75th OREGON LEGISLATIVE ASSEMBLY--2010 Special Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 67

                           A-Engrossed

                         House Bill 3681
                Ordered by the House February 17
          Including House Amendments dated February 17

Sponsored by COMMITTEE ON REVENUE

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.

    { - Extends to 2014 sunset provision for income tax credits
available for renewable energy resource equipment manufacturing
facilities. Modifies criteria for certification of
facilities. - }
    { - Establishes statutory framework consistent with current
law for provision of credits for all other facilities that
maintain existing 2012 sunset provision. - }
    { - Applies to preliminary certifications issued on or after
June 1, 2009. - }
   { +  Directs Director of State Department of Energy and
Director of Oregon Business Development Department to prepare
plans for potential transfer of administration of tax credits
available for renewable energy resource equipment manufacturing
facilities.  Requires submission of report on plans to
Legislative Assembly no later than convening of next regular
session.
  Adds facilities that manufacture specified electric vehicles or
component parts of those vehicles to definition of 'renewable
energy resource equipment manufacturing facility' for purposes
relating to preliminary certification of those facilities. Allows
tax credit for those facilities with maximum total cost of
preliminary certification of $2.5 million. Applies to preliminary
certificates issued on or after July 1, 2009.
  For facilities using wind technology that have installed
capacity of more than 10 megawatts, reduces amount of available
tax credits in each of three tax years, beginning with tax years
beginning on or after January 1, 2010.
  Clarifies that provisions relating to enterprise zones equally
apply to reservation enterprise zones and reservation partnership
zones. Applies to reservation enterprise zones designated, and
reservation partnership zones cosponsored, on or after January 1,
2010.
  Extends sunset on tax credit for eligible businesses that
operate new business facilities in reservation enterprise zones
or reservation partnership zones. + }
  Takes effect on 91st day following adjournment sine die.

                        A BILL FOR AN ACT
Relating to tax credits; creating new provisions; amending ORS
  285C.050, 285C.090, 285C.115, 285C.245, 285C.255, 285C.300,
  285C.309, 285C.320, 314.752, 469.185, 469.197 and 469.200 and
  section 21, chapter 913, Oregon Laws 2009; and prescribing an
  effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1.  { + Section 2 of this 2010 Act is added to and made
a part of ORS  + }  { +  469.185 to 469.225. + }
  SECTION 2.  { + (1) It is the intention of the Legislative
Assembly to develop, for the consideration of the Seventy-sixth
Legislative Assembly, a timely and efficient process for the
future interdepartmental transfer of the administration of tax
credits available for renewable energy resource equipment
manufacturing facilities.
  (2) The Director of the State Department of Energy and the
Director of the Oregon Business Development Department shall
prepare plans for a potential transfer of all duties, functions
and powers relating to the administration, under ORS 469.185 to
469.225, of tax credits available for renewable energy resource
equipment manufacturing facilities, from the State Department of
Energy to the Oregon Business Development Department.
  (3) The State Department of Energy and the Oregon Business
Development Department shall collaborate to plan for a potential
transfer as described in subsection (2) of this section. To the
extent possible under law, the State Department of Energy and the
Oregon Business Development Department shall exchange information
necessary to facilitate this potential transfer. The directors
shall seek input on this potential transfer from representatives
of affected industries and other stakeholders.
  (4) No later than the convening of the next regular session of
the Legislative Assembly, the State Department of Energy and the
Oregon Business Development Department shall jointly submit a
progress report on the activities required under this section to
the Legislative Assembly. + }
  SECTION 3. ORS 469.185 is amended to read:
  469.185. As used in ORS 469.185 to 469.225 and 469.878:
  (1) 'Alternative fuel vehicle' means a vehicle as defined by
the Director of the State Department of Energy by rule that is
used primarily in connection with the conduct of a trade or
business and that is manufactured or modified to use an
alternative fuel, including but not limited to electricity,
ethanol, methanol, gasohol and propane or natural gas, regardless
of energy consumption savings.
  (2) 'Car sharing facility' means the expenses of operating a
car sharing program, including but not limited to the fair market
value of parking spaces used to store the fleet of cars available
for a car sharing program, but does not include the costs of the
fleet of cars.
  (3) 'Car sharing program' means a program in which drivers pay
to become members in order to have joint access to a fleet of
cars from a common parking area on an hourly basis. 'Car sharing
program' does not include operations conducted by car rental
agencies.
  (4) 'Cost' means the capital costs and expenses necessarily
incurred in the acquisition, erection, construction and
installation of a facility, including site development costs and
expenses for a sustainable building practices facility.
  (5) 'Energy facility' means any capital investment for which
the first year energy savings yields a simple payback period of
greater than one year. An energy facility includes:
  (a) Any land, structure, building, installation, excavation,
machinery, equipment or device, or any addition to,
reconstruction of or improvement of, land or an existing
structure, building, installation, excavation, machinery,
equipment or device necessarily acquired, erected, constructed or
installed by any person in connection with the conduct of a trade
or business and actually used in the processing or utilization of
renewable energy resources to:
  (A) Replace a substantial part or all of an existing use of
electricity, petroleum or natural gas;
  (B) Provide the initial use of energy where electricity,
petroleum or natural gas would have been used;
  (C) Generate electricity to replace an existing source of
electricity or to provide a new source of electricity for sale by
or use in the trade or business;
  (D) Perform a process that obtains energy resources from
material that would otherwise be solid waste as defined in ORS
459.005; or
  (E) Manufacture or distribute alternative fuels, including but
not limited to electricity, ethanol, methanol, gasohol or
biodiesel.
  (b) Any acquisition of, addition to, reconstruction of or
improvement of land or an existing structure, building,
installation, excavation, machinery, equipment or device
necessarily acquired, erected, constructed or installed by any
person in connection with the conduct of a trade or business in
order to substantially reduce the consumption of purchased
energy.
