Chapter 857 Oregon Laws 1999
Session Law
AN ACT
HB 2087
Relating to housing tax
credits; creating new provisions; and amending ORS 317.097 and section 2,
chapter 737, Oregon Laws 1991.
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 [on or after
January 1, 1990, and before January 1, 2000] 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
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 construction, development or
rehabilitation is made.
(2) The maximum difference between the amounts described in
subsection (1)(a) and (b) of this section shall 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 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)(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 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; or
(b) 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
(c) Made to refinance a loan that meets the criteria stated in
paragraph (a) or (b) of this subsection.
(5) 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 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 (6) of this section.
(6)(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 [$4] $5 million for any
year. In making loan certifications, the 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 (5) of this section
shall state the period for which the credit will be allowed, which shall not
exceed 20 years.
(7) The credit allowed in this section shall 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).
(8) A loan meeting the requirements of subsections (4) and (5)
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.
(9) As used in this section, the following definitions shall
apply:
(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) "Internal Revenue Code" means the federal
Internal Revenue Code, as amended and in effect on December 31, 1996.
(d) "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.
(e) "Qualified assignee" means any investor
participating in the secondary market for real estate loans.
(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.
(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.
(10) 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.
(11) 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.
(12) 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 1999 Act apply to loan certifications occurring on or after January 1,
2000.
SECTION 3.
Section 2, chapter 737, Oregon Laws 1991, is amended to read:
Sec. 2. The
amendments to ORS 317.097 by section 1 [of
this Act], chapter 737, Oregon Laws
1991, apply to loans made after January 1, 1990[, and before January 1, 2000].
SECTION 4.
ORS 317.097, as amended by section 1 of this 1999 Act, 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
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 construction, development or
rehabilitation is made.
(2) The maximum difference between the amounts described in
subsection (1)(a) and (b) of this section shall 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 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)(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 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; or
(b) 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
(c) Made to refinance a loan that meets the criteria stated in
paragraph (a) or (b) of this subsection.
(5) 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 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 (6) of this section.
(6)(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 [$5] $6 million for any
year. In making loan certifications, the 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 (5) of this section
shall state the period for which the credit will be allowed, which shall not
exceed 20 years.
(7) The credit allowed in this section shall 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).
(8) A loan meeting the requirements of subsections (4) and (5)
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.
(9) As used in this section, the following definitions shall
apply:
(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) "Internal Revenue Code" means the federal
Internal Revenue Code, as amended and in effect on December 31, 1996.
(d) "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.
(e) "Qualified assignee" means any investor
participating in the secondary market for real estate loans.
(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.
(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.
(10) 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.
(11) 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.
(12) The Housing and Community Services Department and the
Department of Revenue may adopt rules to carry out the provisions of this
section.
SECTION 5. The amendments to ORS 317.097 by section 4
of this 1999 Act apply to loan certifications occurring on or after January 1,
2002.
Approved by the Governor
July 23, 1999
Filed in the office of
Secretary of State July 23, 1999
Effective date October 23,
1999
__________