Current through Register Vol. 61, No. 4, April 1, 2022
Under ORS 308.671, a company may elect to
have one of three types of property exempted from ad valorem property taxation.
(a) Licenses granted by the Federal
Communication Commission (FCC),
(b) Franchises, or
(c) Satellites that are used to provide
communication services directly to retail customers, or that are being
constructed for such use, and FCC licenses related to the use of the satellites
to provide communication services.
308.555 authorizes the
department to value all property of a centrally assessed company as a unit.
Unit valuation means valuing an integrated group of assets functioning as an
economic unit as "one thing," without reference to the market value of any
individual assets. To determine a company's unit value, the department
considers one or more of the cost, income and stock and debt approaches to
value, reconciling the approaches to arrive at "unit value" also referred to as
the "correlated system value."
Under ORS 308.671(3), the value of exempt property listed in section (1) above
is equal to the cost of the property carried in the accounting records of the
company, less accrued depreciation reserve for that property. This is the
exempt property net book value ("exempt NBV"). A company must provide in its
Annual Statement the book cost and accrued depreciation reserve for the elected
exempt property to obtain the exemption.
(4) The department removes exempt property
values of various types (for example motor vehicles) from a company's
correlated system value because the income, cost, or stock and debt approaches
may be weighed and reconciled differently in any given tax year for any given
company depending on the availability and quality of information. Because
exempt NBV, for purposes of ORS 308.671, is a cost amount, the department will
directly subtract that amount from the correlated system value if that value is
based solely on the cost approach. Where the correlated system value is based
on income and/or stock and debt approaches, as well as cost, the department
must subtract the amount of exempt NBV that is actually reflected in the
correlated system value. Consistent with the department's long-standing
market-to-book ratio method of subtracting exempt FCC licenses under the former
OAR 150-307.126, a market-to-book ratio will be used for all of the exempt
property under ORS 308.671.
The market-to-book ratio is derived by dividing the company's correlated system
value by the total NBV of the company's taxable property (including the exempt
NBV). The resulting ratio is multiplied by the company's exempt NBV, and that
amount is then subtracted from the company's correlated system value.
Admin. R. 150-308-0695
f. 12-17-10, cert. ef. 1-1-11; Renumbered from 150-307.126,
6-2016, f. 7-28-16, cert. ef.
8/1/2016; Renumbered from 150-308.671,
59-2016, f. 8-13-16, cert. ef.
Stat. Auth.: ORS
Stats. Implemented: ORS