  (c) A necessary feature of a new commercial building or
multiple unit dwelling, as dwelling is defined by ORS 469.160,
that causes that building or dwelling to exceed an energy
performance standard in the state building code.
  (d) The replacement of an electric motor with another electric
motor that substantially reduces the consumption of electricity.
  (6) 'Facility' means an energy facility, recycling facility,
transportation facility, car sharing facility, sustainable
building practices facility, alternative fuel vehicle or
facilities necessary to operate alternative fuel vehicles,
including but not limited to an alternative fuel vehicle
refueling station, a high-efficiency combined heat and power
facility, a high-performance home, a homebuilder-installed
renewable energy system, or a renewable energy resource equipment
manufacturing facility.
  (7) 'High-efficiency combined heat and power facility ' means a
device or equipment that simultaneously produces heat and
electricity from a single source of fuel and that meets the
criteria established for a high-efficiency combined heat and
power facility under ORS 469.197.
  (8) 'High-performance home' means a new single-family dwelling
that:
  (a) Is designed and constructed to reduce net purchased energy
through use of both energy efficiency and on-site renewable
energy resources; and
  (b) Meets the criteria established for a high-performance home
under ORS 469.197.
  (9) 'Homebuilder-installed renewable energy system' means a
renewable energy resource system that:
  (a) Meets the criteria established for a renewable energy
resource system under ORS 469.197; and
  (b) Is installed in a new single-family dwelling by, or at the
direction of, the homebuilder constructing the dwelling.
  (10) 'Qualified transit pass contract' means a purchase
agreement entered into between a transportation provider and a
person, the terms of which obligate the person to purchase
transit passes on behalf or for the benefit of employees,
students, patients or other individuals over a specified period
of time.
  (11) 'Recycling facility' means equipment used by a trade or
business solely for recycling:
  (a) Including:
  (A) Equipment used solely for hauling and refining used oil;

  (B) New vehicles or modifications to existing vehicles used
solely to transport used recyclable materials that cannot be used
further in their present form or location such as glass, metal,
paper, aluminum, rubber and plastic;
  (C) Trailers, racks or bins that are used for hauling used
recyclable materials and are added to or attached to existing
waste collection vehicles; and
  (D) Any equipment used solely for processing recyclable
materials such as balers, flatteners, crushers, separators and
scales.
  (b) But not including equipment used for transporting or
processing scrap materials that are recycled as a part of the
normal operation of a trade or business as defined by the
director.
  (12)(a) 'Renewable energy resource' includes, but is not
limited to:
  (A) Straw, forest slash, wood waste or other wastes from farm
or forest land, nonpetroleum plant or animal based biomass, ocean
wave energy, solar energy, wind power, water power or geothermal
energy; or
  (B) A hydroelectric generating facility that obtains all
applicable permits and complies with all state and federal
statutory requirements for the protection of fish and wildlife
and:
  (i) That does not exceed 10 megawatts of installed capacity; or
  (ii) Qualifies as a research, development or demonstration
facility.
  (b) 'Renewable energy resource' does not include a
hydroelectric generating facility that is not described in
paragraph (a) of this subsection.
  (13) 'Renewable energy resource equipment manufacturing
facility' means any structure, building, installation,
excavation, machinery, equipment or device, or an addition,
reconstruction or improvement to land or an existing structure,
building, installation, excavation, machinery, equipment or
device, that is necessarily acquired, constructed or installed by
a person in connection with the conduct of a trade or business,
that is used primarily to manufacture { + :
  (a) + } Equipment, machinery or other products designed to use
a renewable energy resource and that meets the criteria
established under ORS 469.197 { + ; or
  (b) Electric vehicles, including three-wheeled vehicles,
designed for use as modes of transportation on public roads and
highways or for use as Class I or Class II all-terrain vehicles,
as those terms are defined in ORS 801.190 and 801.193, or
component parts of electric vehicles, but not including component
parts that may be used in both electric and conventional
vehicles.  For purposes of this paragraph, 'component parts' does
not include batteries + }.
  (14) 'Sustainable building practices facility' means a
commercial building in which building practices that reduce the
amount of energy, water or other resources needed for
construction and operation of the building are used. 'Sustainable
building practices facility' may be further defined by the State
Department of Energy by rule, including rules that establish
traditional building practice baselines in energy, water or other
resource usage for comparative purposes for use in determining
whether a facility is a sustainable building practices facility.
  (15) 'Transportation facility' means a transportation project
that reduces energy use during commuting to and from work or
school, during work-related travel, or during travel to obtain
medical or other services, and may be further defined by the
department by rule. 'Transportation facility' includes, but is
not limited to, a qualified transit pass contract or a
transportation services contract.

  (16) 'Transportation provider' means a public, private or
nonprofit entity that provides transportation services to members
of the public.
  (17) 'Transportation services contract' means a contract that
is related to a transportation facility, and may be further
defined by the department by rule.
  SECTION 4. ORS 469.200 is amended to read:
  469.200. (1) For a facility, the total cost that receives a
preliminary certification from the Director of the State
Department of Energy for tax credits in any calendar year may not
exceed:
  (a) $20 million, in the case of a facility using or producing
renewable energy resources or a high-efficiency combined heat and
power facility;
  (b) $40 million, in the case of a renewable energy resource
equipment manufacturing facility { +  other than a facility used
to manufacture electric vehicles + };   { - or - }
   { +  (c) Five percent of the total cost of the facility but no
more than $7 million, in the case of a facility that uses or
produces renewable energy resources and is a wind facility with
an installed capacity of more than 10 megawatts;
  (d) $2.5 million in the case of a renewable energy resource
equipment manufacturing facility used to manufacture electric
vehicles; or + }
    { - (c) - }   { + (e) + } $10 million, in the case of any
other facility.
