Or. Admin. R. 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. In certain cases where the term of a lease is
technically too short, mitigating circumstances include but are not limited to
where:
(a) The firm has the option to
unilaterally renew the lease; or
(b) The firm:
(A) Retains effective prerogatives of
ownership under an unconventional or nontraditional lease that serves mainly as
a financial instrument; and
(B)
Would have an unfettered right to retain title to the property in the event
that the lease were not mutually renewed before the expected end of the
exemption period.
(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 qualified property covered by the lease
agreement; or
(b) The firm/lessee
will compensate the owner of such property in full for the 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.
Notes
Stat. Auth.: ORS 285A.075 & 285C.060(1)
Stats. Implemented: ORS 285C.170, 285C.175, 285C.180& 285C.220
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