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The Oregon Administrative Rules contain OARs filed through March 15, 2014
 
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OREGON BUSINESS DEVELOPMENT DEPARTMENT

 

DIVISION 600

BUSINESS ENERGY TAX CREDITS FOR RENEWABLE ENERGY RESOURCE
EQUIPMENT MANUFACTURING BETC (Manufacturing BETC)

123-600-0100

Purpose and Scope

This division of administrative rules applies to all applicants for the Business Energy Tax Credit for Renewable Energy Resource Equipment Manufacturing (“Manufacturing BETC”) as provided under Oregon Revised Statutes 285C.540 through 285C.559, and 315.341, 356, Oregon Law 2011 Ch. 474 HB2523 and 2012 Ch. 45 HB4079. These rules apply to all applications pending as of the effective date of these rules.

(1) Amount of Tax Credit. Qualified Oregon facilities that manufacture renewable energy resource equipment may be eligible for a tax credit equal to 50% of maximum eligible cost. Costs are limited up to $2.5 million for a facility used to manufacture electric vehicles or component parts of electric vehicles and up to $40 million in the case of any other eligible facility.

(2) Application Review. Application for the Manufacturing BETC is subject to detailed technical and financial review of the project. The Applicant is also required to sign a performance contract with measures that include job creation requirements, job retention requirements and other economic or operational benchmarks as determined by the Department.

(3) Certification of Cost for Tax Credit. The Director shall issue a final certificate pursuant to ORS 285C.553 before the tax credit can be claimed. 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 285C.540 to 285C.559 and applicable rules and standards adopted under ORS 285C.540 to 285C.559. The Director may consider the status of a facility as a research, development or demonstration facility of new renewable resource generating and conservation technologies in the determination.

(4) Use of Tax Credit. The tax credit may be offset against Oregon income and corporation excise taxes owed pursuant to ORS 315.341. An Applicant qualifying for the tax credit may transfer the tax credit through the pass-through option in return for a discounted cash payment from a qualified pass-through partner.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0105

Definitions

The following definitions apply unless the context requires otherwise:

(1) “Applicant” means a person who applies for preliminary certification of a Manufacturing BETC facility under this section including individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies.

(2) “Cost” means the capital costs and expenses necessarily incurred in the erection, construction, installation and acquisition of a facility.

(3) “Completed application” means receipt of payments under OAR 123-600-0140 and all information required in the application form to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director, and all supplemental attachments, exhibits and so forth that the Applicant furnishes at the Department’s request under these rules for the Manufacturing BETC.

(4) “Completed Facility” means a manufacturing facility that is operating in accordance with requirements in the Preliminary Certificate and performance agreement between the Department and the Applicant for which all costs have been paid or committed by a binding contract or agreement.

(5) “Component parts of electric vehicles” means component parts that are for exclusive use in electric vehicles and may not be used in both electric and conventional vehicles. A component part of electric vehicles does not include batteries.

(6) “Director” means the Director of the Oregon Business Development Department or designees.

(7) “Department” means the Oregon Business Development Department, aka: Business Oregon.

(8) “Electric vehicles” means vehicles that are designed for use as Class I or Class II all-terrain vehicles, as those terms are defined in ORS 801.190 and 801.193, and that are used for agricultural, commercial, industrial or governmental purposes, or vehicles that are designed for use as modes of transportation on public roads and highways. The Director of the Oregon Business Development Department may further define “agricultural, commercial, industrial or governmental purposes” of electric vehicles.

(9) “Facility operator” means the person or people to whom the Applicant gives authority to manage a facility. Such person or people shall be the Applicant’s agent for all reasons related to the facility once its development begins.

(10) “Facility start” means the earliest date on or after the date the application for preliminary certification is received by the Department where a non-refundable deposit will be placed on the facility equipment or; a purchase order will be placed for the equipment or; a contract for the design of the facility will be executed or; a document that obligates the Applicant to proceed with a facility will be executed; or any other type of financial commitment towards the erection, construction, installation or acquisition of the facility.

(11) “Federal grant” means any grant received from the federal government in connection with a facility.

(12) “Final certification” means the review and approval of the application for final certification leading to issuance of a final certificate for a completed facility under ORS 285C.551.

(13) “Lease contract” means a lease-purchase contract in which the lessee owns the facility at the end of the lease and is eligible for the Manufacturing BETC, or a lease or lease-option contract in which the lessor owns the facility through the life of the contract and is eligible for the Manufacturing BETC.