  (2) Notwithstanding subsection (1)(b) of this section, the
director may certify a lesser amount than the total cost of the
renewable energy resource equipment manufacturing facility, or
need not certify any amount, if any of the following conditions
exist at the time of preliminary certification:
  (a) The last quarterly economic and revenue forecast for a
biennium indicates that moneys available to the General Fund for
the next biennium will be at least three percent less than
appropriations from the General Fund for the current biennium;
  (b) A quarterly economic and revenue forecast projects that
revenues in the General Fund in the current biennium will be at
least two percent below what revenues were projected to be in the
revenue forecast on which the legislatively adopted budget, as
defined in ORS 291.002, for the current biennium was based;
  (c) The proposed facility, in the estimate of the director,
does not possess the likelihood of success established in
criteria of success under ORS 469.197 (4);
  (d) The proposed facility, in the estimate of the director, is
not likely to increase employment in Oregon to the minimum
threshold level established in rules under ORS 469.197 (4);
  (e) The applicant lacks the minimum level of financial
viability established in rules adopted under ORS 469.197 (4); or
  (f) The applicant is unlikely, in the estimate of the director,
to base a decision to relocate or expand a facility in Oregon on
allowance of the tax credit, given the criteria established in
rules under ORS 469.197 (4).
  (3) The director shall determine the dollar amount certified
for any facility and the priority between applications for
certification based upon the criteria contained in ORS 469.185 to
469.225 and applicable rules and standards adopted under ORS
469.185 to 469.225. The director may consider the status of a
facility as a research, development or demonstration facility of
new renewable resource generating and conservation technologies
or a qualified transit pass contract in the determination.
  SECTION 5. ORS 469.200, as amended by section 4 of this 2010
Act, is amended to read:
  469.200. (1) For a facility, the total cost that receives a
preliminary certification from the Director of the State
Department of Energy for tax credits in any calendar year may not
exceed:
  (a) $20 million, in the case of a facility using or producing
renewable energy resources or a high-efficiency combined heat and
power facility;
  (b) $40 million, in the case of a renewable energy resource
equipment manufacturing facility other than a facility used to
manufacture electric vehicles;
  (c) Five percent of the total cost of the facility but no more
than   { - $7 million - }  { +  $5 million + }, in the case of a
facility that uses or produces renewable energy resources and is
a wind facility with an installed capacity of more than 10
megawatts;
  (d) $2.5 million in the case of a renewable energy resource
equipment manufacturing facility used to manufacture electric
vehicles; or
  (e) $10 million, in the case of any other facility.
  (2) Notwithstanding subsection (1)(b) of this section, the
director may certify a lesser amount than the total cost of the
renewable energy resource equipment manufacturing facility, or
need not certify any amount, if any of the following conditions
exist at the time of preliminary certification:
  (a) The last quarterly economic and revenue forecast for a
biennium indicates that moneys available to the General Fund for
the next biennium will be at least three percent less than
appropriations from the General Fund for the current biennium;
  (b) A quarterly economic and revenue forecast projects that
revenues in the General Fund in the current biennium will be at
least two percent below what revenues were projected to be in the
revenue forecast on which the legislatively adopted budget, as
defined in ORS 291.002, for the current biennium was based;
  (c) The proposed facility, in the estimate of the director,
does not possess the likelihood of success established in
criteria of success under ORS 469.197 (4);
  (d) The proposed facility, in the estimate of the director, is
not likely to increase employment in Oregon to the minimum
threshold level established in rules under ORS 469.197 (4);
  (e) The applicant lacks the minimum level of financial
viability established in rules adopted under ORS 469.197 (4); or
  (f) The applicant is unlikely, in the estimate of the director,
to base a decision to relocate or expand a facility in Oregon on
allowance of the tax credit, given the criteria established in
rules under ORS 469.197 (4).
  (3) The director shall determine the dollar amount certified
for any facility and the priority between applications for
certification based upon the criteria contained in ORS 469.185 to
469.225 and applicable rules and standards adopted under ORS
469.185 to 469.225. The director may consider the status of a
facility as a research, development or demonstration facility of
new renewable resource generating and conservation technologies
or a qualified transit pass contract in the determination.
  SECTION 6. ORS 469.200, as amended by sections 4 and 5 of this
2010 Act, is amended to read:
  469.200. (1) For a facility, the total cost that receives a
preliminary certification from the Director of the State
Department of Energy for tax credits in any calendar year may not
exceed:
  (a) $20 million, in the case of a facility using or producing
renewable energy resources or a high-efficiency combined heat and
power facility;
  (b) $40 million, in the case of a renewable energy resource
equipment manufacturing facility other than a facility used to
manufacture electric vehicles;
  (c) Five percent of the total cost of the facility but no more
than   { - $5 million - }  { +  $3 million + }, in the case of a
facility that uses or produces renewable energy resources and is
a wind facility with an installed capacity of more than 10
megawatts;
  (d) $2.5 million in the case of a renewable energy resource
equipment manufacturing facility used to manufacture electric
vehicles; or
  (e) $10 million, in the case of any other facility.
  (2) Notwithstanding subsection (1)(b) of this section, the
director may certify a lesser amount than the total cost of the
renewable energy resource equipment manufacturing facility, or
need not certify any amount, if any of the following conditions
exist at the time of preliminary certification:
  (a) The last quarterly economic and revenue forecast for a
biennium indicates that moneys available to the General Fund for
the next biennium will be at least three percent less than
appropriations from the General Fund for the current biennium;
  (b) A quarterly economic and revenue forecast projects that
revenues in the General Fund in the current biennium will be at
least two percent below what revenues were projected to be in the
revenue forecast on which the legislatively adopted budget, as
defined in ORS 291.002, for the current biennium was based;
  (c) The proposed facility, in the estimate of the director,
does not possess the likelihood of success established in
criteria of success under ORS 469.197 (4);
  (d) The proposed facility, in the estimate of the director, is
not likely to increase employment in Oregon to the minimum
threshold level established in rules under ORS 469.197 (4);
  (e) The applicant lacks the minimum level of financial
viability established in rules adopted under ORS 469.197 (4); or
  (f) The applicant is unlikely, in the estimate of the director,
to base a decision to relocate or expand a facility in Oregon on
allowance of the tax credit, given the criteria established in
rules under ORS 469.197 (4).
