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Oregon Bulletin

May 1, 2014

Oregon Business Development Department, Chapter 123

Rule Caption: This new division of rules relates to innovation infrastructure.

Adm. Order No.: OBDD 4-2014

Filed with Sec. of State: 4-1-2014

Certified to be Effective: 4-1-14

Notice Publication Date: 3-1-2014

Rules Adopted: 123-015-0100, 123-015-0200, 123-015-0300, 123-015-0400, 123-015-0500

Subject: The 2013 legislature passed SB 241 which provides for assisting technology-based start-up businesses whose purpose is to commercialize university based or assisted research with the University of Oregon, Oregon State University and the Oregon Solutions Network to increase the number of these businesses within Linn, Lane and Lincoln counties. These rules provide for the administration of this program.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-015-0100

Purpose

The following rules are for the purpose of assisting technology-based, start-up businesses in Oregon whose primary purpose is to commercialize university-based or university-assisted research with the University of Oregon, Oregon State University and the Oregon Solutions Network to increase the number of, and ensure the retention of, such businesses within Lane, Linn and Benton counties.

Stat. Auth.: OL 2013, ch. 762

Stats. Implemented: OL 2013, ch. 762

Hist.: OBDD 4-2014, f. & cert. ef. 4-1-14

123-015-0200

Definitions

For the purposes of these rules additional definitions may be found in Procedural Rules, OAR 123-001. The following terms shall have the following definitions, unless the context clearly indicates otherwise:

(1) “Grantee” means University of Oregon, Oregon State University and the Oregon Solutions Network within Lane, Linn and Benton counties.

(2) “Oregon Solutions Network” means the Oregon Solutions Network established pursuant to Executive Order 11-12 dated December 16, 2011.

Stat. Auth.: OL 2013, ch. 762

Stats. Implemented: OL 2013, ch. 762

Hist.: OBDD 4-2014, f. & cert. ef. 4-1-14

123-015-0300

Performance Based Contracts

(1) The department shall enter into performance based contracts and agreements with the University of Oregon, Oregon State University and the Oregon Solutions Network in Lane, Linn and Benton counties.

(2) Performance based contracts and agreements implement and accomplish the following:

(a) Providing financial assistance to programs, entities and providers of technical business development and creation assistance and providing support to technology-based start-up businesses whose primary purpose is to commercialize university-based or university-assisted research;

(b) Identifying and recruiting entrepreneurial talent, qualified investors and other sources of capital;

(c) Acquiring, procuring, furnishing or improving facilities in or near Lane, Linn or Benton counties, as identified by the University of Oregon, Oregon State university and the Oregon Solutions Network, for the operation or support of businesses, receiving assistance under this section, signature research centers and other businesses, programs and entities involved in the commercialization of university-based or university-assisted research;

(d) Establishing, connecting or expanding support programs, directly or indirectly, that provide assistance to technology-based, start-up businesses whose primary purpose is to commercialize university-based or university-assisted research within and outside the region.

Stat. Auth.: OL 2013, ch. 762

Stats. Implemented: OL 2013, ch. 762

Hist.: OBDD 4-2014, f. & cert. ef. 4-1-14

123-015-0400

Administration

The department is responsible for disbursement of funds to entities per legislative designation consistent with OL 2013, ch. 762 and that funds are utilized for the purposes intended by the Legislature. The department will carry out those responsibilities with performance-based contracts that tie timed payments to successful completion of contractual tasks and an agreed-upon timeline.

Stat. Auth.: OL 2013, ch. 762

Stats. Implemented: OL 2013, ch. 762

Hist.: OBDD 4-2014, f. & cert. ef. 4-1-14

123-015-0500

Reporting

Grantees are required to report to the department on a quarterly basis on progress made in meeting all obligations set forth in the performance based contracts and agreements.

Stat. Auth.: OL 2013, ch. 762

Stats. Implemented: OL 2013, ch. 762

Hist.: OBDD 4-2014, f. & cert. ef. 4-1-14


Rule Caption: This new division of rules relates to the Beginning and Expanding Farmer Loan Program.

Adm. Order No.: OBDD 5-2014(Temp)

Filed with Sec. of State: 4-1-2014

Certified to be Effective: 4-1-14 thru 9-27-14

Notice Publication Date:

Rules Adopted: 123-052-0010, 123-052-0020, 123-052-0030, 123-052-0040, 123-052-0050, 123-052-0060, 123-052-0070, 123-052-0080, 123-052-0090, 123-052-0100, 123-052-0110, 123-052-0120, 123-052-0130, 123-052-0140, 123-052-0150

Subject: In the 2013 regular legislative session HB 2700 was passed creating the Beginning and Expanding Farmer Loan Program, otherwise known as “Aggie Bonds”. This program lowers the interest cost on loans made by private parties to beginning farmers for the acquisition of agricultural land and improvements as well as depreciable agricultural property. These rules provide for the administration of program, requirements of the farmers, requirements for lenders and the bonds and fees.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-052-0010

Purpose

(1) The purpose of these rules is to assist Applicants in applying for the benefits available under the Beginning and Expanding Farmer Loan Program (aka “Aggie Bonds Program”) authorized by 2013 Oregon Laws, Chapter 742 and to describe the procedures to be used by the Oregon Business Development Department in administering that Program.

(2) The Program lowers the interest cost on loans made by private parties to Beginning Farmers for the acquisition of Agricultural Land and Agricultural Improvements and Depreciable Agricultural Property. This is accomplished by qualifying loans that Beginning Farmers arrange through Eligible Lenders so that the Eligible Lender may exclude interest from gross income under Section 147(c)(2) of the United States Internal Revenue Code and may exempt interest from Oregon personal income taxes.

(3) Section 147(c)(2) of the United States Internal Revenue Code, its regulations and 2013 Oregon Laws, Chapter 742 impose very substantial restrictions on the Program; these rules outline those restrictions to assist Applicants in determining whether they may qualify for the Program. These rules also describe a simplified Aggie Bond option that reduces the Applicant’s fees for participating in the Program.

(4) The Program does not provide any state or federal money to repay Beginning and Expanding Farmer loans or to guarantee these loans nor to repay any Aggie Bonds that are issued under the Program. Those loans and the related Aggie Bonds are secured only by the resources that eligible Beginning Farmers provide to lenders.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0020

Definitions

For the purposes of these rules, the following terms shall have the following meanings, unless the context clearly indicates otherwise:

(1) “Aggie Bonds” means conduit revenue bonds issued by the State of Oregon pursuant to 2013 Oregon Laws, Chapter 742 and these rules.

