) If the application is denied, the city shall state in writing the reasons for denial and send notice of denial to the applicant at the last-known address of the applicant within 10 days after the denial. The notice shall inform the applicant of the right to appeal under ORS 458.060.

(5) The city, after consultation with the county assessor, shall establish an application fee in an amount sufficient to cover the cost to be incurred by the city and the assessor in administering ORS 458.005 and 458.015 to 458.065. The application fee shall be paid to the city at the time the application for exemption is filed. If the application is approved, the city shall pay the application fee to the county assessor for deposit in the county general fund, after first deducting that portion of the fee attributable to its own administrative costs in processing the application. If the application is denied, the city shall retain that portion of the application fee attributable to its own administrative costs and shall refund the balance to the applicant.

SECTION 10. Notwithstanding ORS 458.025 and 458.040 (both sections as set forth in the 2001 Edition or 2003 Edition or as amended by sections 7 and 9 of this 2005 Act), an application for exemption that seeks a tax year beginning on or before July 1, 2005, as the first year of the exemption may be approved or denied by the city within 30 days following the effective date of this 2005 Act. If an application is approved pursuant to this section, the first tax year of the exemption shall be the tax year beginning July 1, 2005.

SECTION 11. ORS 458.045 is amended to read:

458.045. (1) Except as provided in ORS 458.050, if, after an application has been approved under ORS 458.040, the city finds that construction of [a] single-unit housing [unit] was not completed within two years after the date the application was approved [or on or before January 1, 2003, whichever is earlier,] or on or before January 1, 2015, whichever is earlier, or that any provision of ORS 458.005 and 458.015 to 458.065 is not being complied with, or any provision required by the city pursuant to ORS 458.005 and 458.015 [and] to 458.065 is not being complied with, the city shall give notice to the owner, mailed to the owner’s last-known address, of the proposed termination of the exemption. The notice shall state the reasons for the proposed termination and shall require the owner to appear at a specified time, not less than 20 days after mailing the notice, to show cause, if any, why the exemption should not be terminated.

(2) If the owner fails to show cause why the exemption should not be terminated, the city shall adopt an ordinance or resolution stating its findings and terminating the exemption. A copy of the ordinance or resolution shall be filed with the county assessor and a copy sent to the owner at the owner’s last-known address within 10 days after its adoption.

SECTION 12. ORS 458.050 is amended to read:

458.050. (1) If, after application has been approved under ORS 458.040, [a declaration defined in ORS 100.005 with respect to the property is presented to the county assessor or tax collector for approval under ORS 100.110, or if] the county assessor discovers that the single-unit housing [unit] or a portion of the single-unit housing [unit] is changed to a use that is other than single-unit housing:

(a) The exemption granted the single-unit housing or portion under ORS 458.005 and 458.015 to 458.065 shall terminate immediately, without right of notice or appeal;

(b) The property or portion shall be assessed and taxed as other property similarly situated is assessed and taxed; and

(c) Notwithstanding ORS 311.235, there shall be added to the general property tax roll for the tax year next following the [presentation or] discovery, to be collected and distributed in the same manner as other real property tax, an amount equal to the difference between the amount of tax due on the property and the amount of the tax that would have been due on the property had it not been exempt under ORS 458.005 and 458.015 to 458.065 for each of the years, not to exceed the last 10 years, during which the property was exempt from taxation under ORS 458.005 and 458.015 to 458.065.

(2) If, at the time of [presentation or] discovery, the property is no longer exempt, additional taxes shall be imposed as provided in this section, but the number of years that would otherwise be used to compute the additional taxes shall be reduced by one year for each year that has elapsed since the year the property was last granted exemption.

(3) The assessment and tax rolls shall show potential additional tax liability for each property granted exemption under ORS 458.005 and 458.015 to 458.065.

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

SECTION 13. ORS 458.060 is amended to read:

458.060. (1) Review of a denial of an application under ORS 458.040 shall be as provided by ORS 34.010 to 34.100.

(2) Upon termination of an exemption, the county officials having possession of the assessment and tax rolls shall correct the rolls in the manner provided for omitted property under ORS 311.216 to 311.232 to provide for the assessment and taxation of any property for which exemption was terminated by the city or by a court, in accordance with the finding of the city or the court as to the year in which the exemption is first to be terminated. The county assessor shall make such valuation of the property as shall be necessary to permit such correction of the rolls. The owner may appeal any such valuation in the same manner as provided for appeals under ORS 311.216 to 311.232.

(3) Unless the exemption is terminated pursuant to ORS 458.050, where there has been a failure to comply with ORS 458.045, the property shall become taxable beginning [January 1 of the assessment] July 1 of the tax year in which the noncompliance first occurred. Any additional taxes becoming due shall be payable without interest if paid in the period prior to the 16th day of the month next following the month of correction. If not paid within such period, the additional taxes shall be delinquent on the date they would normally have become delinquent if timely extended on the roll or rolls in the year or years for which the correction was made.

SECTION 14. ORS 458.065 is amended to read:

458.065. Notwithstanding any provision of ORS 458.005 and 458.015 to 458.065:

(1) If the city finds that construction of the single-unit housing [unit] was not completed by [January 1, 2003,] a date that is 12 months after the date on which applications may no longer be approved under ORS 458.040, and further finds that the failure to complete construction was due to circumstances beyond the control of the owner, and that the owner had been acting and could reasonably be expected to act in good faith and with due diligence, the city may extend the deadline for completion of construction for a period not to exceed an additional 12 consecutive months.

(2) If property granted exemption under ORS 458.005 and 458.015 to 458.065 is destroyed by fire or act of God, or is otherwise no longer capable of occupancy due to circumstances beyond the control of the owner, the exemption shall cease but no additional taxes or penalty shall be imposed under ORS 458.005 and 458.015 to 458.065 upon the property.

SECTION 15. The amendments to ORS 458.005, 458.010, 458.015, 458.020, 458.025, 458.035, 458.040, 458.045, 458.050, 458.060 and 458.065 by sections 1 to 4, 6 to 9 and 11 to 14 of this 2005 Act apply to property tax years beginning on or after July 1, 2005.

SECTION 16. Sections 5 and 10 of this 2005 Act and ORS 458.005 and 458.010 are added to and made a part of ORS 458.015 to 458.065.

SECTION 17. ORS 458.015 to 458.065 are added to and made a part of ORS chapter 307.

SECTION 18. This 2005 Act takes effect on the 91st day after the date on which the regular session of the Seventy-third Legislative Assembly adjourns sine die.

Approved by the Governor July 7, 2005

Filed in the office of Secretary of State July 7, 2005

Effective date November 4, 2005

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