  (3) The director shall determine the dollar amount certified
for any facility and the priority between applications for
certification based upon the criteria contained in ORS 469.185 to
469.225 and applicable rules and standards adopted under ORS
469.185 to 469.225. The director may consider the status of a
facility as a research, development or demonstration facility of
new renewable resource generating and conservation technologies
or a qualified transit pass contract in the determination.
  SECTION 7. ORS 469.197 is amended to read:
  469.197. The State Department of Energy shall by rule establish
all of the following criteria:
  (1) For a high-performance home, the minimum design and
construction standards that must be met or exceeded for a
dwelling to be considered a high-performance home, including but
not limited to standards for the building envelope, HVAC systems,
lighting, appliances, water conservation measures, use of
sustainable building materials and on-site renewable energy
systems. The criteria must also establish the minimum reduction
in estimated net purchased energy that a dwelling must achieve to
be considered a high-performance home.
  (2) For a homebuilder-installed renewable energy system, the
minimum performance and efficiency standards that a solar
electric system, solar domestic water heating system, passive
solar space heating system, wind power system, geothermal heating
system, fuel cell system or other system utilizing renewable
resources must achieve to be considered a homebuilder-installed
renewable energy system.
  (3) For a high-efficiency combined heat and power facility, the
minimum performance and efficiency standards that the facility
must achieve to be considered a high-efficiency combined heat and
power facility.
  (4) For a renewable energy resource equipment manufacturing
facility:
  (a) Standards relating to the type of equipment, machinery or
other products being manufactured and related performance and
efficiency standards applicable to the manufactured products;
  (b) Standards, consistent with the definitions in ORS 469.185,
relating to what constitutes a single renewable energy resource
equipment manufacturing facility { +  that include:
  (A) Standards establishing  + }  { - and - }  what constitutes
property that is not included within a renewable energy resource
equipment manufacturing facility; { +  and
  (B) The consideration of such factors as phases of development,
expansion of or additions to existing facilities or product
lines, increased production and number of jobs created or
maintained by an applicant; + }
  (c) Standards relating to the minimum level of increased
employment in Oregon for a renewable energy resource equipment
manufacturing facility;
  (d) Standards relating to indicators of financial viability of
an applicant for preliminary certification under ORS 469.205;
  (e) Standards relating to the likelihood of long-term success
of a renewable energy resource equipment manufacturing facility;
and
  (f) Standards relating to the likelihood that an applicant
seeking preliminary certification of a renewable energy resource
equipment manufacturing facility will base decisions to locate or
expand a facility in Oregon on the allowance of a tax credit
under ORS 315.354.
  SECTION 8.  { + (1) The amendments to ORS 469.185 and 469.197
by sections 3 and 7 of this 2010 Act apply to preliminary
certifications issued under ORS 469.210 on or after July 1, 2009.
  (2) The amendments to ORS 469.200 by section 4 of this 2010 Act
apply to preliminary certifications issued under ORS 469.210 on
or after January 1, 2010, and before January 1, 2011.
  (3) The amendments to ORS 469.200 by section 5 of this 2010 Act
apply to preliminary certifications issued under ORS 469.210 on
or after January 1, 2011, and before January 1, 2012.
  (4) The amendments to ORS 469.200 by section 6 of this 2010 Act
apply to preliminary certifications issued under ORS 469.210 on
or after January 1, 2012. + }
  SECTION 9. ORS 285C.050 is amended to read:
  285C.050. As used in ORS 285C.050 to 285C.250, unless the
context requires otherwise:
  (1) 'Assessment date' and 'assessment year' have the meanings
given those terms in ORS 308.007.
  (2) 'Authorized business firm' means an eligible business firm
that has been authorized under ORS 285C.140.
  (3) 'Business firm' means a person operating or conducting one
or more trades or businesses, a people's utility district
organized under ORS chapter 261 or a joint operating agency
formed under ORS chapter 262, but does not include any other
governmental agency, municipal corporation or nonprofit
corporation.
  (4) 'County average annual wage' means:
  (a) The most recently available average annual covered payroll
for the county in which the enterprise zone is located, as
determined by the Employment Department; or
  (b) If the enterprise zone is located in more than one county,
the highest county average annual wage as determined under
paragraph (a) of this subsection.
  (5) 'Electronic commerce' means engaging in commercial or
retail transactions predominantly over the Internet or a computer
network, utilizing the Internet as a platform for transacting
business, or facilitating the use of the Internet by other
persons for business transactions, and may be further defined by
the Oregon Business Development Department by rule.
  (6) 'Eligible business firm' means a firm engaged in an
activity described under ORS 285C.135 that may file an
application for authorization under ORS 285C.140.

  (7) 'Employee' means a person who works more than 32 hours per
week, but does not include a person with a temporary or seasonal
job or a person hired solely to construct qualified property.
  (8) 'Enterprise zone' means one of the 30 areas designated or
terminated and redesignated by order of the Governor under ORS
284.160 (1987 Replacement Part) before October 3, 1989, one of
the areas designated by the Director of the Oregon Business
Development Department under ORS 285C.080, a federal enterprise
zone area designated under ORS 285C.085, an area designated under
ORS 285C.250 or a reservation enterprise zone designated { + , or
a reservation partnership zone cosponsored, + } under ORS
285C.306.