(2) “Agricultural Improvements” means any improvements, buildings, structures or fixtures suitable for use in farming that are located on Agricultural Land. “Agricultural Improvements” do not include personal residences.

(3) “Agricultural Land” means land located in the State of Oregon that is:

(a) Suitable for use in farming and that is or will be operated as a farm; and

(b)    That will be acquired by a Beginning Farmer.

(4) “Applicant” means any person who submits an Application for Aggie Bond financing.

(5) “Application” means an Application for Aggie Bonds that is submitted to the Department on a form provided by the Department.

(6) “Beginning Farmer” means an individual who meets the requirements of OAR 123-052-0040 and is therefore eligible to be a Borrower under the Program.

(7) “Bond Counsel” means the bond counsel firm(s) under contract with Oregon Business Development Department to represent the State of Oregon as issuer of Aggie Bonds.

(8) “Borrower” means a Beginning Farmer who has received Aggie Bond financing under the Program.

(9) “Code” means the Internal Revenue Code of 1986, as amended, and all rules, regulations, and notices and releases issued under it.

(10) “Department” means the Oregon Business Development Department, or its designee.

(11) “Depreciable Agricultural Property” means personal property suitable for use in farming for which an income tax deduction for depreciation is allowable in computing federal income tax under the Code, including but not limited to farm machinery and trucks but not including feeder livestock, seed, feed, fertilizer and other types of inventory or supplies.

(12) “Eligible Lender” means a lender who meets the requirements of OAR 123-052-0060.

(13) “Eligible Revenue” means the revenue or assets that are provided as security for a loan to a Beginning Farmer participating in the Program.

(14) “Federal Maximum” means the maximum amount of a loan that federal law allows to be financed under the Program. For calendar year 2014 the Federal Maximum is $509,600. This amount may be adjusted for inflation in future calendar years as provided for in Section 147(c)(2)(H) of the Code.

(15) “Financed Property” means property described in OAR 123-052-0050(1)(a) which is financed through the Program.

(16) “Lender Documents” means the loan documents between an Eligible Lender and a Beginning Farmer, including but not limited to any related security documents such as mortgages, deeds of trust and security agreements.

(17) “Permitted Costs” means any costs of property described in OAR 123-052- 0005(1)(a).

(18) “Program” means the Beginning and Expanding Farmer Loan Program authorized by 2013 Oregon Laws, Chapter 742 and described in these administrative rules.

(19) “Related Person” means a person other than the Borrower if (A) the relationship between the Borrower and that person would result in a disallowance of losses under section 267 or 707 (b) of the Code, or (B) the Borrower and that person are members of the same controlled group of corporations (as defined in section 1563 (a), except that “more than 50 percent” shall be substituted for “at least 80 percent” each place it appears therein). For example, a Related Person includes a grandparent, parent, sibling (whether whole or half-blood), child, grandchild, or spouse, as well as certain corporations and partnerships.

(20) “State” means the State of Oregon, any department, agency, or political subdivision of the State of Oregon, or any designee thereof.

(21) “Substantial Farmland” means any parcel of land unless the parcel is smaller than 30 percent of the median size of a farm in the county where the agricultural project is located. However, Substantial Farmland does not include farmland which was previously owned by the individual seeking to qualify as a Beginning Farmer if the farmland was disposed of while the individual was insolvent and Code section 108 applied to indebtedness with respect to that farmland.

(22) “Tax-exempt” means excludable from gross income under the United States Internal Revenue Code of 1986, as amended, and exempt from Oregon personal income taxation.

(23) “State Treasurer” means the Treasurer of the State of Oregon or the Treasurer’s designee.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0030

Application

(1) An Applicant must apply for qualification to the Program on a form provided by the Department.

(2) Each Application shall:

(a) Contain a representation that the Applicant is an individual who has reviewed the Program rules and determined that the Applicant qualifies as a Beginning Farmer as described in OAR 123-052-0040.

(b) Contain a description of the costs to be financed through the Program, together with a representation that those costs are Permitted Costs as described in OAR 123-052-0050.

(c) Contain a statement of whether the Applicant desires the simplified Aggie Bond option described in OAR 123-052-0090.

(d) Be accompanied by a commitment, letter of interest or similar document, signed by the proposed lender that:

(A) Outlines the terms of the proposed loan;

(B) Expresses the lender’s interest in making that loan through the Program;

(C) States that the lender is either:

(i) An insured institution as described in OAR 123-052-0060(1); or

(ii) A lender who qualifies under OAR 123-052-0060

(e) Be accompanied by a signed preliminary tax questionnaire, on a form provided by the Department;

(f) Be accompanied by an application fee of $250. This fee is not refundable; and

(g) Contain any other information or documents specified in the Application form provided by the Department.

(3) The Department shall review each completed Application and notify the Applicant within five business days indicating whether the Applicant, the proposed project and the proposed lender appear eligible for the Program.

(4) If the Department determines that the Applicant, the proposed project and the proposed lender appear eligible for the Program, the Department shall sign a reimbursement declaration that complies with the requirements of Section 1.150-2 of the Code. Execution of the reimbursement declaration by the Department permits the Borrower to use the Program to finance certain expenditures made no earlier than sixty days before such reimbursement declaration is signed, but does not assure the Applicant that any Aggie Bond will be issued. The Department shall notify the Applicant promptly upon execution of the reimbursement declaration.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0040

Requirements for Beginning Farmers

(1) As required by federal law, a Beginning Farmer must:

(a) Be a “first-time farmer” within the meaning of Section 147(c)(2) of the Code. That section of the Code generally provides that a first-time farmer is an individual who has not at any time had any direct or indirect ownership interest in Substantial Farmland in the operation of which the individual has materially participated. However, in certain cases land that was disposed of while the individual was insolvent may be disregarded for this purpose. Dispositions of land while the individual was insolvent should be listed in the Application for Program financing.

(b) Be the principal user of the Financed Property.

(c) Materially and substantially participate in the operation of the farm of which the Financed Property is a part.

(d) Not have received Tax-exempt financing under Section 147(c)(2) of the Code in an aggregate amount that, when added to the amount financed through the Program, exceeds the Federal Maximum.

(2) A Beginning Farmer must be a resident of the State of Oregon.

