Chapter 623 Oregon Laws 1999

Session Law

AN ACT

SB 570

Relating to taxation; creating new provisions; and amending ORS 315.356, 316.116, 469.185, 469.205, 469.215 and 469.878.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 316.116 is amended to read:

316.116. (1)(a) A resident individual shall be allowed a credit against the taxes otherwise due under this chapter for costs paid or incurred for construction or installation of an alternative energy device in a dwelling.

(b) A resident individual shall be allowed a credit against the taxes otherwise due under this chapter for costs paid or incurred to modify or purchase an alternative fuel vehicle or related equipment.

(2)(a) Except in the case of an alternative fuel device, the credit shall be based upon the first year energy yield of the alternative energy device that qualifies under ORS 469.160 to 469.180. The amount of the credit shall be the same whether for collective or noncollective investment.

(b) The credit allowed under this section for each dwelling shall not exceed the lesser of:

(A) $1,500 or the first year energy yield in kilowatt hours per year multiplied by 60 cents per dwelling utilizing the alternative energy device used for space heating, cooling, electrical energy or domestic water heating for tax years beginning on or after January 1, 1990, and before January 1, 1996.

(B) $1,200 or the first year energy yield in kilowatt hours per year multiplied by 48 cents per dwelling utilizing the alternative energy device used for space heating, cooling, electrical energy or domestic water heating for tax years beginning on or after January 1, 1996, and before January 1, 1998.

(C) $1,500 or the first year energy yield in kilowatt hours per year multiplied by 60 cents per dwelling utilizing the alternative energy device used for space heating, cooling, electrical energy or domestic water heating for tax years beginning on or after January 1, 1998.

(c) For an alternative energy device used for swimming pool, spa or hot tub heating, the credit allowed under this section shall be based upon 50 percent of the cost of the device or the first year's energy yield in kilowatt hours per year multiplied by 15 cents, whichever is lower, up to:

(A) $1,500 for tax years beginning on or after January 1, 1990, and before January 1, 1996.

(B) $1,200 for tax years beginning on or after January 1, 1996, and before January 1, 1998.

(C) $1,500 for tax years beginning on or after January 1, 1998.

(d) For an alternative fuel device, the credit allowed under this section is 25 percent of the cost of the alternative fuel device but the total credit shall not exceed $750 if the device is placed in service on or after January 1, 1998.

(3)(a) In the case of a credit for an alternative energy device that is an energy efficient appliance, the credit allowed to a resident individual under this section shall equal:

(A) 48 cents per first year kilowatt hour saved, or the equivalent for other fuel saved, not to exceed $1,200 for each tax year beginning on or after January 1, 1998, and before January 1, 1999; and

(B) 40 cents per kilowatt hour saved, or the equivalent for other fuel saved, not to exceed $1,000 for each tax year beginning on or after January 1, 1999.

(b) Notwithstanding paragraph (a) of this subsection, the credit allowed for an energy efficient appliance shall not exceed 25 percent of the cost of the appliance.

[(4)(a)] (4) To qualify for a credit under this section, all of the following are required:

[(A)] (a) The alternative energy device must be purchased, constructed, installed and operated in accordance with ORS 469.160 to 469.180 and a certificate issued thereunder.

[(B)(i)] (b) [Except as provided under sub-subparagraph (ii) of this subparagraph,] Except for credits claimed for alternative fuel devices, the taxpayer who is allowed the credit must be the owner or contract purchaser of the dwelling or dwellings served by the alternative energy device or the tenant of the owner or of the contract purchaser[.] and must:

(A) Use the dwelling or dwellings served by the alternative energy device as a principal or secondary residence; or

(B) Rent or lease, under a residential rental agreement, the dwelling or dwellings to a tenant who uses the dwelling or dwellings as a principal or secondary residence, unless the basis for the credit is the installation of an energy efficient appliance. If the basis for the credit is the installation of an energy efficient appliance, the credit shall be allowed only to the taxpayer who actually occupies the dwelling as a principal or secondary residence.