  (9) 'Federal enterprise zone' means any discrete area wholly or
partially within this state that is designated as an empowerment
zone, an enterprise community, a renewal community or some
similar designation for purposes of improving the economic and
community development of the area.
  (10) 'First-source hiring agreement' means an agreement between
an authorized business firm and a publicly funded job training
provider whereby the provider refers qualified candidates to the
firm for new jobs and job openings in the firm.
  (11) 'In service' means being used or occupied or fully ready
for use or occupancy for commercial purposes consistent with the
intended operations of the business firm as described in the
application for authorization.
  (12) 'Modification' means modernization, renovation or
remodeling of an existing building, structure or real property
machinery or equipment.
  (13) 'New employees hired by the firm':
  (a) Includes only those employees of an authorized business
firm engaged for a majority of their time in eligible operations.
  (b) Does not include individuals employed in a job or position
that:
  (A) Is created and first filled after December 31 of the first
tax year in which qualified property of the firm is exempt under
ORS 285C.175;
  (B) Existed prior to the submission of the relevant application
for authorization; or
  (C) Is performed primarily at a location outside of the
enterprise zone.
  (14) 'Publicly funded job training provider' includes but is
not limited to a community college, a service provider under the
federal Workforce Investment Act Title I-B (29 U.S.C. 2801 et
seq.), or a similar program.
  (15) 'Qualified business firm' means a business firm described
in ORS 285C.200, the qualified property of which is exempt from
property tax under ORS 285C.175.
  (16) 'Qualified property' means property described under ORS
285C.180.
  (17) 'Rural enterprise zone' means:
  (a) An enterprise zone located in an area of this state in
which an urban enterprise zone could not be located; or
  (b) A reservation enterprise zone designated { + , or a
reservation partnership zone cosponsored, + } under ORS 285C.306.
  (18) 'Sparsely populated county' means a county with a density
of 100 or fewer persons per square mile, based on the most
recently available population figure for the county from the
Portland State University Population Research Center.
  (19) 'Sponsor' means:
  (a) The city, county or port, or any combination of cities,
counties or ports, that received approval of an enterprise zone
under ORS 284.150 and 284.160 (1987 Replacement Part), under ORS
285C.065 and 285C.075, under ORS 285C.085 or under ORS 285C.250;
  (b) The tribal government, in the case of a reservation
enterprise zone;   { - or - }

   { +  (c) Each of the tribal government and the cosponsoring
city, county or port, in the case of a reservation partnership
zone; or + }
    { - (c) - }   { + (d) + } A city, county or port that joined
the enterprise zone through a boundary change under ORS 285C.115
(7) or a port that joined the enterprise zone under ORS 285C.068.
  (20) 'Tax year' has the meaning given that term in ORS 308.007.
  (21) 'Urban enterprise zone' means an enterprise zone in a
metropolitan statistical area, as defined by the most recent
federal decennial census, that is located inside a regional or
metropolitan urban growth boundary.
  (22) 'Year' has the meaning given that term in ORS 308.007.
  SECTION 10. ORS 285C.090 is amended to read:
  285C.090. (1) A proposed enterprise zone must be located in a
local area in which:
  (a) Fifty percent or more of the households have incomes below
80 percent of the median income of this state, as defined by the
most recent federal decennial census;
  (b) The unemployment rate is at least 2.0 percentage points
greater than the comparable unemployment rate for this entire
state, as defined by the most recently available data published
or officially provided and verified by the United States
Government, the Employment Department of this state, the Portland
State University Population Research Center or special studies
conducted under a contract with a regional academic institution;
or
  (c) The Oregon Business Development Department determines on a
case-by-case basis using evidence provided by the cities,
counties or ports applying for designation of the proposed
enterprise zone that there exists a level of economic hardship at
least as severe as that described in paragraph (a) or (b) of this
subsection. The evidence shall be based on the most recently
available data from official sources and may include, but is not
limited to, a contemporary decline of the population in the
proposed enterprise zone, the percentage of persons in the
proposed enterprise zone below the poverty level relative to the
percentage of the entire population of this state below the
poverty level or the unemployment rate for the county or counties
in which the proposed enterprise zone is located.
  (2) An enterprise zone must consist of a total area of not more
than 12 square miles in size. The area of the zone shall be
calculated by excluding that portion of the zone that lies below
the ordinary high water mark of a navigable body of water.
  (3) Except as provided in subsection (4) of this section:
  (a) An enterprise zone must have 12 miles or less as the
greatest distance between any two points within the zone; and
  (b) Unconnected areas of an enterprise zone may not be more
than five miles apart.
  (4) Unconnected areas of a rural enterprise zone may not be
more than 15 miles apart when an unconnected area is entirely
within a sparsely populated county, and the zone:
  (a) Must have 20 miles or less as the greatest distance between
any two points within the zone, if only a portion of the zone is
contained within a sparsely populated county; or
  (b) Must have 25 miles or less as the greatest distance between
any two points within the zone, if the zone is entirely contained
within a sparsely populated county.
  (5) This section does not apply to the designation or
redesignation of a reservation enterprise zone { +  or a
reservation partnership zone + }.
  SECTION 11. ORS 285C.115 is amended to read:
  285C.115. (1) The sponsor of an enterprise zone may submit a
request to the Oregon Business Development Department to change
the boundary of the enterprise zone. A request shall include:
  (a) A copy of the resolution of the governing body of the
sponsor requesting the change;
  (b) If subsection (7) of this section applies, a copy of the
resolution described in subsection (7) of this section;
  (c) A map clearly indicating the existing boundary and the
proposed change thereto;
  (d) A legal description of each area to be withdrawn from or
added to the existing enterprise zone; and
  (e) Other information required by the department.