(3) Any property owned by an individual’s spouse or minor children will be treated as owned by the individual. Any material participation in the operation of a farm by an individual’s spouse or minor children will be treated as operation of that farm by the individual. Any receipt of Tax-exempt financing by an individual’s spouse or minor children will be treated as receipt by the individual.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0050

Requirements for Property Financed through the Program

(1) Federal law requires that:

(a) Property financed through the Program consist only of:

(A) Agricultural Land as defined in OAR 123-052-0020(3)

(B) Agricultural Improvements as defined in OAR 123-052-0020(2)

(C) New Depreciable Agricultural Property, as defined in OAR 123-052-0020(11), that is used for farming on Agricultural Land, and

(D) No more than $62,500 of used Depreciable Agricultural Property, as defined in OAR 123-052-0020(11), that is used for farming on Agricultural Land, including for purposes of compliance with the $62,500 limit, financing received by an individual’s spouse or minor children. The Applicant must provide the Department with an appraisal or other method of determining the value of any used Depreciable Agricultural Property that will be financed through the Program. The appraisal or other method of determining the value of any used Depreciable Agricultural Property must be satisfactory to the Department.

(b) No more than two percent of the borrowed funds are used to pay costs related to obtaining the loan or participating in the Program.

(c) Except as provided in 123-052-0050(1)(d), below, the Borrower cannot use Aggie Bond proceeds to acquire property from a Related Person, within the meaning of OAR 123-052-0020(19).

(d) Property may be acquired from a Related Person only if:

(A) The acquisition price is the fair market value of the property, as shown in an independent, professional appraisal that is performed to qualify the property for financing with the Program and is acceptable to the Department; and

(B) The Related Person will not have a financial interest in the farming operation in which the Financed Property is used.

(2) The Financed Property is located, or will be used, in the State of Oregon.

(3) The Financed Property will only be used for farming by the Beginning Farmer or by the Beginning Farmer and the Beginning Farmer’s family.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0060

Requirements for Lenders

(1) A lender must either be:

(a) An insured institution, as defined by ORS 706.008, that is authorized to do business in Oregon and that regularly makes loans to persons engaging in farming or similar operations;

(b) An “Accredited Investor” (AI) as defined under Section 3(a)(2) of the Securities Act of 1933;

(c) A “Qualified Institutional Buyer” (QIB) as defined under Rule 144A of the Securities Act of 1933; or

(d) A “Sophisticated Investor” (SI) as the term is defined in Rule 501 Regulation D under the Securities Act and further described in 17 CFR 230.506(b)(2)(ii) as one who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

(2) If a lender is an AI, QIB or SI, they must agree in writing that the securities are being acquired for investment and are intended to be held for their own account and not with a view to, or for resale in connection with, the distribution or transfer of the bonds.

(3) Under no circumstances can AI, QIB or SI lenders be substantial users of the Financed Property nor related to a substantial user of that property. For this purpose “related” means a Related Person within the meaning of OAR 123-052-0020(19) but shall also include a partnership and any of its partners (and their spouses and minor children), and an S corporation and each of its shareholders (and their spouses and minor children).

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0070

Additional Requirements for Aggie Bonds

(1) The expenditures financed under the Program cannot exceed the Federal Maximum, reduced by the total amount of Tax-exempt financing under Section 147(c)(2) of the Code that the Borrower, the Borrower’s spouse or minor children have received.

(2) The Department must obtain an allocation of private activity bond volume cap for each Aggie Bond from the Department’s legislative allocation or the private activity bond committee. If an adequate allocation is not available for any reason, the Aggie Bond will not be issued until such allocation is made to the Program.

(3) The Department must hold a “TEFRA hearing” and the State Treasurer must approve the issuance of each Aggie Bond.

(4) The Loan Documents must provide that loan proceeds may only be spent on costs of property described in OAR 123-052-0050.

(5) The Lender Documents must not secure the loan with any stock, other equity securities, any debt securities or any other “investment property” (within the meaning of Treasury Regulation section 1.148 1(b), or require that the Borrower maintain continuing balances of specified amounts in accounts in financial institutions.

(6) To obtain the approving opinion of the Program’s Bond Counsel:

(a) The Borrower must complete a tax and arbitrage certificate, in form and substance satisfactory to the Department and its bond counsel, certifying the accuracy of facts that are necessary for Program Bond Counsel to issue its approving opinion.

(b) The lender must certify that it has not and does not intend to reoffer the Aggie Bond.

(c) The State, the Borrower and the lender must execute any other documents required by Program Bond Counsel in order to deliver its approving tax and legal opinions.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0080

Procedure after Preliminary Eligibility Determination

(1) If the Department notifies the Applicant pursuant to OAR 123-052-0030(3) that the Applicant, the proposed project and the proposed lender appear eligible for the Program, the Borrower may file a request for a final eligibility determination with the Department. This request shall be accompanied by a nonrefundable processing fee of 1.5% of the total Aggie Bonds to be issued for the project, with a minimum of $2,000. The request for final eligibility determination shall be filed on a form provided by the Department, and shall contain:

(a) A detailed description of the costs to be financed;

(b) A statement, signed by the Borrower and in substantially the form provided by the Department:

(A) That the Borrower is a Beginning Farmer who meets the requirements of OAR 123-052-0050, that the Aggie Bond proceeds will be spent only on costs described in OAR 123-052-0050, and that the requested loan complies with OAR 123-052-0080; and

(B) Whether the Borrower is electing the simplified Aggie Bond option under OAR 123-052-0090.

(c) A statement, signed by the lender and in substantially the form provided by the Department:

(A) Attaching drafts of the Lender Documents, in substantially final form;

(2) Describing the principal amount of the requested Aggie Bonds, the interest rate and other material loan terms, including but not limited to all fees and points being charged by the lender (if not stated in the Lender Documents).

(3) That the lender is eligible to purchase Aggie Bonds under OAR 123-052-0070, and providing facts supporting this statement.

(4) That the lender has completed its credit review and is prepared to make the loan under the Lenders Documents provided to the Department, and that no significant contingencies remain.

(5) A signed, completed final tax questionnaire on a form provided by the Department.

(6) Any other information specified in the form of request for final eligibility determination provided by the Department.

(7) The Department review the request for final eligibility determination when the completed request has been filed with the Department and make a final eligibility determination. The final eligibility determination may be favorable or unfavorable.

