Bill Text: OH HB474 | 2009-2010 | 128th General Assembly | Introduced

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Bill Title: To exempt from property taxation renewable energy facilities that are not financed through the Ohio Air Quality Development Authority and to require a payment in lieu of taxes on the basis of each megawatt of production capacity of such facilities.

Spectrum: Moderate Partisan Bill (Republican 7-1)

Status: (Introduced - Dead) 2010-03-30 - To Alternative Energy [HB474 Detail]

Download: Ohio-2009-HB474-Introduced.html

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As Introduced

128th General Assembly Regular Session 2009-2010

H. B. No. 474

Representative Hite 

Cosponsors: Representatives Hottinger, Zehringer, Gardner, Wachtmann, Combs, Bacon, Domenick 

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A BILL

To amend sections 3706.01 and 3706.041 of the Revised

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Code to exempt from property taxation renewable

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energy facilities that are not financed through

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the Ohio Air Quality Development Authority and to

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require a payment in lieu of taxes on the basis of

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each megawatt of production capacity of such

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facilities.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1.  That sections 3706.01 and 3706.041 of the Revised	8
Code be amended to read as follows:	9

Sec. 3706.01.  As used in this chapter:

10

(A) "Governmental agency" means a department, division, or	11
other unit of state government, a municipal corporation, county,	12
township, and other political subdivision, or any other public	13
corporation or agency having the power to acquire, construct, or	14
operate air quality facilities, the United States or any agency	15
thereof, and any agency, commission, or authority established	16
pursuant to an interstate compact or agreement.	17

(B) "Person" means any individual, firm, partnership,	18
association, or corporation, or any combination thereof.	19

(C) "Air contaminant" means particulate matter, dust, fumes,	20
gas, mist, smoke, noise, vapor, heat, radioactivity, radiation, or	21
odorous substance, or any combination thereof.	22

(D) "Air pollution" means the presence in the ambient air of	23
one or more air contaminants in sufficient quantity and of such	24
characteristics and duration as to injure human health or welfare,	25
plant or animal life, or property, or that unreasonably interferes	26
with the comfortable enjoyment of life or property.	27

(E) "Ambient air" means that portion of the atmosphere	28
outside of buildings and other enclosures, stacks, or ducts that	29
surrounds human, plant, or animal life, or property.	30

(F) "Emission" means the release into the outdoor atmosphere	31
of an air contaminant.	32

(G) "Air quality facility" means any of the following:

33

(1) Any method, modification or replacement of property,	34
process, device, structure, or equipment that removes, reduces,	35
prevents, contains, alters, conveys, stores, disperses, or	36
disposes of air contaminants or substances containing air	37
contaminants, or that renders less noxious or reduces the	38
concentration of air contaminants in the ambient air, including,	39
without limitation, facilities and expenditures that qualify as	40
air pollution control facilities under section 103 (C)(4)(F) of	41
the Internal Revenue Code of 1954, as amended, and regulations	42
adopted thereunder;	43

(2) Motor vehicle inspection stations operated in accordance	44
with, and any equipment used for motor vehicle inspections	45
conducted under, section 3704.14 of the Revised Code and rules	46
adopted under it;	47

(3) Ethanol or other biofuel facilities, including any	48
equipment used at the ethanol or other biofuel facility for the	49
production of ethanol or other biofuels;	50

(4) Any property or portion thereof used for the collection,	51
storage, treatment, utilization, processing, or final disposal of	52
a by-product or solid waste resulting from any method, process,	53
device, structure, or equipment that removes, reduces, prevents,	54
contains, alters, conveys, stores, disperses, or disposes of air	55
contaminants, or that renders less noxious or reduces the	56
concentration of air contaminants in the ambient air;	57

(5) Any property, device, or equipment that promotes the	58
reduction of emissions of air contaminants into the ambient air	59
through improvements in the efficiency of energy utilization or	60
energy conservation;	61

(6) Any coal research and development project conducted under	62
Chapter 1555. of the Revised Code;	63

(7) As determined by the director of the Ohio coal	64
development office, any property or portion thereof that is used	65
for the collection, storage, treatment, utilization, processing,	66
or final disposal of a by-product resulting from a coal research	67
and development project as defined in section 1555.01 of the	68
Revised Code or from the use of clean coal technology, excluding	69
any property or portion thereof that is used primarily for other	70
subsequent commercial purposes;	71