(14) “Pass-through payment” means a minimum cash payment equivalent to the net present value of the Manufacturing BETC as determined under OAR 123-600-0135. This is also referred to as the “pass-through rate.”

(15) “Pass-through option” means the option that allows an Applicant a one time only transfer of all or a portion of the facility’s tax credit eligibility to certain persons or businesses in return for a cash payment.

(16) “Pass-through partner” means a personal income tax payer, individual, C corporation or S corporation that is transferred a tax credit certificate in return for a cash payment to an Applicant.

(17) “Preliminary certification” means the review and approval of the application for preliminary certification leading to issuance of a preliminary certificate for an eligible facility under ORS 285C.551.

(18) “Renewable energy resource” means energy derived from sources including but not limited to: 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.

(19) “Renewable energy resource equipment manufacturing facility” means any structure, building, installation, excavation, device, machinery or equipment, or an addition, reconstruction or improvement to land, to an existing structure, building, installation, excavation or device or to existing machinery or equipment, that is necessarily acquired, constructed or installed by a person in connection with the conduct of a trade or business and that is used primarily to manufacture:

(a) Component parts of electric vehicles.

(b) Electric vehicles.

(c) Equipment, machinery or other products designed to use a renewable energy resource and that meets the criteria established under ORS 285C.543 and these rules.

(d) Renewable energy storage devices. [2011 c.474 ¦5]

(20) “Renewable energy storage device” means a device that enables the storage of energy derived from renewable energy resources. A renewable energy storage device a facility does not need to be directly connected to a renewable energy resource, but a beneficial relationship shall be demonstrated between the energy output of the resource or resources and the charge and discharge capabilities of the facility. The storage device may be designed to store energy for transmission lines provided that the transmission lines serve, at least in part, renewable energy resources. A renewable energy storage device includes, but is not limited to, batteries or similar devices used to provide propulsive energy in electric vehicles.

(21) “Research, development, or demonstration facility (RDD)” means a facility under ORS 285C.545 (3) and subject to standards adopted by the Director in these rules that is not standard practice and produces or is likely to produce new renewable resource generating and conservation technologies or products in Oregon when commercialized.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0110

Process Overview

(1) Application Stages. The Department reviews an application for a Manufacturing BETC in two stages.

(a) The first stage is called preliminary certification. Prior to submitting an application and fee payment, the Applicant must contact the Department to initiate a pre-screening process. Once accepted, the application is subject to in-depth review of the manufacturer’s technology, financial model and plan, which may be conducted by a third party contractor selected by the Department for the purpose of determining if a preliminary certificate shall be issued. If the Department determines that the Applicant qualifies for a Manufacturing BETC, the Department may issue a preliminary certificate. The preliminary certificate may contain specific criteria and conditions for the facility to meet in order to complete final certification based on the information provided in the application for the BETC and type of facility that is described in the application. In addition, the Department shall require the Applicant to enter into a performance agreement or other similar agreement as a condition of approval.

(b) The second stage is called final certification. During this stage the application is subject to verification of completion of the facility in accordance with conditions and criteria imposed in the preliminary certificate and performance agreement, and the determination of final eligible costs for purpose of issuing the final tax certificate.

(2) Application. To begin the review process for each stage as described in 123-600-0120 and 123-600-0130, or to change the facility during the review process, an Applicant shall submit the information on the application form approved by the Department and additional information as requested by the Department.

(3) Receipt of Applications. Applications shall be considered received on the date marked received by the Department, unless the application is determined to be incomplete.

(4) Pass-through Option Commitment. An Applicant planning to use a pass-through partner should indicate their intention on the application for preliminary certification and shall select the pass-through option on the application for final certification.

(5) Conditions for Approval. The Director may impose conditions in approving a preliminary or final certificate that the facility shall operate in accordance with the representations made by the Applicant, and any applicable rules or standards adopted by the Director in accordance with the provisions of ORS 285C.540 to 285C.559.

(6) Separate and Distinct Facilities. The Director may issue only one Manufacturing BETC for each separate and distinct facility under these rules. To determine if a facility is separate and distinct, the Director will consider 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.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0120

Preliminary Certification

(1) Pre Screening. Persons interested in applying for a Manufacturing BETC shall first contact the Department to initiate a pre-screening process.