(a) The Department shall notify the Applicant of a favorable final eligibility determination no later than [five] business days after Program Bond Counsel notifies the Department that it expects to be able to issue an approving opinion. The notice of a favorable final eligibility determination shall state that that financing described in the Application and request for final eligibility determination is eligible for Aggie Bond financing, and that the Applicant is authorized to proceed to closing, subject to any conditions imposed by the Department in the final eligibility determination.

(b) The Department shall notify the Applicant of a unfavorable final eligibility determination no later than [five] business days after the first to occur of the following: the Department determines that the financing does not qualify under Oregon law or these rules for Aggie Bond financing, or Program Bond Counsel notifies the Department that it does not expect to be able to issue an approving opinion. The notice of an unfavorable final eligibility determination shall state that that financing described in the Application and request for final eligibility determination is not eligible for Aggie Bond financing, and shall state that the

Applicant is entitled to appeal that determination to the Finance Committee of the Oregon Business Development Commission by filing a notice of appeal with the Department no later than [ten] business days after the Department notifies the Applicant of the unfavorable final eligibility determination. Unless it is appealed, an unfavorable final eligibility determination shall become final on the [eleventh] day after the Department notifies the Applicant of that determination. Any decision by the Finance Committee of the Oregon Business Development Commission on an appeal is final when it is made.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0090

Simplified Aggie Bond Option

(1) The Code has many complex requirements for Tax-exempt loans. The cost to the Borrower of participating in the Program may be reduced if the facts associated with the Applicant’s financing do not raise complex tax issues.

(2) An Applicant may elect the simplified Aggie Bond option if:

(a) All Depreciable Agricultural Property financed under the Program is new property that has a cost of no more than [25%] of the amount financed, and that has a useful life of at least [ten] years.

(3) The Borrower is acquiring all the Financed Property from people or entities that are not Related Persons as defined in OAR 123-052-0020(19).

(4) The lender is an insured institution described in OAR 123-052-0060.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0100

Bond Counsel Opinion

(1) The state requires the Applicant and its lender obtain a traditional approving opinion from the Program’s Bond Counsel concluding that the Aggie Bond issued for the Applicant is a valid and binding obligation of the State, and that interest on the Aggie Bond is exempt from Federal and personal State taxation.

(2) If the Department determines that the financing described in the Application and request for final eligibility determination, filed by the Applicant pursuant to OAR 123-052-0060, is eligible for participation in the Program, the Department shall forward the request for final eligibility determination to the Program’s Bond Counsel. Program Bond Counsel shall:

(a) Conduct tax due diligence and provide forms of tax and arbitrage certificates, and other necessary documents, for the Borrower and lender to execute;

(b) Draft the bond documents and send them to the Borrower and lender for review;

(c) Determine whether Bond Counsel will be able to issue approving opinions on the proposed Aggie Bonds, and notify the Department of that determination.

(3) If Bond Counsel determines it will be able to issue approving opinions on a proposed Aggie Bond, the Department will forward the Aggie Bond documents to the Treasurer with a request that the Treasurer approve the issuance of the Aggie Bonds. The Treasurer, an independent, elected official of the State of Oregon, has no legal obligation to approve any Aggie Bond issue. If the Treasurer approves issuance of an Aggie Bond, the Department will coordinate the closing with the Borrower, the lender, the State Treasurer, and Bond Counsel.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0110

Fees and Costs

(1) The Applicant shall pay the Department the nonrefundable $250 application fee. The Applicant shall pay the Department the nonrefundable processing fee of 1.5% of the total Aggie Bonds to be issued for the project, with a minimum of $2,000.

(2) At closing, the Borrower shall pay the Department or appropriate party the following costs or fees:

(a) Out of pocket costs or fees of the State, including but not limited to any indirect costs charged to the Department or Treasurer by Oregon Department of Justice for complex transactions.

(b) Treasury costs or fees related to the review, approval and processing of each Aggie Bond issuance request and issuance.

(c) Any State Private Activity Bond Committee costs or fees.

(d) Bond Counsel costs or fees

(3) Applicants or beneficiaries of Aggie Bond financing shall pay the Department or appropriate party any costs or fees related to issuance, refunding, modifications, or restructuring of Aggie Bonds including but not limited to Bond Counsel’s legal fees and direct expenses.

(4) If the Department issues an unfavorable final eligibility determination, or the Department’s Bond Counsel determines it is not able to issue an approving opinion, or the Treasurer does not approve issuance of Aggie Bonds, or the requested Aggie Bonds are not issued for any other reason, the Applicant’s Application will terminate and the Borrower shall not be entitled to the return of any fees it has paid, or entitled to recover any costs it may have incurred in the preparation and submission of the Application or any damages it may have suffered as a result of the failure of such Application.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0120

Security for Aggie Bonds

(1) Each Aggie Bond will be a special, limited obligation of the State of Oregon that is payable solely from the Eligible Revenue paid to the lender as provided in the Lender Documents

(2) As required by 2013 Oregon Laws, Chapter 742, the Aggie Bonds are not:

(a) Secured by, payable from or chargeable to moneys other than the Eligible Revenue that is committed to pay the Aggie Bonds;

(b) A liability of the State of Oregon. No lender or other owner of an Aggie Bond may: compel an exercise of the taxing power of the state to pay any Aggie Bonds or the interest on any Aggie Bonds or enforce payment of any Aggie Bonds against any property of the state except the Eligible Revenue that is committed to pay the Aggie Bond.

(c) A charge lien or encumbrance, legal or equitable, upon any property of the state, except the Eligible Revenue that is committed to pay an Aggie Bond.

(3) No Aggie Bond shall be a general obligation of the Department, the state of Oregon, or any department, agency, or political subdivision of the State of Oregon.

(4) The full faith and credit of the Department or the State of Oregon or any department, agency, or political subdivision of the State of Oregon shall not be pledged for the payment of any Aggie Bond.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0130

Waiver

The Department may, in its discretion, waive any of the requirements of these administrative rules to the extent such requirements are not otherwise imposed by law.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0140

Authority to Manage the Program

The Program shall be managed by the Department, and is not a Program of the Business Development Commission.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14

123-052-0150

Confidential Records

(1) Upon written request and within a reasonable time, the Director or his designee shall provide program records, for inspection in accordance with ORS Chapter 192.

(2) The person requesting records will be charged for preparing and mailing such records. Costs may include but not be limited to costs incurred in locating records, separating exempt and nonexempt records, having a custodian present during the inspection, preparing lists of data, making photocopies and telefaxing materials. Fees to be collected shall be set forth in the Department’s schedule of fees and may be amended from time to time as the Department may determine.

