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

 

DIVISION 674

STANDARD EXEMPTION ON TAXABLE ENTERPRISE ZONE PROPERTY

NOTE: Department of Revenue forms referenced in this division are available from the Department of Revenue, Property Tax Division, 955 Center St NE, PO Box 14380, Salem OR 97309-5075, phone 503-378-4988, 800-356-4222, TTY 800-886-7204, fax 503-945-8737, and web http://www.oregon.gov/DOR/PTD/enterform.shtml.

123-674-0001

Purpose, Scope and General Process for Businesses Seeking Exemption

(1) This division of administrative rules clarifies, specifies and establishes elements of ORS 285C.050 to 285C.250 (Oregon Enterprise Zone Act) for the determinations, procedures and requirements relevant to the three- to five-year exemption from property taxes under ORS 285C.175 on qualified property of eligible business firms in any enterprise zone.

(2) The outline of these rules, regarding a business firm’s receipt of this exemption, is that:

(a) The sponsor of the enterprise zone may extend the usually three-year period to four or five consecutive years in total by executing a written agreement with the firm before approval of application in subsection (c) of this section.

(b) The firm must be engaged in eligible activities as primarily determined with authorization.

(c) The firm must apply for authorization, generally before any work begins on the new investment, and the local zone manager and the county assessor need to authorize the firm.

(d) The firm must initially satisfy certain hiring criteria and then maintain corresponding employment minimums during the entire exemption period in order to first become and then stay qualified.

(e) The exemption is primarily on certain new property and only for an authorized firm that timely claims the exemption with the assessor after it has placed the property in service; before that, it may be exempt under ORS 285C.170.

(3) These administrative rules are not meant to interfere with the fiscal parameters or the direct administration of property taxes by county assessors, and they do not supersede administrative rules of the Department of Revenue in OAR chapter 150, as adopted or amended in the future, for purposes necessary under the statutory sections listed in ORS 285C.125(1).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.045 & 285C.050 – 285C.250
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-0100

Definitions

OAR 123-001 (Procedural Rules) contains definitions in addition to the following, as used in this division of administrative rules along with terms under ORS 285C.050, unless the context clearly indicates otherwise:

(1) “Annual Employment” means the number of employees as averaged over the course of a year of exemption under ORS 285C.175 based on OAR 123-674-4000.

(2) “Application” means the latest revision of the Department of Revenue form 150-303-029, Oregon Enterprise Zone Authorization Application (inclusive of attachments), as filled out and submitted by a business firm.

(3) “Approval Form” means the latest revision of the Department of Revenue form 150-303-082, Oregon Enterprise Zone Authorization Approval that documents authorization of the Firm/applicant.

(4) “Claim Employment” means the total number of employees on the date when an authorized business firm files its exemption claim under ORS 285C.220, or on the corresponding April 1, whichever is earlier.

(5) “County Wage” is the average annual figure under ORS 285C.050(4) for all industries in the county, as published at the time when one of the following effectively occurs (whichever is latest), according to the transition from one year’s figure to the next as established by the Department:

(a) Application is approved (Firm/applicant is authorized) under ORS 285C.140(6);

(b) Statement of authorization renewal is submitted under ORS 285C.165(1) for purposes of 285C.160(4); or

(c) Exemption claim is initially filed under ORS 285C.220 and 285C.225 by an inactively authorized business firm under ORS 285C.165(4).

(6) “Estimate” and “estimated,” as used in ORS 285C.140(2), mean current expectations of the owners, managers and executives of an eligible business firm, based on the best information available at the time, and shall not be construed as binding.

(7) “Existing Employment” means the number of employees averaged over the entire 12-month period preceding the date on which the Application is submitted under ORS 285C.140 based on OAR 123-674-4000.

(8) “Firm/applicant” means a business firm that is seeking to have an Application approved in order to be authorized in an enterprise zone, or that has received approval but not yet begun exemption under ORS 285C.175.

(9) “Preauthorization Conference” refers to consultation between a Firm/applicant and enterprise zone sponsor/local zone manager, to which the county assessor is invited, and the associated written summary under ORS 285C.140(4) to (6), as required to take place after submission of the Application and before completion of the Approval Form. The Department shall set forth further guidelines for the Preauthorization Conference, which are hereby incorporated into and made part of these administrative rules by reference.

(10) “Year” means a calendar year or assessment year from January 1 to December 31 (and not a property tax or government fiscal year) consistent with the definitions under ORS 285C.050(1), (20) and (22).

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: 285C.050 – 285C.250
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-0200

“Employment” Terminology

As used in OAR 123-674-0100, with respect to counting the “number of employees” for purposes of this division of administrative rules, especially 123-674-4000 to 123-674-4800:

(1) It does not involve averaging based on hours worked, such as full-time equivalency, but rather relies on counting full-time, year-round jobs associated with relevant business operations throughout the enterprise zone, either at a particular time or on average over a year or 12-month period.

(2) It relates primarily to “employees of the firm” or “employment of the firm,” as used in ORS 285C.200 and 285C.210, which:

(a) Includes positions or persons who are:

(A) Employed directly by the business firm, or retained by lease or contract with the person or a third party, but the firm selected and directly manages them;

(B) Engaged a majority of their time in eligible operations under ORS 285C.135, including but not limited to persons who perform eligible activities as described in OAR 123-674-1100 or 123-674-1200(3) or (4); and

(C) Located anywhere inside the enterprise zone in terms of where they spend at least 75 percent of their time on the job, as well as official work site.

(b) Excludes positions or persons who are employed or performing work:

(A) At temporary or seasonal jobs;

(B) For 32 or fewer hours per week;

(C) Solely in the construction, modification or installation of qualified property;

(D) Regularly outside the zone boundary;

(E) The majority of their time in ineligible operations; or

(F) With any other business firm, including but not limited to affiliates or commonly owned companies.

(3) Consistent with subsection (2) of this rule, only full-time jobs with the firm that are filled indefinitely and exist year-round at the firm’s eligible operations inside the zone are normally counted. The following are exceptions:

(a) Only employees who work at the particular headquarter-type facility (see OAR 123-674-1700) matter, irrespective of other eligible employees inside the zone and paragraph (2)(a)(C) of this rule;

(b) For the transfer of eligible operations within 30 miles of zone boundary, further requirements described in OAR 123-674-4100(4) and 123-674-4600(2) also cover employees at affected sites outside the zone.

(c) The prohibition on jobs losses more than 30 miles outside the zone also encompasses persons employed:

(A) At any type of business operation in Oregon, not only the eligible kind, as are transferred into the zone; and

(B) By any commonly control company (see 123-674-4200).

(d) Jointly owned firms may combine their employment throughout the zone subject to section (4) of this rule.

(e) Temporary workers filling permanent positions are acceptable if the county assessor and the local zone manager conclude that:

(A) The qualified business firm is making every reasonable effort to fill such positions with permanent, regular hires; and

(B) The temporary workers and other potentially available job applicants do not meet reasonable, minimum standards of the firm for permanent hire, such as a high school diploma or equivalency.

(4) Under ORS 285C.135(4), two or more business firms with 100-percent common ownership may elect to be treated as a single firm for combining zone employment, irrespective of paragraph (2)(b)(F) of this rule, if authorized representative(s) of the firms or a parent company formally notify the local zone manager and county assessor to that effect before or with the initial exemption claim under 285C.220. Such an election affects all applicable provisions under 285C.050 to 285C.250 and this division of administrative rules, including but not limited to rendering moot any inter-firm lease of qualified property (which would then all be simply owned by the Firm/applicant), but it does not carry over to any subsequent authorization except in a terminated zone.

(5) Only newly created jobs may satisfy required increases in employment levels, as opposed to any employee associated with the merger or acquisition of another business firm or its existing operations or property, except positions inside the zone that were vacant for 60 or more days at the time of Application, and for which reemployment was otherwise unlikely.

(6) As used in this rule and under ORS 285C.050:

(a) “Person” may mean two or more part-time employees who together perform a single job involving more than 32 hours of work per week by virtue of an established (job-sharing) arrangement.

(b) “32 hours per week” is computed by taking the total number of hours over the course of a year, for which the person is reimbursed in the form of wage or salary, including but not limited to paid holidays, vacation and so forth, and dividing by 52.

(c) “Temporary or seasonal jobs” are nonpermanent positions, including but not limited to persons acquired and receiving compensation through the firm or an outside agency on a short-term, ad hoc or as-needed basis, or where the firm hires, leases or contractually employs a persons for any anticipated period of less than 12 consecutive months.

(7) There is no necessary relationship between minimum employment requirements and the requisite First Source Hiring Agreement, as addressed in OAR 123-070 and 123-674-7700 to 123-674-7730.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.135, 285C.200 & 285C.210
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 31-2010, f. 6-30-10, cert. ef. 7-1-10; OBDD 15-2012, f. & cert. ef. 8-15-12

Extended Tax Abatement

123-674-0500

General Points

With respect to an extended period of property tax abatement longer than three years under ORS 285C.160 and 285C.175(2)(b):

(1) The extended period effectively exposes a qualified business firm to needing to comply for one or two more years with all regular enterprise zone requirements, and to pay back all four or five years of exemption as a consequence of noncompliance and regular disqualification.

(2) The exemption shall revert to the basic three-year period upon failure to satisfy applicable requirements described in OAR 123-674-0600 or 123-674-0700 during any of the four or five years, as well as repayment of taxes abated (only) in the fourth or fifth year.

(3) An eligible business firm has the same rights of appeal as provided elsewhere in ORS 285C.050 to 285C.250 for the enterprise zone exemption, and no part of this division of administrative rules shall interfere with those rights, subject to the determination of appellate authorities.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.160 & 285C.165
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-0600

Compensation Standard

For purposes of ORS 285C.160:

(1) To qualify for the additional one or two years of exemption on qualified property in a rural enterprise zone or an urban enterprise zone outside the Metro/Portland-area regional urban growth boundary:

(a) All of an eligible business firm’s Affected Employees must on average receive Compensation of not less than 150 percent of the County Wage; and

(b) This requirement must be satisfied for and during each year throughout the exemption’s first three years and the additional one or two years in order to receive any additional year.

(2) The County Wage is fixed during the entire enterprise zone exemption period consistent with OAR 123-674-0100(5) and 123-674-3700.

(3) For purposes of this rule, the regular yearly Compensation (excluding bonuses and so forth) of any applicable position temporarily vacant due to unforeseen circumstances at any time during the year may be used in computing the annual average Compensation for all such Affected Employees.

(4) As used in this rule “Affected Employees” means persons, positions or jobs under ORS 285C.050(13) that satisfy the following criteria:

(a) Included as “employment of the firm” in accordance with OAR 123-065-0200; and

(b) New jobs filled for the first time:

(A) After the date of Application under ORS 285C.140(1), even if an individual filling the job is already employed by the eligible business firm in another position that is refilled within the zone; and

(B) On or before December 31 at the end of the initial exemption year.

(5) As used in ORS 285C.160 and in this rule, “Compensation”:

(a) Includes all remuneration in the form of wages, salary, overtime pay, shift differential, profit-sharing, bonuses, paid vacation or financial benefits such as life insurance, medical coverage and retirement plans; but

(b) Excludes free meals, club membership, workplace amenities, any benefit mandated by federal, state or local law (employer’s share of social security, unemployment insurance, etc.), or the like, as well as:

(A) Commissions (except at eligible call center or electronic commerce operations); or

(B) Gratuities and tips (except in association with eligible hotel, motel or destination resort operations).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.160, 285C.165 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-0700

Written Agreement between Sponsor and Eligible Business Firm

For purposes of the written agreement that is required between the sponsor of an enterprise zone and an eligible business firm under ORS 285C.160:

(1) To receive additional one or two years of exemption, the written agreement must be finalized no later than completion of the Approval Form.

(2) Both the Firm/applicant seeking an extended abatement and the sponsor of the zone (see OAR 123-668-2400) must formally authorize the written agreement.

(3) The written agreement shall specify whether:

(a) The total period of abatement is four or five consecutive years; and

(b) The Firm/applicant needs to fulfill additional requirements, as well as what they are exactly, in accordance with OAR 123-668.

(4) Adherence to or satisfaction of such additional requirements shall in no way condition the first three years of an eligible business firm’s enterprise zone exemption under ORS 285C.175(2)(a).

(5) Notwithstanding section (1) of this rule, if the zone sponsor rejected a Firm/applicant’s request for an extended tax abatement, and the Application was subsequently approved, but commencement of construction, modification or installation of qualified property has not yet occurred, then the sponsor may reverse its decision and enter into a written agreement based on a resubmitted Application

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.160 & 285C.175
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Business Eligibility

123-674-1000

Special Business Distinctions

(1) As used in ORS 285C.050 to 285C.250, “hotel, motel or destination resort,” consistent with ORS 699.005 and OAR 150-285C.180, means a facility that:

(a) Offers rooms, suites of rooms, cabins, houses or other such units for transient lodging to persons typically from beyond the local area through direct overnight rental, time-share arrangements or other types of limited transactions;

(b) May include one or more visitor-oriented services, facilities or recreational activities, including but not limited to restaurants, laundry, conference rooms, golf course, swimming pool, tennis courts, ski runs, marinas or bicycle paths; and

(c) May be commonly described or labeled as an inn, resort, convention center or by other such names.

(2) As used in ORS 285C.050(3):

(a) “Municipal corporation” has the same meaning as found under ORS 294.311, including but not limited to any special or local service district, but excluding a people’s utility district or a joint operating agency under ORS 262.005.

(b) “Operating or conducting one or more trades or businesses” means to manage or undertake commercial affairs, as evidenced by the following:

(A) Establishment of a place of business and acquisition of property that is necessary to perform business operations through ownership, renting or leasing;

(B) Approval to do business from the appropriate regulatory authorities, as documented by required licenses or permits;

(C) Capital investment or financing, including self-financing, and procurement of supplies or services from other businesses or operations within the firm;

(D) Maintenance of business records such as those related to sales, shipments, personnel or payroll; and

(E) Ultimate pursuit is producing or furthering the production of income.

