76th OREGON LEGISLATIVE ASSEMBLY--2012 Special Session
Enrolled
House Bill 4200
Sponsored by JOINT SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT
CHAPTER ................
AN ACT
Relating to economic development; and prescribing an effective
date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 3 to 6 of this 2012 special session
Act are added to and made a part of ORS 314.605 to 314.675. + }
{ + NOTE: + } Section 2 was deleted by amendment. Subsequent
sections were not renumbered.
SECTION 3. { + As used in sections 3 to 6 of this 2012 special
session Act:
(1) 'Actual cost' means the costs of labor, materials,
supplies, equipment rental, real or personal property
acquisition, permits, engineering, financing, required fees,
insurance, administration, accounting, maintenance, repair or
replacement and debt service, and all other direct or indirect
costs incurred by a person in order to undertake a capital
project, or of more than one capital project undertaken by the
same taxpayer as part of the same qualifying investment.
(2) 'Capital project' means a project within this state for the
construction, modification, replacement, repair, remodeling or
renovation of a structure or structures, addition to a structure
or structures, or other capital improvement, that qualifies as a
qualifying investment, including but not limited to:
(a) Acquisition of a legal interest or right in land or
property in conjunction with the capital improvement, including
but not limited to the purchase, lease or occupancy of real
property, including the buildings, structures, infrastructure and
leasehold improvements on the land or property;
(b) Acquisition of existing structures, or legal interests or
rights in structures, in conjunction with the capital
improvement;
(c) Acquisition and installation of machinery or equipment,
furnishings, fixtures or other personal property or materials, in
conjunction with the capital improvement; or
(d) Services and activities performed in relation to the
capital improvement, including planning, design, authorizing,
issuing, carrying or repaying interim or permanent financing,
research, study of land use and environmental impacts, acquiring
permits or licenses, or other services connected with the capital
improvement, and costs associated with the performance of these
services and activities.
Enrolled House Bill 4200 (HB 4200-A) Page 1
(3) 'Debt service' includes debt service payments or payments
into reserve accounts for debt service and payment of amounts
necessary to meet debt service coverage requirements.
(4) 'Qualifying investment' means expenditures made by the
taxpayer relating to a capital project:
(a) The actual cost of which exceeds $150 million within a
five-year period measured from the commencement of the term of
the qualifying investment contract; and
(b) That result in the taxpayer employing at least 500 more
full-time equivalent employees in this state than the taxpayer
employed in this state when the qualifying investment was
commenced.
(5) 'Qualifying investment contract' means a contract between
the State of Oregon and a taxpayer that meets the requirements of
section 5 of this 2012 special session Act.
(6) 'Single sales factor method' means the method of business
income apportionment required under ORS 314.650 and 314.665 and
the rules adopted thereunder, as in effect on the date a
qualifying investment contract is executed.
(7) 'Term of the qualifying investment contract' means the
duration of the parties' obligations under a qualifying
investment contract. + }
SECTION 4. { + (1) The Legislative Assembly finds that:
(a) The State of Oregon has a compelling interest in promoting
and stimulating economic development within this state to better
provide for the welfare of its residents, in encouraging
businesses to make significant capital investments within this
state and in creating certainty in the apportionment of business
income for purposes of income and corporate excise taxation that
achieves these ends;
(b) Use of the single sales factor method to apportion business
income promotes an economic development climate that encourages
businesses to locate and remain within this state, encourages
existing Oregon businesses to expand their operations in Oregon
and creates incentives for businesses to make significant capital
investments within this state;
(c) Qualifying investments will create significant, long-term
economic benefits and serve as the catalyst for additional
economic expansion within the State of Oregon;
(d) It is in the interest of the State of Oregon to authorize
the Governor, in consultation with the Director of the Oregon
Business Development Department and the Director of the
Department of Revenue, to enter into qualifying investment
contracts for purposes of stimulating economic development
through qualifying investments;
(e) In consideration for making qualifying investments,
taxpayers should be entitled to rely on the continued application
of the single sales factor method to apportion their business
income for tax purposes;
(f) Factors to be considered in determining the duration of the
term of a qualifying investment contract should include, without
limitation, the number of new employees to be added to the Oregon
workforce of the taxpayer when the qualifying investment is
complete, the duration and compensation of the new jobs created,
other economic development incentives received by the company and
the extent to which the qualifying investment will create
employment opportunities in rural Oregon; and
(g) The State of Oregon has a compelling interest in
contractually guaranteeing to taxpayers making qualifying
investments that such taxpayers may rely on the single sales
Enrolled House Bill 4200 (HB 4200-A) Page 2
factor method as the applicable method to determine the portion
of business income subject to income or corporate excise tax in
the State of Oregon.
(2) The purposes of sections 3 to 6 of this 2012 special
session Act are:
(a) To promote and stimulate economic development by creating
an incentive for qualifying investments;
(b) To authorize the Governor, in consultation with the
Director of the Oregon Business Development Department and the
Director of the Department of Revenue, to enter into qualifying
investment contracts on behalf of this state; and
(c) To ratify any qualifying investment contracts entered into
on or after December 14, 2012.
