Chapter 1078 Oregon Laws 1999

Session Law

AN ACT

HB 3575

Relating to taxation; creating new provisions; amending ORS 293.701, 308.007, 308.207, 308.236, 308.373, 310.108, 310.110, 310.234, 321.257, 321.267, 321.272, 321.273, 321.282, 321.284, 321.307, 321.312, 321.349, 321.353, 321.358, 321.379, 321.381, 321.415, 321.420, 321.421, 321.485, 321.684, 321.805, 321.811, 321.815 and 321.950; repealing ORS 287.010, 321.299, 321.311, 321.317, 321.515 and 321.520 and sections 1, 2, 4, 5, 8 and 9, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452), and sections 2, 3, 4 and 9, chapter 19, Oregon Laws 1999 (Enrolled House Bill 2127); and appropriating money.

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

Western Oregon Forestland Assessment

SECTION 1. Sections 2 to 4, 9 and 10 of this 1999 Act are added to and made a part of ORS 321.257 to 321.381.

SECTION 2. (1) The Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be specially assessed as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more.

(2) Forestland assessed under this section shall have a specially assessed value per acre equal to 75 percent of the value per acre determined under ORS 321.353 (2) to (5) for the applicable land class of the forestland.

(3) For each land class described in ORS 321.353 (2), the forestland maximum assessed value per acre shall equal 103 percent of the forestland maximum assessed value per acre for the preceding tax year.

(4)(a) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (2) or (3) of this section and multiplying that amount by the acreage of the forestland.

(b) Notwithstanding paragraph (a) of this subsection, the forestland shall be assessed as provided in ORS 308.232 if the real market value of the forestland is less than the value established under paragraph (a) of this subsection.

(5) For purposes of this section:

(a) The department shall certify to the county assessor of a county in which forestland identified in subsection (1) of this section is located a list of the property tax accounts containing forestland so identified.

(b) Forestland shall be considered to be in common ownership if the forestland is owned by the person directly or is owned by a corporation, partnership, association or other entity in which the person owns a majority interest.

SECTION 3. Notwithstanding section 2 (3) of this 1999 Act, for the tax year beginning July 1, 2000, the maximum assessed value per acre of forestland specially assessed under section 2 of this 1999 Act shall equal 75 percent of the value per acre for each class determined under ORS 321.353 (2) to (5) for the tax year beginning July 1, 1995, reduced by 10 percent and then increased by three percent for each of the tax years beginning July 1, 1998, July 1, 1999, and July 1, 2000.

SECTION 4. (1) Forestland that is assessed under section 2 of this 1999 Act shall be disqualified from assessment under ORS 321.353 (6) to (9).

(2) Additional taxes may not be imposed as a result of a disqualification under this section.

(3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification occurring under this section.

SECTION 5. (1) On or after the effective date of this 1999 Act and before April 1, 2002, an owner of forestland that is held in common ownership of less than 5,000 acres may elect to have all of the forestland owned by the owner assessed as provided in section 2 (2) to (4) of this 1999 Act.

(2) The election under subsection (1) of this section shall be made by filing an election form with the Department of Revenue. The form shall contain any information required by the department, including a list of the tax lots or account numbers of forestland owned or held in common ownership by the owner. The form shall contain an affirmation that the statements made on the form are true.

(3) Forestland that is subject to an election under this section shall, for tax years beginning on or after July 1, 2000, and before July 1, 2003, be valued and assessed as provided in section 2 of this 1999 Act, without regard to changes in ownership of the forestland.

(4) The provisions of section 2 (5)(b) of this 1999 Act apply to this section.

SECTION 6. Sections 2 and 4 of this 1999 Act apply to tax years beginning on or after July 1, 2000.

SECTION 7. Section 2 of this 1999 Act is amended to read:

Sec. 2. (1) The Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be specially assessed as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more.

(2) Forestland assessed under this section shall [have]:

(a) Be disqualified from a specially assessed value per acre equal to 75 percent of the value per acre determined under ORS 321.353 (2) to (5) for the applicable land class of the forestland; and

(b) Qualify for a specially assessed value per acre equal to 100 percent of the value per acre determined under ORS 321.353 (2) to (5) for the applicable land class of the forestland.

(5) For purposes of this section:

(c) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.

(d) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification occurring under subsection (2)(a) of this section.

SECTION 8. The amendments to section 2 of this 1999 Act by section 7 of this 1999 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 8a. Notwithstanding section 2 (3) of this 1999 Act, for the tax year beginning July 1, 2003, the maximum assessed value per acre of forestland specially assessed under section 2 of this 1999 Act shall equal the value per acre for each class determined under ORS 321.353 (2) to (5) for the tax year beginning July 1, 1995, reduced by 10 percent and then increased by three percent for each of the tax years beginning July 1, 1998, July 1, 1999, July 1, 2000, July 1, 2001, July 1, 2002, and July 1, 2003.

SECTION 9. (1) For the tax year beginning July 1, 2003, forestland subject to assessment under ORS 321.353 (6) to (9) shall be disqualified from such assessment. For the tax year beginning July 1, 2003, and for each tax year thereafter, the forestland described in this subsection shall be assessed as provided in section 2 of this 1999 Act.

(2) Notwithstanding subsection (1) of this section, an owner of forestland that is held in common ownership of less than 5,000 acres may elect to have all of the forestland owned by the owner be assessed under ORS 321.353 (6) to (9).

(3) The election under subsection (2) of this section shall be made by filing an election form with the Department of Revenue. The form shall contain any information required by the department, including a list of the tax lots or account numbers of forestland owned or held in common ownership by the owner. The form shall contain an affirmation that the statements made on the form are true.

(4)(a) An election shall be filed with the department on or before April 1 preceding the first tax year for which the election is to be in effect.

(b) Notwithstanding paragraph (a) of this section, an election may be filed under this section on or before December 31 of the first tax year for which the election is to be in effect, if accompanied by a late filing fee equal to the greater of $200 or one-tenth of one percent of the assessed value of the forestland immediately prior to the filing of the election.

(5) An election shall first apply to the determination of privilege taxes imposed under ORS 321.273 for the calendar year in which the election is made.

(6) Forestland assessed under section 2 of this 1999 Act shall continue to be assessed under section 2 of this 1999 Act following a change in ownership to an owner that owns forestland that is assessed under ORS 321.353 (6) to (9). Following the change in ownership, the new owner may file an additional election under subsection (2) of this section. The election applies to all forestland owned or held in common ownership by the owner.

(7) Additional taxes may not be imposed as a result of a disqualification under this section.

(8) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

(9) The provisions of section 2 (5)(b) apply to this section.

SECTION 9a. Section 9 of this 1999 Act applies to property tax years beginning on or after July 1, 2003.

SECTION 10. (1) If an owner of forestland that is assessed under section 2 of this 1999 Act acquires additional forestland that was assessed under ORS 321.353 (6) to (9) as of the assessment date preceding acquisition, the additional forestland shall be disqualified from assessment under ORS 321.353 (6) to (9) and shall be assessed under section 2 of this 1999 Act as of the assessment date immediately following the acquisition.

(2) Notwithstanding ORS 321.273 (3) or (4), any timber harvested from forestland described in subsection (1) of this section, during the year of acquisition and the four calendar years immediately following, shall be subject to the privilege tax imposed under ORS 321.273 (2).

(3) Additional taxes may not be imposed as a result of a disqualification under this section.

(4) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

SECTION 11. Section 10 of this 1999 Act applies to property tax years beginning on or after July 1, 2000, and to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 12. ORS 321.257 is amended to read:

321.257. As used in ORS 321.257 to 321.381, unless the context requires otherwise:

(1) "Arms-length transaction" means a transaction made in the open market where there is no duress, where each party is independent of the other and where there are no trades or hidden considerations involved.

(2) "Average Pacific Northwest Coast Lumber Price Index" means the average of the Western Wood Products Association Pacific Northwest Coast Lumber Price annual price indices for Douglas Fir and Hem-Fir.

[(2)] (3) "Department" means the Department of Revenue.

[(3)] (4) "Forestland" means land in western Oregon (a) which is being held or used for the predominant purpose of growing and harvesting trees of a marketable species and has been designated as forestland or (b) the highest and best use of which is the growing and harvesting of such trees. Trees of a marketable species may vary in different areas in western Oregon and may change as the utilization of forest trees changes. The size, age, location, quality and condition of trees do not necessarily determine marketable species. Forestland often contains isolated openings which because of rock outcrops, river wash, swamps, chemical conditions of the soil, brush and other like conditions prevent adequate stocking of such openings for the production of trees of a marketable species. If such openings in their natural state are necessary to hold the surrounding forestland in forest use through sound management practices, they are deemed forestland. Forestland does not include buildings, structures, machinery, equipment or fixtures erected upon, under or above the soil, but does include roads described in ORS 308.236.

[(4)] (5) "Harvest" means the point at which timber that has been cut, severed or removed for purposes of sale or use is first measured in the ordinary course of business as determined by reference to common practice in the timber industry.

[(5) "Inadequate sales data" means sale volume of less than 20 percent of the harvest volume reported for that timber age class in the market area for the calendar year ending two years prior to the end of the year for which taxes will be paid or less than 10 timber sales transactions.]

(6) "Immediate harvest value" means the amount that each species or subclassification of timber would sell for at a voluntary sale made in the ordinary course of business for purposes of immediate harvest. The value shall be determined by methods that make reasonable and adequate allowance for age, size, quality, growing conditions, costs of removal, accessibility to point of conversion, market conditions and all other relevant factors.

[(6)] (7) "Land class" or "land classes" means one of the eight classifications of forestland, used for assessment purposes by the department, based upon State Tax Commission Valuation Division Supplements published in 1967, and identified in ORS 321.352 (1).

[(7) "Log Purchase Value Index" shall be based on log grade recovery classes as set by rule which correspond to the timber age classes. The "Log Purchase Value Index" means the percentage change in the average value of log purchases from private lands calculated by comparing the two preceding reporting periods.]

(8) "Market area" means those groups of areas containing timber with similar values as designated by the department [by the authority under ORS 321.282 (1)]. The department shall designate market areas by rule.

(9) "Owner of timber" means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature holding title to harvested timber by virtue of:

(a) An instrument of conveyance;

(b) The harvesting of the timber; or

[(10) "Stumpage value" of timber means values determined from log grade value tables adopted or used by the department pursuant to ORS 321.282.]

[(11)] (10) "Sustained yield management" means the growing and harvesting of timber crops on a continuous basis on land that is primarily dedicated to timber production.

[(12)] (11) "Taxing district" or "district" means each county, city, school district and other corporation vested with the power to levy property taxes in western Oregon.

[(13)] (12) "Taxpayer" means the owner of timber at time of harvest.

[(14)] (13) "Timber" means all logs which can be measured in board feet and other forest products as determined by department rule.

[(15)] (14) "Unit of proper measurement" means any unit of measurement commonly used in the timber industry for measuring timber and timber products harvested.

[(16)] (15) "Western Oregon" means that portion of the state lying west of a line beginning at the intersection of the northern boundary of the State of Oregon and the western boundary of Wasco County, thence southerly along the western boundaries of the counties of Wasco, Jefferson, Deschutes and Klamath to the southern boundary of the State of Oregon.

[(17) "Average Western Oregon Log Value" means the average log value used in calculating the Log Purchase Value Index for each market area or similar geographic unit, and each age class or similar classification weighted by the reported log volume for each market area or similar geographic unit, and each age class or similar classification.]