(2) Submission of Application. Persons determined by the Department to have projects for proposed facilities eligible for a Manufacturing BETC shall submit the application form approved by the Department for application for preliminary certification along with the appropriate fee under OAR 123-600-0140. The Applicant shall also provide additional information the Director considers necessary to determine whether the proposed facility is in accordance with the provisions of ORS 285C.540 to 285C.559 and these rules, including but not limited to:

(a) The type of equipment, machinery or other products being manufactured meet related performance and efficiency standards applicable to the manufactured products;

(b) The economic viability of the facility and any other information for 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 the Applicant;

(c) The minimum levels of increased employment in Oregon for the facility are proportionate to industry standards;

(d) The compensation paid and benefits provided to employees meet or exceed the national average in annual compensation for comparable employment;

(e) Details related to the technology and financial plan that can be independently reviewed by a third party;

(f) The credit worthiness of the Applicant and the likelihood of long-term operation and success of the facility; and

(g) The Applicant’s decision to locate or expand a facility in Oregon is based on the allowance of a tax credit under ORS 315.341.

(3) Qualified Applicant. A qualified Applicant shall meet one of the following criteria:

(a) The Applicant is a person to whom a tax credit for the facility has been transferred; or

(b) The Applicant shall be the owner, contract purchaser or lessee of the facility at the time of erection, construction, installation or acquisition of the proposed facility, and:

(A) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to utilize the facility in connection with Oregon property; or

(B) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to lease the facility to a person that will utilize the facility in connection with Oregon property.

(C) The Applicant is the owner, contract purchaser or lessee of a trade or business that plans to lease the facility to a person that will utilize the facility in connection with Oregon property.

(4) Eligible Costs. Subject to the facility cost limitations of OAR 123-600-0100(1) and the criteria established under ORS 285C.543:

(a) Eligible costs include land purchase costs, structures, buildings, installations, excavations, machinery, equipment or devices, or any addition, reconstruction or improvements to land or existing structures, buildings, installations, excavations, machinery, equipment or devices, necessarily acquired, constructed or installed by a person in connection with the conduct of a trade or business, that is used to manufacture the equipment, machinery or other products used primarily for:

(A) Component parts of electric vehicles; or

(B) Electric vehicles; or

(C) Renewable energy storage devices; or

(D) Equipment, machinery or other products designed to use a renewable energy resource.

(b) An application shall demonstrate compliance with these provisions to be accepted, including clearly describing the specific characteristics of the equipment, machinery or other products that demonstrate why such equipment, machinery or other products will be used primarily for component parts of electric vehicles or; electric vehicles; renewable energy storage devices or; equipment, machinery or other products designed to use a renewable energy resource that meets the criteria established under ORS 285C.543 and not for other commercial purposes and therefore why the costs of such of such equipment, machinery or other products are eligible costs.

(c) The Department may conduct inspections to verify eligible costs.

(d) Eligible facility costs are limited by costs for a facility, or portion thereof, that has previously received a Business Energy Tax Credit.

(e) The sum of any payments from federal grants and the Manufacturing BETC may not exceed total costs.

(f) Eligible costs do not include fees or costs associated with the review of the application.

(g) Eligible costs cannot be incurred prior to submitting an application for preliminary certification, except as provided for under OAR 123-600-0120(7).

(h) Cost can include payments for:

(A) Fees to finance, design or engineer the facility, including but not limited to debt fees and equity fees;

(B) Title searches, escrow fees, government fees, excluding fees required by OAR 330-091-0150, and shipping;

(C) All materials and supplies needed for the erection, construction, installation or acquisition of the proposed facility; and

(D) Work performed by employees or independent contractors of the applicant based on the following conditions:

(i) Employees or contractors must be certified, accredited, licensed, or otherwise qualified to do the work;

(ii) The work must be associated with the erection, construction, installation or acquisition of the proposed facility or in the case of a research development and demonstration facility, the work shall be directly related to the research, development, demonstration, facility design, monitoring, assessment, evaluation and reporting related to the product or technology;

(iii) Project management and other similar costs may only account for up to 15 percent of the total eligible costs; and

(iv) Costs for employee’s or contractor’s work on the facility must be detailed and documented as to specific tasks, hours worked, and compensation costs. Donated, in-kind or volunteer labor is not eligible;

(E) Costs for legal counsel that is directly related to the development of a qualifying facility (non-litigation related) or directly linked to the research, development or demonstration facility; and

(F) Other costs the Director includes.