(3) “Separate” as used in ORS 285C.135(3) means a definitive and physical demarcation, including but not limited to a wall between eligible and ineligible activities sufficient to distinguish the employees and qualified property pertaining to either one.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.070 & 285C.135
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1100

Basic Eligibility of Firms and Operations

For purposes of determining the business eligibility under ORS 285C.135(1) in an enterprise zone:

(1) The Firm/applicant (when qualified) must:

(a) Be a “business firm” consistent with OAR 123-674-1000; and

(b) Produce, sell or provide goods, commodities, products, merchandise, work or services to other businesses or business operations, or be capable of doing so, through eligible activities.

(2) A business firm’s relevant operations will indicate such eligibility if they are:

(a) Performed for internal purposes of the firm;

(b) Reimbursed through sales to another business firm;

(c) Equivalent to what is done for other business firms, even if the actual customer is a government agency or a public or nonprofit corporation/organization; or

(d) Undertaken to create or add value to goods, products or services for ultimate exchange with persons or entities residing beyond the local economy.

(3) Besides manufacturing, assembly, fabrication, processing, shipping or storage, eligible activities include:

(a) Industrial processes or services such as cleaning, coating, curing, kiting, labeling, laminating, packaging, refining, smelting, sorting or treating;

(b) Generation or co-generation of electricity, steam or heat;

(c) Recycling of post-consumer or post-production materials or wastes;

(d) Nonretail, in-shop refurbishment or restoration of equipment or machinery;

(e) Maintenance service or repair work on vehicles, products, parts or devices, performed on a nonretail basis at a permanent location, facility or shop, including but not limited to warranty service contracted or paid for by the manufacturer;

(f) Technical/customer support performed for internal purposes of the firm, or for which a nonretail third party such as the product’s distributor or manufacturer contracts or pays;

(g) Standardized product testing, quality control or laboratory work;

(h) Bulk clerical processing;

(i) Development of standardized computer software products or customized products for business users;

(j) Printing or mass document production;

(k) Distribution;

(l) Wholesaling, which may include complex transactions for single-item purchases by other businesses of large equipment involving contracts, factory-ordered specifications or other attributes distinguishing the sale from retail;

(m) Production of agricultural, mineral, timber or other primary goods or commodities; or

(n) Similar types of business operations.

(4) As a matter of principle, eligibility and ineligibility are mutually exclusive for purposes of ORS 285C.135.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1200

Ineligible Activities

For purposes of ORS 285C.135(2):

(1) The following activities are ineligible, and property used in these activities may not qualify for an enterprise zone exemption, regardless that it serves other businesses:

(a) Retail sales of goods or services;

(b) Retail food service or serving of meals;

(c) Tourism attractions or similar services;

(d) Entertainment or recreation provided directly to the patron or user;

(e) Child care or similar services;

(f) Provision of health care, medical services or similar services to patients;

(g) Professional services, such as accounting, communications, design, engineering, legal advice or management;

(h) Actuary, appraisal, banking, brokerage, extension of credit, insurance, investment, money lending or similar financial services;

(i) Leasing or management of real estate;

(j) Provision of residential housing for purchase or lease;

(k) Construction or modification of real property;

(l) Installation of fixtures, machinery or equipment;

(m) Recreational vehicle parks; or

(n) Other similar types of business operations.

(2) A business firm is eligible, regardless of the presence within the enterprise zone of one or more activities listed in section (1) of this rule, if the requirements of OAR 123-674-1300 or 123-674-1400 are satisfied.

(3) Activities described in or comparable to subsections (1)(b) through (i) of this rule, as well as associated employees and property, are eligible if performed by business firm:

(a) In direct support of its eligible operations or as amenities for associated employees/personnel;

(b) Within the same enterprise zone; and

(c) To support or benefit operations/personnel located mostly inside the zone, such that if more than 25 percent of the activity supports or benefits the firm’s operations outside the zone in terms of person-time or costs, then the requirements of OAR 123-674-1700 for headquarter-type facilities must be fulfilled.

(4) Notwithstanding OAR 123-674-1100, an activity is eligible in the following cases notwithstanding:

(a) Subsection (1)(a) to (i) of this rule or similar activities with electronic commerce operations located in an area designated as such, in accordance with OAR 123-662.

(b) Subsection (1)(a) to (e) of this rule with a hotel, motel or destination resort in an enterprise zone identified by OAR 123-674-1500, if the activity is at the same location, and owned and operated in common with the hotel, motel or destination resort, and 50 percent or more of its receipts are derived from guests staying overnight there.

(c) Subsection (1)(a), (d), (g), (h) or (i) of this rule or similar activities with operations described in OAR 123-674-1600 (Call Centers).

(d) Subsection (1)(d) to (i) of this rule or similar activities with a facility described in OAR 123-674-1700 (Headquarter Facilities).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135 & 285C.185
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1300

Eligible Business Firm with Ineligible Activities

For purposes of ORS 285C.135(3):

(1) A Firm/applicant is eligible:

(a) If when qualified, it engages in an eligible activity in the enterprise zone;

(b) Provided that any ineligible activity of the Firm/applicant is at a separate business operation; and

(c) Regardless of the degree to which an ineligible activity represents the Firm/applicant’s main commercial pursuit.

(2) Any requirement to hire, maintain or compensate employees under ORS 285C.050 to 285C.250 applies only to “eligible employees,” as used in ORS 285C.140(1)(a), consistent with OAR 123-674-0200.

(3) Firm/applicant and the local zone manager shall see that the Preauthorization Conference addresses distinctions relevant to this rule, and the local zone manager shall assist the firm and the county assessor in determining such portions of the firm’s property that will qualify.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135, 285C.200 & 285C.210
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1400

Gross Receipts Test

(1) A gross receipts test shall determine the eligibility of a business firm or business operation that partially involves an ineligible activity only when:

(a) There are Applicable Gross Receipts;

(b) The firm is not eligible as described in OAR 123-674-1200(4); and

(c) For lack of definitive or physical separation, the ineligible activity cannot be effectively isolated from eligible activities for purposes of OAR 123-674-1300.

(2) The Firm/applicant or operation passes the gross receipts test and is otherwise eligible for authorization and qualification in the enterprise zone, if the ratio of Applicable Gross Receipts to Ineligible Receipts equals or exceeds 4.0.

(3) For purposes of this rule, the local zone manager shall see as part of the Preauthorization Conference that the authorization includes:

(a) An explanation of the eligibility of the firm or operation consistent with this rule; and

(b) Arrangements to substantiate this for the firm’s future qualification, as appropriate.

(4) “Applicable Gross Receipts” as used in this rule are based on:

(a) Sales revenue derived directly from a party external to the firm in exchange for goods, products, commodities, merchandise, work or services;

(b) Operations located entirely inside the enterprise zone;

(c) All activities of the firm within the enterprise zone;

(d) An annual total for the most recent fiscal year or calendar year; and

(e) The commercial state of affairs, as realized when the firm is qualified for the property tax exemption being sought, which is estimated for purposes of the Application or Preauthorization Conference.

(5) “Ineligible Receipts” as used in this rule are that subset of the same Applicable Gross Receipts that arise from an ineligible activity described in OAR 123-674-1200(1), including but not limited to receipts that entail:

(a) Consumption by an end-user among the public;

(b) Sales directly to a household or individual that is neither another business firm nor operating as such; or

(c) No subsequent resale of the applicable goods or products by the firm’s customer.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135 & 285C.140
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1500

Local Option for Hotels, Motels and Destination Resorts

(1) For purposes of exemption under ORS 285C.175 (but not ORS 285C.170) on qualified property owned or leased and operated by a Firm/applicant as a hotel, motel or destination resort inside an enterprise zone, with respect to eligibility under ORS 285C.135(5)(c), the business firm and the property must:

(a) Satisfy all applicable requirements; and

(b) Locate in a zone or portion of a zone as permitted under ORS 285C.070 and described in section (2) of this rule.

(2) For hotel/resort businesses, allowable enterprise zones include:

(a) Any future enterprise zone that is acknowledged by the Director in the order of designation as having opted to exempt such qualified property under ORS 285C.070 (see OAR 123-650-2200); and

(b) Subject to change, the following 41 current enterprise zones:

(A) The entire area of the Baker/County, Bay Area, Cascade Locks/Hood River, Columbia Cascade, Columbia River, Coquille Valley, Estacada, Florence, Forest Grove/Cornelius, Fossil, Grande Ronde, Grant County, Greater Umatilla, Harney County/Burns/Hines, Harrisburg, Jackson County, Klamath Falls/Klamath County, Lake County/Lakeview, Lower Umpqua, Malheur County, Medford Urban, Molalla, Port Orford, Roberts Creek, Rogue, Sandy, Sherman County, South Columbia County, South Douglas County, Sutherlin/Oakland, Sweet Home, The Dalles/Wasco County, Tillamook, Veneta and Woodburn Enterprise Zones and the Cottage Grove, Creswell & Southern Lane County Enterprise Zone;

(B) The Dallas/Independence/Monmouth Enterprise Zone, except for any area of Polk County outside city limits;

(C) The Deschutes Rural Enterprise Zone, except for any area of Deschutes County outside city limits;

(D) The Jefferson County Enterprise Zone, except for the incorporated territory of the City of Madras;

(E) The Lower Columbia Maritime Enterprise Zone, except for the incorporated territory of the City of Rainier; and

(F) The South Santiam Enterprise Zone, except for the incorporated territory of the cities of Albany, Millersburg and Tangent.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.070, 285C.135 & 285C.185
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-1600

Call Centers

For purposes of ORS 285C.135(5)(a):

(1) A Firm/applicant and its operations are eligible, regardless of retail or financial services, if:

(a) They serve the firm or its clients exclusively through computer, electronic, telephony or other telecommunication methods;

(b) No more than 10 percent of the customers or business transactions come from inside the local calling area, in which telephone calls are normally made to and from the firm’s location in the enterprise zone without long distance telephone charges or service; and

(c) Not engaged in telemarketing, but rather the firm is taking unsolicited orders or responding to prior instruction, including but not limited to:

(A) Following-up on pledges or expressions of interest to the firm or its client;

(B) Checking with users of client-supplied goods or services, for example, to continue or renew recently expired membership, contract, etc.; or

(C) Collection of voluntarily incurred dues, fees or other charges payable to the client.

(2) The percentage in subsection (1)(b) of this rule is:

(a) First substantiated by the Firm/applicant or local zone manager with the Application or Preauthorization Conference;

(b) Not predicated on the actual transaction or customer communication through a landline telephone call, but only on relative location as if it were;

(c) Calculated by dividing the number of customers or transactions in the local calling area by the firm’s total, arising from the operations in the zone; and

(d) Not dependent on precise calculation or verification, if the generally regional or national extent of the firm’s activities allow for a reasonable assumption of compliance.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-1700

Headquarter Facilities

For purposes of ORS 285C.135(5)(b):

(1) A Firm/applicant and its operations are eligible, regardless of retail, financial, professional or other such ineligible activities, if:

(a) The business is operating at two or more sites in significant ways outside of the enterprise zone;

(b) The operations in the zone support and serve the firm’s other operations throughout this state or throughout a multiple-state or larger region; and

(c) In approving the Application, the local zone manager includes a formal finding by the sponsor pursuant to the Preauthorization Conference under ORS 285C.140(7).

(2) The formal finding for subsection (1)(c) of this rule shall:

(a) Describe how the proposed investment and the business firm will satisfy subsections (1)(a) and (b) of this rule, including indications of applicable services, relevant region and the relationship among intra-firm operations; and

(b) State that the proposed investment is significant for the enterprise zone and the local economy succinctly explaining the reasons for this significance, such as size of anticipated operations relative to local measures of commerce, special job opportunities, diversification, strategic, marketing or visibility objectives of the zone, or other impacts.

(3) As required under ORS 285C.180(2)(g), the business firm may not qualify for the exemption under ORS 285C.175, if the actual investment in qualified property does not essentially conform to the proposed investment as described in the Application and section (2) of this.

(4) The local zone manager may modify the formal finding prior to an authorized business firm qualifying for the exemption, consistent with Application amendment in OAR 123-674-3200.

(5) For purposes of OAR 123-674-4000 to 123-674-4800, as provided under ORS 285C.200(8)(b)(B), only the employees working at a facility described in this rule are counted consistent with OAR 123-674-0200(3)(a).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135, 285C.140, 285C.180 & 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

Authorization Application and Approval

123-674-2000

Timely Submission

For purposes of ORS 285C.140(1):

(1) In applying for authorization with the sponsor of an enterprise zone and the county assessor, the Firm/applicant shall:

(a) Fill out the Application as completely as the Firm/applicant is capable of doing;

(b) Have the Application signed and dated by an owner, executive officer or legally authorized representative of such an owner or officer of the Firm/applicant; and

(c) Submit the Application by mail or otherwise to the local zone manager.

(2) In order for the sponsor to accept the Application from the Firm/applicant for potential approval, all of the actions described in section (1) of this rule must happen before:

(a) The Firm/applicant’s hiring of any eligible employee to qualify under ORS 285C.200; and

(b) Any physical work or vesting in the project, such as construction or reconstruction of a building or structure, construction of an addition or modifications to an existing building or structure, or installation of machinery & equipment, comprising all or part of the qualified property, on which the Firm/applicant will claim exemption under ORS 285C.175.

(3) Physical work for purposes of subsection (2)(b) of this rule includes site preparation that leads directly to construction, modification or installation of qualified property, such as fill, grading or leveling on raw land or the installation of underground utilities and utility connections, except the following:

(a) Offsite development; or

(b) On-site preparations that are incidental or unrelated to subsequent work on qualified property, such as improvements to prepare land for sale or for another project that did not go forward, to prevent erosion or otherwise maintain the land in good condition, or to accommodate or comply with government regulations or public improvements for roadways, trunk lines or the like.

