PUBLIC HEARING, WORK SESSION SB 341

PUBLIC HEARING SB 283

 

TAPES 32, 33 A

 

SENATE REVENUE COMMITTEE

FEBRUARY 10, 2005† †8:30 AM† †STATE CAPITOL BUILDING

 

Members Present:††††††††††††††††† Senator Ryan Deckert, Chair

††††††††††††††††††††††††††††††††††††††††††††††† Senator Gary George

††††††††††††††††††††††††††††††††††††††††††††††† Senator Rick Metsger

††††††††††††††††††††††††††††††††††††††††††††††† Senator Floyd Prozanski

††††††††††††††††††††††††††††††††††††††††††††††† Senator Charles Starr

†††††††††††††††††††††††

Witness Present:††††††††††††††††††† Michelle Deister, League of Oregon Cities

††††††††††††††††††††††††††††††††††††††††††††††† Dee Wescott, Mayor, Damascus

††††††††††††††††††††††††††††††††††††††††††††††† John Hartsock, Mayor Pro Tem, Damascus

††††††††††††††††††††††††††††††††††††††††††††††† Rep. Linda Flores, District 51

††††††††††††††††††††††††††††††††††††††††††††††† Randy Tucker, Metro

††††††††††††††††††††††††††††††††††††††††††††††† William Manne, Oregon State Bar Taxation Section

††††††††††††††††††††††††††††††††††††††††††††††† Jerry Hanson, Washington County Assessor

 

Staff Present:††††††††††††††††††††††††† Paul Warner, Legislative Revenue Officer

††††††††††††††††††††††††††††††††††††††††††††††† Mary Ayala, Economist

††††††††††††††††††††††††††††††††††††††††††††††† Barbara Guardino, Committee Assistant

 

 

TAPE 32, SIDE A

005

Chair Deckert

Calls meeting to order at 8:34 a.m. Opens public hearing on SB 341. Pertaining to newly incorporated city of Damascus.

 

PUBLIC HEARING, SB 341

023

Mary Ayala

Gives overview of SB 341. See Staff Measure Summary (EXHIBIT 1). Enables a city located in an urban growth boundary that was incorporated after 1990 to issue an 18 month obligation in anticipation of tax revenues or other income prior to the beginning of the fiscal year in which the city expects to receive these revenues. Gives background. City has no funding.

 

056

Michelle Deister

Introduces mayor and mayor pro tem of city of Damascus. Points out, bill has an emergency clause.

 

069

Dee Wescott

Gives background on recent Damascus incorporation.

 

092

John Hartsock

Testifies in favor of SB 341. See written testimony (EXHIBIT 2) paraphrased. City has no money to operate.

 

143

Hartsock

SB 341 modifies ORS 288.165 to provide Damascus the ability to operate over the next 6 months. Urges committee to move bill as an emergency measure.

 

165

Chair Deckert

Comments, bill is needed but has one concern: would bill make it easier for several new small cities to sprout up? There is legislation in the House to allow this in the Portland metro region.

 

181

Hartsock

Has not read House bill and is not aware of which parts of statutes are being changed to allow this. Damascus is limited by 3-mile veto, meaning any adjacent city within 3 miles can say no. Believes protections are there.

 

211

Rep. Flores

Introduces Randy Tucker.

 

220

Randy Tucker

Scenario Deckert describes is currently not possible without consent of Portland, Beaverton, Hillsboro, etc. ORS 221.010 and 221.031 contain those prohibitions.

 

250

Chair Deckert

Expresses concern current law might be changed.

 

255

Rep. Flores

Acknowledges Chair Deckertís concerns. Urges support for SB 341.

 

 

 

WORK SESSION, SB 341

275

Vice Chair C. Starr

MOTION: MOVES SB 341 TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

277

Chair Deckert

ASKS FOR ANY OBJECTION TO MOTION. THERE BEING NO OBJECTION THE CHAIR SO ORDERS.

VOTE: 5-0-0

MEMBERS VOTING AYE: GEORGE, METSGER, PROZANSKI, VICE CHAIR C. STARR, CHAIR DECKERT

 

 

 

PUBLIC HEARING, SB 283

301

Mary Ayala

Gives overview of SB 283 (EXHIBITS 3, 4, 5). Enables a limited liability company to qualify for property tax exemption or special assessment if the LLC is wholly owned by one or more nonprofit corporations.

 

356

William Manne

Testifies in favor of SB 283. See written testimony, paraphrased (EXHIBIT 6). ORS 307 grants property tax exemption to real property held and used by qualifying nonprofit corporations.

 

422

Manne

Explains, ORS 307 was formulated long before limited liability statutes existed. Corporations can form nonprofit subsidiaries and qualify but they canít form an LLC and qualify for tax exemption. Bill gives them another choice. Believes bill is revenue neutral.

 

444

Ayala

Is still researching whether bill is revenue neutral.

 

 

 

 

TAPE 33, SIDE A

025

Manne

In Oregon a nonprofit cannot be designated as an LLC. Federal law is also grappling with LLCs. State follows federal law for income tax purposes. Billís intention is to give charitable entities the opportunity to use this form since it is a better form.

 

055

Chair Deckert

Asks how sophisticated a nonprofit has to be in order to use this form.

058

Manne

Responds, they are usually larger, sophisticated charities. Itís the purpose for which the property is used that distinguishes whether it qualifies for an exemption. It only qualifies if itís being used for charitable purposes.

 

092

Chair Deckert

Asks for an example of a charity that qualified for an LLC.

 

095

Manne

Gives an example of a nonprofit thrift store.

 

116

Chair Deckert

A good policy question for the committee is whether a nonprofit should act like a business.

 

119

Manne

By recognizing thereís no policy purpose served by preventing a charity from acting like a business, thereís no reason to prevent a charity from availing itself of LLC form. The statutes simply donít refer to LLC.

 

130

Vice Chair Starr

Notes a conflict of interest since he is involved in a nonprofit organization (a Christian school) that rents facilities. Bill would affect his enterprise, although he favors its passage.

 

155

Sen. Prozanski

Summarizes, a nonprofit can currently create another nonprofit entity. This takes away an extra step.

 

172

Jerry Hanson

Discloses he is a board member on two nonprofits. Testifies, this change might be considered a change in ownership. If a nonprofit creates a new LLC it should be aware it needs to file an application with the county assessor. Otherwise entities could jeopardize their exemptions.

 

206

Chair Deckert

Closes public hearing on SB 283. Adjourns meeting at 9:18 a.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant††††††††††††††††††††††††††††††††††††††††††††††††††††††

 

Exhibit Summary:

1.      SB 341, Staff Measure Summary, Ayala, 1 pp.

2.      SB 341, Testimony of John Hartsock, Damascus City Council, Hartsock, 2 pp.

3.      SB 283, Preliminary Revenue Impact of Proposed Legislation, Ayala, 1 pp.

4.      SB 283, Staff Measure Summary, Ayala, 1 pp.

5.      SB 283, Legislative Fiscal Office, No Expenditure Impact Statement, Ayala, 1 pp.

6.      SB 283, Legislative Testimony Before Senate Revenue Committee, Manne, 1 pp.