(i) Cost may not include:

(A) Interest;

(B) Litigation or other operational-related legal fees and court costs;

(C) Costs to maintain and operate a facility;

(D) Administrative costs to apply for grants, loans, tax credits or other similar funding for a facility including, but not limited to, the BETC charge, costs associated with the creation and development of the CPA verification letter and costs associated with securing a pass-through partner for the facility;

(E) Routine operational or maintenance costs associated with the facility, including services, supplies and labor;

(F) Expenses that are directly or indirectly offset with federal fee waivers; and

(G) Other costs the Director excludes.

(j) If a facility is built under a lease, lease-option or lease-purchase contract, the lessee's cost to acquire the facility is the value paid for the facility. If that amount is not known, the cost is the sum of:

(A) Tax credits passed-through by the lessor to the lessee;

(B) The amount paid when the facility is transferred; and (C) The lease payments not including taxes, insurance, interest, and operating costs.

(C) Payments to be made in the future must be discounted to present value.

(5) Preliminary Certification Review Process. Except as provided in OAR 123-600-0120(7), an application for preliminary certification shall be received by the Department on or prior to the facility start for the erection, construction, installation or acquisition of a facility.

(a) The application for preliminary certification shall be considered received on the date marked received by the Department, unless the application does not contain all information required in the application form and the payment as required in OAR 123-600-0140.

(b) An application is incomplete if it does not include information needed to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director. The Department shall provide the Applicant a written notice relating to the incomplete application and the information needed to make the application complete. If no action is taken within 30 days by the Applicant, the application shall expire.

(c) After a completed application is received, the Department shall notify the Applicant of the procedures for the Department’s due diligence review.

(d) If the application complies with the provisions of ORS 285C.540 to 285C.559, the Director may approve the preliminary certificate. The preliminary certificate shall state the amount of eligible costs for a Manufacturing BETC up to the maximum amount of certifiable costs under ORS 285C.545. It may differ from the amount requested for reasons explained and based on these rules. Also, it shall state any conditions that shall be met before development, final certification, or some other event can occur. The Director shall explain why each condition is needed to comply with these rules.

(e) If it does not comply, the Director may deny the application. No later than 60 days after the Director issues an order denying the application, the Applicant may request reconsideration as provided in these rules.

(f) An Applicant can re-submit an application that is denied if features of the facility change, the Applicant provides data the absence of which resulted in the denial, or other changes warrant. An application for preliminary certification can be amended or withdrawn by the Applicant before the Director issues a preliminary certificate. The Applicant may be required to pay additional fee for expenses incurred by the Department in connection with the additional review of the application for preliminary certification or amendment to the preliminary certificate.

(6) Preliminary Certification for Less than Total Eligible Costs. If under the provisions of ORS 285C.545(2), the Department intends to certify less than the total or no amount of eligible costs of renewable energy resource equipment Manufacturing BETC facility, the Department shall notify the Applicant in writing of that intent before approving the preliminary certificate.

(a) The Applicant shall have 30 calendar days from the date notification was issued to inform the Department in writing whether it wishes to withdraw the application or suspend further consideration of the application until a future date specified or submit additional information in support of the application.

(b) If the Department has not received notification or additional information in support of the application within that period of time, the Director may certify less than the total or no amount of eligible costs of the Manufacturing BETC facility.

(c) Once eligible costs are certified and a preliminary certificate is issued under this section, the certified eligible costs may be revised if conditions under ORS 285C.545(2) change or upon notification from the Applicant or other information indicating that the scope of the project or the facility has changed in such a way to impact the preliminary certificate.

(7) Eligibility of Costs Before Facility Start. The Director may approve a preliminary certificate for costs incurred prior to the Department’s receipt of the application for preliminary certification if the Applicant files a written request for a waiver in accordance with these rules.

(a) Special circumstances beyond the Applicant's control made application for preliminary certification before facility start impracticable. Such circumstances include process delays, facility funding and energy supplies or markets; and

(b) The Department is in receipt of the application for preliminary certification and receives a waiver request from the Applicant within 90 days of the facility start. Under extraordinary circumstances the Department may extend the waiver period provided the facility serves the aims of the program.

(c) Failing to submit an application for preliminary certification before signing contracts for the facility does not constitute special circumstances supporting a waiver.

(8) Preliminary Certificate. If the Department determines that the application for preliminary certification qualifies the Applicant and the facility for a Manufacturing BETC, the Director may issue a preliminary certificate.