[(ii)] (c) In the case of an alternative fuel device, if the device is a fueling station necessary to operate an alternative fuel vehicle, unless the verification form and certificate are transferred as authorized under ORS 469.170 (7), the taxpayer who is allowed the credit must be the contractor who constructs the dwelling that incorporates the fueling station into the dwelling or installs the fueling station in the dwelling. If the alternative energy device is an alternative fuel vehicle, the credit must be claimed by the owner as defined under ORS 801.375 or contract purchaser. If the alternative energy device is related equipment, the credit may be claimed by the owner or contract purchaser.

[(C) Except in the case of an alternative fuel device, and except as provided in paragraph (b) of this subsection, the taxpayer who is allowed the credit must use the dwelling or dwellings served by the alternative energy device as a principal or secondary residence.]

[(D) Notwithstanding subparagraph (B) or (C) of this paragraph, the taxpayer must both own and occupy the principal or secondary residence, if the basis of the credit is the installation of an energy efficient appliance.]

[(E)(i) Except as provided in sub-subparagraph (ii) of this subparagraph, the credit must be claimed for the tax year during which the alternative energy device which has been certified under ORS 469.160 to 469.180 first is placed in service or the immediately succeeding tax year.]

[(ii)] (d) [For tax years beginning on or after January 1, 1990,] The credit [may] must be claimed for the tax year in which the alternative energy device was purchased if the system is operational by April 1 of the next following tax year.

[(b) Notwithstanding the requirements of paragraph (a)(C) of this subsection, a taxpayer who otherwise qualifies for the credit allowed under this section but who does not use the dwelling or dwellings served by the alternative energy device as a principal or secondary residence, shall be allowed the credit if the taxpayer rents or leases the dwelling or dwellings to a tenant who uses the dwelling or dwellings as a principal or secondary residence. This paragraph does not apply if the basis for the credit under this section is the installation of an energy efficient appliance.]

(5) The credit provided by this section shall not affect the computation of basis under this chapter.

(6) The credit allowed under this section in any one year shall not exceed the tax liability of the taxpayer.

(7) Any tax credit otherwise allowable under this section which is not used by the taxpayer in a particular year may be carried forward and offset against the taxpayer's tax liability for the next succeeding tax year. Any credit remaining unused in such next succeeding tax year may be carried forward and used in the second succeeding tax year, and likewise any credit not used in that second succeeding tax year may be carried forward and used in the third succeeding tax year, and any credit not used in that third succeeding tax year may be carried forward and used in the fourth succeeding tax year, and any credit not used in that fourth succeeding tax year may be carried forward and used in the fifth succeeding tax year, but may not be carried forward for any tax year thereafter.

(8) A nonresident shall be allowed the credit under this section in the proportion provided in ORS 316.117.

(9) If a change in the taxable year of a taxpayer occurs as described in ORS 314.085, or if the Department of Revenue terminates the taxpayer's taxable year under ORS 314.440, the credit allowed by this section shall be prorated or computed in a manner consistent with ORS 314.085.

(10) If a change in the status of a taxpayer from resident to nonresident or from nonresident to resident occurs, the credit allowed by this section shall be determined in a manner consistent with ORS 316.117.

(11) A husband and wife who file separate returns for a taxable year may each claim a share of the tax credit that would have been allowed on a joint return in proportion to the contribution of each. However, a husband or wife living in a separate principal residence may claim the tax credit in the same amount as permitted a single person.

(12) As used in this section, unless the context requires otherwise:

(a) "Collective investment" means an investment by two or more taxpayers for the acquisition, construction and installation of an alternative energy device for one or more dwellings.

(b) "First year energy yield" has the meaning given in ORS 469.160.

(c) "Noncollective investment" means an investment by an individual taxpayer for the acquisition, construction and installation of an alternative energy device for one or more dwellings.

(13) As used in this section, "taxpayer" includes a transferee of a verification form under ORS 469.170 (7).

(14) Notwithstanding any provision of subsection (1) or (2) of this section, the sum of the credit allowed under subsection (1) of this section plus any similar credit allowed for federal income tax purposes shall not exceed the cost to the taxpayer for the acquisition, construction and installation of the alternative energy device.