(3) Except as otherwise provided in ORS 192.410-192.595, records exempt from disclosure include but are not limited to:

(a) Reports and analyses of reports which bear on the Applicant’s character, finances, management ability and reliability, and which were obtained in confidence from persons or firms not required by law to submit them and the Department has obliged itself in good faith not to disclose the information;

(b) Financial statements, tax returns, business records, employment history and other personal data submitted by or for Applicants, or analysis of such data;

(c) Intra-departmental advisory memoranda preliminary to a decision;

(d) Formulas, plans, designs and related information that constitute trade secrets under ORS 192;

(e) Personal financial statement;

(f) Financial statements of Applicants;

(g) Customer lists;

(h) Information of an Applicant pertaining to litigation to which the Applicant is a party if the complaint has been filed, or if the complaint has not been filed, if the Applicant shows that such litigation is reasonably likely to occur. This exemption does not apply to conclude litigation and nothing in this section shall limit any right or opportunity granted by law to a party involved in litigation;

(i) Production, sales or cost data; and

(j) Marketing strategy information that relates to an Applicant’s plan to address specific markets and Applicant’s strategy regarding specific competitors.

Stat. Auth.: ORS 285A.420 - 285A.435, ch. 742 OL 2013

Stats. Implemented: ORS 285A.420.420 - 285A.435, ch. 742 OL 2013

Hist.: OBDD 5-2014(Temp), f. & cert. ef. 4-1-14 thru 9-27-14


Rule Caption: The amendments in these rules relate to the Oregon Low Income Community Jobs Initiative.

Adm. Order No.: OBDD 6-2014

Filed with Sec. of State: 4-1-2014

Certified to be Effective: 4-1-14

Notice Publication Date: 3-1-2014

Rules Adopted: 123-630-0110

Rules Amended: 123-630-0000, 123-630-0010, 123-630-0020, 123-630-0030, 123-630-0040, 123-630-0050, 123-630-0060, 123-630-0070, 123-630-0080, 123-630-0090, 123-630-0100

Rules Repealed: 123-630-0000(T), 123-630-0010(T), 123-630-0020(T), 123-630-0030(T), 123-630-0040(T), 123-630-0050(T), 123-630-0060(T), 123-630-0070(T), 123-630-0080(T), 123-630-0090(T), 123-630-0100(T)

Subject: In 2013 the legislature passed HB 2763 which made a number of modifications to the Oregon Low Income Community Jobs Initiative. Changes were made to the definition of Quality Equity Investment. Other changes were made to the rules for application, reporting requirements and certification.

   Temporary rules were filed in October of 2013 and are now being made permanent.

Rules Coordinator: Mindee Sublette—(503) 986-0036

123-630-0000

Purpose

This division of administrative rules specifies procedures and criteria necessary to administer processes under the Oregon Low Income Community Jobs Initiative for the certification of a qualified equity investment in order to receive a credit allowance for taxes otherwise due under ORS Chapter 316, 317 or 318.

Stat. Auth.: ORS 285C.650-285C.656, 315.526 – 315.536

Stats. Implemented: ORS 285C.650-285C.656, 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12, OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0010

Definitions

For the purposes of this division of administrative rules, additional definitions are found in Procedural Rules, OAR chapter 123-001. As used in OAR chapter 123 division 630 the following terms have the meanings set forth below and in ORS 285C.650-285C.656 and ORS 315.526-315.536, unless the context clearly indicates otherwise.

(1) “Applicable percentage” means zero percent for each of the first two credit allowance dates, seven percent for the third credit allowance date and eight percent for the next four credit allowance dates.

(2) “Credit allowance date” means, with respect to any qualified equity investment:

(a) The date on which the investment is initially made; and

(b) Each of the six yearly anniversary dates after that initial date.

(3) “Long-term debt security” means any debt instrument issued by a qualified community development entity, at par value or at a premium, with an original maturity date of at least seven years from the date of its issuance, with no acceleration of repayment, amortization or prepayment features prior to its original maturity date.

(4) “Purchase price” means the amount of cash paid to a qualified community development entity for a qualified equity investment.

(5) “Qualified active low-income community business” has the meaning given that term in section 45D of the Internal Revenue Code and the rules and regulations adopted pursuant thereto. “Qualified active low-income community business” does not include, a business that derives or projects to derive 15 percent or more of its annual revenue from the rental or sale of real estate, unless the business is controlled by, or under common control with, another business that:

(a) Does not derive or project to derive 15 percent or more of its annual gross revenues from the rental or sale of real estate; and

(b) Is the primary tenant of real estate leased from the controlled business.

(6) “Qualified community development entity” has the meaning given that term in section 45D of the Internal Revenue Code, provided that the entity has entered into, or is controlled by an entity that has entered into, an allocation agreement with the Community Development Financial Institutions Fund of the United States Department of the Treasury with respect to credits authorized by section 45D of the Internal Revenue Code, and the State of Oregon is included within the service area set forth in the allocation agreement.

(7) “Qualified equity investment” means any equity investment in, or long-term debt security issued by, a qualified community development entity, that:

(a) Is acquired at its original issuance solely in exchange for cash after July 1, 2012, unless it was a qualified equity investment in the hands of a prior holder; and

(b) Within 12 months of its issuance substantially all of its cash purchase price is used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in this state and thereafter over the term of the qualified equity investment no less than 85 percent of its cash purchase price is used by the issuer to make qualified low-income community investments in qualified active low-income community businesses located in this state. All reinvestments must be made in this state.

(8) “Qualified low-income community investment” means any capital or equity investment in, or loan to, any qualified active low-income community business made after July 1, 2012.

Stat. Auth.: ORS 315.526 – 315.536

Stats. Implemented: ORS 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0020

Credit Allowance

(1) A person or entity that makes a qualified equity investment shall, at the time of investment, earn a vested credit against the taxes otherwise due under ORS chapter 316, 317 or 318.

(2) The total amount of the tax credit available to a taxpayer under this section shall equal 39 percent of the purchase price of the qualified equity investment. The applicable percentage is zero percent for years 1 and 2, seven percent for year 3 and eight percent for years 4, 5, 6 and 7. A tax credit allowed under this section may not be sold or transferred, with the exception that tax credits that a partnership, limited liability company, S corporation or other pass-through entity is entitled to claim may be allocated to the partners, members or shareholders of the entity for their direct use in accordance with the provisions of any agreement among the partners, members or shareholders.