(a) The preliminary certificate may contain specific criteria and conditions for the facility to meet in order to complete final certification based on the information provided in the application for the BETC and type of facility that is described in the application. In addition, the Department shall require the Applicant to enter into a performance agreement or other similar agreement as a condition of approval. The Director may consider a broad range of comparative data sources in determining criteria and conditions for job creation, job maintenance and compensation in the preliminary certificate or performance agreement, including but not limited to:

(A) National Compensation Survey (NCS), US Department of Labor Bureau of Labor Statistics

(B) Quarterly Census of Employment and Wages, US Department of Labor Bureau of Labor Statistics

(C) Oregon Labor Market Information System including the Oregon Employment Department’s most current Covered Employment and Wages Summary Report for Total Private Coverage.

(b) If the facility does not proceed the Applicant shall inform the Department in writing if it does not proceed with the facility or intends to proceed without the tax credit. In that case, the Director shall cancel the preliminary certificate.

(9) Applicant’s Request to Amend a Preliminary Certificate. An Applicant shall file a written request with the Department prior to the completion of the facility to amend a preliminary certificate.

(a) The request shall describe the change to the facility and reasons for the change. It may include changes in cost, tax credit amount, facility design, and materials. The request may also include changes in the jobs created, project financing, the Applicant, the location, or other matters that demonstrate substantial change in the project’s scope. The request shall be accompanied by the appropriate fee.

(b) If a request does not include information needed to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director shall provide the Applicant a written notice relating to the information needed to make the request complete. If the Applicant does not provide all of the requested information to the Department within 30 days, the request shall expire and no changes shall be made to the preliminary certificate.

(c) After the Applicant files the change request, the Department shall decide if the facility as modified complies with ORS 285C.540 to 285C.559 and these rules.

(A) If it complies, the Director may issue an amended preliminary certificate which may contain new or amended criteria, conditions and requirements.

(B) If it does not comply, the Director shall issue an order that denies the change and provide written reasons for the denial.

(10) Director’s Amendment or Revocation of a Preliminary Certificate. The Director may issue an order altering, conditioning, suspending or denying preliminary certification if the Director determines that:

(a) The erection, construction, installation or acquisition does not comply with the provisions of ORS 285C.540 to 285C.559 and applicable rules and standards; or

(b) The Applicant has previously received preliminary or final certification for the same costs; or

(c) The Applicant is unable to demonstrate that the facility would be economically viable without the allowance of additional credits under ORS 315.341; or

(d) The Applicant was directly involved in an act for which the Director has levied civil penalties or revoked, canceled or suspended any certification under ORS 285C.540 to 285C.559; or

(e) The Applicant or the principal, director, officer, owner, majority shareholder or member of the Applicant, or the manager of the Applicant if the Applicant is a limited liability company, is in arrears for payments owed to any government agency while in any capacity with direct or indirect control over a business; or

(f) The facility undergoes changes without the changes being approved under these rules;

(g) Any other reason allowed by the amendments to ORS 285C.551(3) in Oregon Laws, 2011, Chapter 474, Section 11.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0130

Final Certification

(1) Facility Completion. To qualify for a final certificate, the facility shall be completed as described in the preliminary certificate, and in accordance with the performance agreement and these rules. Any changes to the preliminary certificate and/or application for preliminary certification shall be made through the amendment process outlined in these rules and shall be completed prior to the project completion date. Failure to obtain approval through the amendment process may result in denial of the application for final certification.

(2) Application and Review.

(a) Applicants with completed facilities must have a valid preliminary certificate for a Manufacturing BETC in accordance with ORS 285C.547(5) in order to complete final certification including all transactions associated with the pass-through option described in 123-600-0135.

(b) The application shall be considered received for the purposes of ORS 285C.557 on the date marked received by the Department, unless the application is incomplete. If the application for final certification is not complete, the date marked received by the Department on the complete application containing all of the required information shall be considered the received date.

(c) Review of the application for final certification shall include a determination by the Director that the proposed erection, construction, installation or acquisition is technically feasible and should operate in accordance with the representations made by the Applicant, and is in accordance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards adopted by the Director, including but not limited to:

(A) Evidence in a form acceptable to the Department that the conditions of the preliminary certification and performance agreement have been complied with;

(B) Evidence of the costs of the facility. If the actual cost of the facility is less than $50,000, copies of receipts for purchase and installation of the facility; or if the actual cost of the facility is $50,000 or more, certified to by a certified public accountant who is not an employee of the Applicant. The certified public accountant shall:

(i) Complete a written review of costs paid or incurred to be reported in the Final Application, related to the facility as described in the Preliminary Application and Preliminary Certificate, based on canceled checks, invoices, or receipts, a binding contract or agreement, or other documentation as may be required under these rules and certify that such costs were properly paid or incurred and represent eligible costs under these rules indicating exceptions as applicable.