SECTION 2. The amendments to ORS 316.116 by section 1 of this 1999 Act apply to tax years beginning on or after January 1, 1998.

SECTION 3. ORS 315.356 is amended to read:

315.356. (1) If a taxpayer obtains a grant or tax credit from the Federal Government other than an investment tax credit or a low income housing tax credit in connection with a facility which has been certified by the administrator of the Office of Energy, the certified cost of the facility shall be reduced on a dollar for dollar basis. Any income or excise tax credits which such taxpayer would be entitled to under ORS 315.354 and 469.185 to 469.225 after any such reduction shall not be reduced by such federal grants or tax credits. A taxpayer applying for a federal grant or credit shall notify the Department of Revenue by certified mail within 30 days after each application, and after the receipt of any grant.

(2) If a facility eligible for a credit under ORS 315.354 is financed in part by any governmental or quasi-governmental body or municipal corporation, as defined in ORS 297.405, a tax credit may be claimed only on the portion of the cost that is privately financed.

(3) A taxpayer is eligible to participate in both this tax credit program and low interest, government-sponsored loans.

(4) A taxpayer who receives a tax credit or ad valorem tax relief on a pollution control facility or an [alternate] alternative energy device under ORS 307.405, 315.304 or 316.116 is not eligible for a tax credit on the same facility or device under ORS 315.354 and 469.185 to 469.225.

(5) No credit shall be allowed under ORS 315.354 if the taxpayer has received a tax credit on the same facility or device under ORS 315.324.

SECTION 4. ORS 469.185 is amended to read:

469.185. As used in ORS 469.185 to 469.225:

(1) "Alternative fuel fleet vehicle" means a vehicle in a fleet as defined by the administrator of the Office of Energy by rule that is used in connection with the conduct of a trade or business and that is manufactured or modified to use an alternative fuel, including but not limited to electricity, ethanol, methanol, gasohol and propane or natural gas, regardless of energy consumption savings.

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

(3) "Energy facility" means any capital investment for which the first year energy savings yields a simple payback period of greater than one year. An energy facility includes:

(a) Any land, structure, building, installation, excavation, machinery, equipment or device, or any addition to, reconstruction of or improvement of, land or an existing structure, building, installation, excavation, machinery, equipment or device necessarily acquired, erected, constructed or installed by any person in connection with the conduct of a trade or business and actually used in the processing or utilization of renewable energy resources to:

(A) Replace a substantial part or all of an existing use of electricity, petroleum or natural gas;

(B) Provide the initial use of energy where electricity, petroleum or natural gas would have been used;

(C) Generate electricity to replace an existing source of electricity or to provide a new source of electricity for sale by or use in the trade or business; or

(D) Perform a process that obtains energy resources from material that would otherwise be solid waste as defined in ORS 459.005.

(b) Any acquisition of, addition to, reconstruction of or improvement of land or an existing structure, building, installation, excavation, machinery, equipment or device necessarily acquired, erected, constructed or installed by any person in connection with the conduct of a trade or business in order to substantially reduce the consumption of purchased energy.

(c) A necessary feature of a new commercial building or multiple unit dwelling, as dwelling is defined by ORS 469.160, that causes that building or dwelling to exceed an energy performance standard in the state building code.

(d) The replacement of an electric motor with another electric motor that substantially reduces the consumption of electricity.

(4) "Facility" means an energy facility, recycling facility, transportation facility, alternative fuel fleet vehicle or facilities necessary to operate alternative fuel fleet vehicles, including but not limited to an alternative fuel fleet vehicle refueling station[, or a qualified transit pass contract].

(5) "Qualified transit pass contract" means a purchase agreement entered into between a [public mass transit district] transportation provider and an employer, the terms of which obligate the employer to purchase transit passes on behalf of the employer's employees over a specified period of time.

(6) "Recycling facility" means equipment used by a trade or business solely for recycling:

(a) Including:

(A) Equipment used solely for hauling and refining used oil;

(B) New vehicles or modifications to existing vehicles used solely to transport used recyclable materials that cannot be used further in their present form or location such as glass, metal, paper, aluminum, rubber and plastic;

(C) Trailers, racks or bins that are used for hauling used recyclable materials and are added to or attached to existing waste collection vehicles; and

(D) Any equipment used solely for processing recyclable materials such as bailers, flatteners, crushers, separators and scales.