(8) Any property or portion thereof that is part of the	72
FutureGen project of the United States department of energy or	73
related to the siting of the FutureGen project.	74

(9) Any property, device, or equipment that promotes the	75
reduction of emissions of air contaminants into the ambient air	76
through the generation of clean, renewable energy with renewable	77
energy resources or advanced energy resources as defined in	78
section 3706.25 of the Revised Code.	79

(10) Any property, device, structure or equipment necessary	80
for the manufacture and production of equipment described as an	81
air quality facility under this chapter.	82

"Air quality facility" further includes any property or	83
system to be used in whole or in part for any of the purposes in	84
divisions (G)(1) to (10) of this section, whether another purpose	85
is also served, and any property or system incidental to or that	86
has to do with, or the end purpose of which is, any of the	87
foregoing. Air quality facilities that are defined in this	88
division for industry, commerce, distribution, or research,	89
including public utility companies, are hereby determined to be	90
those that qualify as facilities for the control of air pollution	91
and thermal pollution related to air under Section 13 of Article	92
VIII, Ohio Constitution.	93

(H) "Project" or "air quality project" means any air quality	94
facility, including undivided or other interests therein, acquired	95
or to be acquired or constructed or to be constructed by the Ohio	96
air quality development authority under this chapter, or acquired	97
or to be acquired or constructed or to be constructed by a	98
governmental agency or person with all or a part of the cost	99
thereof being paid from a loan or grant from the authority under	100
this chapter or otherwise paid from the proceeds of air quality	101
revenue bonds, including all buildings and facilities that the	102
authority determines necessary for the operation of the project,	103
together with all property, rights, easements, and interests that	104
may be required for the operation of the project.	105

(I) "Cost" as applied to an air quality project means the	106
cost of acquisition and construction, the cost of acquisition of	107
all land, rights-of-way, property rights, easements, franchise	108
rights, and interests required for such acquisition and	109
construction, the cost of demolishing or removing any buildings or	110
structures on land so acquired, including the cost of acquiring	111
any lands to which such buildings or structures may be moved, the	112
cost of acquiring or constructing and equipping a principal office	113
and sub-offices of the authority, the cost of diverting highways,	114
interchange of highways, and access roads to private property,	115
including the cost of land or easements for such access roads, the	116
cost of public utility and common carrier relocation or	117
duplication, the cost of all machinery, furnishings, and	118
equipment, financing charges, interest prior to and during	119
construction and for no more than eighteen months after completion	120
of construction, engineering, expenses of research and development	121
with respect to air quality facilities, the cost of any commodity	122
contract, including fees and expenses related thereto, legal	123
expenses, plans, specifications, surveys, studies, estimates of	124
cost and revenues, working capital, other expenses necessary or	125
incident to determining the feasibility or practicability of	126
acquiring or constructing such project, administrative expense,	127
and such other expense as may be necessary or incident to the	128
acquisition or construction of the project, the financing of such	129
acquisition or construction, including the amount authorized in	130
the resolution of the authority providing for the issuance of air	131
quality revenue bonds to be paid into any special funds from the	132
proceeds of such bonds, and the financing of the placing of such	133
project in operation. Any obligation, cost, or expense incurred by	134
any governmental agency or person for surveys, borings,	135
preparation of plans and specifications, and other engineering	136
services, or any other cost described above, in connection with	137
the acquisition or construction of a project may be regarded as a	138
part of the cost of that project and may be reimbursed out of the	139
proceeds of air quality revenue bonds as authorized by this	140
chapter.	141

(J) "Owner" includes an individual, copartnership,	142
association, limited liability company, or corporation having any	143
title or interest in any property, rights, easements, or interests	144
authorized to be acquired by this chapter.	145

(K) "Revenues" means all rentals and other charges received	146
by the authority for the use or services of any air quality	147
project, any gift or grant received with respect to any air	148
quality project, any moneys received with respect to the lease,	149
sublease, sale, including installment sale or conditional sale, or	150
other disposition of an air quality project, moneys received in	151
repayment of and for interest on any loans made by the authority	152
to a person or governmental agency, whether from the United States	153
or any department, administration, or agency thereof, or	154
otherwise, proceeds of such bonds to the extent that use thereof	155
for payment of principal of, premium, if any, or interest on the	156
bonds is authorized by the authority, amounts received or	157
otherwise derived from a commodity contract or from the sale of	158
the related commodity under such a contract, proceeds from any	159
insurance, condemnation, or guaranty pertaining to a project or	160
property mortgaged to secure bonds or pertaining to the financing	161
of the project, and income and profit from the investment of the	162
proceeds of air quality revenue bonds or of any revenues.	163