SECTION 13. The amendments to ORS 321.257 by section 12 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001, and property tax years beginning on or after July 1, 2001.

SECTION 14. ORS 321.353 is amended to read:

321.353. (1) The assessed value of forestland in western Oregon shall be determined as provided in subsection (8) of this section.

(2) Notwithstanding ORS 308.205, 308.232, 321.352, 321.357 or other law and subject to subsection (3) of this section, [for the tax year beginning July 1, 1995, and for each tax year thereafter,] forestland in western Oregon shall be considered to have a specially assessed value per acre in accordance with the following schedule:

___________________________________________________________________

Land Class Value Per Acre

FA..................................... $720

FB..................................... $619

FC..................................... $396

FD..................................... $299

FE..................................... $171

FF........................................ $42

FG......................................... $7

FX......................................... $1

___________________________________________________________________

(3)(a)(A) For [the tax year beginning July 1, 1995, and for each tax year thereafter,] tax years beginning on or after July 1, 1995, and before July 1, 2001, the values per acre of forestland as determined under subsection (2) of this section shall be adjusted according to the change calculated under this [subsection] paragraph.

[(b)] (B) The Department of Revenue shall determine the assessed values of forestland by multiplying the assessed values of the forestland for the previous year by the value index calculated by the department and certified to the appropriate county assessors under subsection (4) of this section. For the tax year beginning July 1, 1995, the "assessed values of the forestland for the previous year" means the values set forth in subsection (2) of this section.

[(c)] (C) As used in this [subsection] paragraph, "value index" means the number 1.0 plus the decimal equivalent of 50 percent of the change, whether positive or negative, in the Average Western Oregon Log Value, as defined in ORS 321.257 (1997 Edition) for:

[(A)] (i) The current and seven preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1995;

[(B)] (ii) The current and nine preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1996;

[(C)] (iii) The current and 11 preceding six-month periods when compared with a similar calculation made one year previously for the tax year beginning July 1, 1997; and

[(D)] (iv) The current and 13 preceding six-month periods when compared with a similar calculation made one year previously for all tax years beginning on or after July 1, 1998.

[(d)] (D) As used in this [subsection] paragraph, "current" means the six-month period last ending before the calculation is made.

[(e)] (E) For purposes of determining forestland values under this [section] paragraph, forestland in western Oregon shall be divided into those land market areas as the department shall establish by rule.

(b)(A) For the tax year beginning July 1, 2001, and for each tax year thereafter, the values per acre of forestland shall be determined by the department by multiplying the values per acre for the previous tax year by the value index calculated by the department and certified to the appropriate county assessor under subsection (4) of this section.

(B) As used in this paragraph, "value index" means the number 1.0 plus the decimal equivalent of one-half of the percentage change, whether positive or negative, in the average of the Average Pacific Northwest Coast Lumber Price Index values over the seven preceding one-year (calendar) periods when compared with the corresponding average calculated with respect to the previous year.

(4) Prior to July 1 of each tax year, the department shall determine and certify to the appropriate county assessor the values of forestland in western Oregon. Except as provided in ORS 321.352 (7), the county assessor shall use the value so certified in the preparation of the assessment and tax rolls of the county each tax year.

(5) ORS 321.352 (5) to (9) apply to the forestland values determined under this section.

(6) For the tax year beginning July 1, 1995, and for each tax year thereafter, forestland in western Oregon that is not assessed under section 2 of this 1999 Act shall be subject to ad valorem taxation at the same rates as nonforestland similarly situated. However, the assessed value for taxation of such forestland shall not exceed 20 percent of its value determined under ORS 321.352 to 321.381.

(7) For each land class described in subsection (2) of this section, the forestland maximum assessed value per acre of forestland assessed under this section shall equal 103 percent of the forestland maximum assessed value per acre for the preceding assessment year.

(8) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (6) of this section or subsection (7) of this section and multiplying the value by the acreage of the forestland.

(9) For the first assessment year for which property is designated as forestland, the forestland's assessed value shall be determined as provided in subsection (8) of this section.

SECTION 15. For the tax year beginning July 1, 2001, solely for purposes of determining the value index for the tax year beginning July 1, 2001, under ORS 321.353, a calculation shall be made under ORS 321.353 (3)(b) for the tax year beginning July 1, 2000.

SECTION 16. The amendments to ORS 321.353 by section 14 of this 1999 Act apply to property tax years beginning on or after July 1, 2001.

Western Oregon Privilege Tax

SECTION 17. ORS 321.267 is amended to read:

321.267. (1) The following timber and forest land are not subject to ORS 321.257 to 321.381:

(a) Timber and forest land assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665, 308.805 to 308.820 and 308.990.

(b) Except as provided in ORS 321.347, timber and land classified under ORS 321.705 to 321.765.

(d) Except as provided in ORS 321.347, land and Christmas trees which are grown or growing on that land which has been prepared by intensive cultivation and tilling and on which all unwanted plant growth is controlled continuously for the exclusive purpose of growing such Christmas trees.

(e) Except as provided in ORS 321.274, land and hardwood timber, including but not limited to hybrid cottonwood, which are:

(A) Grown or growing on land which has been prepared by intensive cultivation methods and which is cleared of competing vegetation for at least three years after tree planting;

(B) Of a species marketable as fiber for inclusion in the "furnish" for manufacturing paper products;

(D) Subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

(f)(A) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS 308.370 or 308.740 to 308.790, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS 308.370 or 308.740 to 308.790 for at least five property tax years preceding the date the timber was harvested from the land.

(B) For purposes of this paragraph and ORS 321.273 (3) and (4), land that has been forestland assessed under section 2 of this 1999 Act for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under section 2 of this 1999 Act.

(2) The tax imposed by ORS 321.273 shall be in addition to that levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(3) Nothing contained in ORS 321.257 to 321.381 shall prevent:

(a) The collection of ad valorem property taxes which became a lien prior to January 1, 1978.

(b) The collection of taxes levied by ORS 321.005 to 321.185 and 321.560 to 321.600.

(c) Except as provided in section 45, chapter 892, Oregon Laws 1977, the collection of amounts payable upon declassification described under ORS 321.705 to 321.765.

(d) The collection of taxes imposed under ORS 321.255 to 321.360 (1975 Replacement Part).

SECTION 18. The amendments to ORS 321.267 by section 17 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 19. ORS 321.272 is amended to read:

321.272. [(1) Effective January 1, 1994:]

[(a)] (1) All timber in western Oregon shall be exempt from ad valorem taxation.

[(b)] (2) For the privilege of harvesting timber from privately owned land in western Oregon a tax is imposed as provided in ORS 321.257 to 321.322.

[(c)] (3) The tax imposed by [paragraph (b) of this subsection] subsection (2) of this section is intended to recover the annuitized value of forgone property taxes on forestland.

[(2) Effective July 1, 1994, all forestland in western Oregon shall be assessed and taxed and the value determined under ORS 308.205, 308.232, 321.348, 321.352, 321.353 and 321.357.]

SECTION 19a. If House Bill 2452 becomes law, section 1, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 321.272), is repealed.

SECTION 19b. Section 2, chapter 19, Oregon Laws 1999 (Enrolled House Bill 2127) (amending ORS 321.272), is repealed.

SECTION 20. The amendments to ORS 321.272 by section 19 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000, and to property tax years beginning on or after July 1, 2000.

SECTION 21. ORS 321.273 is amended to read:

321.273. (1) For the privilege of harvesting timber from privately owned land in western Oregon, a privilege tax is imposed on taxpayers at the rates provided under subsection (2) or [(4)] (3) of this section.

[(2)(a) The rate of the privilege tax is 4.40 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 3.80 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 1995, and before January 1, 1996.]

[(c)] (2) If the land upon which the timber is harvested is not assessed as provided in section 2 of this 1999 Act and is otherwise subject to privilege taxes, the rate of the privilege tax is 3.20 percent of the stumpage value of timber harvested from privately owned land [on or after January 1, 1996].

[(3) If the timber is harvested from land designated as reforestation land pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) as of July 1, 1977, for the privilege of harvesting the timber, taxpayers in western Oregon shall pay a privilege tax on the stumpage value of timber harvested from such land at the rate provided under subsection (4) of this section.]

[(4)(a) The rate of the privilege tax is 5.75 percent of the stumpage value of timber harvested on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 4.82 percent of the stumpage value of timber harvested on or after January 1, 1995, and before January 1, 1996.]

[(c) The rate of the privilege tax is 3.20 percent of the stumpage value of timber harvested on or after January 1, 1996.]

(3) If the timber is harvested from forestland assessed under section 2 of this 1999 Act:

(a) The rate of the privilege tax is 1.9 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 2000, and before January 1, 2002.

(b) The rate of the privilege tax is 1.4 percent of the stumpage value of timber harvested from privately owned land on or after January 1, 2002, and before January 1, 2003.

(4) Timber harvested from forestland assessed under section 2 of this 1999 Act on or after January 1, 2003, is exempt from the privilege tax imposed under ORS 321.257 to 321.322.

SECTION 21a. If House Bill 2452 becomes law, section 2, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 321.273), is repealed.

SECTION 21b. Section 3, chapter 19, Oregon Laws 1999 (Enrolled House Bill 2127) (amending ORS 321.273), is repealed.

SECTION 22. The amendments to ORS 321.273 by section 21 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 23. ORS 321.273, as amended by section 21 of this 1999 Act, is amended to read:

(2) If the land upon which the timber is harvested is not assessed as provided in section 2 of this 1999 Act and is otherwise subject to privilege taxes, the rate of the privilege tax is 3.20 percent of the [stumpage] immediate harvest value of timber harvested from privately owned land.

(3) If the timber is harvested from forestland assessed under section 2 of this 1999 Act:

(a) The rate of the privilege tax is 1.9 percent of the [stumpage] immediate harvest value of timber harvested from privately owned land on or after January 1, 2000, and before January 1, 2002.

(b) The rate of the privilege tax is 1.4 percent of the [stumpage] immediate harvest value of timber harvested from privately owned land on or after January 1, 2002, and before January 1, 2003.

(4) Timber harvested from forestland assessed under section 2 of this 1999 Act on or after January 1, 2003, is exempt from the privilege tax imposed under ORS 321.257 to 321.322.

SECTION 24. The amendments to ORS 321.273 by section 23 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001.

SECTION 25. ORS 321.282 is amended to read:

321.282. [(1) On or before October 1 of each year, the Department of Revenue shall designate areas containing timber with similar values and such areas shall be used as units for determination of stumpage values. Prior to February 1 of each year, the department shall prepare and adopt by order tables of values by log grade or other appropriate system recognized by the department as commonly used in the industry for each species or subclassification of timber within such units. The tables shall be used to calculate taxes due under ORS 321.257 to 321.381 for the year for which the tables are adopted. The values shall be determined as of January 1 of the year for which the tables are adopted.]

[(2)(a) Except as provided in paragraphs (b) and (c) of this subsection, the stumpage values shall be based upon voluntary purchases of standing timber made in the ordinary course of business for harvest within 37 months and shall make reasonable and adequate allowances for all relevant factors, including size, quality, volume, age, disease, defect, breakage, stand density, costs of removal, accessibility to point of conversion, topography of the site and surrounding country, and local market conditions in western Oregon. The values shall be expressed in terms of a dollar amount per thousand board feet for each log grade of each species or subclassification, and shall be determined by averaging the available sales data for the 12 calendar months prior to October 1 of the year preceding the year for which the tables are adopted for each species or subclassification.]