(4) A faxed, e-mailed or similarly furnished copy of the Application is acceptable, if the copy is:

(a) Received by the zone sponsor before the time described in section (2) of this rule; and

(b) Promptly followed up by signed original to the local zone manager.

(5) Zone officials may verify conformity with this rule, as necessary, through:

(a) Final documents for transfer of ownership, sale closing or execution of a lease;

(b) Building permit or contract;

(c) Written statement/affidavit from someone other than an owner or employee of the Firm/applicant; or

(d) Similar forms of written and independently substantiated proof.

(6) The Firm/applicant shall pay an authorization filing fee, if directed to do so by the local zone manager, as described in OAR 123-668-1700.

(7) In the event that the local zone manager does not timely receive an Application as described in this rule, the manager may still accept it if the Firm/applicant produces dated evidence to the satisfaction of the zone manager and assessor that the Application was sent in a timely manner.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.140(1) & (12)
Stats. Implemented: ORS 285C.140 & 285C.145
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-2100

Allowably Late Applications

Notwithstanding OAR 123-674-2000(2), the zone manager may accept an Application after:

(1) Certain physical work that consists only of:

(a) Demolition, cleanup, environmental remediation, removal of hazardous materials, and so forth;

(b) On-site delivery, storage or upkeep of materials or elements of qualified property prior to construction/installation activity; or

(c) Construction or the like that occurred and completely ceased six months or longer before Application, consistent with paragraph (3)(b) of OAR 150-258C.180, insofar as the property is never placed in service and the Application precedes the resumption of work.

(2) The commencement of hiring or physical work, if the Application wholly replaces a previously submitted Application by December 31 immediately before the initial year of exemption consistent with OAR 123-674-3200, such that in this case, the originally submission date is used.

(3) The commencement of hiring or physical work pursuant to a waiver issued by the Department of Revenue, or as otherwise allowed under ORS 285C.140(11) and (12).

(4) The commencement of physical work on a qualified building or structure (aside from associated machinery & equipment) under 285C.145(2), if the following are true:

(a) Firm/applicant did not own or lease any such building or structure, or have a binding obligation to do so, at any time before the commencement of construction, reconstruction or modifications;

(b) Firm/applicant includes a copy of an executed lease or purchase agreement for the qualified building or structure with the Application;

(c) Firm/applicant does not have any familial, employment, corporate or other such entity relationship with the owner or previous owner of the building or structure; and

(d) Approval of the Application occurs before the Firm/applicant begins to use or occupy the building or structure for commercial operations.

(5) The commencement of physical work on one type of property that will not qualify, but before work begins on other property that may qualify, as differentiated consistent with ORS 285C.180(1) and described in OAR 123-674-3100(3).

(6) Even the completion of construction, modifications or installations as otherwise allowed in sections (2) to (5) of this rule.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.140(12)
Stats. Implemented: ORS 285C.140 & 285C.145
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-2300

Initial Processing by Local Zone Manager

Following submission of an Application:

(1) The local zone manager may collect an authorization filing fee as described in OAR 123-668-1700.

(2) The local zone manager shall deny the Application if finding:

(a) The Firm/applicant does not fulfill any basis for eligibility under ORS 285C.135;

(b) The Firm/applicant is unwilling or unable to unambiguously commit to an action/obligation as required under ORS 285C.140(2);

(c) The Application was submitted too late as described in OAR 123-674-2000 and 123-674-2100;

(d) The location of proposed qualified property is outside the enterprise zone boundary and no relevant boundary change is pending (or possible); or

(e) Other reason precludes authorization.

(3) Within 15 business days of denial per section (2) of this rule, the local zone manager shall:

(a) Refund any authorization filing fee that was paid;

(b) Write a letter to the Firm/applicant that justifies the denial;

(c) Send copies of the letter to the county assessor, Department of Revenue and the Department; and

(d) Ensure that the letter:

(A) Is sent to the Firm/applicant through certified mail or in such a way that the date of receipt can be verified; and

(B) Contains information on the Firm/applicant’s rights of appeal under ORS 305.404 to 305.560 to the Magistrate Division of the Oregon Tax Court.

(4) If there is no apparent reason to deny authorization, per section (2) of this rule, then the local zone manager shall undertake the Preauthorization Conference, inviting the county assessor, to explore eligibility questions, extended abatement criteria, matters related to OAR 123-674-4000 through 123-674-4600, and so forth.

(5) With respect to a sponsor’s failing to authorize under ORS 285C.140(9), a Firm/applicant may proceed with an appeal after 30 days following the submission of the Application, if no formal action is yet to be taken as described in this rule or in response to special circumstances in OAR 123-674-2500(4).

(6) After the Preauthorization Conference, the local zone manager shall approve the Application in order to authorize the Firm/applicant under ORS 285C.140(6), unless determining to deny it as described in sections (2) and (3) of this rule.

(7) If the Firm/applicant’s will locate in an urban enterprise zone that imposes additional conditions under ORS 285C.150 in effect at the time of authorization, the local zone manager shall:

(a) Approve the Firm/applicant for authorization only if the Firm/applicant has made acceptable commitments to satisfy such conditions; and

(b) Include a standardized attachment to the Application documenting the commitments of the Firm/applicant consistent with OAR 123-668-2500.

(8) In five or fewer business days after approval, the local zone manager shall:

(a) Fill out and sign the Approval Form except for the section pertaining to the county assessor;

(b) See that the county assessor has the Approval Form and a copy of the Application (with all current attachments);

(c) Notify the Firm/applicant of the status of the Application, as appropriate; and

(d) Inform the local contact agency for the First Source Hiring Agreement (see OAR 123-070 and 123-674-7000 to 123-674-7730).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-2500

Final Processing

(1) The county assessor or county assessment staff to whom the assessor delegates enterprise zone duties:

(a) Shall accept any requisite invitation to a Preauthorization Conference, as feasible and warranted.

(b) Shall approve or deny the Application within a reasonable time after receiving the Approval Form from the local zone manager.

(c) Shall in five or fewer business days after making a decision in subsection (b) of this section, respective to the Approval Form: Enter signature and date, verify the information as it pertains to future steps for the Firm/applicant, retain copy for assessor’s records, and return the remainder to the local zone manager.

(d) Shall include a written explanation with the materials returned to the local zone manager if denying authorization for any reason in OAR 123-674-4300(2).

(e) May refuse to approve the Application on condition of receiving a finalized item in section (4) of this rule, or other reasonably critical information from the Firm/applicant or zone sponsor, including but not limited to resolving a concern raised with the Preauthorization Conference, or an additional meeting if not properly notified of prior meeting.

(2) In completing the Approval Form, the local zone manager shall have a photocopy made of the Approval Form (with original signatures) for the zone sponsor’s records.

(3) If the county assessor denies the Firm/applicant’s authorization, the local zone manager or county assessor shall in 15 or fewer business days after denial:

(a) Refund any authorization filing fee that was paid.

(b) Have the respective top and colored copies of the Approval Form and the county assessor’s written explanation sent to the Firm/applicant through certified mail or in such a way that the date of receipt can be verified and distributed to the other entities listed in subsection (5)(a) of this rule.

(4) Pending the completion and inclusion of the following documents as part of the Application, to which they shall be attached, the local zone manager and county assessor may delay final processing of the Approval Form:

(a) Written agreement described in OAR 123-674-0700 for an extended abatement;

(b) Resolution or resolutions of the governing body or bodies of the zone sponsor for a local waiver of the employment increase requirement described in OAR 123-674-4300; or

(c) Executed lease or purchase agreement as necessary for OAR 123-674-2100(4).

(5) Subject to both the local zone manager and county assessor approving the Application, as well as wrapping up special circumstances related to section (4) of this rule, the local zone manager or county assessor shall have the respective copies of the Approval Form promptly distributed to:

(a) The following (with copies of the approved Application and attachments, as appropriate or requested):

(A) Firm/applicant;

(B) Department of Revenue; and

(C) Department; and

(b) Local contact agency for the First Source Hiring Agreement without Application attachments.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.145, 285C.155 & 285C.160
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Coverage and Effect of Authorization

123-674-3000

Being an Authorized Business Firm

(1) For purposes of ORS 285C.050 to 285C.250 and this division of administrative rules, the Firm/applicant becomes “authorized” only upon fulfillment of OAR 123-674-2500(5). (As applicable, County Wage is primarily established at that point)

(2) Authorization serves to establish and address critical issues related to a Firm/applicant’s knowledge of the enterprise zone, the eligibility of its business activity, Existing Employment, clarity in the unlikely event of concurrent Applications, and so forth.

(3) Authorization does not as such govern the qualified property subject to exemption under ORS 285C.170 or 285C.175, other than the basic, general parameters described in OAR 123-674-3100, in that:

(a) The anticipated timing, estimates and descriptions of the investment in qualified property in the Application are not in and of themselves binding and do not serve a regulatory function.

(b) The two exceptions to this section are qualified property of a headquarter-type facility (see OAR 123-674-1700) or in a rural renewable energy development zone (see OAR 123-680), in that the actual, completed project or facility must conform substantially to representations in the Application (aside from anticipated timing) to enjoy the standard exemption under ORS 285C.175.

(4) Such authorization must already be in effect for the Firm/applicant to use the exemption on qualified property under ORS 285C.170 for work in progress, as described in OAR 123-674-6000, although the Firm/applicant may apply for and receive exemption on property as otherwise allowed under ORS 307.330.

(5) In order to receive exemption under ORS 285C.175 on qualified property that is in service:

(a) The zone sponsor/county assessor shall authorize the Firm/applicant, at the absolute latest, before it files its initial claim for exemption with property schedule under ORS 285C.220 and 285C.225.

(b) Such an exemption claim may be provisionally filed pending authorization delayed for extenuating circumstances through no fault of the Firm/applicant, but authorization must occur before the firm may qualify for the exemption.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.170, 285C.175, 285C.220 & 285C.225
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-3100

Limitations on Exemption Relative to Authorization

The Application and the information in it restrict what qualified property may receive exemption under ORS 285C.170 or 285C.175 in only the following four ways under ORS 285C.180(2)(d) to (f) and 285C.225(3), in that any qualified property must be:

(1) Possessed for use by the Firm/applicant or qualified business firm:

(a) In that the firm must either own the property or lease it as described in OAR 123-674-5500.

(b) Except as allowably transferred to another eligible business firm acquiring the authorized firm or the property, including but not limited to OAR 123-674-4800.

(2) At the same general location:

(a) That encompasses a single, coherent area of business operations;

(b) Which may consist of a complex of lots or parcels of land or of a comparably proximate set of multiple sites, such that each lot, parcel or site is separated one from the other by commonly owned land, and not otherwise broken up except by roads, easements and so forth; and

(c) Which the Firm/applicant need not describe in whole, such that inclusion in the Application of a street address or tax lot within the overall area is sufficient.

(3) Generically identified in submissions or other Application materials in terms of:

(a) Buildings or structures, each of which has construction, reconstruction or modification costs of $50,000 or more; reference with the Application to a particular project, for which associated improvements are implicit, may be treated as adequate for this subsection.

(b) The basic category of property, regardless of cost, as represented by some such indication of:

(A) Newly constructed buildings/structures;

(B) Additions to or modifications to existing buildings, structures or portions thereof;

(C) Newly installed real property machinery & equipment;

(D) Modifications to real property machinery & equipment under ORS 285C.190; or

(E) Newly installed personal property.

(4) Placed in service over not more than three successive years:

(a) Once the business firm successfully claims any exemption pursuant to the Application (whether later or earlier than anticipated), subsequent exemptions may be claimed based on the same Application only in one or both of the next two years. This is true regardless of an extended abatement or the length of the underlying periods of exemption.

(b) Additional qualified property covered by each subsequent exemption necessitates its being:

(A) Placed in service during the first or second year of the initial exemption; and

(B) Listed in a new property schedule under ORS 285C.225, as filed with the same exemption claim for that and prior property (see OAR 123-674-6100 and 123-674-6200).

(c) Each exemption as described in this section shall enjoy its own three to five-year exemption period, which will overlap.

(d) All overlapping exemptions for purposes of this section are subject to disqualification for noncompliance of the business firm based on only the requirements arising from the Application.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.170, 285C.175, 285C.180, 285C.185, 285C.l90, 285C.220 & 285C.225
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-3200

Amending the Application/Authorization

For purposes of amending an application before or after its approval:

(1) To substantively modify the Application, such that it reestablishes what might be exempt as described in OAR 123-674-3100, the Firm/applicant must formally deliver the amendment on or before December 31 preceding the initial year of exemption under ORS 285C.140(3), including but not limited to:

(a) Changing the Firm/applicant to that of another eligible business firm that has or is purchasing or leasing the qualified property of an actively authorized business firm;

(b) Revising the location of the property inside the same enterprise zone; or

(c) Adding a basic type of property absent from the Application, or distinct projects or operations entailing substantial new development.

(2) The Firm/applicant may do so through written explanation delivered to the local zone manager and county assessor that is identified as an amendment, addendum, correction or the like in reference to the Application, without directly altering previously submitted materials, or for example, a Firm/applicant may submit a new, replacement Application per OAR 123-674-2100(2).

(3) Amendment is strongly encouraged at any time, even if unnecessary to secure exemption on any property, whenever information in the submitted Application is significantly inaccurate due to:

(a) An error or omission;

(b) A change in plans; or

(c) New name or mailing address of the Firm/application, because of the company’s restructuring or its ownership changing hands, in which case the relevant rights and requirements of authorization automatically transfer along with ownership of the firm; or

(d) Similar reasons.

(4) An authorization renewal statement under ORS 285C.165 shall revise all information in the Application that is no longer accurate, especially with respect to anticipated timing for the investment (see 123-674-3700).