(3) The holder of a qualified equity investment or any partner, member or shareholder of such holder pursuant to subparagraph 2 above on a particular credit allowance date of the qualified equity investment may claim a portion of the tax credit against its tax liability for the tax year that includes the credit allowance date equal to the applicable percentage for that credit allowance date multiplied by the purchase price of the qualified equity investment.

(4) The credit allowed under this section may not exceed the tax liability of the taxpayer claiming the credit for the tax year in which the credit is claimed.

(5) For qualified low-income community investments made, any tax credit otherwise allowable under this section that is not used by the taxpayer in a particular tax year may be carried forward and offset against the taxpayer’s tax liability in any succeeding tax year. Any credit remaining in the next succeeding tax year may be carried forward and used in the second succeeding tax year. Any credit remaining unused in the second succeeding tax year may be carried forward and used in the third succeeding tax year. Any credit remaining unused in the third succeeding tax year may be carried forward and used in the fourth succeeding tax year. Any credit remaining unused in the fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, but may not be used in any tax year thereafter. For qualified low-income community investments made prior to January 1, 2014, any tax credit otherwise allowed under this section that is not used by the taxpayer in a particular tax year may be carried forward and offset against the taxpayer’s tax liability in any succeeding tax year.

Stat. Auth.: ORS 315.526 – 315.536

Stats. Implemented: ORS 315.526 – 315.536, ORS 316, 317 or 318

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0030

Eligibility

(1) The following conditions and/or criteria must exist for a taxpayer to be eligible for the credit:

(a) A qualified community development entity that issues a debt instrument may not make cash interest payments on the debt instrument during the period commencing with its issuance and ending on its final credit allowance date in excess of the sum of the cash interest payments and the cumulative operating income, as defined in the regulations promulgated under section 45D of the Internal Revenue Code, of the qualified community development entity for the same period. This limitation shall only apply to long-term debt securities issued by a qualified community development entity that are designated as qualified equity investments and shall not apply to other debt of the qualified community development entity. Neither this paragraph nor the definition of “long-term debt security” provided in ORS 315.529 in any way limits the holder’s ability to accelerate payments on the debt instrument in situations where the qualified community development entity has defaulted on covenants designed to ensure compliance with this section or section 45D of the Internal Revenue Code.

(b) A business is considered a qualified active low-income community business for the duration of a qualified community development entity’s investment in or loan to the business if it is reasonable to expect that at the time of the qualified community development entity’s investment in or loan to a qualified active low-income community business, the business will continue throughout the duration of the investment in or loan to the business.

(c) A qualified equity investment must be designated a qualified equity investment by the qualified community development entity and be certified by the department.

(d) Prior to January 1, 2014, the maximum amount of qualified low-income community investments made in a qualified active low-income community business, together with all of its affiliates, that may count towards the requirement that a qualified community development entity invest substantially all of the qualified equity investment required by OAR 123-630-0010(7)(b) in qualified active low-income community businesses in this state is $4 million, whether made by one or several qualified community development entities.

(e) The maximum amount of qualified low-income community investments made in a qualified active low-income community business, together with all of its affiliates, that may count towards the requirement that a qualified community development entity invest at least the percentage of the qualified equity investment required by OAR 123-630-0010(7)(b) in qualified active low-income community businesses in this state is $8 million, whether made by one or several qualified community development entities. New or revised projects summaries submitted by the community development entity on or after January 1, 2014, to demonstrate increased qualified low-income community investment must demonstrate that the new or expanded project is new and distinct from the original project to the extent of the increased qualified low-income community investment made on or after January 1, 2014. Project summaries received prior to January 1, 2014 will be considered under 123-630-0030(1)(d).

(f) A qualified equity investment must be made before July 1, 2016. Nothing in this paragraph precludes an entity that makes a qualified equity investment prior to July 1, 2016, from claiming a tax credit relating to that qualified equity investment for each applicable credit allowance date.

(g) No more than 40% of the total project costs that are paid for by the qualified low-income community investment may be for working capital, financing and other fees and other soft costs.

(2) A taxpayer claiming a credit may not claim any other credit under ORS 315 or 285C during the same tax year based on activities related to the same qualified active low-income community business.

Stat. Auth.: ORS 285C.650-285C.656, 315.526 – 315.536

Stats. Implemented: ORS 285C.650-285C.656, 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0040

Ineligible Activities

Not all projects or businesses will qualify for the Oregon Low Income Community Jobs Initiative. Example businesses that are ineligible include but are not limited to:

(1) Residential rental;

(2) Owner occupied housing;

(3) Farming operations;

(4) Private or commercial golf courses;

(5) Country clubs;

(6) Massage parlors;

(7) Hot tub facilities;

(8) Suntan facilities;

(9) Racetracks or other facilities used for gambling; and

(10) Any store of which the principal business is the sale of alcoholic beverages for consumption off premises.

Stat. Auth.: ORS 285C.650-285C.656, 315.526 – 315.536

Stats. Implemented: ORS 285C.650-285C.656, 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0050

Application and Fees

(1) An applicant seeking to have an equity investment or long-term debt security certified as a qualified equity investment and eligible for a tax credit under ORS 285C.650 and OAR 123-630-0080 must submit an application to the department on a form that the department provides. A complete application must include all of the following:

(a) The entity’s name, address, tax identification number and evidence of certification as a qualified community development entity.

(b) A copy of an allocation agreement executed by the entity, or its controlling entity, and the Community Development Financial Institutions Fund that includes the State of Oregon in its service area.

(c) A certificate executed by an executive officer of the entity attesting that the allocation agreement remains in effect and has not been revoked or canceled by the Community Development Financial Institutions Fund.

(d) A description of the proposed purchase price, structure and purchaser of the equity investment or long-term debt security.

(e) The name and tax identification number of any person eligible to claim a tax credit, under ORS 285C.650 – 285C.656, and 315.526 – 315.536, allowed as a result of the certification of the qualified equity investment.

(f) Information regarding the proposed use of proceeds from the issuance of the qualified equity investment on a form provided by the department. If the information described in the previous sentence is not submitted with the application, the applicant shall, at least 20 days prior to the date of the applicant proposes to make a qualified low-income community investment, submit to the department for review and approval of the qualified low-income community investment, an updated qualified low-income community investment certification on a form provided by the department. The information will include but is not limited to the following for each proposed qualified low-income community investment:

(A) Location;

(B) Sources and uses of funds;

(C) Impacts to communities;

(D) Revenues;

(E) Number of jobs created and/or retained; and

(F) Economic impacts

(g) A nonrefundable application fee of $20,000. This fee shall be paid to the department and shall be required for each application submitted.