(ii) Conduct the review in the form of an agreed-upon procedures engagement that is in accordance with AT Section 201, Agreed-Upon Procedure Engagements (Statements on Standards for Attestation Engagements 10, as amended) of the American Institute of Certified Public Accountants.

(iii) Conduct any sampling of costs in accordance with procedures in the Statement on Auditing Standards in the AICPA Guidelines.

(iv) Review sufficient information if an applicant has an outstanding binding contract or loan agreement, to become satisfied that accounts directly related to the facility are not in default in order to include such costs as eligible costs.

(C) The amount of the credit under ORS 315.341 that is to be claimed and that the costs have not previously received preliminary or final certification;

(D) Information sufficient to demonstrate the number and type of jobs created and maintained by the operation and maintenance of the facility over the five-year period beginning with the year of preliminary certification under ORS 285C.551 and information on the benefits of the facility with regard to overall economic activity in this state will be met;

(E) Information sufficient to demonstrate that the facility shall remain in operation for at least five years, unless the Director by rule specifies a shorter period of operation;

(F) Documentation of compliance with applicable state and local laws and regulations and licensing and permitting requirements as defined by the Department; and

(G) A statement that the Applicant or the principal, director, officer, owner, majority shareholder or member of the Applicant, or the manager of the Applicant if the Applicant is a limited liability company, is not in arrears for payments owed to any government agency while in any capacity with direct or indirect control over a business.

(H) Any other information determined by the Department to be necessary prior to issuance of a final certificate, including inspection of the facility by the Department.

(b) After an application for final certification is received, the Department shall determine whether the application is complete. An application is incomplete if it does not include information needed to demonstrate substantive compliance with the provisions of ORS 285C.540 to 285C.559 and any applicable rules or standards and preliminary certification conditions adopted by the Director. If it is not complete, the Applicant shall be provided a written explanation describing deficiencies. If it is complete, the Department shall process the application. Within 60 days after a completed application for final certification is received the Department shall either approve or deny the application.

(c) If the Department approves the application; the Director shall issue a certified amount letter, which shall state the amount of certified costs, reduced as applicable by any federal grants received, and the amount of the tax credit approved. The certified amount letter may contain additional criteria and conditions that shall be met in order to retain tax credit benefits or the tax credit certificate issued to the Applicant may be subject to revocation. If the facility fails to meet any of the criteria, conditions and requirements established in final certification, the Applicant shall notify the Department within 30 days.

(d) When an Applicant chooses to transfer the tax credit under ORS 285C.549, the Department may hold the application for final certification until pass-through partner(s) information is received by the Department.

(3) Final Certificate. A certificate issued under ORS 285C.553 is required for purposes of obtaining tax credits in accordance with ORS 315.341. Such certification shall be granted for a period not to exceed five years. Unless transferred to a pass-through partner under ORS 285C.549, the five-year period shall begin with the tax year of the Applicant during which the completed application for final certification of the facility under ORS 285C.553 is received by the Department.

(a) If the original owner of the certificate uses any portion of the credit, the certificate becomes nontransferable.

(b) After the Director issues a final certificate, an Applicant shall notify the Department in writing within 30 days of any of the following conditions:

(A) The facility has been moved;

(B) Title to the facility has been conveyed;

(C) The facility is subject to or part of a bankruptcy proceeding;

(D) The facility is not operating; or

(E) The term of a leased facility has ended.

(4)(a) Basis for Denying Tax Credit Benefits. The Department may deny final certification if any of the following conditions exist:

(A) Final certification is not complete before 1,825 days (5 years) after the preliminary certificate was issued.

(B) The Applicant does not provide information about the facility in a reasonable time after the Department requests it;

(C) The facility is significantly different than the proposed facility for which the preliminary certificate was issued;

(D) The Applicant misrepresents or fails to construct or operate the facility;

(E) The Applicant fails to demonstrate that the facility described in the application is separate and distinct from previous or current applications reviewed by the Department;

(F) The facility does not meet all of the conditions and requirements contained in the preliminary certificate or performance agreement; or

(G) The Applicant is unable to demonstrate that the facility complies with all applicable provisions of ORS Chapter 285C.540 to 285C.559 and these rules.