[(b) In the event there are inadequate sales data in a market area, the department shall use the Log Purchase Value Index for the affected timber age class for the market area as defined by rule.]

[(c) In order to determine values for hardwoods and substandard grades of conifers, the department may use a conversion return technique as defined by rule of the department.]

[(3)(a) Supplemental tables for adjustment shall be prepared in recognition that certain primary factors affecting logging costs and stumpage values may vary significantly within a given valuation area. The adjustments may be either plus or minus, depending upon the basis of the typical logging cost used in subsection (1) of this section. The primary factors to be considered are average volume per acre harvested, logging conditions, and average log size for young growth thinning operations. In addition, recognition shall be given to the added costs involved in logging small, somewhat isolated areas. However, the department, either on its own motion or in response to an application from a taxpayer, may specify an adjustment of stumpage value for timber that is damaged by fire, ice storm, insect damage, disease, flood, blowdown or other causes.]

[(b) When a taxpayer uses the adjustments specified in this subsection, the taxpayer shall maintain appropriate accounting records to support the adjustments.]

[(4) The log grading system used by the department for valuation purposes and by the taxpayer in making the privilege tax return shall be that of the Columbia River Log Scaling and Grading Bureau or other system commonly used in the forest industry and adopted by the department by rule.]

(1) The Department of Revenue shall determine on or before February 1 of each year the immediate harvest values as of January 1 of the calendar year for which the immediate harvest values are to be used in computing the privilege tax imposed by ORS 321.273. The values shall be determined for each species or subclassification, as provided in subsection (2) of this section, and shall be expressed in terms of a dollar amount per thousand board foot or other unit measure. The total listing of values shall be combined into a convenient set of tables issued by the department. A copy of the tables shall be retained on file in the office of the department.

(2) The department shall select various areas in western Oregon to be treated as units for the application of the immediate harvest values determined under this section. The department shall determine unit values for immediate harvest for each species in each area. The department may make further value classifications based on age, size and other relevant factors. The areas shall be selected, within the discretion of the department based on administrative feasibility, to include timber having similar growing and marketing conditions. The determination of the size and location of appropriate areas shall not be subject to review by the courts.

[(5)] (3) Public hearings shall be held at least 45 days prior to the adoption of timber valuation schedules or changes in the boundaries of valuation areas developed in accordance with subsections (1) [to (3)] and (2) of this section. Notice of the hearings shall be published in a newspaper of general circulation throughout the state at least 14 days prior to the hearings date. In addition, the department may cause notice to be broadcast pursuant to ORS 193.310 to 193.360.

[(6)(a)] (4)(a) A taxpayer who harvests less than 500,000 board feet of timber in the calendar year or who has less than 1,000 acres of forestland in western Oregon, and who, during the calendar year immediately preceding the due date of the privilege tax return, is not engaged in and does not have an ownership interest of more than 10 percent in a business engaged in the processing of timber into wood products, may elect to calculate and pay a tax on the basis of net stumpage recovery from such forestland rather than by use of the tables prepared in accordance with subsections (1) [to (3)] and (2) of this section.

(b) For purposes of this subsection, "net stumpage recovery" means the selling price of the logs at a conversion center in an arm's length transaction, less the costs described in one of the following subparagraphs:

(A) The logging costs reflected by a written agreement entered into in connection with the logging operation. The department may analyze the agreement and adjust the contract price to eliminate costs paid by the taxpayer for work or material not connected with logging, log hauling costs and marketing the timber.

(B) Administration, logging and log hauling costs typical for the type of harvest as determined by the department.

(c) The department may require such proof from the taxpayer as it deems necessary to determine the amount of stumpage recovery and eligibility for the alternate calculation of the tax provided in this subsection.

SECTION 26. The amendments to ORS 321.282 by section 25 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001.

SECTION 26a. ORS 321.284 is amended to read:

321.284. (1) Within 21 days after the [stumpage] immediate harvest value tables are adopted by the Department of Revenue as provided in ORS 321.282, a taxpayer may appeal [either] the [stumpage] immediate harvest values [or any allowances of all relevant factors, or both, as listed in ORS 321.282] to the Oregon Tax Court. Values modified by the court shall apply only to the complainant. Multiple appeals may be consolidated by the court. In the event that five or more taxpayers owning in the aggregate not less than five percent of the total forestland subject to ad valorem taxation in a single market area, or their representative organization appeals, values modified by the court shall apply to all taxpayers in that market area.

(2) An appeal to the Oregon Tax Court under this section shall be taken in the same manner and form as a complaint filed under ORS 305.404 to 305.560. A taxpayer shall be considered to be aggrieved by the department's values if the taxpayer harvests timber in western Oregon. The court has jurisdiction to affirm or modify the values contained in the [stumpage] immediate harvest value tables adopted by the department.

(3) An appeal filed in the Oregon Tax Court pursuant to this section shall have priority over all other cases pending before the court and shall be heard and decided as soon after coming to issue as is reasonably possible.

(4) If the Oregon Tax Court fails to render a decision before November 1, the [stumpage] immediate harvest values adopted by the department may be used as the [stumpage] immediate harvest values for the tables referred to in ORS 321.282 until a decision is reached. If the court establishes [stumpage] immediate harvest values different from those adopted by the department, the provisions of ORS 321.560 shall apply, except that no penalty shall be assessed for deficiencies attributable to changes in the [stumpage] immediate harvest values and any refund shall be payable, with interest, no later than July 1 following the calendar year in which the court renders the decision.

SECTION 26b. The amendments to ORS 321.284 by section 26a of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001.

SECTION 27. ORS 321.379 is amended to read:

321.379. (1) Any purchaser in an arms-length transaction of privately owned timber located within western Oregon shall, within 30 days after the purchase of the timber, report the particulars of the purchase to the Department of Revenue. The particulars that must be reported shall be those designated by rule of the department and shall be relevant to the valuation of stumpage. The report shall be made in the form specified by rule of the department.

[(2) Except as provided in subsection (5) of this section, on or before September 1 of each year for the first six months of that calendar year, and on or before March 1 of each year for the second six months of the preceding calendar year, purchasers of logs shall report log purchases from timber harvested from private land within western Oregon to the department, or make information concerning those purchases available to the department, as prescribed by rule of the department.]

[(3) Except as provided in subsection (5) of this section, on or before September 1 of each year for the first six months of that calendar year, and on or before March 1 of each year for the second six months of the preceding calendar year, purchasers of logs shall report log purchases from timber harvested from public land within western Oregon to the department, or make information concerning those purchases available to the department, under rules adopted by the department.]

[(4)] (2) Any seller of woods direct logs shall provide any purchaser of those logs with the proper State Forestry Department Notification of Operations permit number applicable to the logs and the name of the timber owner as shown on the permit. Purchasers shall include that information in [the reports filed pursuant to subsections (2) and (3) of this section] any records or reports of purchases required by the department under this chapter.

[(5) A seller who intends to sell more than five million board feet of logs from timber harvested within western Oregon in a calendar year may elect annually to report those log sales directly to the department in lieu of providing information on the source of logs sold to log purchasers during that year. Any seller electing to report log sales directly to the department under this subsection shall notify the department in writing at least 30 days before the beginning of a calendar year that the seller will report all of the seller's log sales directly to the department for that calendar year. The department shall issue a certificate to the seller verifying that the seller will report log sales directly to the department for the calendar year. The seller shall inform each purchaser to whom the seller sells logs during that calendar year that the seller will report the log sales directly to the department. Purchasers of logs from sellers electing to report sales under this subsection shall not be required to report those purchases under subsection (1) or (2) of this section. The seller shall report log sales for that calendar year in accordance with subsections (2) and (3) of this section in the form prescribed by the department by rule.]

[(6)] (3) Any seller or purchaser who fails to report a sale or purchase as required under [subsections (1) to (5) of] this section shall be liable for a penalty of $1,000 for each failure to report, which shall be assessed and collected in the manner provided in ORS 321.560 and 321.570.

SECTION 28. The amendments to ORS 321.379 by section 27 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 29. ORS 321.307 is amended to read:

321.307. (1) The revenue from the taxes imposed by ORS 321.273 shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Western Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Western Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.273 and other expenses associated with forest taxation and for costs incurred by the State Forestry Department in carrying out ORS 315.104 and 321.705 to 321.765 for the period beginning July 1, 1997, and ending July 1, 1999.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed by ORS 321.273 is appropriated continuously to the department and shall be used by the department for the payment of all refunds of taxes imposed by ORS 321.273 which have been audited and approved by the department. This appropriation shall be from the Western Oregon Timber Tax Account. Any penalties, interest and taxes due from the taxpayer on account of taxes imposed by ORS 321.273 shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

[(3)(a) The records of the department shall reflect the amount of revenue deposited in the Western Oregon Timber Tax Account which it has credited to the account of each taxing district. Subject to appropriations as provided in subsections (1) and (2) of this section and ORS 321.311 and transfers required under ORS 321.299, the department shall credit the entire balance of such revenue to such districts. The amount credited to each district from the revenue collected during each calendar quarter shall be determined by allocating the revenue collected in each calendar quarter to the several western Oregon counties and then by allocating the share of each county among the several participating taxing districts within that county. Seventy-five percent of the collections shall be allocated in the proportion that the average annual harvest value of timber harvested in each county during the last five calendar years preceding the fiscal year in which the collection occurs bears to the average annual harvest value of timber harvested in all western Oregon counties during the same period. Twenty-five percent of the collections shall be allocated in the proportion that the assessed value of forestland in each western Oregon county during the preceding fiscal year bears to the assessed value of forestland in all western Oregon counties during such fiscal year. The amounts as allocated shall be apportioned and credited to each participating district in each county as follows:]

[(A) Seventy-five percent thereof shall be apportioned in the proportion that the average annual harvest value of timber harvested in the district during said five years, multiplied by the average of the district's rates of levy in the ad valorem tax roll for the five preceding fiscal years, bears to the average harvest value of timber harvested in all districts in the county multiplied by the corresponding average rate of levy in each district.]

[(B) Twenty-five percent thereof shall be apportioned in the proportion that the assessed value of forestland in the district during the preceding fiscal year multiplied by the average of the district's rates of levy in the ad valorem tax roll for the five preceding fiscal years bears to the assessed value of forestland in all districts in the county multiplied by the corresponding average rate of levy in each district.]

[(b) For purposes of this subsection, for fiscal years beginning before July 1, 1995, the average annual harvest value of timber harvested from land classified under ORS 321.255 to 321.360 (1975 Replacement Part) as reforestation land as of July 1, 1977, shall be adjusted. The adjustment shall be computed by dividing the total severance tax rate imposed upon timber harvested from such reforestation land by six and one-half percent. The resulting factor shall be multiplied by the value of timber harvested from the reforestation lands.]

[(4) All moneys credited to the taxing districts pursuant to subsection (3) of this section are continuously appropriated to the districts in whose names they are credited, and the department shall remit the full amounts including interest remaining to the credit of each district as of the 10th day of the second month following the close of each calendar quarter to the county treasurers of the respective counties in which the districts are located on or before the last day of that month, together with the department's certification of the amount thereof which is for the credit of each such district. A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses provided by subsection (1) of this section.]