(L) "Public roads" includes all public highways, roads, and	164
streets in the state, whether maintained by the state, county,	165
city, township, or other political subdivision.	166

(M) "Public utility facilities" includes tracks, pipes,	167
mains, conduits, cables, wires, towers, poles, and other equipment	168
and appliances of any public utility.	169

(N) "Construction," unless the context indicates a different	170
meaning or intent, includes reconstruction, enlargement,	171
improvement, or providing furnishings or equipment.	172

(O) "Air quality revenue bonds," unless the context indicates	173
a different meaning or intent, includes air quality revenue notes,	174
air quality revenue renewal notes, and air quality revenue	175
refunding bonds, except that notes issued in anticipation of the	176
issuance of bonds shall have a maximum maturity of five years as	177
provided in section 3706.05 of the Revised Code and notes or	178
renewal notes issued as the definitive obligation may be issued	179
maturing at such time or times with a maximum maturity of forty	180
years from the date of issuance of the original note.	181

(P) "Solid waste" means any garbage; refuse; sludge from a	182
waste water treatment plant, water supply treatment plant, or air	183
pollution control facility; and other discarded material,	184
including solid, liquid, semisolid, or contained gaseous material	185
resulting from industrial, commercial, mining, and agricultural	186
operations, and from community activities, but not including solid	187
or dissolved material in domestic sewage, or solid or dissolved	188
material in irrigation return flows or industrial discharges that	189
are point sources subject to permits under section 402 of the	190
"Federal Water Pollution Control Act Amendments of 1972," 86 Stat.	191
880, 33 U.S.C.A. 1342, as amended, or source, special nuclear, or	192
byproduct material as defined by the "Atomic Energy Act of 1954,"	193
68 Stat. 921, 42 U.S.C.A. 2011, as amended.	194

(Q) "Sludge" means any solid, semisolid, or liquid waste,	195
other than a recyclable by-product, generated from a municipal,	196
commercial, or industrial waste water treatment plant, water	197
supply plant, or air pollution control facility or any other such	198
wastes having similar characteristics and effects.	199

(R) "Ethanol or other biofuel facility" means a plant at	200
which ethanol or other biofuel is produced.	201

(S) "Ethanol" means fermentation ethyl alcohol derived from	202
agricultural products, including potatoes, cereal, grains, cheese	203
whey, and sugar beets; forest products; or other renewable or	204
biomass resources, including residue and waste generated from the	205
production, processing, and marketing of agricultural products,	206
forest products, and other renewable or biomass resources, that	207
meets all of the specifications in the American society for	208
testing and materials (ASTM) specification D 4806-88 and is	209
denatured as specified in Parts 20 and 21 of Title 27 of the Code	210
of Federal Regulations.	211

(T) "Biofuel" means any fuel that is made from cellulosic	212
biomass resources, including renewable organic matter, crop waste	213
residue, wood, aquatic plants and other crops, animal waste, solid	214
waste, or sludge, and that is used for the production of energy	215
for transportation or other purposes.	216

(U) "FutureGen project" means the buildings, equipment, and	217
real property and functionally related buildings, equipment, and	218
real property, including related research projects that support	219
the development and operation of the buildings, equipment, and	220
real property, designated by the United States department of	221
energy and the FutureGen industrial alliance, inc., as the	222
coal-fueled, zero-emissions power plant designed to prove the	223
technical and economic feasibility of producing electricity and	224
hydrogen from coal and nearly eliminating carbon dioxide emissions	225
through capture and permanent storage.	226

(V) "Commodity contract" means a contract or series of	227
contracts entered into in connection with the acquisition or	228
construction of air quality facilities for the purchase or sale of	229
a commodity that is eligible for prepayment with the proceeds of	230
federally tax exempt bonds under sections 103, 141, and 148 of the	231
Internal Revenue Code of 1986, as amended, and regulations adopted	232
under it.	233