(3) The intent of the Legislative Assembly is for sections 3 to
6 of this 2012 special session Act to establish a contractually
binding obligation under which taxpayers that execute qualifying
investment contracts with the State of Oregon may rely on the
single sales factor method of apportionment to apportion their
business income for each tax year of the taxpayer that ends
during the term of the qualifying investment contract. + }
SECTION 5. { + (1) The Governor, in consultation with the
Director of the Oregon Business Development Department and the
Director of the Department of Revenue, may enter into, on behalf
of the State of Oregon, a qualifying investment contract with any
taxpayer according to the provisions of sections 3 to 6 of this
2012 special session Act.
(2) Any contract executed pursuant to subsection (1) of this
section on or after December 14, 2012, and before the effective
date of this 2012 special session Act that meets the requirements
of a qualifying investment contract is ratified by sections 3 to
6 of this 2012 special session Act.
(3) A taxpayer may not satisfy the requirement that a
qualifying investment result in an increase in the number of
employees of the taxpayer by gain of another entity's existing
Oregon employees through a merger or acquisition of any portion
of that entity.
(4) A qualifying investment contract executed under sections 3
to 6 of this 2012 special session Act may not be less than five
years' duration and may not exceed 30 years' duration.
(5) The obligations of the State of Oregon under a qualifying
investment contract:
(a) Include the promise of this state that, if the taxpayer
commences a qualifying investment, the taxpayer's Oregon business
income tax liability may not exceed the amount the taxpayer would
pay or owe under the single sales factor method for each tax year
that ends during the term of the qualifying investment contract;
and
(b) May not be abridged, impaired, limited or modified by any
subsequent law.
(6) If a taxpayer that has executed a qualifying investment
contract files a report or return with the Department of Revenue
for a tax year ending during the term of the qualifying
investment contract and reporting personal income taxes or
corporate excise or income taxes imposed under ORS chapter 316,
317 or 318, that are determined in whole or part by apportioning
business income using the single sales factor method, the
department may not assess a deficiency against the taxpayer that
is attributable to the use of a different method of
apportionment.
Enrolled House Bill 4200 (HB 4200-A) Page 3
(7) An action for a breach of a qualifying investment contract
may be brought against the State of Oregon.
(8) The sole and exclusive remedies for the State of Oregon in
an action for breach of a qualifying investment contract brought
by the state shall be:
(a) A judgment rescinding the qualifying investment contract;
and
(b) A judgment awarding an amount equal to the difference, if
any, between:
(A) The amount of taxes due from the taxpayer under the single
sales factor method from the date of breach through termination
of the qualifying investment contract; and
(B) The amount of taxes due from the taxpayer during the same
period using the method of apportioning business income:
(i) Under the tax laws that would have applied to the taxpayer
but for the qualifying investment contract; or
(ii) Identified in the judgment as fairly representing the
extent of the taxpayer's business activity in this state. + }
SECTION 6. { + (1) The Oregon Business Development Department
may, after consultation with the Department of Revenue, adopt
rules to implement sections 3 to 6 of this 2012 special session
Act, including rules that define terms consistently with sections
3 to 6 of this 2012 special session Act. Rules adopted under this
section apply only to qualifying investment contracts executed on
or after the date the rule is adopted.
(2) On or before February 15 of each odd-numbered year, the
Oregon Business Development Department shall report to the
Legislative Assembly in the manner provided in ORS 192.245
regarding the progress of qualifying investment contracts
executed under sections 3 to 6 of this 2012 special session Act,
including whether each taxpayer subject to a qualifying
investment contract has complied with the employment requirement
under section 3 (4) of this 2012 special session Act. + }
SECTION 7. { + A qualifying investment contract as defined in
section 3 of this 2012 special session Act may not be entered
into:
(1) Before December 14, 2012.
(2) On or after January 1, 2014. + }
SECTION 8. { + This 2012 special session Act takes effect on
the 91st day after the date on which the special session of the
Seventy-sixth Legislative Assembly adjourns sine die. + }
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Enrolled House Bill 4200 (HB 4200-A) Page 4
Passed by House December 14, 2012
.............................................................
Ramona Kenady Line, Chief Clerk of House
.............................................................
Bruce Hanna, Speaker of House
.............................................................
Arnie Roblan, Speaker of House
Passed by Senate December 14, 2012
.............................................................
Peter Courtney, President of Senate
Enrolled House Bill 4200 (HB 4200-A) Page 5
Received by Governor:
......M.,............., 2012
Approved:
......M.,............., 2012
.............................................................
John Kitzhaber, Governor
Filed in Office of Secretary of State:
......M.,............., 2012
.............................................................
Kate Brown, Secretary of State
Enrolled House Bill 4200 (HB 4200-A) Page 6