(3) Moneys remaining in the Western Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (9) shall be distributed as follows:

(A) Ninety-three percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the State School Fund for the purposes for which State School Fund moneys may be spent.

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) Thirty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.353 (6) to (9) shall be distributed to county general funds of western Oregon counties.

(c) The balance of the account shall be distributed as follows:

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(4)(a) Moneys that are to be distributed to western Oregon counties under subsection (3)(b) of this section shall be distributed to each western Oregon county in the proportion that the assessed value of forestland in the county for the preceding fiscal year bears to the total assessed value of forestland for the preceding fiscal year.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 31 of each fiscal year, the department shall determine the amount distributable to counties from the Western Oregon Timber Tax Account as of May 15 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Western Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 15 of the fiscal year and transferred on or before May 31 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Western Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 29a. Section 4, chapter 19, Oregon Laws 1999 (Enrolled House Bill 2127) (amending ORS 321.307), is repealed.

SECTION 30. ORS 321.312 is amended to read:

321.312. [(1)] Each year when extending the [levies] operating levy of the [taxing districts] county upon the assessment [rolls] roll the county assessor shall offset against the levy submitted by [each taxing district an estimated amount of revenue to be raised from privilege taxes imposed by ORS 321.273] the county the amount of revenue distributed to the county pursuant to ORS 321.307 (3)(b) and correspondingly reduce the amount of the levy to be collected through extension on the tax roll for the current fiscal year.

[(2)(a) Prior to January 15, 1994, and prior to January 15 of each year thereafter, the Department of Revenue shall prepare a preliminary estimate of the revenues received from all taxes imposed under ORS 321.273 as a result of the harvesting of timber that will be credited to taxing districts for the ensuing fiscal year. The estimate shall include an estimate of the proportion of those revenues that each taxing district will receive. The estimate shall be forwarded to the taxing unit and may be used by the taxing unit in the preparation of its budget.]

[(b) Prior to August 31 of each fiscal year, the Department of Revenue, on the basis of its records and other information available to the department, shall prepare a final estimate of the collections that will be credited to each taxing district as a result of the harvest of timber during the calendar quarter beginning July 1, October 1 and January 1 of the current fiscal year and shall certify the final estimates so prepared to the appropriate county treasurer for use by the county treasurer and by the county assessor both in determining the amount of revenue to be distributed to the taxing district as limited by subsection (6) of this section and the amount of revenue to be offset against the levy of the taxing unit under subsection (3) of this section. In making the estimate, the department shall take into consideration any transfers to or from the Western Oregon Timber Tax Reserve Account required under ORS 321.299.]

[(3) Not later than September 10 of each year each county treasurer in western Oregon shall certify to the county assessor of the county the amount of privilege tax receipts then on deposit to the credit of each taxing district in the county under ORS 321.307 plus an amount equal to the department's estimate of collections that will be credited to the taxing district as a result of the harvest of timber during the calendar quarters beginning July 1, October 1 and January 1 of the current fiscal year as certified under of subsection (2)(b) of this section. However, the amount on deposit each August 31 shall be deemed to include amounts payable to the treasurer by the department not later than August 31 pursuant to ORS 321.307 (4) even if payment has not been made by August 31. Subject to instructions from the department pursuant to subsection (4) of this section, the estimated amount of revenue to be offset against the levy of a district pursuant to subsection (1) of this section shall be the amount so certified to the assessor by the treasurer.]

[(4) Subject to ORS 321.299, if the department has reason to believe that estimates made pursuant to subsection (3) of this section will be greater than the revenue from privilege taxes which will actually be available to the taxing district in the fiscal year, it may instruct the assessor to decrease the estimate accordingly, and such corrected estimate shall be the amount offset against the levy submitted by the district pursuant to subsection (1) of this section.]

[(5) Each county treasurer shall thereafter distribute the moneys on deposit on August 31 and the moneys remitted from the Western Oregon Timber Tax Account during that fiscal year, to the taxing districts to which they have been credited as certified by the department pursuant to ORS 321.307 (4) until the total of the moneys which were thus on deposit plus the total thus remitted, or the amount offset against the levy under subsection (1) of this section, whichever is the lesser, has been distributed.]

[(6) If the moneys on deposit on August 31 plus the moneys thus remitted to the treasurer and credited to a taxing district exceed the amount offset against the levy under subsection (1) of this section, the county treasurer shall hold such excess receipts on deposit in a special account until the following year when they shall be included in and treated as moneys on deposit on August 31 of such following year.]

SECTION 31. The amendments to ORS 321.307 and 321.312 by sections 29 and 30 of this 1999 Act apply to Western Oregon Timber Tax Account distributions occurring on or after July 1, 2000.

SECTION 32. (1) Notwithstanding ORS 321.307 (3)(b), for the fiscal year beginning July 1, 2000, a distribution of Western Oregon Timber Tax Account moneys to western Oregon counties may not be made.

(2) On or before August 31, 2000, 30 percent of moneys held in the Western Oregon Timber Tax Reserve Account shall be distributed to western Oregon counties in the manner provided for Western Oregon Timber Tax Account distributions under ORS 321.307 (4) and (5), and is appropriated to western Oregon counties for the purposes for which Western Oregon Timber Tax Account distributions are appropriated.

(3) The Department of Revenue shall certify to the county assessor the amount distributed to the county under this section. For purposes of calculating the property tax offset under ORS 321.312 for the property tax year beginning July 1, 2000, the county assessor shall consider a distribution received under this section to be a distribution pursuant to ORS 321.307 (3)(b).

(4) On August 31, 2000, the balance of moneys in the Western Oregon Timber Tax Reserve Account shall be distributed as follows:

(a) Ninety-three percent of the amount distributed under this subsection shall be transferred to and is appropriated to the State School Fund for the purposes for which State School Fund moneys may be spent.

(b) Seven percent of the amount distributed under this subsection shall be transferred to and is appropriated to the Community College Support Fund established under ORS 341.620.

(5) A transfer described in ORS 321.299 (2) to (4) may not be made on or after July 1, 2000.

SECTION 33. ORS 310.108 is amended to read:

310.108. If the taxing district is a district other than a school district, education service district, community college district or community college service district, and is a district for which the assessor is directed to offset timber harvest privilege tax revenues against the district's ad valorem property taxes under ORS 321.312 or 321.515, the operating tax rate certified on the notice required under ORS 310.060, shall be further adjusted to reflect the amount of the offset.

SECTION 33a. The amendments to ORS 310.108 by section 33 of this 1999 Act apply to property tax years beginning on or after July 1, 1998.

SECTION 33b. ORS 310.108, as amended by section 33 of this 1999 Act, is amended to read:

310.108. If the taxing district is a district other than a school district, education service district, community college district or community college service district, and is a district for which the assessor is directed to offset timber harvest privilege tax revenues against the district's ad valorem property taxes under ORS 321.312 or [321.515] section 57 of this 1999 Act, the operating tax rate certified on the notice required under ORS 310.060, shall be further adjusted to reflect the amount of the offset.

SECTION 33c. The amendments to ORS 310.108 by section 33b of this 1999 Act apply to property tax years beginning on or after July 1, 2000.

Eastern Oregon Forestland Assessment

SECTION 34. Sections 35 to 38, 42 and 43 of this 1999 Act are added to and made a part of ORS 321.805 to 321.825.

SECTION 35. (1) The Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be specially assessed as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more.

(2) Forestland assessed under this section shall have a specially assessed value per acre equal to 75 percent of the value per acre determined under ORS 321.811 (2) to (7).

(3) Forestland assessed under this section shall have a maximum assessed value per acre equal to 103 percent of the forestland maximum assessed value per acre for the preceding tax year.

(5) For purposes of this section:

SECTION 36. Notwithstanding section 35 (3) of this 1999 Act, for the tax year beginning July 1, 2000, the maximum assessed value per acre of forestland specially assessed under section 35 of this 1999 Act shall equal 75 percent of the value per acre for each class determined under ORS 321.811 (2) to (7) for the tax year beginning July 1, 1995, reduced by 10 percent and then increased by three percent for each of the tax years beginning July 1, 1998, July 1, 1999, and July 1, 2000.

SECTION 37. (1) Forestland that is assessed under section 35 of this 1999 Act shall be disqualified from assessment under ORS 321.811 (8) to (11).

(2) Additional taxes may not be imposed as a result of a disqualification under this section.

(3) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification occurring under this section.

SECTION 38. (1) On or after the effective date of this 1999 Act and before April 1, 2002, an owner of forestland that is held in common ownership of less than 5,000 acres may elect to have all of the forestland owned by the owner assessed as provided in section 35 (2) to (4) of this 1999 Act.

(3) Forestland that is subject to an election under this section shall, for tax years beginning on or after July 1, 2000, and before July 1, 2003, be valued and assessed as provided in section 35 of this 1999 Act, without regard to changes in ownership of the forestland.

(4) The provisions of section 35 (5)(b) of this 1999 Act apply to this section.

SECTION 39. Sections 35 and 37 of this 1999 Act apply to tax years beginning on or after July 1, 2000.

SECTION 40. Section 35 of this 1999 Act is amended to read:

Sec. 35. (1) The Department of Revenue shall identify the forestland that is held in common ownership of 5,000 acres or more as of January 1, 2000. Forestland that the department has so identified shall be specially assessed as provided in this section for the tax year beginning July 1, 2000, and for subsequent tax years, without regard to whether the forestland continues to be held in common ownership of 5,000 acres or more.

(2) Forestland assessed under this section shall [have]:

(a) Be disqualified from a specially assessed value per acre equal to 75 percent of the value per acre determined under ORS 321.811 (2) to (7); and

(b) Qualify for a specially assessed value per acre equal to 100 percent of the value per acre determined under ORS 321.811 (2) to (7).

(3) Forestland assessed under this section shall have a maximum assessed value per acre equal to 103 percent of the forestland maximum assessed value per acre for the preceding tax year.

(5) For purposes of this section:

(c) Additional taxes may not be imposed as a result of a disqualification under subsection (2)(a) of this section.

SECTION 41. The amendments to section 35 of this 1999 Act by section 40 of this 1999 Act apply to property tax years beginning on or after July 1, 2003.

SECTION 41a. Notwithstanding section 35 (3) of this 1999 Act, for the tax year beginning July 1, 2003, the maximum assessed value per acre of forestland specially assessed under section 35 of this 1999 Act shall equal the value per acre for each class determined under ORS 321.811 (2) to (7) for the tax year beginning July 1, 1995, reduced by 10 percent and then increased by three percent for each of the tax years beginning July 1, 1998, July 1, 1999, July 1, 2000, July 1, 2001, July 1, 2002, and July 1, 2003.

SECTION 42. (1) For the tax year beginning July 1, 2003, forestland subject to assessment under ORS 321.811 (8) to (11) shall be disqualified from such assessment, and shall be assessed as provided in section 35 of this 1999 Act.

(4)(a) An election shall be filed with the department on or before April 1 preceding the first tax year for which the election is to be in effect.

(5) An election shall first apply to the determination of privilege taxes imposed under ORS 321.421 for the calendar year in which the election is made.

(6) Forestland assessed under section 35 of this 1999 Act shall continue to be assessed under section 35 of this 1999 Act following a change in ownership to an owner that owns forestland that is assessed under ORS 321.811 (8) to (11). Following the change in ownership, the new owner may file an additional election under subsection (2) of this section. The election applies to all forestland owned or held in common ownership by the owner.