(5) Once the Firm/applicant is authorized, an amendment may not be used to make or alter a determination, waiver, extension or the like under ORS 285C.150, 285C.155, 285C.160, 285C.200(2) or 285C.205.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.145, 285C.165, 285C.180 & 285C.220
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-3500

Additional, Concurrent Authorizations

While amendment to an outstanding Application as described in OAR 123-674-3200 is generally preferable for reasons of simplicity, approval of two or more outstanding Applications for the same Firm/applicant in the same enterprise zone is allowable, and in come cases, desirable or necessary:

(1) The Firm/applicant must make another Application for any case that goes beyond what a single Application may cover, according to OAR 123-674-3100, such as investments in qualified property:

(a) At more than one general location inside the zone;

(b) Inadequately indicated in terms of a basic type of property or major improvements in the Application, which may not be amended once the first year of the initial exemption has already begun; or

(c) That will not be in service until the third or later year following the first exemption year of initial property covered by a current authorization.

(2) For any additional Application even if for proposed qualified property at the same site:

(a) It must be timely submitted according to OAR 123-674-2000 and 123-674-2100 in terms of the commencement of work on newly proposed property; and

(b) It establishes unique Existing Employment and resulting criteria under ORS 285C.200 and 285C.210.

(3) In the event of concurrent exemptions under ORS 285C.175 on qualified property covered by two or more Applications, the authorized business firm shall file separate exemption claims and property schedules, as described in OAR 123-674-6100 and 123-674-6200, corresponding to each Application and associated qualified property, such that qualification depends on satisfying:

(a) Criteria arising from the Application most clearly associated with the particular property (including but not limited to consideration of when work on such property actually commenced).

(b) The effectively most stringent requirement among outstanding Applications for any qualified property that does not definitively relate to any particular Application.

(c) The effectively least stringent requirement among the outstanding Applications for qualified property specifically described by two or more Applications.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.170, 285C.175, 285C.180, 285C.185, 285C.l90, 285C.220 & 285C.225
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-3700

Renewal of Active Status and Inactive Authorization

Under ORS 285C.165 an eligible business firm’s authorization in an enterprise zone becomes ‘inactive’ after more than two years:

(1) The authorization remains active over:

(a) The remainder of the year after approval of the Application;

(b) The two-year period immediately following; and

(c) Each two-year period directly thereafter, subject to a statement of renewal as described in subsection (2)(b) of this rule.

(2) Authorization is still ‘active’ if immediately after any period described in section (1) of this rule, the firm:

(a) Files under ORS 285C.220 and 285C.225 to initially claim exemption on qualified property placed in service during such timeframe; or

(b) Submits a written statement between January 1 and April 1 (as presently received by both the local zone manager and the county assessor’s office) that:

(A) Comes from the firm consistent with authority required for Application;

(B) Affirms that the firm still intends to complete its proposed investment in qualified property inside the zone and to claim the exemption;

(C) Revises or amends any relevant information in the Application; and

(D) Formally accepts resetting/updating of the County Wage applicable to any compensation standard.

(3) An inactively authorized business firm retains its right to claim the exemption after the timeframe described in section (1) of this rule, but letting active status lapse has the following consequences with the initial exemption claim:

(a) Filing fee under ORS 285C.165(3); and

(b) Updated/revised County Wage with any compensation standard.

(4) Moreover, an inactively authorized business firm may not receive exemption under ORS 285C.170, while qualified property is in the process of construction, modification or installation, but it may still seek exemption under applicably comparable provisions of ORS 307.330 and 307.340.

(5) This rule no longer applies once exemption is granted under ORS 285C.175, or the zone terminates under ORS 285C.245 (see OAR 123-674-8100).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.170, 285C.175, 285C.180, 285C.185, 285C.l90, 285C.220 & 285C.225
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Employment of Firms

123-674-4000

Computation of Average Employment

(1) Annual Employment or Existing Employment is calculated such that:

(a) The actual employment of the firm at the end of each period (such as pay periods or calendar months) that concludes during any exemption year or the entire 12 months before Application shall be summed and then divided by the total number of periods.

(b) Periods are not longer than a quarter of a year, and such quarters shall begin on January 1, April 1, July 1 and October 1.

(c) Results are rounded to a whole number equal to one or more.

(2) For purposes of determining Existing Employment relative to the submission of the Application:

(a) The time when applicable physical work began shall be used instead of the submission date, whenever appropriate or necessary for special situations that completely waive the requirement for timely submission.

(b) If such physical work has not yet begun, an authorized business firm may submit a replacement Application to establish a lower level of Existing Employment; otherwise, the number from the original submission date stands.

(c) The Firm/applicant may correct for a miscalculation by amending the Application under ORS 285C.140(3) (see OAR 123-674-3200), including but not limited to erroneous counting of part-time, temporary, seasonal or ineligible employees.

(d) After the first (January-1) assessment date for exemption under ORS 285C.175, Existing Employment may be altered only to correct for a gross error, subject to a formal finding of good cause by the Department.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.140(12)
Stats. Implemented: ORS 285C.140, 285C.200 & 285C.210
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-4100

Employment Requirement to Qualify Initially

To receive and begin an enterprise zone exemption under ORS 285C.175, an authorized business firm must qualify by filing under ORS 285C.220 and 285C.225 (as described in OAR 123-674-6100):

(1) The first Claim Employment must equal or exceed the greater of one plus, or 1.1 times, Existing Employment. (If the actual Claim Employment is insufficient, the requirement under ORS 285C.200(1)(c) is still met if a sufficiently high level of employment was achieved at any time prior to April 1 but after Application, as explained by the business firm in an attachment to the claim form)

(2) For a subsequent exemption on additional qualified property pursuant to the same Application, as described in OAR 123-674-3100(4), the requirement of section (1) of this rule has effectively already been satisfied.

(3) If section (1) of this rule is not satisfied, then the county assessor shall deny the exemption claim and not grant any exemption under ORS 285C.175 on qualified property, except with a waiver by the zone sponsor and qualification as described in OAR 123-674-4300. Such denial does not directly affect the firm’s authorization status and its ability to qualify other (later) property under ORS 285C.170 or 285C.175.

(4) Under ORS 285C.200(6), the transfer of eligible employees, jobs or positions into the zone from a site within 30 miles outside the zone boundary triggers an additional requirement in terms of section (1) of this rule, insofar as any part of the transfer occurred between the time of Application and the end of the initial year of exemption. For purposes of this section’s additional requirement, the definitions of Claim Employment and Existing Employment are expanded to include the number of employees located at any such site, as well as those inside the zone.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.175, 285C.200, 285C.220 & 285C.225
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-4200

Diminishing Employment Well beyond the Zone

Under ORS 285C.200(1)(d) and (5), an authorized business firm seeking an exemption in any enterprise zone may not qualify or remain qualified, if the firm transfers operations into the zone involving the closure or curtailment of operations and any drop in employment or job losses elsewhere in this state:

(1) Unless the originating location is 30 miles or less from the boundary of the zone, and the firm meets the requirements under ORS 285C.200(6) and 285C.210(2)(c) described in OAR 123-674-4100(4) and 123-674-4600(2).

(2) Except if the firm demonstrates, with or without the assistance of the zone sponsor, to the satisfaction of the county assessor or the Department that the curtailment/job losses:

(a) Occurred entirely before Application;

(b) Occur entirely after the initial year of exemption on qualified property;

(c) Will not be permanent, such that restoration of the jobs is reasonably likely and does in fact happen on or before December 31 of the initial year of exemption;

(d) Pertain to business operations that the firm does not control in any way through common ownership, corporate affiliation, contracts governing relevant operations, or the like;

(e) Are completely unrelated to investments in the zone, such that there is effectively no transfer of curtailed operations or jobs into the zone; or

(f) Have only de minimis impact, which the Department may deem true if job losses will amount to less than one hundredth of 1 percent (0.01%) of the most recently available figure from the State Employment Department for annual average total nonfarm, private employment in the county experiencing curtailed operations.

(3) For purposes of this rule, transferred operations and curtailed employment relate to any type of business activity, including but not limited to what would be ineligible in an enterprise zone.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.200, 285C.210 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-4300

Local Waiver of Employment Increase inside Zone

For purposes of ORS 285C.155, 285C.200(2) and 285C.205, in which the local enterprise zone sponsor waives the required increase in the employment of the firm:

(1) The requirements as described in OAR 123-674-4100(1) or 123-674-4600(1) do not apply, but those related to not decreasing employment outside the zone still do, consistent with OAR 123-674-4100(4), 123-674-4200 and 123-674-4600(2), if relevant.

(2) To use the provisions of either ORS 285C.200(2)(b)(A) or (B), each governing body of the sponsor must adopt a resolution:

(a) Before authorization of the eligible business firm;

(b) Stipulating the minimum employment level to be maintained during the exemption as described in section (4) of this rule; and

(c) Identifying any other reasonable condition in accordance with OAR 123-668.

(3) The resolution(s) described in section (2) of this rule shall incorporate:

(a) The minimum investment under ORS 285C.200(2)(b)(A), which the firm may satisfy based on the cost of qualified property placed in service and contained in property schedules over as many as three successive years. [Multiple authorizations, consistent with subsection (2)(a) of this rule, may be used for concurrent investment activity at one or more locations inside the same zone]; or

(b) Specifications and methods for managing, measuring and enforcing the requirements under ORS 285C.205, to increase productivity by 10 percent, and to dedicate 25 percent of the property tax savings to employee training under ORS 285C.200(2)(b)(B).

(4) The minimum employment as stipulated in the resolution(s):

(a) Is a single, stated number of employees;

(b) May be determined, as indicated in the resolution(s), by way of either Annual Employment or Claim Employment; and

(c) Relative to Existing Employment, it:

(A) May be lower for purposes of ORS 285C.200(2)(b)(A); or

(B) Shall be at least the same under ORS 285C.200(2)(b)(B).

(5) Prior to July 1 of the initial exemption year, the sponsor may (jointly) modify its resolution in accordance with sections (2) to (4) of this rule, but only if so requested by the firm.

(6) Failure to satisfy the minimums, requirements or conditions, as described in this rule, shall result in the exemption’s denial or disqualification consistent with OAR 123-674-4100(3) and 123-674-6400, although the county assessor is in no way obligated to consider compliance with any requirement arising under ORS 285C.155 or 285C.205 without formal communication from the zone sponsor.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.155, 285C.200, 285C.205, 285C.230 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-4600

Maintaining Sufficient Employment

For purposes ORS 285C.200(1)(e) and 285C.210:

(1) Failure occurs (unless waived under ORS 285C.155 and 285C.200) if:

(a) The latest Annual Employment is less than the greater of one plus, or 1.1 times, Existing Employment;

(b) The current Claim Employment is less than 15 percent of any previous Claim Employment; or

(c) Both the current Claim Employment and the one from the prior year are less than 50 percent of any previous Claim Employment.

(2) Subject to OAR 123-674-4100(4)’s being effective, a qualified business firm must likewise meet an additional requirement in terms of section (1) of this rule but only for the initial year of exemption. For purposes of this section’s additional requirement, Annual Employment, Claim Employment and Existing Employment broaden to include employees located at any relevant site outside but within 30 miles of the zone boundary, as well as jobs inside the zone.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.200, 285C.210, 285C.220, 285C.230 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-4800

Sale or Leasing of Property while Exempt

For purposes of ORS 285C.175(2)(c), a qualified business firm may sell or lease qualified property without triggering disqualification on such property under 285C.240, such that the exemption continues for the remainder of its normal period. This rule depends on all of the following:

(1) The qualified property continues to be located and eligibly used inside the enterprise zone.

(2) The purchaser or lessee is an eligible business firm.

(3) Effective satisfaction of requirements under ORS 285C.210 as described in OAR 123-674-4600 continues, such that:

(a) The Annual Employment of the purchaser/lessee and of the originally qualified business firm equal or exceed the sum of:

(A) The minimum Annual Employment required of the firm per OAR 123-674-4600(1)(a); and

(B) The annual average employment of the purchaser/lessee in the zone immediately prior to the change in ownership/lease; and

(b) The combined Claim Employment sufficiently compares to previous Claim Employment, plus the total employment of the purchaser/lessee in the zone at the time of the change in ownership/lease.

(4) That the purchaser/lessee and the qualified property comply with all other applicable requirements.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.050, 285C.175, 285C.210 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Qualified Property

123-674-5000

Critical Property Terms

As used in 285C.050 to 285C.250, consistent with relevant definitions in ORS Chapter 307 and OAR 150-285C.180, and in this division of administrative rules unless the context dictates otherwise:

(1) “Addition” includes one or both of the following as indicated by the context:

(a) The re-construction of an existing building or structure to expand or enlarge its area, volume, dimensions or structural capacity; or

(b) The newly erected or created space, enclosure or annex of the building or structure, per the re/construction described in subsection (a) of this section.

(2) “Building” includes a real property improvement erected on the land, mostly enclosed by walls and roofing, and designed for human use, occupancy or shelter, along with structural components necessary to make the building usable and habitable such as wiring, plumbing, foundation, fixtures, lighting and heating and cooling system.

(3) “Commercial” relates to the principal undertaking by a qualified business firm in the direct furtherance of the production of income through the handling, making or provision of goods, products or services for ultimate (though not typically direct) sale.

(4) “Completion of construction, addition, modification or installation” has the same meaning as placing property ‘in service’ under ORS 285C.050, in that it is legally and practically ready, following installation, testing or proving of safety, information and other systems essential to produce commercially viable output, as well as necessary use & occupancy permits. Excluded are training of personnel and other similarly intangible activities, however critical they might be for business operations in general.