  (2) The amended enterprise zone shall:
  (a) Add land zoned for use by eligible business firms that has
or will have infrastructure facilities, road access, on-site
water, on-site sewage disposal and necessary utility services;
  (b) Continue to include any authorized business firms within
the enterprise zone;
  (c) Add residential areas or nonresidential areas that are
adjacent to residential areas only if the level of economic
hardship in the areas to be added is at least as severe as the
conditions that existed at the time the original enterprise zone
was designated or that currently exist in the original enterprise
zone;
  (d) Retain at least 50 percent of the lands in the original
enterprise zone; and
  (e) Meet the applicable total area and greatest distance
requirements set forth in ORS 285C.090.
  (3) If the enterprise zone is a reservation enterprise zone
 { +  or a reservation partnership zone + } and the land to be
added to the zone is not described in ORS 285C.306, the request
for a boundary change, and the resulting boundary of the zone,
must fully satisfy the provisions of this section.
  (4) A request under subsection (1) of this section may include
a proposal to:
  (a) Remove only the land that is residential or not zoned or
available for use by eligible business firms; or
  (b) Change the name of the enterprise zone.
  (5) The boundary of an urban enterprise zone may not be
modified to include land located outside a regional or
metropolitan urban growth boundary.
  (6) A request to modify the boundary of a rural enterprise zone
to include land located outside an urban growth boundary shall
satisfy the requirements of subsections (1) and (2) of this
section and shall satisfy any other criteria that the department
may adopt by rule.
  (7) If an area to be added to an enterprise zone is under the
jurisdiction of a city, county or port that is not a sponsor of
the enterprise zone, the governing body of that city, county or
port shall submit a resolution requesting the change and
requesting that the city, county or port become a sponsor, or
shall submit a resolution consenting to the change, as provided
under ORS 285C.065 (1). The resolution of the joining city,
county or port shall be submitted jointly with the resolution
adopted by the governing body of the existing sponsor. The
joining resolution of the city, county or port may:
  (a) Include a binding proposal for enhanced local public
services, local incentives or local regulatory flexibility to be
effective within the portion of the enterprise zone to be under
the jurisdiction of that city, county or port; or
  (b) Include a restriction described in ORS 285C.070 (4). A
restriction made under this paragraph may be made without regard
to the time limitation described in ORS 285C.070 (4)(c) and
becomes final on the effective date of the boundary change.
  (8) The department shall review the request for a boundary
change. If the request is incomplete or does not satisfy the
requirements of this section, the department shall seek
additional information as necessary or shall return the request
to the sponsor. If the request is returned, the sponsor may
submit a revised request at any time. If the request is complete
and does satisfy the requirements of this section, the Director
of the Oregon Business Development Department shall order a
change in the boundary of an enterprise zone based on the request
of the sponsor and specify the effective date of the boundary
change, which may not be earlier than the receipt of a completed
request.
  (9) A change in the boundary of an enterprise zone under this
section does not change the termination date of the enterprise
zone under ORS 285C.245 (2).
  SECTION 12. ORS 285C.245 is amended to read:
  285C.245. (1) When the termination of an enterprise zone occurs
under this section:
  (a) The termination of the enterprise zone does not affect:
  (A) The continuation of a qualified business firm's property
tax exemption first allowed before the effective date of the
termination of the enterprise zone; or
  (B) The ability of an authorized business firm to claim
exemption under ORS 285C.175 if:
  (i) The authorization application of the firm was filed with
the sponsor before the effective date of the termination of the
zone;
  (ii) The firm remains authorized at the time the exemption is
claimed;
  (iii) The firm completes construction, addition, modification
or installation of the qualified property within a reasonable
time and without interruption of construction, addition,
modification or installation activity; and
  (iv) The property meets all other applicable requirements for
exemption under ORS 285C.175.
  (b) A business firm that is currently authorized or qualified
in the enterprise zone shall be allowed until 10 years after the
effective date of the termination of the enterprise zone to apply
for authorization under ORS 285C.140 and to subsequently claim
the exemption for any qualified property that is constructed,
added, modified or installed inside the former enterprise zone
boundaries, as those boundaries existed at the time of
termination, and entirely outside of the boundaries of any
current enterprise zone. Construction, addition, modification or
installation of qualified property must commence prior to the end
of the final tax year in which qualified property of the firm is
exempt under ORS 285C.175 and must be completed within a
reasonable time and without interruption of construction,
addition, modification or installation activity. The property
must meet all other applicable requirements for exemption under
ORS 285C.175.
  (c) Disqualification under ORS 285C.240 of all exempt property
of the business firm after the effective date of the termination
of the enterprise zone shall prohibit and terminate all
authorizations sought or obtained by the business firm that would
not otherwise be allowed except for paragraph (b) of this
subsection. Disqualification under ORS 285C.240 of all exempt
property of the business firm on or after the effective date of
the termination of the enterprise zone shall cause the assessor
to deny any claim for exemption under ORS 285C.175 of qualified
property of the business firm made in a subsequent tax year.
  (2) An enterprise zone designated by the Director of the Oregon
Business Development Department under ORS 285C.080, 285C.085 or
285C.250 shall terminate when 10 years plus that number of days
necessary to delay the date of termination to the June 30 next
following have elapsed since the enterprise zone was originally
designated.
  (3) An enterprise zone designated by the director under ORS
285C.080, 285C.085 and 285C.250 shall terminate prior to the time
specified in subsection (2) of this section only as provided in
subsections (4) to (6) of this section.
  (4) The governing body of the sponsor may submit a resolution
requesting termination of the enterprise zone to the Oregon
Business Development Department. The sponsor shall provide copies
of the resolution to the county assessor and the Department of
Revenue. After receipt of the request, the director shall order
termination of the enterprise zone and shall specify the
effective date of the termination.