(b) But not including equipment used for transporting or processing scrap materials that are recycled as a part of the normal operation of a trade or business as defined by the administrator.

(7)(a) "Renewable energy resource" includes, but is not limited to, straw, forest slash, wood waste or other wastes from farm or forest land, industrial waste, solar energy, wind power, water power or geothermal energy.

(b) "Renewable energy resource" does not include a hydroelectric or geothermal electric generating facility larger than one megawatt of installed capacity unless the facility qualifies as a research, development or demonstration facility.

(8) "Transportation facility" means a transportation project that reduces energy use during commuting to and from work or during work-related travel, and may be further defined by the Office of Energy by rule. "Transportation facility" includes, but is not limited to, a qualified transit pass contract or a transportation services contract.

(9) "Transportation provider" means a public, private or nonprofit entity that provides transportation services to members of the public.

(10) "Transportation services contract" means a contract that is related to a transportation facility, and may be further defined by the Office of Energy by rule.

SECTION 5. ORS 469.205 is amended to read:

469.205. (1) Prior to erection, construction, installation or acquisition of a proposed facility any person may apply to the Office of Energy for preliminary certification under ORS 469.210 if:

(a) The erection, construction, installation or acquisition of the facility is to be commenced on or after October 3, 1979;

(b) The facility complies with the standards or rules adopted by the administrator of the Office of Energy; and

(c) The applicant meets one of the following criteria:

(A) The applicant will be the owner or contract purchaser of the facility at the time of erection, construction, installation or acquisition of the proposed facility, and:

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

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

(iii) The applicant is a person to whom a tax credit has been transferred under ORS 469.208.

(B) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing rental housing unit energy conservation measures as described in ORS 469.636 or alternative fuel fleet vehicles for commercial or industrial customers as provided in ORS 469.878.

(C) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing alternative fuel fleet vehicles or associated facilities.

(D) Notwithstanding ORS 315.354 (9)(a) and (b), the applicant is a public utility as defined in ORS 757.005 or a subsidiary or an affiliated interest of a public utility as defined in ORS 757.015, for purposes of financing transportation facilities.

(2) An application for preliminary certification shall be made in writing on a form prepared by the Office of Energy and shall contain:

(a) A statement that the applicant or the lessee of the applicant's facility:

(A) Intends to convert from a purchased energy source to a renewable energy resource;

(B) Plans to acquire, construct or install a facility that will use a renewable energy resource or solid waste instead of electricity, petroleum or natural gas;

(C) Plans to use a renewable energy resource in the generation of electricity for sale or to replace an existing or proposed use of an existing source of electricity;

(D) Plans to acquire, construct or install a facility that substantially reduces the consumption of purchased energy;

(E) Plans to acquire, construct or install equipment for recycling as defined in ORS 469.185 (6);

(F) Plans to acquire an alternative fuel fleet vehicle or to convert an existing vehicle to an alternative fuel fleet vehicle;

(G) Plans to acquire, construct or install a facility necessary to operate alternative fuel fleet vehicles; [or]

(H) Plans to acquire transit passes for use by the applicant's employees; or

(I) Plans to acquire, construct or install a transportation facility.

(b) A detailed description of the proposed facility and its operation and information showing that the facility will operate as represented in the application.

(c) Information on the amount by which consumption of electricity, petroleum or natural gas by the applicant or the lessee of the applicant's facility will be reduced, and on the amount of energy that will be produced for sale, as the result of using the facility.

(d) The projected cost of the facility.

(e) If applicable, a copy of the proposed qualified transit pass contract or transportation services contract.

(f) Any other information the administrator of Office of Energy considers necessary to determine whether the proposed facility is in accordance with the provisions of ORS 469.185 to 469.225, and any applicable rules or standards adopted by the administrator.

(3) An application for preliminary certification shall be accompanied by a fee established under ORS 469.217. The administrator may refund the fee if the application for certification is rejected.