(5) “Cost” means expenses documentable through existing records or retrospective compilation of evidence as incurred for:

(a) Construction, reconstruction, modification or installation of qualified property, including but not limited to materials, supplies, labor, paint, contractor charges, equipment usage, engineering, architectural fees and physical connections to utilities and other property, but excluding the costs associated with maintenance, financing, legal fees, off-site improvements, the authorized business firm’s own management and so forth; or

(b) Purchase of real or personal property machinery & equipment or of ready-made buildings or structures directly prior to installation or occupancy. Estimated fair market value shall substitute for purchase price in the case of existing property, for which there has not been a recent sale (for example, leasing of used property).

(6) “Installation” is the actual placement, affixing, connection or integration of machinery & equipment or personal property in or with a building, structure or other machinery & equipment for purposes of being used and does not mean the purchase, onsite delivery or storage of such property.

(7) “Item,” subject to further definition in OAR chapter 150 under ORS 285C.185(6)(b), includes any personal property that may be effectively appraised or assessed as a unit, including but not limited to an entire conveyance, information or other system, the various components of which are mechanically, electrically or similarly integrated.

(8) “Land” includes raw undeveloped land and any improvements to the land for site development.

(9) “Located in/inside the enterprise zone” means the use or operation of qualified property for trade or business operations within the current boundary of the enterprise zone, from which it is not removed during the standard exemption period other than incidental reasons of repair, maintenance and so forth.

(10) “Modification” under ORS 285C.050 comprises:

(a) Reconditioning, refurbishment, retrofitting or upgrading of real property machinery & equipment for purposes of ORS 285C.190; or

(b) The alteration or reconstruction of all or part of an existing building or structure, as distinct from an addition to the building or structure.

(11) “Personal property” includes any tangible property (readily movable as opposed to effectively fixed or very heavy) that is used in the business process or activity and is otherwise subject to ad valorem taxation, including but not limited to devices, tools and (former) spare parts that are put to use (see OAR 123-674-5200).

(12) “Production of tangible goods” means any physical process or manipulation of materials, commodities or products, including but not limited to manufacturing, assembly, sorting, cooking, heating, freezing, mixing, sorting, wrapping, onsite conveyance, packaging or bulk printing.

(13) “Real property machinery & equipment” include real property (fixed or stationary and immovable due to weight, size or attachment to or integration with other real property) used in business activity and not otherwise described in this rule, including but not limited to devices, specialized pipes, air filtration systems, wiring, electrical panels or switches, or other non-structural, assembled apparatus. (This type of property may be classified as ‘personal property’ for income tax or other purposes)

(14) “Structure” includes a real property improvement on or under the land other than buildings, machinery or equipment, including but not limited to ramps, docks, parking lots, outdoor freestanding signs, subterranean compartments and outdoor lighting, as well as associated fixtures, paving, wiring, pipes, foundations and so forth.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.050 - 285C.250
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-5100

Eligible Utilization

For purposes of property to be exempt in an enterprise zone under ORS 285C.170 or 285C.175:

(1) It must be exclusively for use in one or more eligible activities described in OAR 123-674-1100 and not an activity listed in OAR 123-674-1200(1).

(2) Consistent with section (1) of this rule, some property will typically not qualify for the exemption, including but not limited to the following examples:

(a) Commercial fixtures and space in a retail setting;

(b) A commercially operated kitchen and associated fixtures and appliances for retail food service;

(c) Entertainment, recreational and exercise facilities or equipment;

(d) Medical devices; or

(e) Construction equipment.

(3) Sections (1) and (2) of this rule are excepted in the case of otherwise qualified property that is used for operations and at facilities described in OAR 123-674-1200(3) or (4), including but not limited to electronic commerce operations in a so-designated area as described in OAR 123-662.

(4) Any such property must also:

(a) Relate to the Application consistent with OAR 123-674-3000 through 123-674-3500; and

(b) Be constructed, added to, modified or installed in the zone to serve essentially only commercial/non-personal purposes.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.135, 285C.180, 285C.185 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-5200

Mechanical, Personal and Unqualified Property

For purposes of enterprise zone property to be exempt under ORS 285C.170 or 285C.175:

(1) Real property machinery & equipment or personal property may qualify, despite prior usage outside the zone (or as allowed under ORS 285C.190), such that the exempt value is based on the usual factors of appraisal, such as age, deterioration and obsolescence, as well as any reconditioning, refurbishment or restoration.

(2) More than three months before submission of the Application, any real property machinery & equipment (except under ORS 285C.190) or personal property must not be both:

(a) Owned or leased by the business firm; and

(b) Located in the county containing the site of the property inside the zone.

(3) An item of personal property machinery & equipment with a cost of less than $50,000 qualifies for the exemption only if used:

(a) Exclusively in the production of tangible goods, which by itself will usually preclude furniture and most simple, ordinary communication, design, information, office or video machines; or

(b) In electronic commerce at a location in a so-designated area as described in OAR 123-662.

(4) Subsection (3)(a) of this rule also covers personal property items of machinery & equipment:

(a) Even if the tangible good in question is not actually created or manufactured from raw inputs, but is instead modified, processed, restored, repaired, measured, sized, imprinted, packaged, conveyed, shipped or comparably affected in a physical manner.

(b) That maintain, calibrate, adjust, monitor, test or fix qualified property directly involved with tangible output or production, or that assure quality control of tangible output or production, including but not limited to research and development equipment incorporated into production activities.

(5) Regardless of any other provision of this division of administrative rules, the following property does not qualify for the exemption:

(a) Land and improvements “to” raw land, such as site preparation.

(b) Any item of personal property with a cost of less than $1,000.

(c) Fuel, lubricants and other ‘non-inventory’ supplies.

(d) Any machinery, equipment or device that can roam freely by its own motive power under the control of an operator/driver, including but not limited to forklifts.

(e) Any self-propelled motorized vehicle.

(f) Any device or item that is pulled, pushed or carried by a vehicle and designed to hold and transport people, goods or property on highways, waterways or railways beyond the zone boundaries, including but not limited to trailers, rolling stock, barges, carriages or railroad cars.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.180, 285C.185 & 285C.190
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-5300

Buildings, Structures and Other Real Property

For purposes of enterprise zone property to be exempt under ORS 285C.170 or 285C.175:

(1) A building, structure or newly installed real property machinery & equipment does not qualify, unless the cost of all such property in a single property schedule under ORS 285C.225 equals or exceeds $50,000 in total.

(2) Qualified property, including but not limited to a building or structure, is severable under ORS 285C.180(5) (which does not pertain to the matter of timely Application), such that:

(a) A part of the building or structure may be exempt, even if another part of the same building or structure is owned or leased by a different business firm, used for ineligible activities, or otherwise not subject to the same exemption; and

(b) The amount of property value that is exempt shall be determined through pro rata calculation based on floor area or other reasonable method, as preferably considered with the Preauthorization Conference, and verified by the zone sponsor, as necessary.

(3) If so classified by the county assessor as structural improvements rather than enhancements to the land, landscaping or comparable elements may qualify, for example, a golf course in the case of a hotel, motel or destination resort under ORS 285C.185(4).

(4) The exemption on qualified additions, modifications, reconditioning, refurbishment, retrofits or upgrades under ORS 285C.175(3)(b) is measured in each year by:

(a) Computing the assessed value of such taxable property (lesser of real market value or maximum assessed value in each case):

(A) With such qualified improvements or changes; and

(B) Without such qualified improvements or changes (that is, the assessed value that would have been subject to taxation) accounting for other concurrent changes to property.

(b) Taking the difference between the values described in paragraphs (a)(A) and (a)(B) of this section, such that any negative difference equates to zero.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.175, 285C.180, 285C.185 & 285C.190
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-5400

Property Already Entered on Rolls

Qualified property already entered on the assessment roll of the county — but only after the effective date of the zone’s designation or the area’s amendment into the zone — may under certain circumstances receive exemption under ORS 285C.170 and 285C.175, including but not limited to the following examples:

(1) Assessment occured while in the process of construction, modification or installation, even if the taxpayer did not apply in a timely or acceptable fashion under ORS 285C.170 or 307.330 and 307.340.

(2) Acquisition of machinery & equipment located elsewhere in the county by the Firm/applicant but subsequently installed in the enterprise zone.

(3) While an administrative or judicial appeal is pending.

(4) The authorized business firm misses the first-year filing deadline but receives the remaining years of the exemption as described in OAR 123-674-6100(5)(b).

(5) A building or structure acquired from an unrelated third party and authorized as described in OAR 123-674-2100(4) (provided the building, structure, or the applicable portion of or improvement to it was not in service for more than a year preceding the first year of exemption).

(6) Other circumstances that do not necessarily nullify the exemption under ORS 285C.175.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.170, 285C.175, 285C.180 & 285C.220
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-5500

Obligations for All Leases, Lessors and Lessees

(1) Qualified property that is not owned by the authorized business firm is exempt in an enterprise zone under ORS 285C.185(3) subject to all other applicable requirements, if used, occupied or operated by the firm under a lease agreement executed no later than July 1 of the first year of exemption on the leased property under ORS 285C.175.

(2) The term of the lease must also extend until at least the end of the tax year that begins in the last exemption year, unless the qualified business firm will or does assume ownership of the property by such time.

(3) The owner of leased qualified property may be any person or corporation, including but not limited to a public body or an owner of the firm.

(4) The lease agreement must effectively operate as a net lease, inasmuch as:

(a) The firm/lessee directly pays all ad valorem taxes assessed against any property covered by the lease agreement; or

(b) The firm/lessee will compensate the owner of the property in full for such property taxes in addition to rent or other costs throughout the period of the lease.

(5) The stipulation of a net lease is irrelevant if the owner and lessee have common ownership and are subject to treatment as a single eligible business firm according to OAR 123-674-0200(4).

(6) The owner of any such qualified property (even machinery & equipment) must join the firm in filing the property schedule as an attachment to the exemption claim form under ORS 285C.225(4)(d) for the first exemption year, such that the owner or the owner’s authorized legal agent signs one of the following:

(a) The same property schedule that has the original signature of the firm’s representative; or

(b) An attachment to the schedule that provides for equivalent acknowledgment by the owner.

(7) For purposes of this rule, a lessee that sub-leases property to the firm may substitute for the “owner.”

(8) The owner has the same right as the firm to timely notify the county assessor and the zone sponsor under ORS 285C.240(1) if a requirement is not met, in order to avoid penalties under ORS 285C.240(4).

(9) A copy of the lease agreement is not required with Application or with the exemption claim, except as described in OAR 123-674-2100(4) or as requested by the county assessor.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.170, 285C.175, 285C.180 & 285C.220
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Filing and Compliance

123-674-6000

Exemption Prior to Property Being ‘In Service’

Under ORS 285C.170 qualified property of an actively authorized business firm in the enterprise zone is exempt from ad valorem taxation for up to two years, such that:

(1) Consistent with OAR 123-674-6100(4), this exemption precedes and complements the one under ORS 285C.175, in that

(a) It applies only to property that is not yet placed in service before the (January-1) assessment date; and

(b) The property is thus not qualified to start the three- to five-year exemption period in the present assessment year.

(2) This exemption is largely interchangeable with the one under ORS 307.330 and 307.340 (Commercial Facilities Under Construction); common elements are that:

(a) The firm must file with the county assessor, as described in section (3) of this rule, no later than April 1 of each assessment year when the property exists in the zone/county;

(b) Any (utility) property subject to central assessment by the Department of Revenue is disallowed;

(c) Exemption is permissible for not more than two consecutive years; and

(d) The relationship to ORS 285C.175 as described in section (1) of this rule is the same in terms of the property being in service or not.

(3) The firm shall file the latest revision of the Department of Revenue form 150-310-021, Application for Construction-in-Process Enterprise Zone Exemption. An eligible business firm that instead files form 150-310-020, Application for Cancellation Of Assessment On Commercial Facilities Under Construction, will:

(a) Receive only the treatment allowed under ORS 307.330; but

(b) It needs to do so in any case for situations described in section (5) and (6) of this rule.

(4) The following may be exempt in the zone, but would not be under ORS 307.330:

(a) Property at a project site where there is no construction of or additions to a building or structure;

(b) Mere modifications to a building or structure;

(c) A nonmanufacturing facility with re/construction taking less than a year’s time to complete and to put the facility in service;

(d) Additional property that is not yet placed in service, even though a portion or element of the project, facility or structure has been completed, consistent with OAR 123-674-5300(2); or

(e) Machinery & equipment, even if it will:

(A) Not be installed in or affixed to a building, structure or addition thereto; or

(B) Remain personal property after installation.

(5) Irrespective that property might qualify under ORS 285C.175, the following situations may not use this exemption, although exemption under ORS 307.330 is possible:

(a) Property had been exempt already at the same site in the zone under ORS 307.330 even if for only one year;

(b) The business firm is a hotel, motel or destination resort, regardless of the zone;

(c) The authorized business firm does not or will not necessarily own or lease the property;

(d) The business firm has applied but is not yet authorized, consistent with OAR 123-674-3000 by the April-1 filing deadline in this rule; or

(e) As of the January 1 assessment date:

(A) Authorization is inactive under ORS 285C.165 unless also renewed by April 1;

(B) Property is not yet located inside the boundary of the designated zone; or

(C) The zone has terminated.

(6) Pending approval of the Application, the firm may file and have property exempted as allowed under ORS 307.330, such that:

(a) After approval/authorization, the assessor may extend exemption under ORS 285C.170 to other qualified property subject to this rule; but

(b) The ongoing exemption of property may continue only under ORS 307.330.

(7) The county assessor shall not exempt property specifically under ORS 285C.170, if the assessor has a reasonable and definitive reason to believe that:

(a) The property is or will not be qualified property when placed in service;

(b) The authorized business firm will not qualify under ORS 285C.200; or

(c) Other applicable requirements under ORS 285C.175 will not be met.

(8) In the face of significant doubts about conformance with the requirements of ORS 285C.170, the assessor may depend on reasonably requested information or confirmation from the firm or zone sponsor, before determining to the grant the exemption.

(9) Consistent with subsection (2)(c) of this rule, property exempted under ORS 285C.170 may not receive further exemption under ORS 307.330 beyond the cumulative two-year period.