(b) If the Department does not approve the application, the Department shall provide written notice of the action, including a statement of the findings and reasons for the denial by regular and certified mail.

(c) An application for final certification that is denied can be submitted again. An application for final certification can be amended or withdrawn by the Applicant. If an application is submitted again or amended, the time for review of the application for final certification starts over.

(d) If the Director does not issue a certified amount letter for final certified cost or a final certificate within 60 days after an application is filed, the application is denied pursuant to ORS 285C.553 (4).

(5)(a) Basis for Revoking Tax Credit Benefits. The Director shall revoke certificates as provided in ORS 285C.559 and 315.341 (4)(a) if the Director finds that:

(A) The certification was obtained by fraud or misrepresentation. For the purposes of this section, “fraud or misrepresentation” means any misrepresentation made by an Applicant for a preliminary or final certification, including but not limited to, misrepresentations as to the Applicant’s financial viability, facility construction and operation, or any other information provided as part of an application for a preliminary or final certification;

(B) The holder of the certificate or the operator of the facility has failed to construct or operate the facility in compliance with the plans, specifications and procedures in the certificate or the performance agreement; or

(C) The facility is no longer in operation.

(b) If all or a part of the tax credit certificate has been transferred to a pass-through partner under ORS 285C.549, the certificate is not considered revoked as to the pass-through partner, but the Applicant is liable for the amount of tax credits claimed or that could be claimed.

(6)(a) Sale or Disposition of the Facility After Final Certification. Pursuant to ORS 315.341(4)(a), upon receiving notice that the facility has been sold or otherwise transferred, the Director shall revoke the final certificate, as of the date of the disposition of the facility, unless the Manufacturing BETC for the facility has already been transferred under ORS 285C.549.

(b) The new owner or new or renewed lessee of a facility may apply for a final certificate. The request shall comply with ORS 285C.540 through 285C.559 and these rules and include information to allow the Department to determine the amount of tax credit not claimed by the former owner or former lessee. If the facility continues to comply with the requirements set out in these rules and any applicable conditions imposed by the Department, the Director shall issue a new final certificate consistent with the provisions of ORS 315.341 (4)(a).

(7) Request for Reconsideration. No later than 60 days after the Director issues an order on preliminary certification, final certification, or canceling or revoking a preliminary or final certificate under these rules, the Applicant may request reconsideration in writing.

(8) Inspections. After an application is filed under ORS 285C.547 or 285C.553 or a tax credit is claimed under these rules, the Department may inspect the facility. The Department shall schedule the inspection during normal working hours, following reasonable notice to the facility operator.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0135

Pass-through Transfer of the Tax Credit

For purposes of ORS 285C.549 and the pass-through rate for discounting the face value of a certified Business Energy Tax Credit to the Net Present Value that is the minimum amount the Applicant shall receive as a cash payment from the Pass-through Partner(s) in exchange for the Credit:

(1) Rate Formula. As set forth by the Department on the first business day of each calendar quarter, the pass-through rate, to be multiplied by the credit amount, equals “1 ÷ (1 + R + S + P)^5,” where:

(a) “R” is the U.S. Prime Rate as published by The Wall Street Journal newspaper;

(b) “S” is a spread factor greater than zero to account for special transactional and risk elements, and initially set at 3.25 percentage points, but subject to adjustment by the Department based on experience and changing circumstances;

(c) “P” is an estimate of projected price inflation, as determined by the Department, but to be not less than the average of the lower central tendency for core price inflation in the succeeding two years from the latest economic projections of the Federal Reserve Board members and Federal Reserve Bank presidents; and

(d) “5” means to exponentially raise the preceding sum to the fifth power in accordance with the five years over which the credit may be claimed.

(2) Modification of Formula. In addition to modifications of the variables “R” and “S” in subsection (1)(a) of this rule, the Department may alter the formula for purposes of this rule, as announced at the start of the calendar quarter, in response to any greatly changing situation with prevailing market rates of return or projected price inflation, potentially pending a temporary or permanent rulemaking.

(3) Rate Option. The Applicant may elect to use the quarterly pass-through rate as set in section (1) of this rule for the calendar quarter, during which occurs either:

(a) Preliminary Certification, or

(b) Transaction of the pass-through payment.

(4) For the Department to issue a tax credit certificate to a pass through partner the Applicant must be in compliance with the conditions and requirements of the Preliminary Certificate, the performance agreement and these rules.

(5) A tax credit may be transferred one time only, from the Applicant to an eligible pass through partner.