(2) In addition to what is required by the application or in this division of administrative rules, the applicant will submit any information requested by the department for purposes of evaluating the application.

(3) A qualified community development entity submitting an application for certification of an additional equity investment or long-term debt security as a qualified equity investment and eligible for a tax credit under ORS 315.533, must demonstrate to the satisfaction of the department that all previous equity investments and long-term debt securities certified as qualified equity investments have been fully committed and used in compliance with the requirements of the Oregon Low Income Community Jobs Initiative.

(4) A qualified community development entity that is certified under ORS 285C.650 and OAR 123-630-0080 shall pay an annual evaluation fee of $1,000 to the department with the submission of each report described in 123-630-0070.

(5) Applications will be processed on a first come, first serve basis.

Stat. Auth.: ORS 285C.650 , 315.526 – 315.536

Stats. Implemented: ORS 285C.650 & 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0060

Preference

The department may give preference to applications for projects in traded sectors as identified by the Commission in the Strategic Plan and that demonstrates overall community benefit and have one or more of the following characteristics:

(1) Produce goods that directly reduce emissions of greenhouse gases or are designed as environmentally sensitive replacements for products in current use;

(2) Have a primary purpose of improving the environment or reducing emissions of greenhouse gases;

(3) Are operated by businesses with 100 or fewer employees;

(4) Are located in rural or distressed areas of the state;

(5) Employ displaced workers in the area;

(6) Assist in the economic diversification of the area;

(7) Contain a significant amount of owner equity capital. At least ten percent of the project costs for established companies and 30 percent of project costs for start-ups should come from equity or subordinated loans from the owners;

(8) Encourage the flow of capital from outside the local area; or

(9) Do not cause adverse competitive disadvantages to existing businesses.

Stat. Auth.: ORS 285C.650 , 315.526 – 315.536

Stats. Implemented: ORS 285C.650 & 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0070

Reporting Requirements

(1) The qualified community development entity will submit a report by the first anniversary of the initial credit allowance date that provides proof that substantially all of the cash purchase price of its qualified equity investment was used to make qualified low-income community investments in qualified active low-income community businesses located in this state.

(2) Thereafter, the qualified community development entity will submit an annual report within 45 days of the beginning of the state’s fiscal year during the compliance period on a form provided by the department. No annual report shall be due prior to the first anniversary of the initial credit allowance date. The form shall be remitted to the department both in electronic and hard copy formats. The information provided in an annual report will be submitted by the department to the Oregon Department of Administrative Services no later than September 30 following submission of the report and will be posted on the Oregon transparency website no later than December 31 of the same year. The report will include but is not limited to the following:

(a) Number of employment positions created and retained as a result of qualified low-income community investments;

(b) Annual salary of each position described in subparagraph (a) of this paragraph; and

(c) Number of positions described in subparagraph (a) of this paragraph that provide health benefits as described in ORS 743.730.

(d) Proof that substantially all of the cash purchase price of the qualified equity investment continues to be used to make qualified low-income community investments in qualified active low-income community businesses located in this state.

(e) The costs and expenses of making the qualified low-income community investment, including but not limited to fees paid for professional services, including legal and accounting services, related to the formation of operating entities; and

(f) Information with respect to the qualified equity investments made for the purpose of making qualified low-income community investments in Oregon that would be reported as part of the institution level report and transaction level reports submitted by qualified community development entities pursuant to section 45D of the Internal Revenue Code.

(3) The qualified community development entity will submit a report, in a format acceptable to the department, within 5 business days of each qualified low-income community investment made in a qualified low-income community business located in this state. The report will include, but is not limited to, the amount of the investment and the date on which the investment was made to the qualified active low-income community business and will be accompanied by documentation satisfactory to the department regarding the investment.

(4) The qualified community development entity will submit a quarterly report that provides proof that each qualified low-income community investment continues to be invested in qualified active low-income community businesses located in this state. The report will include, but is not limited to, the amount of the original investment, the date on which the original investment was made to the qualified active low-income community business, the current balance of the investment in the qualified active low-income community business, and any reinvestment of capital returned to or recovered from the original investment, exclusive of any profits realized (together with the same type of information regarding said investment as was reported regarding the original investment).

Stat. Auth.: ORS 285C.650 , 315.526 – 315.536

Stats. Implemented: ORS 285C.650 & 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0080

Certification

(1) Within 15 days after having received a complete application, the department will grant or deny the application in full or in part and notify the applicant of the decision.

(2) If the application is deemed complete, the department will certify the proposed equity investment or long-term debt security as a qualified equity investment and eligible for a tax credit under ORS 285C.650 and this rule, and subject to the limitations stated in applicable statues and these rules. The department shall provide written notice of the certification to the qualified community development entity. The notice shall include the names of those taxpayers who are eligible to utilize the credits and their respective credit amounts. If the names of the persons or entities that are eligible to utilize the credits change due to a transfer of a qualified equity investment or a change in an allocation pursuant to OAR 123-630-0020(2), the qualified community development entity shall notify the department of the change.

(3)(a) Except as otherwise provided in paragraph (b) below, within 60 days after receiving notice of certification, the qualified community development entity shall issue the qualified equity investment and receive cash in the amount of the certified purchase price. The qualified community development entity must provide the department with evidence of the receipt of the cash investment within 10 business days after receipt. If the qualified community development entity does not receive the cash investment and issue the qualified equity investment on or before the 60th day following receipt of the certification notice, the certification shall lapse and the entity may not issue the qualified equity investment without reapplying to the department for certification. A certification that lapses reverts to the department and may be reissued only in accordance with the application process outlined in this section.

(b) For a qualified equity investment described in ORS 285C.653(2), a qualified community development entity shall issue the qualified equity investment during the period beginning July 1, 2012, and ending 60 days after receiving notice of certification, If the qualified equity investment is issued prior to the submission of an application for certification under the applicable statutes and rules, the qualified community development entity must provide the department with evidence of the qualified equity investment and of receipt of the cash investment at the time of application for certification.