  (5) If a sponsor is unable or unwilling to carry out its
responsibilities under ORS 285C.105, the director shall order
termination of the enterprise zone and shall specify the
effective date of the termination. However, in the case of
failure to provide enhanced local public services, local
incentives or local regulatory flexibility included in the
application for designation as an enterprise zone or in the
resolution under ORS 285C.115 (7), termination is not required if
the sponsor provides to authorized or qualified business firms
new enhanced local public services, local incentives or local
regulatory flexibility that is of comparable value, or makes
reasonable corrections of shortcomings in existing local
incentives. A sponsor may reduce the time within which it will
provide enhanced local public services, local incentives and
local regulatory flexibility to a time period equal to the amount
of time allowed for an exemption under ORS 285C.175 without
causing termination under this section.
  (6) An enterprise zone designated on or after January 1, 2004,
shall terminate if no qualified business firm has located within
the zone by December 31 following the date that is six years
after the date the zone was designated.
  (7) A reservation enterprise zone designated { + , or a
reservation partnership zone cosponsored, + } under ORS 285C.306
shall terminate in accordance with subsection (2) of this
section, but may be redesignated at any time under ORS 285C.306.
  SECTION 13. ORS 285C.255 is amended to read:
  285C.255. (1) Notwithstanding any other provision of ORS
285C.050 to 285C.250:
  (a) An area may not be designated as an enterprise zone after
June 30, 2013;
  (b) A business firm may not obtain authorization under ORS
285C.140 after June 30, 2013; and
  (c) An enterprise zone, except for a reservation enterprise
zone { +  or a reservation partnership zone + }, that is in
existence on June 29, 2013, is terminated on June 30, 2013.
  (2) Notwithstanding subsection (1) of this section:
  (a) A reservation enterprise zone may be designated { + , and a
reservation partnership zone may be cosponsored, + } under ORS
285C.306 after June 30, 2013; and
  (b) A business firm may obtain authorization under ORS 285C.140
after June 30, 2013:
  (A) If located in a reservation enterprise zone { +  or a
reservation partnership zone + }; or
  (B) As allowed under ORS 285C.245 (1)(b).
  SECTION 14. ORS 285C.300 is amended to read:
  285C.300. As used in ORS 285C.300 to 285C.320:
  (1) 'Eligible business' means a business that:
  (a) Is engaged within a reservation enterprise zone  { + or a
reservation partnership zone + } in the manufacture or provision
of goods, products or services to other businesses or to the
general public, through activities including, but not limited to,
manufacturing, assembly, fabrication, processing, shipping,
storage, retail sales or services, child care, housing, retail
food service, health care, tourism, entertainment, financial
services, professional services, energy development, construction
or similar activities; and
  (b) Occupies or owns a new business facility within a
reservation enterprise zone { +  or a reservation partnership
zone + }.
  (2) 'New business facility':

  (a) Means a physical asset within a reservation enterprise zone
 { + or a reservation partnership zone + } that satisfies the
following requirements:
  (A) The facility is used by a business in the operation of a
revenue-producing enterprise, except that the revenue-producing
enterprise must consist of activity other than leasing the
facility to another person; and
  (B) The facility is acquired by or leased to a business on or
after January 1, 2002, including a facility, the title or
possession of which is transferred to the business on or after
January 1, 2002, or a facility, the construction, erection or
installation of which is completed on or after January 1, 2002;
  (b) Subject to paragraph (c) of this subsection, includes a
facility acquired or leased from a person that used the facility
in a revenue-producing enterprise within the boundaries of the
same Indian reservation immediately prior to the transfer of
title or possession of the facility to the business; and
  (c) Does not include:
  (A) A facility that is used in a revenue-producing enterprise
that is the same or substantially identical to the
revenue-producing enterprise in which the facility was previously
used within the boundaries of the same Indian reservation; or
  (B) Any property that merely replaces existing property and
that does not expand the capacity of the revenue-producing
enterprise in which the facility is to be used.
  (3) 'Reservation enterprise zone' means   { - a - }   { + an
enterprise + } zone designated   { - by - }   { + under + } ORS
285C.306.
   { +  (4) 'Reservation partnership zone' means an enterprise
zone cosponsored under ORS 285C.306. + }
    { - (4) - }   { + (5) + } 'Tribal government' means the
governing body of an Indian tribe, if the governing body has the
authority to levy, impose and collect taxes within the boundaries
of the reservation of the tribe.
    { - (5) - }   { + (6) + } 'Tribal tax' means any specific tax
that is or may be levied or imposed by a tribal government upon a
business and that is measured with reference to a specific level
or quantity of that business's income, operations, use or
ownership of property. 'Tribal tax' includes, but is not limited
to, an income or excise tax, an ad valorem property tax, a gross
receipts tax or a sales and use tax.
  SECTION 15. ORS 285C.309 is amended to read:
  285C.309. (1) A credit against the taxes that are otherwise due
under ORS chapter 316 or, if the taxpayer is a corporation, under
ORS chapter 317 or 318, is allowed to an eligible business
operating a new business facility in a reservation enterprise
zone  { +  or a reservation partnership zone + }.
  (2) The amount of the credit allowed to the eligible business
shall equal:
  (a) The amount of tribal property tax imposed on a new business
facility of an eligible business that is paid or incurred by the
eligible business during the income or corporate excise tax year
of the eligible business; or
  (b) If the eligible business has not previously conducted
business operations within the reservation enterprise zone { +
or reservation partnership zone + }, the amount of tribal tax
paid or incurred by the eligible business during the income or
corporate excise tax year of the eligible business.
  (3) The credit allowed to the eligible business may not exceed
the tax liability of the eligible business for the tax year and
may not be carried over to another tax year.