(W) "Exempt energy air quality facility" means any "advanced	234
energy project" that generates electricity from a "renewable	235
energy resource" as those terms are defined by section 3706.25 of	236
the Revised Code for which an application is filed with the Ohio	237
power siting board, or upon which construction or installation is	238
commenced, on or after January 1, 2010, but on or before December	239
31, 2011, and that is placed in service on or before December 31,	240
2012.	241

(X) "Job and economic development impact model" means the job	242
and economic development impact model published by the national	243
renewable energy laboratory of the United States department of	244
energy. "Job and economic development impact model" includes	245
economic models that project job creation and that are approved by	246
the air quality development authority in consultation with the	247
department of development for technologies for which the national	248
renewable energy laboratory has not developed an applicable model.	249

Sec. 3706.041.  (A) With respect to projects, and the	250
financing thereof, for industry, commerce, distribution, or	251
research, including public utility companies, under agreements	252
whereby the person to whom the project is to be leased, subleased,	253
or sold, or to whom a loan is to be made for the project, is to	254
make payments sufficient to pay all of the principal of, premium,	255
if any, and interest on the air quality revenue bonds issued for	256
the project, or the counterparty under any related commodity	257
contract agrees to make payments sufficient in amount to pay all	258
of the principal of, premium, if any, and interest on the related	259
air quality revenue bonds, the Ohio air quality development	260
authority shall make appropriate provision for adequate	261
maintenance of the project and may, in addition to other powers	262
under this chapter:	263

(1) Make loans for the acquisition or construction of the	264
project to such person upon such terms as the authority may	265
determine or authorize, including secured or unsecured loans, and,	266
in connection therewith, enter into loan agreements and other	267
agreements, including commodity contracts, accept notes and other	268
forms of obligation to evidence such indebtedness and mortgages,	269
liens, pledges, assignments, or other security interests to secure	270
such indebtedness, which may be prior or subordinate to or on a	271
parity with other indebtedness, obligations, mortgages, pledges,	272
assignments, other security interests, or liens or encumbrances,	273
and take such actions as may be considered by it appropriate to	274
protect such security and safeguard against losses, including,	275
without limitation thereto, foreclosure and the bidding upon and	276
purchase of property upon foreclosure or other sale.	277

(2) Sell such project under such terms as it may determine,	278
including, without limitation thereto, sale by conditional sale or	279
installment sale, under which title may pass prior to or after	280
completion of the project or payment or provisions for payment of	281
all principal of, premium, if any, and interest on such bonds, or	282
at any other time provided in such agreement pertaining to such	283
sale, and including sale under an option to purchase at a price	284
which may be a nominal amount or less than true value at the time	285
of purchase.	286

(3) Grant a mortgage, lien, or other encumbrance on, or	287
pledge or assignment of, or other security interest with respect	288
to, all or any part of the project, revenues, reserve funds, or	289
other funds established in connection with such bonds, or on, of,	290
or with respect to any lease, sublease, sale, conditional sale or	291
installment sale agreement, loan agreement, or other agreement	292
pertaining to the lease, sublease, sale, or other disposition of a	293
project or pertaining to a loan made for a project, or any	294
guaranty or insurance agreement made with respect thereto, or any	295
interest of the authority therein, or any other interest granted,	296
assigned, or released to secure payments of the principal of,	297
premium, if any, or interest on the bonds or to secure any other	298
payments to be made by the authority, which mortgage, lien,	299
encumbrance, pledge, assignment, or other security interest may be	300
prior or subordinate to or on a parity with any other mortgage,	301
assignment, other security interest, or lien or encumbrance.	302

(4) Provide that the interest on such bonds may be at a	303
variable rate or rates changing from time to time in accordance	304
with a base or formula as authorized by the authority.	305

(5) Contract for the acquisition or construction of such	306
project or any part thereof, including any related commodity	307
contracts, and for the leasing, subleasing, sale or other	308
disposition of such project in a manner determined by the	309
authority in its sole discretion, without necessity for	310
competitive bidding or performance bonds.	311

(B) Property comprising a project shall not be subject to	312
taxes or assessments and so long as the bonds or notes issued to	313
finance the costs of such project are outstanding, and the	314
transfer of title to or possession of such property to the person	315
to whom a loan or installment sale or conditional sale with	316
respect to such project is made shall not be subject to the taxes	317
levied pursuant to Chapters 5739. and 5741. of the Revised Code.	318