(7) Additional taxes may not be imposed as a result of a disqualification under this section.

(8) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

(9) The provisions of section 35 (5)(b) apply to this section.

SECTION 42a. Section 42 of this 1999 Act applies to property tax years beginning on or after July 1, 2003.

SECTION 43. (1) If an owner of forestland that is assessed under section 35 of this 1999 Act acquires additional forestland that was assessed under ORS 321.811 (8) to (11) as of the assessment date preceding acquisition, the additional forestland shall be disqualified from assessment under ORS 321.811 (8) to (11) and shall be assessed under section 35 of this 1999 Act as of the assessment date immediately following the acquisition.

(2) Notwithstanding ORS 321.421 (4), any timber harvested from forestland described in subsection (1) of this section, during the year of acquisition and the four calendar years immediately following, shall be subject to the privilege tax imposed under ORS 321.421 (2).

(3) Additional taxes may not be imposed as a result of a disqualification under this section.

(4) The notification requirements and other procedures that the county assessor must follow in disqualifying forestland do not apply to a disqualification under this section.

SECTION 44. Section 43 of this 1999 Act applies to property tax years beginning on or after July 1, 2000, and to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 45. ORS 321.805 is amended to read:

321.805. As used in ORS 321.805 to 321.825, unless the context requires otherwise:

(1) "Average Pacific Northwest Inland Lumber Price Index" means the average of the Western Wood Products Association Pacific Northwest Inland Lumber Price annual price indices for Douglas Fir-Larch, White Fir (Hem-Fir) and Coast Inland North Ponderosa Pine.

[(1)] (2) "Forestland" means land east of the summit of the Cascade Mountains which is not assessed as farmland pursuant to ORS 308.345 to 308.365 and 308.370 to 308.407 and is not assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820; and which either is being held or used for the predominant purpose of growing and harvesting trees of a marketable species and has been designated as forestland under ORS 321.805 to 321.825, or is land the highest and best use of which is the growing and harvesting of such trees. Forestland is the land alone. Forestland often contains isolated openings which because of rock outcrops, river wash, swamps, chemical conditions of the soil, brush and other like conditions prevent adequate stocking of such openings for the production of trees of a marketable species. If such openings in their natural state are necessary to hold the surrounding forestland in forest use through sound management practices, they are deemed forestland.

[(2)] (3) "Owner" means any individual or combination of individuals, partnership, firm, corporation or association of whatever nature owning or controlling forestland.

[(3)] (4) The "summit of the Cascade Mountains" shall be considered to be a line beginning at the intersection of the northern boundary of the State of Oregon and the western boundary of Wasco County, thence southerly along the western boundaries of the counties of Wasco, Jefferson, Deschutes and Klamath to the southern boundary of the State of Oregon.

SECTION 46. ORS 321.811 is amended to read:

321.811. (1) The assessed value of forestland in eastern Oregon shall be determined as provided in subsection (10) of this section.

(2) Notwithstanding ORS 308.205 and 308.235, and for purposes of ORS 308.232, the specially assessed value of forestland shall be determined under subsections (2) to (8) of this section. Land that has been designated as forestland under ORS 321.805 to 321.825 shall be valued as forestland under subsections (2) to (7) of this section and shall be noted on the assessment and tax roll as being forestland potentially subject to additional taxes under ORS 321.825 (1).

(3) Subject to subsection (4) of this section, for tax years beginning on or after July 1, 1995, forestland shall be considered, for purposes of ORS 321.805 to 321.825, to have a value of $42 per acre.

(4) Each tax year beginning on or after July 1, 1995, the value of forestland shall be determined by multiplying the value of the forestland for the previous tax year by the [forestland] value index calculated by the Department of Revenue and certified to the appropriate county assessors under subsection (5) of this section. [As used in this subsection, for the tax year beginning July 1, 1995, "value of the forestland for the previous tax year" means $42.]

(5) The Department of Revenue shall calculate, and certify to each county assessor on or before [August 15, 1995, and on or before] August 15 of each tax year [thereafter, the forestland] the value index to be used in the calculation of the value of forestland as of the [July 1] assessment date immediately preceding. Except as provided in ORS 321.810 (7), the county assessor shall use the index so certified in the preparation of the assessment and tax roll.

(6) As used in subsections (2) to (7) of this section, "[forestland] value index" means the number 1.0 plus the decimal equivalent of [50 percent] one-half of the percentage change, whether positive or negative, in the [sum of the yearly average immediate harvest value of timber determined by the department for the previous five years compared to the sum of the five yearly average immediate harvest values beginning one year prior to the most recent five-year harvest dates. The average immediate harvest value for each year shall be calculated by the Department of Revenue by dividing the total of the immediate harvest values on the returns by the total of the volumes on the returns. The volumes and immediate harvest values used to determine the index shall be based upon those volumes reported in thousand board feet or in the unit of measure in which the preponderance of volume has been reported. The returns used shall be the privilege tax returns timely filed under ORS 321.435.] average of the Average Pacific Northwest Inland Lumber Price Index values over the five preceding one-year (calendar) periods when compared with the corresponding average calculated with respect to the previous year.

(7) ORS 321.810 (5) to (9) apply to the forestland values determined under subsections (2) to (7) of this section.

(8) For the tax year beginning July 1, 1995, and for each tax year thereafter, forestland that is not assessed under section 35 of this 1999 Act shall be subject to ad valorem property taxation at the same rates as nonforestland similarly situated. However, the assessed value for taxation of such forestland shall not exceed 20 percent of its value determined under subsections (2) to (7) of this section.

(9) Forestland assessed under this section shall have a maximum assessed value per acre equal to 103 percent of the forestland's maximum assessed value per acre for the preceding assessment year.

(10) The assessor shall compute the assessed value of forestland by taking the lesser of the value established under subsection (8) of this section or subsection (9) of this section and multiplying the value by the acreage of the forestland.

(11) For the first assessment year for which property is designated as forestland, the forestland's assessed value shall be determined as provided in subsection (10) of this section.

SECTION 47. For the tax year beginning July 1, 2001, solely for purposes of determining the value index for the tax year beginning July 1, 2001, under ORS 321.811, a calculation shall be made under ORS 321.811 (6) for the tax year beginning July 1, 2000.

SECTION 48. The amendments to ORS 321.805 and 321.811 by sections 45 and 46 of this 1999 Act apply to tax years beginning on or after July 1, 2001.

Eastern Oregon Privilege Tax

SECTION 49. ORS 321.415 is amended to read:

321.415. (1) Lands assessed by the Department of Revenue pursuant to ORS 308.505 to 308.665 or 308.805 to 308.820 and the timber thereon shall not be subject to the provisions of ORS 321.405 to 321.520.

(2) The tax imposed under the provisions of ORS 321.405 to 321.520 shall be additional to that levied under the provisions of ORS 321.005 to 321.185 and 321.560 to 321.600.

(3) Timber on timberland which is exempt from the ad valorem real property tax shall be exempt from the privilege tax imposed by ORS 321.405 to 321.520.

(4) Land used exclusively for growing cultured Christmas trees, and the cultured Christmas trees growing thereon, as defined in ORS 215.203, shall not be subject to the provisions of ORS 321.405 to 321.520 and 321.805 to 321.825.

(5) Except as provided in ORS 321.426, land and hardwood timber, including but not limited to hybrid cottonwood, shall not be subject to the provisions of ORS 321.405 to 321.520 and 321.805 to 321.825 if the land and timber are:

(a) Grown or growing on land which has been prepared by intensive cultivation methods and which is cleared of competing vegetation for at least three years after tree planting;

(b) Of a species marketable as fiber for inclusion in the "furnish" for manufacturing paper products;

(d) Subject to intensive agricultural practices such as fertilization, insect and disease control, cultivation and irrigation.

(6)(a) Timber on land that, at the time of harvest, is assessed under ORS 308.146 (1) to (3) or specially assessed under ORS 308.370 or 308.740 to 308.790, if the land was assessed under ORS 308.146 (1) to (3) or 308.232 or was specially assessed under ORS 308.370 or 308.740 to 308.790 for at least five property tax years preceding the date the timber was harvested from the land, shall not be subject to the provisions of ORS 321.405 to 321.520.

(b) For purposes of this subsection and ORS 321.421 (4), land that has been forestland assessed under section 35 of this 1999 Act for any of the five property tax years preceding the date the timber was harvested from the land shall be considered to be forestland assessed under section 35 of this 1999 Act.

[(6)] (7) Nothing contained in ORS 321.405 to 321.520 shall prevent:

(a) The collection of ad valorem property taxes which became a lien against timber prior to July 1, 1962.

(b) The collection of taxes, charges or assessments made pursuant to law for protection.

SECTION 50. The amendments to ORS 321.415 by section 49 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 51. ORS 321.420 is amended to read:

321.420. [(1) Effective January 1, 1994:]

[(a)] (1) All timber in eastern Oregon shall be exempt from levy and collection of the general ad valorem real property tax.

[(b)] (2) For the privilege of harvesting timber from privately owned land in eastern Oregon a tax is imposed as set forth in ORS 321.405 to 321.520.

[(c)] (3) The tax imposed by [paragraph (b) of this subsection] subsection (2) of this section is intended to recover the annuitized value of forgone property taxes on forestland.

[(2) Effective July 1, 1994, all forestland in eastern Oregon shall be assessed and taxed and the value determined under ORS 308.205, 308.232, 321.357 and 321.810 or 321.811.]

SECTION 51a. If House Bill 2452 becomes law, section 4, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 321.420), is repealed.

SECTION 52. The amendments to ORS 321.420 by section 51 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000, and to property tax years beginning on or after July 1, 2000.

SECTION 53. ORS 321.421 is amended to read:

321.421. (1) For the privilege of harvesting timber from privately owned land in eastern Oregon, a privilege tax is imposed upon taxpayers at the rates provided under subsection (2) or [(4)] (3) of this section.

[(2)(a) The rate of the privilege tax is 3.30 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 2.90 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 1995, and before January 1, 1996.]

[(c)] (2) If the land upon which the timber is harvested is not assessed as provided in section 35 of this 1999 Act and is otherwise subject to privilege taxes, the rate of the privilege tax is 1.80 percent of the immediate harvest value of timber harvested from privately owned land [on or after January 1, 1996].

(3) If the timber is harvested from [land designated as reforestation land pursuant to ORS 321.255 to 321.360 (1975 Replacement Part) as of July 1, 1977, for the privilege of harvesting the timber, taxpayers in eastern Oregon shall pay a privilege tax on the immediate harvest value of timber harvested from such land at the rate provided under subsection (4) of this section.] forestland assessed under section 35 of this 1999 Act:

(a) The rate of the privilege tax is 1.1 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 2000, and before January 1, 2002.

(b) The rate of the privilege tax is 0.8 percent of the immediate harvest value of timber harvested from privately owned land on or after January 1, 2002, and before January 1, 2003.

(4) Timber harvested from forestland assessed under section 35 of this 1999 Act on or after January 1, 2003, is exempt from the privilege tax imposed under ORS 321.405 to 321.520.

[(4)(a) The rate of the privilege tax is 5.61 percent of the immediate harvest value of timber harvested on or after January 1, 1994, and before January 1, 1995.]

[(b) The rate of the privilege tax is 4.78 percent of the immediate harvest value of timber harvested on or after January 1, 1995, and before January 1, 1996.]

