The 2016 Legislative Session is now history. For 32-days we sought fair, meaningful, well-reasoned legislation necessary for our circumstances. We passed policies assisting rural industries, small businesses, veterans, and working families throughout the State of Oregon.
We took our responsibility seriously and did what we could to contribute to the larger effort. The following legislative measures were my priorities during the 2016 Legislative Session:
1) HJR 202 – a referral to the November ballot for a permanent set-aside of a portion of Lottery Revenues for veterans’ outreach and services;
2) HB 4081 – an extension of a tax exemption for affordable housing providers; and
3) SB 1565 – a new tool for rural economic development important for our emergent beer, spirits, and wine industry. All three of these priorities successfully passed the Oregon Legislature.
A new tool for rural economic development important for our emergent beer, spirits, and wine industry. All three of these priorities successfully passed the Oregon Legislature.
WHAT THE MEASURE DOES: Allows county or city, by ordinance or resolution, to provide property tax exemption or deferral for newly constructed or installed industrial improvements with cost of initial investment of at least $1 million. Provides exemption only to property with cost of initial investment of $25 million or less. Requires applicant to specify eligible property in cases where cost of initial investment of eligible property exceeds $25 million. Requires qualified property to be located in rural area, owned or leased by applicant, used through the final year of the exemption for the purpose and at the location identified in the application. Defines rural area. Property is eligible only if qualified property was first placed in service after the ordinance or resolution is adopted and if first assessment year corresponds to assessment year to which the application is filed. Requires property tax exemption to be granted equal to 100 percent of qualified property's real market value for any three out of five consecutive property tax years. Allows city or county to specify in ordinance or resolution any number of years not greater than five for which the exemption shall be granted and the percentage of the real market value of the qualified property granted exemption for each year. Requires governing bodies, representing 75 percent or more of total combined rate of taxation on qualified property, to agree to ordinance or resolution in order for ordinance or resolution to take effect. Allows city or county to grant deferral of property taxes instead of exemption within same parameters of exemption. To deviate from standard model three year 100 percent RMV exemption or to provide deferral, requires county or city adopting ordinance or resolution to receive public testimony from county assessor regarding the cost and administrability of the proposed terms of exemption. Requires applicant to increase employment, by specified minimum amount, at location applying to receive exemption. Prohibits applicant from closing or permanently curtailing operations at other locations. Requires applicant to enter into a first source hiring agreement. Allows county or city to establish other reasonable conditions related to economic development at time of application. Allows city or county to amend or terminate ordinance or resolution but requires property granted exemption to continue to receive exemption under existing terms at time exemption was first granted. With exception of the facilities under construction exemption, prohibits property from receiving exemption prior to or after receiving industrial improvement exemption. Requires city or county to prescribe application forms and process applications. Requires city or county to submit specified information to Department of Revenue for submittal to Department of Administrative Services for posting on Oregon transparency website. Requires application fee in amount equal to actual costs to county or city processing the application. Allows assessor to impose fee equal to actual costs of administering exemption or deferral of qualified property. Provides provisions for levying and collecting back taxes if qualification criteria is not met by property owner for duration of exemption period. Authority of county or city to provide exemption and deferral sunsets on January 2, 2024. Takes effect on the 91st day following adjournment sine die.
EFFECT OF COMMITTEE AMENDMENT: Requires applicant to increase employment at location applying to receive exemption by greater of 110% of annual average employment or annual average employment plus one employee. Prohibits applicant from closing or permanently curtailing operations at other locations. Requires applicant for exemption to enter into first-source hiring agreement. Allows county or city to establish other reasonable conditions related to economic development at time of application. Changes sunset from 2027 to 2024. Requires posting of specified information to Oregon transparency website. Requires eligible property to be located in a rural area. Defines rural area as an area located entirely outside of the urban growth boundary of a city with a population of 40,000 or more.
BACKGROUND: In FY 2013-14, there were roughly 2,500 state appraised industrial property accounts located at nearly 900 sites. On average, about 100-150 industrial property owners add state appraised industrial property in amounts greater than $1 million in value.
Extends sunset from June 30, 2018 to June 30, 2022 for property tax exemption available to property of a nonprofit corporation that, for tax year 2012-13, was actually offered, occupied or used as low-income housing and granted exemption under ORS 307.130 by the county in which property is located.
BACKGROUND: ORS 307.130 provides a property tax exemption for certain museums, volunteer fire departments or literary, benevolent, charitable and scientific institutions. The statutory exemption language regarding qualification requirements for property of charitable organizations is rather broad, and as such, case law provides guidance as what property will qualify for exemption. For property to qualify for exemption under ORS 307.130, the owner of the property must be a nonprofit charitable institution and the property must be actually and exclusively occupied or used in the charitable work carried on by the organization. In the February 2013 Oregon Tax Court decision of Corvallis Neighborhood Housing Services Inc v. Linn County Assessor and Department of Revenue, the court upheld the assessor's rejection of exemption under ORS 307.130 for plaintiff's low income rental housing property. In the decision, the Tax Court acknowledged that the plaintiffs were a qualifying charitable nonprofit, however, because the property in question was leased to private individuals and used solely as personal residences, the property did not qualify for exemption under ORS 307.130. This decision of the Tax Court effectively removed the availability of exemption under ORS 307.130 for the properties in question along with all like properties throughout Oregon. Passed in 2014, HB 4039 provided exemption under ORS 307.130 for charitable nonprofit property that was offered, occupied or used as low-income housing and granted exemption under ORS 307.130 by the county for the tax year beginning on July 1, 2012. HB 4039 effectively grandfathered the low-income housing property that was qualifying for exemption at the time, through property tax year 2017 as HB 4039 included a sunset provision following the 2017 property tax year. Low-income property owned by charitable nonprofits that was not receiving exemption as of July 1, 2012, does not qualify for exemption under ORS 307.130. Parties to Corvallis Neighborhood Housing Services v. Linn County Assessor have since settled. The settlement vacated the Tax Court's decision and provided exemption to plaintiffs under the same conditions of exemption made available in HB 4039. Absent changes to sunset, qualifying properties receiving exemption under ORS 307.130 will no longer qualify for exemption under 307.130 beginning with the 2018 property tax year.
HJR 202 B
5/5/2016 Update on HJR 202:
I want to applaud the Oregon Department of Justice, Oregon Secretary of State's Office, and all the others involved in correcting the errors included in the original draft language. I am proud of the team effort we put together in facilitating a clear, organized argument for improving the draft language. This outcome gives me greater confidence in our structures and systems of governance -- faith in the underlying fairness of our approach to citizen engagement.