(10) In the event that the anticipated exemption under ORS 285C.175 is unclaimed under ORS 285C.220, denied, or disqualified under ORS 285C.240, the exemption as described in this rule is not necessarily jeopardized in any way, even for such property that would not normally be exempt under ORS 307.330.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.165, 285C.170 & 307.330
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6100

Mandatory First-year Claim with Property Schedule

For purposes of an enterprise zone exemption on qualified property under ORS 285C.175:

(1) The authorized business firm:

(a) Must file the latest revision of the following Department of Revenue forms with the county assessor under ORS 285C.220 and 285C.225 to begin the exemption period:

(A) 150-310-075, Oregon Enterprise Zone Exemption Claim; and

(B) 150-310-076, Oregon Enterprise Zone Property Schedule (as an attachment that lists and identifies the property to be exempt);

(b) May do so only after December 31 of the year, in which the re/construction, modification or installation of qualified property is completed; and

(c) Shall send copies of the forms to the zone sponsor.

(2) The property must not have been in service at a location inside the zone before January 1 of the year directly prior to claiming the exemption as described in section (1) of this rule.

(3) Subsection (1)(b) of this rule is synonymous with qualified property having been ‘placed in service’ during that year, which:

(a) May be only a portion of the entire investment proposed with authorization; and

(b) Does not include property (even if physically operable or finished) that pending completion of the overall facility or investment is still:

(A) Incapable of effective use or occupancy for commercial or regulatory purposes; or

(B) Not yet intended for use or operation, subject to testing, shakedown or other general startup steps.

(4) Sections (1) to (3) of this rule dovetail and are mutually exclusive with criteria for exemption under ORS 285C.170, as described in OAR 123-674-6000.

(5) The filing as described in section (1) of this rule shall be due no later than the corresponding April 1, but:

(a) By June 1, the authorized business firm may submit it with a late fee under ORS 285C.220(7) or amend a timely filed property schedule form under ORS 285C.225(5); or

(b) On or before April 1 of the next year, the authorized business firm may file very late under ORS 285C.220(10) without a fee to receive the remainder of an exemption minus the first year, provided the firm was in compliance with all applicable requirements in order for the exemption to have been in effect during that first year.

(6) The county assessor may deny the exemption under ORS 285C.175(6) if unable to obtain critical and reasonably requested clarification, confirmation or substantiation of information missing from or supplemental to the filed forms from the:

(a) Firm under ORS 285C.220(3); or

(b) Zone sponsor under ORS 285C.230, or as arranged with the Preauthorization Conference.

(7) The county assessor shall deny the exemption:

(a) To any authorized business firm with inactive status, as described in OAR 123-674-3700, if the filing does not include the fee under ORS 285C.165(3) (in addition to subsection (5)(a) of this rule if applicable).

(b) On any property that is not actually in use or occupancy between January 1 and June 30 of the first year that the exemption is claimed, notwithstanding its being in service by January 1 or even in use or occupancy during the preceding year.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.165, 285C.170, 285C.175, 285C.220, 285C.225 & 285C.230
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6200

Filing Latter-year Claims

For qualified property to continue to be exempt in an enterprise zone throughout the entire period under ORS 285C.175:

(1) The qualified business firm must file annually under ORS 285C.220:

(a) Using the latest revision of Department of Revenue form 150-310-075, Oregon Enterprise Zone Exemption Claim;

(b) With the county assessor and a copy to the zone sponsor;

(c) On or before April 1 directly after every assessment year of exemption; and

(d) In addition to the first-year filing described in OAR 123-674-6100.

(2) The claim form also covers other property pursuant to the same authorization, consistent with OAR 123-674-3100(4), including but not limited to the attachment of another property schedule for any new, additional qualified property.

(3) For a claim form filed by itself for purposes of compliance in maintaining an ongoing exemption or exemptions, the assessor’s office may accept it late until August 31 under ORS 285C.220(8) but only if:

(a) Furnished to the zone sponsor, as well; and

(b) Accompanied with the progressively larger late filing fee.

(4) The assessor may henceforth deny the exemption for the remainder of the period, subject to notice under ORS 285C.175(6) without further procedure, if the claim form is not received (at the latest on August 31) or it lacks for the late filing fee.

(5) Besides arrangements from the Preauthorization Conference, the zone sponsor and the county assessor shall consider and rely on the duties and options under ORS 285C.230, as well as exercise the procedure under ORS 285C.235 to demand corroborating evidence of the firm by time/receipt-verified mail whenever warranted, which:

(a) Would be the only recourse if the firm refuses to submit a claim form after the final year of exemption;

(b) Is always available if the submitted information and the compliance of the firm with employment/other requirements is suspect; and

(c) Causes disqualification:

(A) Automatically, if the firm does not satisfactorily respond within 60 days, but without extra penalty; or

(B) With the 20-percent penalty on back taxes under ORS 285C.240(4), in the event that any provided evidence shows that the qualified business was required to have given notice under ORS 285C.240(1).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.175, 285C.220, 285C.225, 285C.230, 285C.235 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6300

Disqualification of Particular Property

A qualified business firm does not lose its ongoing enterprise zone exemption under ORS 285C.175 on all qualified property if only certain property fails to satisfy a relevant requirement:

(1) Disqualification (including back taxes) shall ensue under ORS 285C.240 only on such property, and the one-year payback of tax savings under ORS 285C.240(6) does not apply

(2) Such disqualification pertains when the exempt property no longer satisfies a relevant criterion under ORS 285C.175, 285C.180, 285C.185 or 285C.190, including but not limited to property during an exemption year that is:

(a) Removed from the enterprise zone;

(b) Sold, exchanged or leased to another business firm, except as described in OAR 123-674-4800;

(c) Used ineligibly or by an ineligible business firm in violation of OAR 123-674-5100; or

(d) Not actually in use or occupancy (notwithstanding its being in service) for at least 180 consecutive days concluding in the preceding exemption year.

(3) In order for the qualified business firm to avoid the 20-percent penalty on the back taxes associated with such property-specific disqualification, notice under ORS 285C.240(1)(a), (e) or (f) is due by July 1 after the year in which failure occurred. The owner of leased, exempt property may give such notice, and the firm may do so through a timely exemption claim as described in 123-674-6200.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.175, 285C.220, 285C.225, 285C.230, 285C.235 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6400

General Firm Disqualification

(1) Loss of exemption under ORS 285C.175 applies to all qualified property of a firm in a year when an event occurs, for which notice is due under ORS 285C.240(1)(b), (c) or (d), including but not limited to:

(a) Substantial curtailment, consistent with OAR 123-674-4600;

(b) Failure to satisfy an applicable local additional requirement, according to OAR 123-668, and pursuant to written notification to the assessor from the zone sponsor;

(c) Noncompliance with any general law in accordance with OAR 123-674-7200 to 123-674-7250; or

(d) What is described in OAR 123-674-0500(2) for the requirements specific to an extended abatement.

(2) If an event occurs relative to section (1) of this rule, then the qualified business firm shall notify both the local zone manager and the county assessor in writing at the latest by July 1 of the next year, which may be done:

(a) Through timely filing of the exemption claim described in 123-674-6200.

(b) By the owner of any qualified property that the qualified business firm leases.

(3) Notice as described in section (2) of this rule shall result in either:

(a) The firm reimbursing the enterprise zone sponsor for an amount equal to all associated property taxes abated in that year under ORS 285C.240(6), as described in OAR 123-674-6600 to 123-674-6630; or

(b) The assessor disqualifying the firm under ORS 285C.240, including loss of future years of the exemption and retroactive payment of applicable back taxes with the next tax bill.

(4) If the assessor or zone sponsor discovers a failure, for which there was not timely notice as described in section (2) of this rule, then subsection (3)(a) of this rule is inapplicable, and disqualification as described in subsection (3)(b) of this rule shall include the 20-percent penalty on back taxes.

(5) Disqualification for purposes of this rule does not affect property covered by any other Application, for which the particular requirements are still satisfied, consistent with OAR 123-674-3500, except for another Application made after the zone terminated as described in OAR 123-674-8200, in which case the other such Application is nullified, and associated property, disqualified.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.200, 285C.220, 285C.225, 285C.230, 285C.235 & 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

Payback in Lieu of Disqualification

123-674-6600

Applicability of Payback Provisions

For purposes of ORS 285C.240(6) and OAR 123-674-6600 to 123-674-6630, a qualified business firm’s avoidance of disqualification through payment to the zone sponsor of the firm’s tax savings for one year is allowed, only if:

(1) The firm fails to meet an employment, compensation, waiver, locally established condition or other requirement affecting an overall exemption on qualified property, pursuant to ORS 285C.240(1)(b), (c) or (d), and not for any requirement pertaining to particular qualified property (see OAR 123-674-6300) or to the firm’s eligibility under ORS 285C.135;

(2) The firm provides written notice under ORS 285C.240 to the zone sponsor or the county assessor by not later than July 1 of the year following the year that failure as described in section (1) of this rule occurred;

(3) The firm maintains the business operations pertaining to the qualified property, unless the firm can demonstrate that any discontinuation (shutdown) is only temporary;

(4) The firm has not previously used ORS 285C.240(6) for any failure covered by section (1) of this rule to avoid disqualification of the ‘same exemption,’ respective to property actually first qualifying in the same year, but not in other years even if covered by the same authorization; and

(5) The firm provides written proof to the county assessor that it has paid the full amount of the year’s tax savings to the zone sponsor, not later than August 31 of the year following:

(a) The year in which the failure occurred; or

(b) The fourth year of exemption, in the case of failure to meet a requirement for an additional two years of exemption under ORS 285C.160, during (only) one of the first four exemption years.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6610

Payment of Tax Savings

For purposes of the payment by a qualified business firm described in OAR 123-674-6600(5):

(1) The firm shall pay to the sponsor of the enterprise zone an amount equal to the additional taxes due, as the county assessor computed under ORS 285C.175(7), on all of the qualified property receiving the exemption.

(2) The sponsor of the enterprise zone is responsible for enabling the firm to make the payment, by doing the following in a timely manner:

(a) Issuing an invoice for such payment to the firm (as necessary);

(b) Receiving such moneys; and

(c) Issuing a receipt or equivalent evidence of the amount paid by the firm.

(3) In collecting, invoicing, holding or spending any money paid by the firm, the zone sponsor shall establish the necessary accounts, special funds, procedures or documentation in accordance with ORS chapter 294 and applicable local laws.

(4) If the county assessor does not receive proof that sufficient and timely payment has been made by the firm, the assessor shall disqualify the exemption or exemptions covered by the requirement consistent with OAR 123-674-6400(3)(b).

(5) If the assessor later disqualifies the firm respective to the same exemption, the assessor shall reduce the back taxes by any amount previously paid in accordance with this rule.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6620

Distribution of Payment among Cosponsors

In the case of an enterprise zone sponsor comprising two or more city or county governments or port districts:

(1) Any cosponsor may act as the initial depository for collecting the qualified business firm’s payment as described in OAR 123-674-6610 and providing the firm with the requisite proof of payment, but at least one cosponsor must do so.

(2) The cosponsors may create joint mechanisms and arrangements to receive, hold or use such payments.

(3) The cosponsors may distribute the amount of any such payment among themselves through any mutually agreed method or formula, including but not limited to proportional receipt only by cosponsors that levy taxes where the property is located.

(4) If distribution does not happen within six months of receipt of payment, unless pending a joint effort among the cosponsors as described in OAR 123-674-6630, the government or entity holding the funds shall distribute the full amount in equal portions to each city, port or county government that sponsors the zone without assessing any administrative fee. If more than one county sponsors the zone, then the cosponsors in the county containing the qualified property shall receive and divide among themselves not less than half of the total payment.

(5) There is no obligation to maintain or repeat for future payments any of the sponsor’s elections and methods utilized in accordance with this rule for a given payment.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6630

Utilization of Payments

In accordance with ORS 285C.240(6)(b), the expenditure of moneys collected from a qualified business firm shall benefit residents of the enterprise zone and its immediate vicinity, such that:

(1) For a rural zone, the immediate vicinity will generally encompass (but is not necessarily limited to) the entire incorporated and urban growth area of any city sponsoring the zone, unless the city is relatively large, and only some parts of the zone boundary are in or near the city.

(2) Public, public/private or community-based activities, efforts or programs that acceptably serve residents of the zone and its local area include but are not limited to:

(a) Job training, placement, skill development, career counseling and similar programs predominately involving such residents;

(b) Better educational opportunities, facilities and so forth that serve such residents;

(c) Planning, analyses or support for infrastructure, public safety or other public/community services or facilities that have the potential to stimulate commerce and employment growth in association with the zone;

(d) Programs that assist with financing or other matters for businesses largely started by or employing such residents;

(e) Improvements to environmental conditions, recreational resources or other qualities of the community; or

(f) Reasonable contributions to the management, marketing or other needs of the enterprise zone itself.

(3) Combining these moneys with funds obtained from authorization filing fees or from other resources associated with the enterprise zone (see 123-668), or otherwise belonging to the local community is allowable.

(4) If the payment per cosponsor is less than $5,000, the zone sponsor may:

(a) Delay spending the moneys for an indefinite period of time, pending complementary opportunities or resources; and

(b) Allocate the moneys to existing programs and projects that are likely to benefit such residents, even if not exclusively.

(5) If the payment per cosponsor is between $5,000 and $25,000, the zone sponsor may:

(a) Postpone spending the moneys for up to two years; and

(b) Allocate the moneys to existing programs and projects, but the sponsor shall make reasonable efforts to ensure that relevant residents in particular are beneficiaries of additional expenditures.

(6) If the payment per cosponsor exceeds $25,000, the zone sponsor shall see that the moneys go to ongoing programs, special projects and so forth, but only if such expenditures have a direct and particular impact on relevant residents.