[(c) The rate of the privilege tax is 1.80 percent of the immediate harvest value of timber harvested on or after January 1, 1996.]

SECTION 53a. If House Bill 2452 becomes law, section 5, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 321.421), is repealed.

SECTION 53b. Section 9, chapter 19, Oregon Laws 1999 (Enrolled House Bill 2127) (amending ORS 321.421), is repealed.

SECTION 54. The amendments to ORS 321.421 by section 53 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2000.

SECTION 55. ORS 321.485 is amended to read:

321.485. (1) The revenue from the taxes imposed by ORS 321.405 to 321.520 shall be remitted by the Department of Revenue to the State Treasurer who shall deposit it in a suspense account, separate and distinct from the General Fund, established under the provisions of ORS 293.445 which shall be known as the Eastern Oregon Timber Tax Account. Interest earned on cash balances invested by the State Treasurer shall be credited to this account. Moneys are appropriated continuously from the Eastern Oregon Timber Tax Account for use in reimbursing the General Fund for expenses incurred in the collection of taxes imposed by ORS 321.405 to 321.520 and other expenses associated with administering forest taxes and for costs incurred by the State Forestry Department in carrying out the provisions of ORS 526.425 by providing assistance to nonindustrial private forest landowners in eastern Oregon.

(2) Notwithstanding the provisions of ORS 291.238, the amount of moneys necessary to pay refunds of the taxes imposed under ORS 321.405 to 321.520 is appropriated continuously to the department from the suspense account referred to in subsection (1) of this section, and shall be used by the department for the payment of all refunds of taxes imposed under ORS 321.405 to 321.520 which have been audited and approved by the department. Any penalties, interest and taxes then due from the taxpayer shall be applied in that order in computing any refund, and only the balance due the taxpayer, if any, shall be refunded.

[(3) Subject to subsections (1) and (2) of this section, the records of the department shall reflect each county's credit which shall be proportionate to the total credit in the same proportion that each county's total appraised timber valuation bears to the total appraised timber valuation for eastern Oregon. Appraised valuations of timber for purposes of ORS 321.405 to 321.520 shall be those determined in accordance with the provisions of ORS 306.127 (1961 Replacement Part), as adjusted by the department, or with the department's approval, as of July 1 of each year. After July 1, 1964, however, the appraised values as of that date shall serve as the basis for the allocation of privilege tax revenues under ORS 321.405 to 321.520, except that readjustments in such appraised values shall be made annually for the purpose of subtracting or adding the appraised valuations of timber on reforestation lands which have been on or before July 1 of each year classified or declassified and for the purpose of subtracting or adding the appraised valuations of timber which before July 1 of each year has been transferred into or out of ownerships exempt from taxation.]

[(4) All moneys and interest earned thereon credited to the counties pursuant to subsection (3) of this section are continuously appropriated to the counties in whose names they are credited, and the full amounts remaining to the credit of each county as of the 10th day of the second month following the close of each of the calendar quarters designated in ORS 321.435 shall be remitted to the county treasurers of the respective counties on or before the last day of that month. Remittances shall be made by the Department of Revenue from the suspense account referred to in subsection (1) of this section. A working balance may be retained in the Eastern Oregon Timber Tax Account for the payment of administrative expenses provided by subsection (1) of this section.]

(3) Moneys remaining in the Eastern Oregon Timber Tax Account following the appropriations described in subsections (1) and (2) of this section shall be distributed as follows:

(a) Sixty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.811 (8) to (11) shall be distributed as follows:

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(b) Thirty-five percent of moneys that are derived from the harvest of timber on land subject to assessment under ORS 321.811 (8) to (11) shall be distributed to county general funds of eastern Oregon counties.

(c) The balance of the account shall be distributed as follows:

(B) Seven percent of the amount distributed under this paragraph shall be transferred to and is continuously appropriated to the Community College Support Fund established under ORS 341.620.

(4)(a) Moneys that are to be distributed to eastern Oregon counties under subsection (3)(b) of this section shall be distributed to each eastern Oregon county in the proportion that the assessed value of forestland in the county in the preceding fiscal year bears to the total assessed value of forestland for the preceding fiscal year.

(b) The Department of Revenue may adopt rules to further implement the distribution calculation described in this subsection.

(5) All moneys distributed to counties pursuant to subsection (4) of this section are continuously appropriated to the counties to which the moneys are distributed. On or before August 31 of each fiscal year, the department shall determine the amount distributable to counties from the Eastern Oregon Timber Tax Account as of May 15 of the preceding fiscal year, and shall remit to the counties the amounts so determined. The department shall certify to the county assessor the amount remitted to the county under this subsection.

(6) The amount of Eastern Oregon Timber Tax Account moneys to be transferred for a fiscal year under subsection (3)(a) and (c) of this section shall be determined as of May 15 of the fiscal year and transferred on or before May 31 of the fiscal year in which the distribution is being made.

(7) A working balance may be retained in the Eastern Oregon Timber Tax Account for the payment of administrative expenses described in subsection (1) of this section.

SECTION 55a. The amendments to ORS 321.485 by section 55 of this 1999 Act apply to Eastern Oregon Privilege Tax distribution periods beginning on or after July 1, 2000.

SECTION 56. Section 57 of this 1999 Act is added to and made a part of ORS 321.405 to 321.520.

SECTION 57. Each year when extending the operating levies of the county upon the assessment rolls, the county assessor shall offset against the levy submitted by the county the amount of revenue distributed to the county pursuant to ORS 321.485 (3)(b) and correspondingly reduce the amount of the levy to be collected through extension on the tax roll for the current fiscal year.

SECTION 58. Section 57 of this 1999 Act applies to Eastern Oregon Timber Tax Account distributions and property tax years beginning on or after July 1, 2001.

SECTION 58a. (1) Notwithstanding ORS 321.485 (3)(b), for the fiscal year beginning July 1, 2000, a distribution of Eastern Oregon Timber Tax Account moneys to eastern Oregon counties may not be made.

(2) On or before August 31, 2000, each county treasurer in eastern Oregon shall certify to the county assessor of the county the amount of privilege tax receipts then on deposit. Each county assessor shall apply the amount so certified to reduce the property tax levy of taxing units within the county as provided in subsections (3) and (4) of this section.

(3) The county assessor shall first allocate receipts to the various taxing units having appraised timber valuations established under ORS 321.485 (3) (1997 Edition) in the same proportion that the computed property tax on timber in the taxing unit bears to the total computed property tax on timber in all taxing units within the county for the fiscal year beginning July 1, 1999. As used in this subsection, "computed property tax on timber" means the amount of property tax in dollars that would have been imposed on the appraised valuation of timber in the unit for the fiscal year beginning July 1, 1999, if timber had not been exempt from ad valorem taxation by ORS 321.420 and had been included in the computation of a rate percent of levy extended against timber as well as other property within the unit.

(4) Immediately upon extension of the tax levy as provided in ORS 311.105, the county assessor shall certify to the county treasurer the amounts that have been apportioned to the various taxing units within the county. The county treasurer shall thereafter distribute the moneys on deposit on August 31, 2000, to the taxing units in proportion to the total amounts certified to the county treasurer by the county assessor until the total of amounts so certified have been distributed.

Interim Study and Report

SECTION 59. (1) The Department of Revenue shall convene a working group to review forestland values established under ORS 321.353 and 321.811 and real market values for highest and best use forestlands. The working group shall develop and make recommendations on appropriate measures of forestland values for tax years beginning on or after July 1, 2003. The Department of Revenue shall present a report stating the recommendations of the working group to the interim committees of the Seventieth Legislative Assembly having jurisdiction over revenue matters, before January 1, 2001.

(2) The working group shall consist of representatives of owners of eastern Oregon and western Oregon forestland, county assessors, the Department of Revenue and the State Forestry Department.

(3)(a) If the working group is unable to agree on appropriate measures of forestland value within a time that is sufficient to prepare a report and make recommendations to the interim revenue committees by the time prescribed in subsection (1) of this section, the department shall commence an alternative means of dispute resolution as authorized under ORS 183.502. If the alternative means of dispute resolution requires the appointment of outside consultants or of a panel, the consultants or panel members shall have expertise in forestland appraisal. The members of the working group shall agree upon the method for selecting the consultants or panel members.

(b) The expenses of the working group and any expenses associated with an alternative means of dispute resolution commenced under this section shall be considered expenses of administering forest taxes.

SECTION 59a. In addition to and not in lieu of any other appropriation, there is appropriated to the Department of Revenue, for the biennium beginning July 1, 1999, out of the General Fund, the amount of $360,000 for the purpose of funding expenses of the working group and alternative means of dispute resolution described in section 59 of this 1999 Act.

SECTION 60. The Department of Revenue shall convene a working group representing affected parties to study and make recommendations for an economical, administratively efficient and cost-effective small forestland landowner deferred forest tax optional program. Any recommendation must allow small forestland landowners to choose to pay a substantial majority of forest taxes at the time of harvest. The recommendations shall be presented to the interim committees of the Seventieth Legislative Assembly having jurisdiction over revenue matters, prior to January 1, 2001.

SECTION 61. The Department of Revenue shall convene a working group representing affected parties to study the methods and procedures by which forestland owners may appeal determinations of forestland real market value. The department shall prepare recommendations and present those recommendations to the interim committees of the Seventieth Legislative Assembly having jurisdiction over revenue matters, prior to January 1, 2001.

Miscellaneous

SECTION 62. ORS 308.236 is amended to read:

308.236. (1) The availability, usefulness and cost of using roads, including all roads of the owner of land or timber, and all roads which such owner has the right to use, shall be taken into consideration in determining the real market value of land, the immediate harvest value of timber in eastern Oregon as defined in ORS 321.430 (3) and the [stumpage] immediate harvest value of timber in western Oregon as defined in ORS 321.257.

(2) Farm or grazing land roads and forest roads themselves, except principal exterior timber access roads, shall not be appraised, valued or assessed and they shall not be classed as improvements under ORS 308.215. The underlying land upon which roads are constructed shall be assessed if it is otherwise subject to assessment.

(3)(a) As used in this section, "road" includes fills, ballast, bridges, culverts, drains, surfacing and other appurtenances of a like kind commonly associated with roads, but excludes railroads.

(b) "Principal exterior timber access roads" means those portions of high standard main-line private roads that provide access from a conversion center or public way to the exterior boundary of the principal forest area served by the road. A high standard main-line private road is a permanent road of two lanes or more which is paved, macadamized, or with fine-gravel surface which is permanently and continuously maintained.

SECTION 63. The amendments to ORS 308.236 by section 62 of this 1999 Act apply to property tax years beginning on or after July 1, 2001.

SECTION 64. ORS 321.950 is amended to read:

321.950. (1) Each taxpayer expecting to incur a liability pursuant to ORS 321.273 or 321.421 of $10,000 or more for the year shall, on forms prescribed by the Department of Revenue, make and file with the department on or before the last day of the month following the end of each calendar quarter an estimate of tax liability for the year. At least one-quarter of the estimated tax shall be remitted to the department with each estimated tax report and the balance shall be remitted to the department on or before the due date of the privilege tax return for the year described in ORS 321.322 or 321.435, whichever is applicable, without regard for any extension of the due date thereof.