The authority shall certify the property comprising a project	319
which is exempt from taxes and assessments pursuant to this	320
section, and shall send, by certified mail, copies of such	321
certification to the owner of such exempt property, to the tax	322
commissioner, and to the county auditor of the county or counties	323
in which any such exempt property is located.	324

Each county auditor shall maintain a separate list of all	325
property exempt pursuant to this section and sections 6121.044 and	326
6123.041 of the Revised Code, in addition to the list of exempt	327
property required to be maintained pursuant to section 5713.07 of	328
the Revised Code.	329

Any facility exempted from taxation under division (C) of	330
this section shall not also be exempted under this division.	331

(C) The authority, in the lease, sale or loan agreement with	332
respect to a project referred to in division (A) of this section,	333
shall make appropriate provision for adequate maintenance of the	334
project.(1) Real and tangible personal property constituting an	335
exempt energy air quality facility shall not be subject to taxes	336
or assessments if the air quality development authority certifies	337
under this division that the construction and operation of the	338
facility creates and maintains the number of jobs as projected by	339
the job and economic development impact model during construction	340
and each year the facility is in service. The owner of the	341
facility shall apply to the authority for certification in the	342
manner prescribed by the authority. The application shall include	343
the facility's job creation and maintenance projection as	344
estimated by the job and economic development impact model. Any	345
facility exempted from taxation under division (B) of this section	346
shall not also be exempted under this division.	347

Within sixty days after receiving an application under this	348
division, the authority, in consultation with the department of	349
development, shall determine whether the facility qualifies for	350
exemption under this division and, if so, shall certify the	351
qualification in writing and shall send, by certified mail, copies	352
of the certification to the owner of the facility, to the tax	353
commissioner, and to the county auditor of the county or counties	354
in which any such exempt property is located.	355

(2) The owner of a facility that is exempted from taxes and	356
assessments under division (C) of this section shall make annual	357
service payments in lieu of taxes to the county treasurer of any	358
county in which the exempted property is located. Service payments	359
shall be required for each tax year for which the property is	360
exempt. If the facility is not owned by one or more public utility	361
companies, the payment shall equal six thousand dollars for each	362
megawatt of name plate capacity of the exempted property. If the	363
facility is owned by one or more public utility companies, the	364
payment shall equal five thousand dollars for each megawatt of	365
name plate capacity. The payment shall be charged, collected, and	366
distributed at the same time and in the same manner as the taxes	367
imposed on taxable property subject to assessment under Chapter	368
5727. of the Revised Code.	369

(3) The owner of an exempt energy air quality facility that	370
is exempted from taxation under division (C) of this section shall	371
do all of the following:	372

(a) Offer to sell power or renewable energy credits from the	373
exempted facility to electric distribution utilities or electric	374
service companies subject to renewable energy resource	375
requirements under section 4928.64 of the Revised Code that have	376
issued requests for proposal for such power or renewable energy	377
credits. If no electric distribution utility or electric service	378
company issues a request for proposal on or before December 31,	379
2010, or accepts an offer for power or renewable energy credits	380
within forty-five days after the offer is submitted, the owner of	381
the exempt energy air quality facility may sell the power or	382
renewable energy credits to other persons. Contracts made for the	383
sale of power or renewable energy credits before the effective	384
date of ..... . B. ..... of the 128th general assembly are not	385
subject to division (C)(3)(a) of this section.	386

(b) Repair all roads affected by construction as reasonably	387
required to restore them to their preconstruction condition;	388

(c) Provide or facilitate training for fire and emergency	389
responders to respond to emergency situations related to the	390
facility and, at the facility owner's expense, equip such fire and	391
emergency responders with proper equipment as reasonably required	392
to enable them to respond to such events;	393

(d) Make a best faith effort to ensure that a majority of	394
employees employed at the facility are domiciled in this state.	395

(D) With respect to the projects referred to in this section,	396
the authority granted by this section is cumulative and	397
supplementary to all other authority granted in this chapter. The	398
authority granted by this section does not alter or impair any	399
similar authority granted elsewhere in this chapter for or with	400
respect to other projects.	401

Section 2.  That existing sections 3706.01 and 3706.041 of	402
the Revised Code are hereby repealed.	403