(6) Finding Pass-through Partners. The Applicant is responsible for seeking a pass-through partner. The Department cannot guarantee a pass-through partner for any completed project.

(a) The Applicant will notify the Department if a third-party intermediary will be used to assist the Applicant in seeking a pass-through partner.

(b) The Applicant will notify the Department when a pass-through partner(s) is identified. The Department will provide the necessary instructions and forms needed to complete verification of the pass-through payment transaction in order to issue a tax credit certificate.

(7) Transferee’s Certification Period. For a transferee holding a credit that has been transferred under ORS 285C.549, the five-year period begins with the tax year of the transferee in which the transferee pays for the credit.

(8) Expiration of Transferability. The Director may issue a final certificate in the name of the Applicant for any tax credit balance remaining sixty days prior to the expiration of the Preliminary Certificate under ORS 285C.547(5).

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0140

Budget Limits and Payments

(1) Amount of Credits Allowed for a Facility. During any calendar year, a Manufacturing BETC preliminary certificate shall not be issued for more than:

(a) $40 million in maximum eligible facility costs for a renewable energy resource equipment facility, not including those used to manufacture electric vehicles;

(b) $2.5 million in maximum eligible facility costs for a facility used to manufacture electric vehicles;

(2) Fees for Certification. The Department has established the following schedule for payments to accompany an application as required under 285C.555.

(a) Included with each application for preliminary certification shall be an initial payment payable to the Department. The payment is 0.0060 multiplied by the facility eligible cost and not to exceed a payment amount of $75,000, and subject to additional expenses incurred by the Department as described in this section.

(A) A refund shall not be granted for any reduced eligible costs that are included in an amended certificate.

(B) An additional application payment shall be paid as specified in (3)(a) of this rule if a request to amend a certificate to increase the eligible cost.

(C) No facilities shall be exempt from these requirements.

(b) Applications for preliminary certification shall not be reviewed or considered complete if not accompanied by the fee payment. Preliminary certificates shall only be issued if the application is complete. In addition, the Applicant may be required to pay for expenses incurred by the Department in connection with the application that exceed these payments and which the Department determines are incurred in connection with processing the application. The Applicant shall be advised of any additional application expenses the Applicant shall pay before the expenses are incurred by the Department.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0150

Prioritization System for Manufacturing BETC Facilities

Applications in Excess of Biennial Limits. In the event that the Department receives applications for preliminary certification with a total amount of potential tax credits in excess of the limitations in ORS 285C.545, the Department shall allocate the potential tax credits according to the order in which the applications are complete.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

123-600-0250

Research, Development, or Demonstration Facility (RDD)

(1) Criteria. Eligible RDD facilities shall comply with one or more of the following criteria:

(a) Research facilities that include a test bench research, prototype or pilot scale construction of a theoretically proved or primary researched new renewable resource generating or conservation technology;

(b) Development facilities that include the manufacture or initiation of the capability to manufacture new products for renewable resource generating or energy conservation in Oregon;

(c) Demonstration facilities that are likely to resolve questions on how to apply new renewable resource generating or more efficient energy technologies through pilot or production scale applications of technology; and

(d) Facilities that are likely to achieve Department’s goals as determined by the Director and shall demonstrate a reasonable potential to result in benefits in Oregon for which the value is likely to exceed the value of the tax credit, based on information filed with the application for preliminary certification.

(2) Eligible costs. Eligible costs for a RDD facility may include:

(a) Engineering, design and administrative costs

(b) Costs inherent in a research, development or demonstration facility that may not result directly in saved or produced energy. Such costs may include:

(A) Facility design, monitoring, assessment, evaluation and reporting. This includes but is not limited to: the development of standards, specifications, policies and procedures facilitating technology transfer; instruments, and controls.

(B) Other equipment needed to monitor, assess or evaluate the facility and the impacts of the facility.

(c) The following costs related to demonstration model(s) may be considered eligible:

(A) Materials for the demonstration model(s).

(B) The manufacturing, construction, assembly, and/or installation of the demonstration model(s).

(C) Testing and monitoring the demonstration model(s).

(d) Other eligible costs as determined by the Director.

Stat. Auth.: ORS 285C.540 - 285C.559, ORS 315.341, OL 2011, Ch. 474 HB2523
Stats. Implemented: ORS 285C.540-559, 315.341, OL 2011, Ch. 474 HB2523, OL 2012, Ch. 45 HB 4079
Hist.: OBDD 8-2012, f. & cert. ef. 6-1-12

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