(2) If the amount remitted with an estimated report filed on or before the due date thereof is at least 25 percent of the privilege tax of the taxpayer as due for the calendar year preceding the quarter for which the report is made or at least 20 percent of the privilege tax liability as due for the year for which the report is made, based on the [stumpage or] immediate harvest value tables most recently adopted by the department, or 100 percent of the privilege tax liability on the actual timber harvested for the preceding calendar quarter, based on the [stumpage or] immediate harvest value tables most recently adopted by the department, no penalty or interest shall be charged. Otherwise a penalty in the form of interest at the rate established under ORS 305.220 for each month or fraction thereof shall be assessed for the period of delinquency calculated on the difference between the payment made and the payment which would have been due had the taxpayer estimated liability for the quarter in an amount equal to the liability as due for such quarter. The provisions of ORS chapters 305 and 314 relating to penalties and interest shall not apply to the estimated tax payments described in this section.

(3) This section does not apply to a taxpayer who elects to compute tax liability pursuant to ORS 321.282 [(6)] (4) or 321.432.

SECTION 65. The amendments to ORS 321.950 by section 64 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001.

SECTION 66. ORS 308.007 is amended to read:

308.007. (1) As used in the statute laws of this state, unless the context or a specially applicable definition requires otherwise, for purposes of property taxation:

(a) "Assessment date" means the day of the assessment year on which property is to be assessed under ORS 308.210 or 308.250.

[(a)] (b) "Assessment year" means calendar year.

[(b)] (c) "Tax year" or "fiscal year" means a period of 12 months beginning on July 1.

(2) Unless the context requires otherwise:

(a) The assessment year beginning January 1 corresponds to the tax year beginning July 1 of the same calendar year; and

(b) The term "year" means the assessment year.

SECTION 67. ORS 293.701 is amended to read:

293.701. As used in ORS 293.701 to 293.820, unless the context requires otherwise:

(1) "Council" means the Oregon Investment Council.

(2) "Investment funds" means:

(a) Public Employees Retirement Fund referred to in ORS 238.660;

(b) Industrial Accident Fund referred to in ORS 656.632;

(d) Employment Department Special Administrative Fund referred to in ORS 657.822;

(e) Insurance Fund referred to in ORS 278.425;

(f) Funds under the control and administration of the Division of State Lands;

(g) State Scholarship Commission Fund referred to in ORS 348.570;

(h) Moneys made available to the Commission for the Blind under ORS 346.270 and 346.540 or rules adopted thereunder;

(i) Forest rehabilitation bonds sinking fund referred to in ORS 530.280;

(j) Oregon War Veterans' Fund referred to in ORS 407.495;

(k) Oregon War Veterans' Bond Sinking Account referred to in ORS 407.515;

(L) World War II Veterans' Compensation Fund;

(m) World War II Veterans' Bond Sinking Fund;

(n) Savings and loan association funds in the hands of the Director of the Department of Consumer and Business Services;

(o) Funds in the hands of the State Treasurer that are not required to meet current demands;

(p) State funds that are not subject to the control and administration of officers or bodies specifically designated by law;

(q) Funds derived from the sale of state bonds;

(r) Social Security Revolving Account referred to in ORS 237.490;

(s) Investment funds of the State Board of Higher Education lawfully available for investment or reinvestment;

(t) Local Government Employer Benefit Trust Fund referred to in ORS 657.513;

[(u) Western Oregon Timber Tax Reserve Account referred to in ORS 321.299;]

[(v)] (u) Elderly and Disabled Special Transportation Fund established by ORS 391.800;

[(w)] (v) Oregon Resource and Technology Development Fund established by ORS 284.630;

[(x)] (w) Education Endowment Fund established by ORS 348.696; and

[(y)] (x) Deferred Compensation Fund established under ORS 243.411.

(3) "Investment officer" means the State Treasurer in the capacity as investment officer for the council.

SECTION 68. The amendments to ORS 293.701 by section 67 of this 1999 Act become operative on September 1, 2000.

SECTION 69. ORS 310.110 is amended to read:

310.110. (1) If a taxing district lies in two or more counties, and the district certifies an item of ad valorem property tax as an amount in the notice required under ORS 310.060, the amount certified by the district shall be apportioned on the basis of the assessed value used to compute the tax rate for the current tax year, in the proportion that the assessed value of the part of the district lying in each county bears to the assessed value of the whole district. However, if a boundary change affecting the district becomes effective as to the levy being apportioned, an adjustment of the assessed value shall be made so as to reflect the boundary change.

(2) Any assessor who is unable to certify the current assessed value for any joint district lying partially in the county by September 25 shall, with the cooperation of the Department of Revenue, estimate as closely as practicable the assessed value of that district for the purpose of apportioning the ad valorem property taxes of the joint district in the current year as equitably as is possible. The estimate shall be completed and certified to the assessor or assessors of the other counties on the fifth business day after September 25 and shall be used as the basis for the apportionment required by this section.

(3) Notwithstanding any provision of ORS 321.405 to 321.520, timber shall be considered as though it remained on the tax rolls at the appraised values established pursuant to [ORS 321.485 (3)] section 57 of this 1999 Act, but only for the purpose of apportionment of the levy required by subsection (1) of this section.

SECTION 70. The amendments to ORS 310.110 by section 69 of this 1999 Act apply to property tax years beginning on or after July 1, 2000.

SECTION 71. ORS 310.234 is amended to read:

310.234. If the taxing district is a district other than a school district, education service district, community college district or community college service district and is a district for which the assessor is directed to offset timber harvest privilege tax revenues against the district's ad valorem property taxes under ORS 321.312 or 321.515 (1997 Edition), the operating tax rate calculated under ORS 310.236 (3), (4) or (5), whichever is applicable, shall be further adjusted to reflect the amount of the offset. Except as provided in this section, the adjusted rate shall not be used for any purpose under ORS 310.200 to 310.242 other than determination of the district's ad valorem property taxes for the tax year beginning July 1, 1997.

SECTION 72. ORS 321.381 is amended to read:

321.381. (1) Particulars of timber and log sales or purchases, reported to the Department of Revenue under ORS 321.379, shall be confidential records of the department. Those records shall be available to the State Forestry Department, the Legislative Revenue Officer, or authorized representatives of the Legislative Revenue Officer, for the purpose of preparation of reports, estimates and analyses required by ORS 173.800 to 173.850, and to the authorized agents of the Federal Government and the several states on a reciprocal basis where the Federal Government and states have a provision of law which provides confidentiality meeting or exceeding that provided by this section.

(2) Violation of subsection (1) of this section is subject to a fine not exceeding $5,000 or, if an officer or employee of the state, dismissal or removal from office or employment, or both fine and dismissal or removal from office or employment.

(3) Notwithstanding subsection (1) of this section, if [stumpage] immediate harvest value tables are appealed to the Oregon Tax Court under ORS 321.284, the department may disclose to the court any information received under ORS 321.379 that the department collected in determining the [stumpage] immediate harvest values under appeal.

SECTION 73. The amendments to ORS 321.381 by section 72 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001, and property tax years beginning on or after July 1, 2001.

SECTION 74. ORS 321.358 is amended to read:

321.358. (1) An owner of land desiring that it be designated as forestland shall make application to the county assessor on or before April 1 of the assessment year for which special assessment as forestland is first desired, and the owner may also do so within 30 days of receipt of notice of its assessment as omitted property.

(2) Notwithstanding subsection (1) of this section, an owner of land may apply to the county assessor by December 15 to have the land designated as forestland for the assessment year if:

(a) For the prior assessment year the land had been forestland under ORS 321.257 [(3)] (4) by reason of the land being highest and best use forestland; and

(b) For the current assessment year the land is being assessed at a value reflecting a use other than highest and best use forestland.

(3) The application shall be made upon forms prepared by the Department of Revenue and supplied by the county assessor, and shall include the following:

(a) A description of all land the applicant desires to be designated as forestland.

(b) Date of acquisition.

(c) Whether the land is being held or used for the predominant purpose of growing and harvesting trees of marketable species.

(d) Whether there is a forest management plan for it.

(e) If so, whether the plan is being implemented, and the nature and extent of implementation.

(f) Whether the land is used for grazing.

(g) Whether the land has been platted under ORS chapter 92.

(h) Whether the land is timberland subject to ORS chapter 477, and if it is not, the reasons therefor.

(i) Whether the land, or any of it, is subject to a lease or option which permits it to be used for any purpose other than the growing and harvesting of trees.

(j) A summary of past experience and activity of the applicant in growing and harvesting trees.

(k) A summary of current and continuing activity of the applicant in growing and harvesting trees.

(L) A statement that the applicant is aware of the potential tax liability involved when the land ceases to be designated as forestland.

(m) An affirmation that the statements contained in the application are true.

(a) The application states the land is not being held or used for the predominant purpose of growing and harvesting trees of marketable species; or

(b) Subject to the provisions of ORS 321.257, the land does not substantially meet minimum stocking or acreage requirements under rules adopted by the department. Otherwise, the determination whether the land is properly classifiable as forestland shall be made with due regard to all relevant evidence and without any one or more items of evidence necessarily being determinative.

(5) The application shall be deemed to have been approved unless, within three months of the date such application was delivered to the assessor or prior to July 1, whichever is later, the assessor shall notify the applicant in writing of the extent to which the application is denied.

SECTION 75. The amendments to ORS 321.358 by section 74 of this 1999 Act apply to property tax years beginning on or after July 1, 2001.

SECTION 76. ORS 321.815 is amended to read:

321.815. (1) An owner of land desiring that it be designated as forestland for purposes of ORS 321.805 to 321.825 shall make application to the county assessor on or before April 1 of the assessment year for which special assessment as forestland is first desired, and the owner may also do so within 30 days of receipt of notice of its assessment as omitted property.

(2) Notwithstanding subsection (1) of this section, an owner of land may apply to the county assessor by December 15 to have the land designated as forestland for the assessment year if:

(a) For the prior assessment year the land had been forestland under ORS 321.257 [(3)] (4) by reason of the land being highest and best use forestland; and

(b) For the current assessment year the land is being assessed at a value reflecting a use other than highest and best use forestland.

(3) The application shall be made upon forms prepared by the Department of Revenue and supplied by the county assessor, and shall include the following:

(a) A description of all land the applicant desires to be designated as forestland.

(b) Date of acquisition.

(c) Whether the land is being held or used for the predominant purpose of growing and harvesting trees of marketable species.

(d) Whether there is a forest management plan for it.

(e) If so, whether the plan is being implemented, and the nature and extent of implementation.

(f) Whether the land is being held or used for the predominant purpose of grazing or raising of livestock.

(g) Whether the land has been platted under ORS chapter 92.

(h) Whether a permit has been granted for harvesting for excepted purposes under the Oregon Forest Practices Act.

(i) Whether the land is timberland subject to ORS chapter 477, and if it is not, the reasons therefor.

(j) Whether the land, or any of it, is subject to a lease or option which permits it to be used for any purpose other than the growing and harvesting of trees.

(k) A summary of past experience and activity of the applicant in growing and harvesting trees.

(L) A summary of current and continuing activity of the applicant in growing and harvesting trees.

(m) A statement that the applicant is aware of the potential tax liability involved when the land ceases to be designated as forestland.

(n) An affirmation that the statements contained in the application are true.