(7) There is no obligation to maintain or repeat for future payments any of the elections and methods utilized in accordance with this rule for a given payment.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.240
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-6880

Deferral During Recession

For purposes of section 2, chapter 39, Oregon Laws 2010, and deferring the standard enterprise zone exemption, during which time the qualified business firm shall pay taxes on qualified property:

(1) It pertains to a firm facing disqualification for substantial curtailment or other noncompliance (see OAR 123-674-4600, 123-674-6300 and 123-674-6400). Nevertheless, the firm must have had sufficient employment at one point to qualify initially as described in OAR 123-674-4100, such that with a sufficient employment level since Application, the firm may seek, and the zone sponsor may apply this deferral to the first year of exemption.

(2) The total cost of the investment covered by the authorization (over one to three years) must equal or exceed the amounts under ORS 285C.200(3)(c) (2010) for the respective type of enterprise zone.

(3) The zone sponsor must take an action to grant the deferral, such as formal notification from the local zone manager to the firm, that:

(a) Indicates whether the deferral is for one year or two consecutive years;

(b) Sets a minimum level of employment of the firm (below which the firm may not fall even during a year of deferral) that is a single, stated number of employees equal to or less than the latest Annual and Claim Employment figures, and possibly less than the Existing Employment; and

(c) Occurs at a time when under section 2(2), chapter 39, Oregon Laws 2009, as determined by the Department:

(A) Seasonally adjusted state employment has declined over at least two successive quarters during the prior 12 months: and

(B) The unemployment rate for any county containing the zone is two percentage points greater than the state on average for:

(i) The entire previous year (annual average unemployment rates); or

(ii) Any of the three most recent three-month periods, including the latest calendar quarter, based on the most recently available seasonally adjusted data.

(4) On or after May 27, 2010, but no later than 60 days after the action in section (3) of this rule or August 31 of the first year of deferral, the sponsor must adopt resolution(s) confirming the grant of deferral.

(5) Any exemption claim filed in a year of deferral may be withdrawn or ignored, and regardless, the county assessor shall deny the exemption under ORS 285C.175 (without necessarily giving notice) and all qualified property covered by the authorization is subject to normal taxation for that year.

(6) At the conclusion of the deferral period:

(a) The firm shall reclaim and resume the remainder of exemption under ORS 285C.175 on any qualified property, provided that the firm’s employment in reclaiming the exemption does not constitute substantial curtailment, and it is otherwise qualified.

(b) If the firm continues to have substantially curtailed its operations or fell below the minimum level in this rule, or the sponsor has revoked the resolution, then the property is subject to disqualification under ORS 285C.240, including but not limited to repayment for every year of exemption before the deferral period.

(7) The one-year payment in lieu of disqualification under ORS 285C.240(6) may occur with respect to a year before or after the deferral period as described in this rule (see OAR 123-674-6600 to 123-674-6630).

(8) The noncompliance and the year(s) of deferral shall closely correspond in time, but the exact relationship is subject to the determination of the local zone sponsor in consultation with the county assessor with the resolution. If the tax year beginning July 1, 2009, (2009-2010) is the final tax year of the exemption, the sponsor may grant the deferral respective to that year by August 31, 2010, to prevent retroactive disqualification.

(9) The sponsor may:

(a) Modify the resolution(s) on or before the next August 31 to retract or insert the second consecutive year of deferral.

(b) Grant two one-year deferrals, if separately done in complete conformance with sections (3) and (4) of this rule.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: OL 2010, Ch. 39
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

General Lawfulness

123-674-7200

Special Terminology

For purposes of OAR 123-674-7200 to 123-674-7250, with respect to an eligible business firm compliance with other laws under ORS 285C.200(1)(f):

(1) “Determination” means either of the following:

(a) A rightfully available written admission by the firm of a Noncompliance; or

(b) The issuance of an order, ruling or similar action by a duly empowered court, regulatory authority or similar entity that is:

(A) An official finding of Noncompliance that has the force of law under the jurisdiction of the court, regulatory authority or similar entity; and

(B) The final action by the particular regulatory or judicial process, even if prior to potential appeals.

(2) “Event of Noncompliance” means a Determination corresponding to an Illegal Act, for which the underlying Noncompliance is both:

(a) Material, as described in OAR 123-674-7230; and

(b) Not cured in accordance with OAR 123-674-7240.

(3) “Illegal Act” means an action, omission, chain of occurrences or similar failings by the firm or by an officer or agent in the conduct of the firm’s operations and activities, effectively occurring after the Application but before January 1 of the last year of exemption, that cause the Noncompliance corresponding to the relevant Determination. (An Illegal Act may also result from Noncompliance with a Determination related to an earlier act)

(4) “Noncompliance” means a violation of a law, as enacted by one of the following, or the violation of any of the rules or regulations duly promulgated under such law:

(a) The United States Congress;

(b) The Oregon Legislative Assembly; or

(c) The governing body of a city or county that sponsors the enterprise zone.

(5) “Substantial Falsification” means that information in an enterprise zone form, filing or associated documentation by the firm, subject to declaration under penalties of false swearing, does one or both of the following:

(a) Misreports or omits required information, such that the enterprise zone exemption would have been denied or disqualified had the information been correctly or completely reported, which by itself shall be considered an Illegal Act in addition to any penalties resulting from false swearing under ORS 305.990; or

(b) Contradicts OAR 123-674-7210(1), in that at the time of the relevant declaration, the firm failed to disclose an Illegal Act, of which it should reasonably have been aware, including but not limited to one that is pending a Determination at the time of authorization.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-7210

Declarations and Responsibilities

(1) Any Department of Revenue form for an enterprise zone tax abatement shall also have the firm declare that it is in compliance with applicable laws described in OAR 123-674-7200(4), as part of the declaration made under penalties of false swearing (as to the truth and correctness of the form or document under ORS 305.810 and 305.815).

(2) Without clear evidence of a Determination:

(a) The county assessor is under no obligation to undertake any effort for purposes of ORS 285C.200(1)(f); and

(b) The exemption on qualified property of an otherwise qualified business firm is unaffected.

(3) Regardless of expertise or jurisdiction, any entity or person may present evidence of a Determination to the county assessor.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.125 & 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-7220

Effect of Event of Noncompliance

Upon an Event of Noncompliance:

(1) In the case where an authorized business firm is not yet qualified, the county assessor shall deny exemption under ORS 285C.170 or 285C.175.

(2) In the case where the firm is receiving or has received the exemption, the Event of Noncompliance shall cause retroactive disqualification (see OAR 123-674-6400).

(3) In response to or in anticipation of such denial or disqualification, the assessor shall give notice that:

(a) Is sent to the firm and is copied to the zone sponsor, the Department of Revenue and the Department;

(b) Provides the firm with an explanation of the action and includes copies or descriptions of the evidence for the Determination; and

(c) Explains how the firm may appeal the action or anticipated action to the Tax Court under ORS 305.404 to 305.560.

(4) The county assessor may reverse a decision or action in section (1) or (2) of this rule, for reconsideration of an issue listed in OAR 123-674-7250(1) or a successful appeal that negates the Determination. As necessary to effect a reversal for this section, the assessor may reinstate the exemption and refund taxes paid on qualified property to the firm consistent with provisions of ORS Chapter 311.

(5) If the Determination is appealed by the business firm through administrative or judicial channels under the law in question, then the assessor may indefinitely suspend the action as described in section (2) of this rule, such that:

(a) If the business firm prevails in the appeal, then the exemption is unaffected; or

(b) If the business exhausts, withdraws or effectively fails in its pursuit of such appeal, then the action takes effect. In such a case, the assessor may add interest to any back taxes during the intervening period for the appeals process, until the next general property tax roll, as provided under ORS 311.206.

(6) The business firm’s right to appeal actions or tax collections directly to the Oregon Tax Court is in no way infringed by this or any administrative rule, nor is it prevented by ORS 285C.200(7).

(7) Section (5) and (6) of this rule operate only in lieu of using ORS 285C.240(6), as described in OAR 123-674-6600 to 123-674-6630.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.125 & 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-7230

Materiality

An eligible business firm’s Noncompliance is material for purposes of ORS 285C.200(1)(f), only if all of the following are true:

(1) Zone-Applicable. It is related to or part of actual operations of and by the business firm within the enterprise zone boundary, including firm-wide activities that actually influence affairs in the zone, as well as elsewhere that the firm operates, such that:

(a) The Illegal Act(s) might still occur outside the zone and be material if derivable from or directly beneficial to operations of the firm in the zone; but

(b) Even if the Determination circumstantially indicates illicit intent by firm personnel or decisions, it is still be immaterial, if lacking evident effect on tangible activities or behavior at zone locations.

(2) Significant. It has or could conceivably harm, threaten, disrupt or undermine any of the following: An individual person, fair and honest commerce, government revenue collection, others’ property rights, environmental protection, public health and safety, the general welfare and so forth, in contrast to a Noncompliance that results only in inconveniences (e.g., parking violations), aesthetical problems (e.g., poor landscape maintenance), etc.

(3) Substantive. It relates to the actual behavior or effects that the law in question is intended to control or prevent, as opposed to failings or missteps in terms of procedural matters, data reporting or similar technicalities, unless such failings or missteps exhibit willfulness, perniciousness or a history of repetition.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-7240

Cure

As a consequence of actions taken by an eligible business firm in response to a Determination, it may still comply with the law and, in effect, cure the Noncompliance for purposes of ORS 285C.200(1)(f), such that:

(1) A Noncompliance is not curable if, in the presence of clear and convincing evidence, the Illegal Act in question is:

(a) Heinous, reckless or knowingly perpetrated or allowed to happen as a matter of firm policy; or

(b) Committed within five years of a previous determination relating to the same or similar violation of the law, regardless if the prior violation occurred:

(A) Before authorization;

(B) At a location outside the enterprise zone; or

(C) Under another U.S. state’s or locality’s laws or regulations.

(2) A Noncompliance is also incurable if the total monetary penalty as described in subsection (3)(a) of this rule exceeds a level publicly declared for purposes of this rule and established by the zone sponsor before the Determination became final. According to stipulations in the sponsor’s declaration, this level or levels shall be equal to or greater than:

(a) For a fine or fines levied by a regulatory agency under a single citation or for closely related violations, $100,000; and

(b) Overall, including but not limited to court-imposed damages, $500,000.

(3) A Noncompliance, except as precluded by section (1) or (2) of this rule, may be cured insofar as the firm fully and clearly documents or demonstrates for the county assessor that:

(a) All fines, damages and so forth arising from the Determination have been paid in full, according to the final regulatory or judicial assessment imposed;

(b) The firm promptly submitted to and fulfilled all other applicable penalties and has taken or has demonstrable plans to take all other actions, as required by the court, regulatory authority or similar entity;

(c) The circumstances that led to the Noncompliance have been eliminated and resolved, such that further Noncompliance by the firm of a comparable or more serious nature is not expected to occur; and

(d) It or associated entities have undertaken reasonable efforts to compensate other substantially harmed parties uninvolved with any court action.

(4) The decision to consider a Noncompliance cured happens on a one-time basis and shall not necessarily be subject to neither ongoing action by the firm nor continual verification.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-7250

Interpretation

With respect to the interpretation of OAR 123-674-7200 to 123-674-7250 for purposes of ORS 285C.200(1)(f):

(1) There are five primary issues related to the conclusion that there is an Event of Noncompliance:

(a) Is there a Determination as defined?

(b) Did the Illegal Act occur as defined? ..., after Application?

(c) Is the Noncompliance of a material nature?

(d) Is the Noncompliance curable ..., and if so, has it been cured?; or

(e) Has there been Substantial Falsification, and what are the implications of it?

(2) In deciding whether there is an Event of Noncompliance, the county assessor may do as follows at the assessor’s initiative or in response to issues raised by a business firm’s response to notice in OAR 123-674-7220(3):

(a) The assessor may submit the question at issue to the sponsor of the enterprise zone whether through the local zone manager or otherwise, such that:

(A) The submission is made in writing with a summary of the matter and copies sent to the affected business firm, the Department of Revenue and the Department; and

(B) The assessor may consider a written decision from the zone sponsor only within a prescribed period not exceeding 60 days after the submission.

(b) Either in lieu of or subsequent to the request of the zone sponsor, the assessor may submit the question or questions to the Director, such that:

(A) The submission is in writing with a summary of the matter, and the affected business firm, the Department of Revenue and the zone sponsor receive copies;

(B) The assessor certifies whether a conclusive response by the Director shall bind the assessor’s action in OAR 123-674-7220;

(C) The Director may request additional information from the assessor, the firm, the sponsor, the Department of Revenue or the Department of Justice; and

(D) The Director shall respond in writing to the question or questions submitted by the assessor, who shall treat it as official state interpretation of this division of administrative rules.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.200(7)
Stats. Implemented: ORS 285C.200
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

First Source Hiring Agreements

123-674-7700

First-Source Coverage

For purposes of an authorized or qualified business firm’s entering into a First Source Hiring Agreement in an enterprise zone:

(1) “Contact agency” means the entity that represents publicly funded job training providers, consistent with OAR 123-070, which is exclusively the local office of Worksource Oregon (State Employment Department).

(2) The agreement shall apply to all of the firm’s sites of operation within the enterprise zone but only for that zone, except for “job openings” that do not matter directly under ORS 285C.050 and 285C.200 (see OAR 123-674-0200).

(3) Whenever the firm intends to fill a job opening with someone, who in a voluntary, temporary, part-time or other capacity, has been working at the business or job site for at least 30 days prior to closure date of the job opening:

(a) The firm must indicate this situation and include the name of the prospective hire in its notification to the contact agency.