(4) The administrator may allow an applicant to file the preliminary application after the start of erection, construction, installation or acquisition of the facility if the administrator finds:

(a) Filing the application before the start of erection, construction, installation or acquisition is inappropriate because special circumstances render filing earlier unreasonable; and

(b) The facility would otherwise qualify for tax credit certification pursuant to ORS 469.185 to 469.225.

SECTION 6. ORS 469.215 is amended to read:

469.215. (1) No certification shall be issued by the administrator of the Office of Energy under this section unless the facility was acquired, erected, constructed or installed under a preliminary certificate of approval issued under ORS 469.210 and in accordance with the applicable provisions of ORS 469.185 to 469.225 and any applicable rules or standards adopted by the administrator.

(2) Any person may apply to the Office of Energy for final certification of a facility:

(a) After having obtained preliminary certification for the facility under ORS 469.210; and

(b) After completion of erection, construction, [or] installation or acquisition of the proposed facility or, if the facility is a qualified transit pass contract, after entering into the contract with a [public mass transit entity] transportation provider.

(3) An application for final certification shall be made in writing on a form prepared by the Office of Energy and shall contain:

(a) A statement that the conditions of the preliminary certification have been complied with;

(b) The actual cost of the facility certified to by a certified public accountant who is not an employee of the applicant or, if the actual cost of the facility is less than $50,000, copies of receipts for purchase and installation of the facility;

(c) A statement that the facility is in operation or, if not in operation, that the applicant has made every reasonable effort to make the facility operable; and

(d) Any other information determined by the administrator to be necessary prior to issuance of a final certificate, including inspection of the facility by the Office of Energy.

(4) The administrator shall act on an application for certification before the 60th day after the filing of the application under this section. The administrator, after consultation with the Public Utility Commission, may issue the certificate together with such conditions as the administrator determines are appropriate to promote the purposes of this section and ORS 315.354, 469.185, 469.200, 469.205 and 469.878. The action of the administrator shall include certification of the actual cost of the facility. However, in no event shall the administrator certify an amount for tax credit purposes which is more than 10 percent in excess of the amount approved in the preliminary certificate issued for the facility.

(5) If the administrator rejects an application for final certification, or certifies a lesser actual cost of the facility than was claimed in the application, the administrator shall send to the applicant written notice of the action, together with a statement of the findings and reasons therefor, by certified mail, before the 60th day after the filing of the application. Failure of the administrator to act constitutes rejection of the application.

(6) If the application is rejected for any reason, or if the applicant is dissatisfied with the certification of cost, then, within 60 days of the date of mailing of the notice under subsection (5) of this section or from a denial under subsection (5) of this section, the applicant may request a hearing to appeal the rejection under the provisions of ORS 183.310 to 183.550 governing contested cases.

(7) Upon approval of an application for final certification of a facility, the administrator shall certify the facility. Each certificate shall bear a separate serial number for each device. Where one or more devices constitute an operational unit, the administrator may certify the operational unit under one certificate.

(8) Except as a result of an appeal under subsection (6) of this section, the administrator shall not grant final certification under this section for any facility after December 31, 2004.

SECTION 7. The amendments to ORS 469.185, 469.205 and 469.215 by sections 4 to 6 of this 1999 Act apply to preliminary and final certifications issued on or after the effective date of this 1999 Act.

SECTION 8. ORS 469.878 is amended to read:

469.878. (1) An investor-owned utility may offer cash payments to assist the utility's commercial and industrial customers in purchasing a facility as defined in ORS 469.185, [alternative fuel fleet vehicles or facilities necessary to operate alternative fuel fleet vehicles] including but not limited to an alternative fuel fleet vehicle refueling station. The utility may pay the customer the present value to the utility of the tax credit to which the customer would be entitled under ORS 469.185 to 469.225.

(2) As used in this section, "cash payment" and "investor-owned utility" have the meanings given those terms in ORS 469.631.

SECTION 9. The amendments to ORS 469.878 by section 8 of this 1999 Act apply to tax years beginning on or after January 1, 2000.

Approved by the Governor July 12, 1999

Filed in the office of Secretary of State July 12, 1999

Effective date October 23, 1999

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