(4) The county assessor shall approve an application for forestland designation if the assessor finds that the land is properly classifiable as forestland. The county assessor shall not find land properly classifiable as forestland if the application states the land is not being held or used for the predominant purpose of growing and harvesting trees of marketable species. Otherwise, the determination whether the land is properly classifiable as forestland shall be made with due regard to all relevant evidence and without any one or more items of evidence necessarily being determinative.

(5) The application shall be considered to have been approved unless, within three months of the date such application was delivered to the assessor or prior to July 1, whichever is later, the assessor shall notify the applicant in writing of the extent to which the application is denied.

SECTION 77. The amendments to ORS 321.815 by section 76 of this 1999 Act apply to property tax years beginning on or after July 1, 2001.

SECTION 78. ORS 308.373 is amended to read:

308.373. (1) If land specially valued under ORS 308.370 (1) or (2), [321.272 (2), 321.420] 321.257 to 321.381, 321.805 to 321.825 or 321.720 is acquired by a governmental agency or body as a result of an exchange of the land for land of approximately equal value held by the governmental agency or body, then notwithstanding ORS 308.390 (2)(b), 308.397, 321.359 (1)(b)(B), 321.760 (2) or 321.820 (1)(a)(B), no additional taxes, interest or penalties shall be imposed under ORS 308.395, 308.399, 321.372, 321.760 (3), 321.825 or 321.960 on account of the exchange. As of the day preceding the date of the exchange, the potential additional tax liability shall cease to exist as a contingent lien or liability against the property acquired by the governmental agency or body as a result of the exchange and shall be transferred to and be noted on the assessment and tax roll as potential additional tax liability against the land acquired by the other party to the exchange.

(2) If, upon an exchange described under subsection (1) of this section, the land acquired from the governmental agency or body is not farm use land located within an exclusive farm use zone or is not land, the highest and best use of which is the growing and harvesting of trees of a marketable species, the owner shall make application for special valuation as farm or forest land in the manner provided under ORS 308.375, 321.358, 321.730 or 321.815, whichever is applicable, as follows:

(a) If the exchange takes place prior to July 1, the owner shall file the application on or before August 1.

(b) If the exchange takes place on or after July 1, the owner shall file the application on or before April 1 of the following year. Failure to file an application as required under this subsection, or failure to otherwise meet the qualification for special valuation under the special assessment law for which application is made shall disqualify the land for purposes of ORS 308.395, 308.399, 321.372, 321.760 or 321.825, whichever is applicable. However, the amount of additional taxes and interest imposed upon the disqualification under this subsection shall be equal to those that would have been imposed against the land transferred to the governmental agency or body on account of the exchange were it not for subsection (1) of this section.

(3) For purposes of computing additional taxes and interest under ORS 308.395, 308.399, 321.372, 321.760, 321.825 or 321.960 upon subsequent disqualification of land acquired as a result of an exchange described in subsection (1) of this section, the number of years of special assessment shall be equal to the number of years the land transferred to the governmental agency or body received the special assessment before the exchange plus the number of years, if any, the land acquired from the governmental agency or body received a special assessment after the exchange. In all other respects, the additional taxes and interest shall be as determined under ORS 308.395, 308.399, 321.372, 321.760, 321.825 or 321.960, whichever is applicable.

(4) If an application filed under subsection (2) of this section is for classification for special farm use assessment under ORS 308.370 (2), the owner shall have five years beginning with the first year of classification to meet the income requirements under ORS 308.372 and need not meet the two-year farm use requirements of ORS 308.370 (2).

(5) This section shall not apply to an exchange of forestland to which ORS 321.359 (1)(d) or 321.820 (1)(d) applies.

SECTION 78a. If House Bill 2452 becomes law, section 8, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 308.373), is repealed.

SECTION 79. ORS 321.349 is amended to read:

321.349. (1) Subject to subsection (3) of this section, land that is changed under ORS 321.960 from special assessment at its value for farm use under ORS 308.370 (1) or (2) to special assessment as forestland under ORS 321.257 to 321.381, at the election of the owner made under rules adopted by the Department of Revenue, shall not be valued under ORS 308.205, 308.232 and 321.257 to 321.381 for the tax year of the change and years thereafter in which such special forestland assessment is in effect for the land, but shall be valued under ORS 308.345, if:

(a) The land has been assessed under ORS 308.370 (1) or (2) for at least the 10 consecutive years immediately prior to the year for which the change is first effective;

(b) The planting of the timber takes place after October 15, 1983, and qualifies for the current tax year for special assessment as forestland under ORS [321.272 (2)] 321.257 to 321.381;

(d) The land is held by an owner having a total ownership of forestland in western Oregon not in excess of 2,000 acres, as determined under subsection (4) of this section.

(2) If land described in subsection (1) of this section was classified as reforestation land under ORS 321.255 to 321.360 (1975 Replacement Part) on July 1, 1977, the percentage provided in ORS 321.357 shall be applied to the value determined under subsection (1) of this section.

(3) If timber on land valued under subsection (1) of this section reaches, for any tax year, an average age of 40 years or more, this section shall cease to apply. However, without application and without any additional tax, interest or penalty, the land shall for that tax year and for each year thereafter for which the land is qualified, be valued under ORS 308.205, 308.232 and 321.257 to 321.381.

(4) In computing a forestland owner's acreage for purposes of subsection (1) of this section, all of the owner's forestland, as defined in ORS 321.257, in western Oregon shall be included. As used in this subsection, "total ownership" includes (a) forestland owned by the owner individually; and (b) forestland owned by any corporate or other group owner in which the owner holds a share of ownership of 10 percent or more. No owner may have forestland valued under subsection (1) of this section if the owner, or any individual having a share in the owner, has a spouse, brother, sister, ancestor or lineal descendant who is an owner, or who holds a share in an owner having forestland valued under subsection (1) of this section. However, the county assessor may grant exceptions to this requirement if the owner satisfactorily demonstrates that the combination of ownership with the indicated relatives arose from bona fide business reasons other than a desire to circumvent the 2,000 acre limitation imposed under subsection (1) of this section.

SECTION 79a. If House Bill 2452 becomes law, section 9, chapter [Vetoed], Oregon Laws 1999 (Enrolled House Bill 2452) (amending ORS 321.349), is repealed.

NOTE: Section 80 was deleted by amendment. Subsequent sections were not renumbered.

SECTION 81. ORS 321.684 is amended to read:

321.684. (1) The Department of Revenue may:

(a) Furnish to any taxpayer or authorized representative, upon request of the taxpayer or authorized representative, a copy of the taxpayer's timber tax return filed with the department for any year, or a copy of any report filed by the taxpayer in connection with the return.

(b) Publish a list of taxpayers who are entitled to unclaimed tax refunds.

(c) Publish statistics classified so as to prevent the identification of taxable value or any particulars contained in any report or return.

(d) Disclose a taxpayer's name, address and social security number or employer identification number to the extent necessary in connection with the processing and mailing of forms for any report or return required in the administration of ORS 321.045, 321.322, 321.435 and 321.950.

(e) Disclose names and addresses of taxpayers filing under ORS 321.282 [(6)] (4) and 321.432 to Oregon State University pursuant to surveys and programs related to forest management.

(f) Disclose to the State Forester, upon request of the forester, for the purpose of soliciting nominations and conducting elections referred to in ORS 526.610, the names of producers meeting producer class qualifications established under ORS 526.610 who filed forest products harvest tax returns.

(2) The department also may disclose and give access to information described in ORS 321.682 to:

(a) The Commissioner of Internal Revenue or authorized representative, for tax purposes only.

(b) The United States Forest Service, Bureau of Land Management and the State Forestry Department pursuant to their regulatory programs and for investigative purposes related to timber theft.

(c) The Attorney General, assistants and employees in the Department of Justice or other legal representative of the State of Oregon, to the extent the department considers disclosure or access necessary for the performance of the duties of advising or representing the department pursuant to ORS 321.045, 321.322, 321.435 and 321.950.

(d) Employees of the State of Oregon, other than the Department of Revenue or Department of Justice, to the extent the department considers disclosure or access necessary for such employees to perform their duties under contracts or agreements between the department and any other department, agency or subdivision of the State of Oregon in the department's administration of the tax laws.

(e) The Legislative Revenue Officer or the authorized representative upon compliance with ORS 173.850. Such officer or representative shall not remove from the premises of the department any materials that would reveal the identity of any taxpayer or any other person or the volume of harvest and value reported on individual returns and reports.

(f) Any agency of the State of Oregon, or any person, or any officer or employee of such agency or person to whom disclosure or access is given by state law and not otherwise referred to in this section, including but not limited to the Secretary of State as Auditor of Public Accounts under section 2, Article VI of the Constitution of the State of Oregon.

(3) Each officer or employee of the department and each person described or referred to in subsection (2)(b) to (f) of this section to whom disclosure or access to the tax information is given under subsection (2) of this section or any other provision of state law, prior to beginning employment or the performance of duties involving such disclosure or access, shall be advised in writing of the provisions of ORS 321.682 and 321.686 relating to penalties for the violation of ORS 321.682, and shall, as a condition of employment or performance of duties, execute a certificate for the department, in a form prescribed by the department, stating in substance that the person has read these provisions of law, that the person has had them explained and that the person is aware of the penalties for the violation of ORS 321.682.

SECTION 82. The amendments to ORS 321.684 by section 81 of this 1999 Act apply to privilege tax reporting periods beginning on or after January 1, 2001.

SECTION 83. ORS 308.207 is amended to read:

308.207. (1) If the taxing or bonding power of any governmental unit is limited to a millage or percentage of the real market value of the taxable property within the unit, the real market value shall be the real market value as reflected in the last certified assessment roll [plus the values required by ORS 287.010 and 321.317 to be added on account of timber removed from the rolls].

(2) Changes in the boundary lines of a governmental unit shall be taken into account in computing its real market value for purposes of subsection (1) of this section even though such boundary changes may not be included on the latest assessment roll.

(3) As used in this section, "governmental unit" includes the state, counties, cities, municipal corporations, and all special districts having the power to levy taxes or issue bonds.

SECTION 84. The amendments to ORS 308.207 by section 83 of this 1999 Act apply to property tax years beginning on or after July 1, 2000.

SECTION 84a. (1) For tax years beginning on July 1, 1999, and July 1, 2000, any appeal of the maximum assessed value, assessed value or real market value of forestland assessed under ORS 321.257 to 321.381 or 321.805 to 321.825 shall be made to the Department of Revenue in lieu of filing a petition with the board of property tax appeals pursuant to ORS 309.026.

(2) A board of property tax appeals may not hear a petition for the reduction of value of forestland described in subsection (1) of this section.

(3) For tax years beginning on July 1, 1999, and July 1, 2000, appeals of land classification under ORS 321.353 shall be made to the department under this section.

(4) The department may prescribe rules setting forth procedures applicable to appeals filed under this section.

(5) The department's determination of an appeal under this section may be appealed to the tax court pursuant to ORS 305.570.

(6) This section does not apply to appeals described in ORS 321.352 or 321.810.

Repeals

SECTION 85. ORS 287.010, 321.311, 321.317 and 321.520 are repealed on July 1, 2000.

SECTION 86. ORS 321.299 and 321.515 are repealed on September 1, 2000.

Captions

SECTION 87. The unit captions used in this 1999 Act are provided only for the convenience of the reader and do not become part of the statutory law of this state or express any legislative intent in the enactment of this 1999 Act.

Approved by the Governor September 1, 1999

Filed in the office of the Secretary of State September 2, 1999

Effective date October 23, 1999

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