  (4) A credit is allowable under this section only to the extent
the tribal tax on which the credit is based is imposed on
businesses not owned by Indians on a uniform basis within the
territory over which the tribal government has the authority to
levy, impose and collect taxes.
  (5) The credit shall be claimed on a form prescribed by the
Department of Revenue containing the information required by the
department, including information sufficient for the department
to determine that the taxpayer is an eligible business and that
the facility operated by the business is a new business facility.
  (6) An eligible nonresident individual shall be allowed the
credit computed in the same manner and subject to the same
limitations as the credit allowed a resident by subsection (1) of
this section. However, the credit shall be prorated using the
proportion provided in ORS 316.117.
  (7) If a change in the taxable year of a taxpayer occurs as
described in ORS 314.085, or if the Department of Revenue
terminates the taxpayer's taxable year under ORS 314.440, the
credit allowed by this section shall be prorated or computed in a
manner consistent with ORS 314.085.
  (8) If a change in the status of a taxpayer from resident to
nonresident or from nonresident to resident occurs, the credit
allowed by this section shall be determined in a manner
consistent with ORS 316.117.
  (9) An eligible business claiming a credit under this section
shall maintain records sufficient to authenticate the allowance
of the credit claimed under this section and shall furnish the
department with these records upon the request of the department.
  (10) A credit claimed by an eligible business may not be
disallowed solely because the eligible business conducts business
operations both within and outside of a reservation enterprise
zone { +  or a reservation partnership zone + }.
  SECTION 16. ORS 285C.320 is amended to read:
  285C.320. (1) A reservation enterprise zone   { - is a rural
enterprise zone - }   { + and a reservation partnership zone are
rural enterprise zones + } for purposes of ORS 285C.050 to
285C.250.   { - The tribal government of the reservation is the
sponsor of the reservation enterprise zone. - }
  (2) Reservation enterprise zones  { + and reservation
partnership zones + } may not be taken into account in
determining the number of rural enterprise zones allowable in
this state under ORS 285C.050 to 285C.250, and are not subject to
numerical limitation under ORS 285C.050 to 285C.250.
  (3) Exemptions and tax credits available in connection with an
enterprise zone are available in connection with a reservation
enterprise zone { +  or a reservation partnership zone + }. In
order for property within a reservation enterprise zone  { + or a
reservation partnership zone + } to be exempt under ORS 285C.175,
the business firm and property must meet the requirements
applicable to business firms and property in an enterprise zone.
  (4) As used in this section, 'business firm' has the meaning
given that term in ORS 285C.050.
  SECTION 17. ORS 314.752 is amended to read:
  314.752. (1) Except as provided in ORS 314.740 (5)(b), the tax
credits allowed or allowable to a C corporation for purposes of
ORS chapter 317 or 318 shall not be allowed to an S corporation.
The business tax credits allowed or allowable for purposes of ORS
chapter 316 shall be allowed or are allowable to the shareholders
of the S corporation.
  (2) In determining the tax imposed under ORS chapter 316, as
provided under ORS 314.734, on income of the shareholder of an S
corporation, there shall be taken into account the shareholder's
pro rata share of business tax credit (or item thereof) that
would be allowed to the corporation (but for subsection (1) of
this section) or recapture or recovery thereof. The credit (or
item thereof), recapture or recovery shall be passed through to
shareholders in pro rata shares as determined in the manner
prescribed under section 1377(a) of the Internal Revenue Code.
  (3) The character of any item included in a shareholder's pro
rata share under subsection (2) of this section shall be
determined as if such item were realized directly from the source
from which realized by the corporation, or incurred in the same
manner as incurred by the corporation.
  (4) If the shareholder is a nonresident and there is a
requirement applicable for the business tax credit that in the
case of a nonresident the credit be allowed in the proportion
provided in ORS 316.117, then that provision shall apply to the
nonresident shareholder.
  (5) As used in this section, 'business tax credit' means a tax
credit granted to personal income taxpayers to encourage certain
investment, to create employment, economic opportunity or
incentive or for charitable, educational, scientific, literary or
public purposes that is listed under this subsection as a
business tax credit or is designated as a business tax credit by
law or by the Department of Revenue by rule and includes but is
not limited to the following credits: ORS 285C.309 (tribal taxes
on reservation enterprise zones { +  and reservation partnership
zones + }), ORS 315.104 (forestation and reforestation), ORS
315.134 (fish habitat improvement), ORS 315.138 (fish screening,
by-pass devices, fishways), ORS 315.156 (crop gleaning), ORS
315.164 and 315.169 (farmworker housing), ORS 315.204 (dependent
care assistance), ORS 315.208 (dependent care facilities), ORS
315.213 (contributions for child care), ORS 315.304 (pollution
control facility), ORS 315.324 (plastics recycling), ORS 315.354
and 469.207 (energy conservation facilities), ORS 315.507
(electronic commerce), ORS 315.511 (advanced telecommunications
facilities), ORS 315.604 (bone marrow transplant expenses), ORS
317.115 (fueling stations necessary to operate an alternative
fuel vehicle) and ORS 315.141 (biomass production for biofuel).
  SECTION 18.  { + The amendments to ORS 285C.050, 285C.090,
285C.115, 285C.245, 285C.255, 285C.300, 285C.309, 285C.320 and
314.752 by sections 9 to 17 of this 2010 Act apply to reservation
enterprise zones designated, and reservation partnership zones
cosponsored, on or after January 1, 2010. + }
  SECTION 19. Section 21, chapter 913, Oregon Laws 2009, is
amended to read:
   { +  Sec. 21. + } A credit may not be claimed under ORS
285C.309 for tax years beginning on or after January 1,
 { - 2014 - }  { +  2018 + }.
  SECTION 20.  { + This 2010 Act takes effect on the 91st day
after the date on which the special session of the Seventy-fifth
Legislative Assembly adjourns sine die. + }
                         ----------