(4) The department shall certify qualified equity investments in the order applications are received by the department. Applications received on the same day shall be deemed to have been received simultaneously. For applications received on the same day and deemed complete, the department shall certify, consistent with remaining tax credit capacity, qualified equity investments in proportionate percentages based upon the ratio of the amount of qualified equity investment requested in an application to the total amount of qualified equity investments requested in all applications received on the same day. Applications for certification under ORS 285C.653(2) and OAR 123-630-0090(2) submitted without complete project summaries commensurate with the amount of certification applied for, may be reduced at the sole discretion of the department. Applications must demonstrate the ability to identify projects described in ORS 285C.653(2) and OAR 123-630-0090(2), and failure to identify projects described in ORS 285C.653(2) and OAR 123-630-0090(2) may additionally result in a reduction of the certification. If a pending request cannot be fully certified because of the limitations in the applicable statutes and 123-630-0090, the department shall certify the portion that may be certified unless the qualified community development entity elects to withdraw its request rather than receive partial credit.

(5) If the department denies any part of the application, the notification to the applicant will include the grounds for denial. The applicant will have 15 days of receipt of the notification to provide additional information to mediate the denial. Within 15 days after the department receives any such additional information, the department will reconsider the application. If the department grants the application upon reconsideration, the approval will be effective as of the original date of submission. If the applicant fails to provide additional information within 15 days of receipt of the denial, the application remains denied.

Stat. Auth.: ORS 285C.650 , 315.526 – 315.536

Stats. Implemented: ORS 285C.650 & 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12: OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0090

Limitations for Certification

(1) Once the department has certified a cumulative amount of qualified equity investments that can result in the utilization of $16 million of tax credits in any tax year, the department may not certify any more qualified equity investments under ORS 285C.650 and OAR123-630-0080. This limitation shall be based on the scheduled utilization of tax credits without regard to the potential for taxpayers to carry forward tax credits to later tax years.

(2) The department will reserve $30 million of qualified equity investment authority for qualified low-income community investments in qualified active low-income community businesses that:

(a) Have a primary purpose of improving the environment or reducing emissions of greenhouse gases; or

(b) Produce goods that directly reduce emissions of greenhouse gases or are designed as environmentally sensitive replacements for products in current use.

(3) The department will reserve $130 million of qualified equity investment authority for all other qualified active low-income community investments (which may include the types of investments described in ORS 285C.653(s) and OAR 123-630-0090(2)).

(4) All applications will indicate the amount of qualified equity investment authority sought by the applicant under OAR 123-630-0090(2) and 123-630-0090(3). The maximum amount of qualified equity investment authority for which an applicant may apply under 123-630-0090(2) is $30 million and under 123-630-0090(3) is $170 million.

Stat. Auth.: ORS 285C.650 – 653, 315.526 – 315.536

Stats. Implemented: ORS 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0100

Recapture of Tax Credit

(1) The Department of Revenue may recapture any portion of a tax credit per ORS 285C.656 and 315.533.

(2) The Department of Revenue may recapture any portion of a tax credit if the qualified community development entity applies for and receives qualified equity investment authority under ORS 285C.653(2) and OAR 123-630-0090(2) and fails to invest at least 85 percent of the cash purchase price of the QEI in qualified active low-income community businesses that satisfy the requirements of ORS 285C.653(2) and OAR 123-630-0090(2) within 12 months of the issuance of the qualified equity investment and maintain such level of investment in qualified active low-income community businesses satisfying such requirements until the last credit allowance date for such qualified equity investment.

(3) The department shall pre-screen a qualified community development entity’s proposed investment in a qualified active low-income community business for purposes of determining if the business satisfies the requirements of ORS 285C.653(2) and OAR123-630-0090(2). The department shall, not later than 15 business days after the date of receipt of all relevant documentation, determine whether the qualified active low-income community business satisfies the requirements of ORS 285C.653(2) and OAR 123-630-0090(2) and notify the qualified community development entity in writing of the determination and an explanation of its determination. If the department fails to notify the qualified community development entity with respect to the proposed investment within the period specified in this paragraph, the business in which the qualified community development entity proposes to invest is considered to satisfy the requirements of ORS 285C.653(2) and OAR 123-630-0090(2).

Stat. Auth.: ORS 285C.656 & 315.526 – 315.536

Stats. Implemented: ORS 285C.656 & 315.526 – 315.536

Hist.: OBDD 9-2012, f. & cert. ef. 6-1-12; OBDD 9-2013(Temp), f. & cert. ef. 10-15-13 thru 4-11-14; OBDD 6-2014, f. & cert. ef. 4-1-14

123-630-0110

Confidential Records

(1) Upon written request and within a reasonable time, the Director or his designee shall provide program records, for inspection in accordance with ORS Chapter 192.

(2) The person requesting records will be charged for preparing and mailing such records. Costs may include but not be limited to costs incurred in locating records, separating exempt and nonexempt records, having a custodian present during the inspection, preparing lists of data, making photocopies and telefaxing materials. Fees to be collected shall be set forth in the Department’s schedule of fees and may be amended from time to time as the Department may determine.

(3) Except as otherwise provided in ORS 192.410-192.595, records exempt from disclosure include but are not limited to:

(a) Reports and analyses of reports which bear on the Applicant’s character, finances, management ability and reliability, and which were obtained in confidence from persons or firms not required by law to submit them and the Department has obliged itself in good faith not to disclose the information;

(b) Financial statements, tax returns, business records, employment history and other personal data submitted by or for Applicants, or analysis of such data;

(c) Intra-departmental advisory memoranda preliminary to a decision;

(d) Formulas, plans, designs and related information that constitute trade secrets under ORS 192;

(e) Personal financial statement;

(f) Financial statements of Applicants;

(g) Customer lists;

(h) Information of an Applicant pertaining to litigation to which the Applicant is a party if the complaint has been filed, or if the complaint has not been filed, if the Applicant shows that such litigation is reasonably likely to occur. This exemption does not apply to conclude litigation and nothing in this section shall limit any right or opportunity granted by law to a party involved in litigation;

(i) Production, sales or cost data; and

(j) Marketing strategy information that relates to an Applicant’s plan to address specific markets and Applicant’s strategy regarding specific competitors.

Stat. Auth.: ORS 285A.075, 192, 285C.656 & 315.526 – 315.536

Stats. Implemented: ORS 192, 285C.656 & 315.526 – 315.536

Hist.: OBDD 6-2014, f. & cert. ef. 4-1-14

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2013.

2.) Copyright Oregon Secretary of State: Terms and Conditions of Use

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722
Phone: (503) 986-1523 • Fax: (503) 986-1616 • oregon.sos@state.or.us

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