(b) With receipt of such notification, the contact agency is in no way obligated to send job applicants.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.215(3)
Stats. Implemented: ORS 285C.050, 285C.060, 285C.200 & 285C.215
Hist.: EDD 3-2000, f. & cert. ef. 2-1-00; EDD 1-2005, f. & cert. ef. 2-25-05; Renumbered from 123-070-2100 by OBDD 31-2010, f. 6-30-10, cert. ef. 7-1-10

123-674-7710

First-Source Procedures

(1) A Firm/applicant shall enter into an agreement as described in OAR 123-070 either:

(a) After the local zone manager approves the application for authorization (see 123-674-2300);

(b) Before hiring new employees to qualify under ORS 285C.200; or

(c) Both as possible.

(2) The local zone manager shall:

(a) Advise every Firm/applicant to promptly seek such an agreement;

(b) Notify the contact agency about the Application and about how to contact the business firm; and

(c) Send the contact agency the appropriate colored copy from the completed Approval Form.

(3) Upon learning of the Firm/applicant, the contact agency shall arrange an opportunity for it to execute an agreement. A Firm/applicant shall have the right to initiate such contact and to enter promptly into an agreement.

(4) The contact agency shall:

(a) Provide a copy of each executed agreement to the respective local zone manager within 10 business days of entering into it with a Firm/Applicant; or

(b) Notify the local zone manager of any problem that arises in association with executing it.

(5) The local zone manager shall:

(a) See that each authorized business firm has entered into a timely, valid and accurate agreement, in accordance with OAR 123-070; and

(b) Inform the county assessor under ORS 285C.215(2)(a) of any such firm that might have failed to enter into such an agreement.

(6) The local zone manager shall assist in advising and explaining to business firms their obligations under the agreement, including but not limited to requests by the contact agency or any publicly funded job training provider.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.215(3)
Stats. Implemented: ORS 285C.050, 285C.060, 285C.200 & 285C.215
Hist.: EDD 7-1989(Temp), f. & cert. ef. 10-17-89; EDD 8-1990, f. 4-13-90, cert. ef. 4-14-90; EDD 22-1990(Temp), f. & cert. ef. 8-9-90; EDD 3-1992(Temp), f. 3-12-92, cert. ef. 3-13-92; EDD 1-1996, f. 2-28-96, cert. ef. 3-1-96; EDD 3-2000, f. & cert. ef. 2-1-00, Renumbered from 123-070-0370; EDD 1-2005, f. & cert. ef. 2-25-05; Renumbered from 123-070-2200 by OBDD 31-2010, f. 6-30-10, cert. ef. 7-1-10

123-674-7720

Handling Exemption Claims

For purposes of the First Source Hiring Agreement and the county assessor’s processing of an initial exemption claim with property schedule as described in OAR 123-674-6100, except in the case of a general waiver under ORS 285C.215(3) (see OAR 123-070):

(1) An authorized business firm may attach a copy of the agreement to the claim form.

(2) For purposes of ORS 285C.175(1)(c), the assessor shall rely principally on the zone sponsor and contact agency to inform the assessor’s office under ORS 285C.215(2) if a requisite agreement is lacking.

(3) To verify the existence, effectiveness or general suitability of the agreement, the assessor may do the following:

(a) Request and receive an agreement copy from the local zone manager, contact agency or Firm/applicant; or

(b) Seek assistance under ORS 285C.230(1)(b) before approving the exemption claim, as a mandatory duty of the zone sponsor.

(4) If learning of a problem with execution of a suitable agreement by the Firm/applicant, then pending a corrective waiver by the Director, the county assessor:

(a) May deny the exemption claim, if the agreement was not executed as described in OAR 123-674-7710.

(b) Shall deny the exemption claim, if the agreement was not executed on or before December 31 directly preceding the first exemption year under ORS 285C.175, does not cover at least all years of exemption, or is otherwise deficient.

(5) The assessor shall deny the exemption under ORS 285C.175(6), if by August 31 of the first tax year of exemption, a problem as described in subsection (4) of this rule is not resolved through copies/documentation of the following:

(a) A (revised/replacement) agreement;

(b) Applicable waiver as allowed in OAR 123-070 or 123-674-7730; or

(c) Both, as necessary.

(6) Once a business firm is qualified and approved to receive the exemption, the exemption is not subject to later revocation or disqualification for lack of an agreement, except for the case of fraudulent representations.

(7) Subject to requisite resolution of the outstanding problem, the assessor may reverse a denial as described in section (5) of this rule and grant the exemption, as otherwise allowed under the laws and rules governing the procedures and authority of the assessor.

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.215(3)
Stats. Implemented: ORS 285C.060, 285C.105, 285C.175, 285C.215, 285C.220, 285C.240
Hist.: EDD 3-2000, f. & cert. ef. 2-1-00; EDD 1-2005, f. & cert. ef. 2-25-05; EDD 26-2009, f. 11-30-09, cert. ef. 12-1-09; Renumbered from 123-070-2300 by OBDD 31-2010, f. 6-30-10, cert. ef. 7-1-10

123-674-7730

Allowing Late Execution of First-Source Agreement

For purposes of an authorized business firm’s needing to have entered into a First Source Hiring Agreement:

(1) The Director may issue a waiver that excuses the requirement until the time when the agreement is actually executed or takes effect, such that the firm is not required to have been entered into the agreement:

(a) At the time of applicable hiring; or

(b) On or before December 31 of the year when qualified property is placed in service, directly before the first exemption year, as otherwise required under ORS 285C.215(1).

(2) The Director may issue waiver as described in section (1) of this rule for the following reasons:

(a) The Firm/applicant was using first-source services in a timely fashion, without having a formal agreement;

(b) Mistaken communications, an absence of local contacts or the like hampered the ability or understanding of the Firm/applicant as to the agreement or the need to enter into it;

(c) The Firm/applicant made a good faith effort to obtain an agreement, but it was misled or otherwise unable to readily obtain it through no fault of its own; or

(d) Similar circumstances.

(3) The local zone manager, county assessor or contact agency on behalf of the authorized business firm or the firm itself may seek a waiver under this rule by contacting the Department after authorization, whether before or after an action by the county assessor as described in OAR 123-674-7720.

(4) A waiver under this rule shall take the form of a written recommendation from staff to the Director that the Director approves. The written recommendation shall describe:

(a) The justification for the waiver pursuant to this rule;

(b) The basis or source of evidence for such justification or determinations, including but not limited to verbal communications with the contact agency, the county assessor or other local parties;

(c) The status of the Firm/applicant’s entering into an agreement; and

(d) The date by which the agreement must be in effect.

(5) The Department shall provide notice of the Director’s decision and distribute copies of any approved waiver, as well as any waiver as described in OAR 123-070 affecting an enterprise zone exemption, to the:

(a) Firm/applicant;

(b) County assessor;

(c) Contact agency;

(d) Local zone manager; and

(e) Department of Revenue (Attention: Exemptions Specialist, Property Tax Division).

Stat. Auth.: ORS 285A.075, 285C.060(1) & 285C.215(3)
Stats. Implemented: ORS 285C.050, 285C.060, 285C.200 & 285C.215
Hist.: EDD 3-2000, f. & cert. ef. 2-1-00; EDD 1-2005, f. & cert. ef. 2-25-05; EDD 26-2009, f. 11-30-09, cert. ef. 12-1-09; Renumbered from 123-070-2400 by OBDD 31-2010, f. 6-30-10, cert. ef. 7-1-10

With Beginning or End of Zone

123-674-8000

Designation/Amendment of an Enterprise Zone

Respective to an enterprise zone exemption on qualified property under ORS 285C.170 or 285C.175:

(1) Property may not be exempt if prior to the effective date of the zone’s designation or the location’s inclusion through a change in the zone boundary, it is:

(a) On the assessment rolls of the county respective to the same location or ownership/lease; or

(b) Located in the zone or in the process of actual construction, improvement, modification or installation there, excluding what is described in:

(A) OAR 123-674-2000(3) such as site preparation; or

(B) OAR 123-674-2100(1) including but not limited to demolition.

(2) A Firm/applicant may make Application and even have it approved before but pending an effective date in section (1) of this rule.

(3) Notwithstanding section (1) of this rule, property may qualify as would otherwise be allowed for an actively authorized business firm in a terminated zone under ORS 285C.245(1), consistent with OAR 123-674-8100 or 123-674-8200. Accordingly, the authorization automatically belongs to the newly designated or amended zone, if:

(a) The zone encompasses the site of the authorized business firm’s proposed investment; and

(b) The authorization is:

(A) Active under ORS 285C.165 (see OAR 123-674-3700); and

(B) Not expired as described in OAR 123-674-8100(2)(c).

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.175
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-8100

Authorization and Zone Termination

Consistent with OAR 123-650-9100:

(1) For purposes of exemption under ORS 285C.175 in a terminated enterprise zone, an eligible business firm is ‘authorized’ and may claim the exemption, subject to OAR 123-674-8300 and section (2) of this rule, if:

(a) Its outstanding authorization was still active under ORS 285C.165 at the time of termination, in which case it may avail itself of OAR 123-674-8200 and grandfathering in the zone; or

(b) The local zone manager received the Application before the effective termination of the zone, and the zone sponsor and the county assessor subsequently approved the Application under ORS 285C.140 after termination.

(2) For any authorized business firm described in section (1) of this rule, its authorization expires on January 1 directly after the 30th month of the zone’s termination, such that only if qualified property proposed pursuant to the Application is in service before that date does the firm remain authorized under ORS 285C.245(1)(a)(B)(ii) and may it receive the exemption. As such, ORS 285C.165 (active status of authorization) is irrelevant for qualified property remaining outside of a current enterprise zone.

(3) In order to successfully apply for authorization on any investment in qualified property at a location in a terminated zone remaining outside any current designation, the Firm/applicant must satify the grand-fathering provisions in accordance with OAR 123.674-8200. In addition:

(a) Only if also qualified in the zone at the time of its termination may a firm described in subsection (1)(a) of this rule re/apply respective to the same location; and

(b) Unless otherwise qualified or authorized (as described by section (1)(a) of this rule) in the zone at the time of its termination, an authorized business firm described in subsection (1)(b) of this rule

(A) May not utilize the grandfathering provisions; and.

(B) As such, may not ever apply for authorization anywhere in the terminated zone.

(4) For purposes of this rule and OAR 123-674-8200, an eligible business that has its site in the zone (inadvertently) removed by a boundary change, notwithstanding ORS 285C.115(2)(b), has the same rights and privileges as if the zone had terminated.

(5) For purposes of termination under ORS 285C.255 — that is, statutory sunset of enterprise zone program — the Application must be made before June 30, 2025 and (notwithstanding subsection (1)(b) of this rule) approved not later than that day.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.175, 285C.245 & 285C.255
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10; OBDD 15-2012, f. & cert. ef. 8-15-12

123-674-8200

Grandfathering in a Terminated Zone

Under ORS 285C.245(1)(b) and (c) after termination of an enterprise zone:

(1) Qualified property outside any current zone and owned or leased by an eligible business firm is exempt, if all of the following requirements are true:

(a) Within 10 years after the effective date of the termination of the zone, the eligible business firm submits a complete Application under ORS 285C.140, in accordance with OAR 123-674-2000 and 123-674-2100;

(b) The qualified property is to be located entirely within the boundaries of the terminated zone, as they existed at the time of termination;

(c) On the effective date of termination, the firm was an actively authorized or qualified business firm in that same zone, having had an Application approved before termination;

(d) The eligible business firm has not been disqualified under ORS 285C.245(1)(c) in the terminated zone consistent with section (2) of this rule;

(e) Construction, modification or installation of the qualified property commences on or before June 30 immediately following the last year of the firm’s final outstanding exemption in the zone;

(f) The eligible business firm’s Application receives approval:

(A) From the county assessor and the local manager of the terminated zone or the manager’s successor;

(B) Lacking a local zone manager, from the county assessor and either the Department or a formal action of the zone sponsor; or

(C) On appeal;

(g) Completion of construction, additions, modification or installation occurs in accordance with OAR 123-674-8300;

(h) Timely exemption claim is made to the county assessor under ORS 285C.220 and 285C.225; and

(i) The authorized business firm complies with all applicable requirements of ORS 285C.050 to 285C.250 in effect when the zone terminated, including but not limited to any requirement arising from or associated with authorization.

(2) Disqualification for purposes of ORS 285C.245(1)(c) does not include:

(a) Loss of an extended abatement under ORS 285C.240(3)(b) consistent with OAR 123-674-0500(2);

(b) Payment to the zone sponsor of the equivalent of one year’s tax savings under ORS 285C.240(6); or

(c) Failure to meet a requirement pertaining to particular property as described in OAR 123-674-6300.

(3) The sponsor of a terminated enterprise zone may consider, approve and enter into a written agreement with an eligible business firm for an extended abatement under ORS 285C.160, prior to final action for subsection (1)(f) of this rule.

(4) An authorized or qualified business firm may not make Application, if since termination, another business or corporation has bought or absorbed the firm, except if the firm remains essentially intact as a corporate entity, such as becoming a subsidiary to the purchasing corporation and continuing to operate substantially as it had.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.140, 285C.175 & 285C.245
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

123-674-8300

Timely Completion of Construction

For purposes of a proposed investment in qualified property by a business firm that is or becomes authorized in a terminated enterprise zone under ORS 285C.245(1)(a)(B)(iii) and (b):

(1) Completion of “construction, addition modification or installation within a reasonable time” means the property is in service no later than 18 months after the date on which any relevant construction, reconstruction, modification or installation activity commenced.

(2) “Without interruption” means that the property does not remain in an unfinished state for more than six months without significant progress toward the completion of activities as described in section (1) of this rule.

(3) The property may not qualify and receive the exemption under ORS 285C.175, if section (1) or (2) of this rule is violated, except if the Department issues a written finding to the county assessor that the violation is reasonable and not excessive, given the nature and extent of the authorized business firm’s investment or of inadvertent circumstances.

(4) Nothing in this rule shall influence or restrict the qualification of an exemption in an enterprise zone that still exists and has not terminated.

Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.175 & 285C.245
Hist.: OBDD 27-2010, f. & cert. ef. 6-14-10

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