(1) Commercial
lending institutions making loans for soil remediation, UST upgrading, and
replacement of UST systems containing motor fuel may qualify to receive an
Oregon income tax credit.
(2) The
Oregon income tax credit may not exceed the difference between the amount of
finance charge charged during the taxable year including interest on the loan
and interest on any loan fee financed at an annual rate of 7.5 percent and the
amount of finance charge that would have been charged by the commercial lending
institution during the taxable year, including any interest on the loan and
interest on any loan fee financed at an annual rate charged for nonsubsidized
loans. For purposes of calculating the income tax credit, the determination of
the interest rate charged on a nonsubsidized loan (including any additional
notes or replacement notes) shall be calculated by using a fixed annual
interest rate equal to three percent above the publicly announced prime rate of
interest of either United States National Bank of Oregon or First Interstate
Bank of Oregon, N.A. in effect on the date of the initial note. The commercial
lending institution shall choose which of the two banks prime rate it uses to
make this calculation. The difference in income between the interest rate
calculated in this manner and a 7.5 percent interest rate shall be the tax
credit due the commercial lending institution.
(3) Income tax credits may be received where:
(a) The borrower pays 7.5 percent fixed
interest;
(b) The loan is amortized
with equal payments over the term of the loan.
NOTE:To assure that funds are available from the
UST Compliance and Corrective Action Fund (USTCCAF) to pay interest rate
subsidies during the life of the loan, it is necessary for most loans to have
equal payments over the term of the loan. The Department, however, recognizes
that the lending policies may differ between commercial lending institutions
and may differ between individual loans, particularly during construction. The
Department is willing to consider other loan arrangements and other loan
repayment schedules subsequent to the initial loan, such as multiple loans and
loan refinancing where the interest rate subsidy conserves the USTCCAF monies
so that all qualified interest rate subsidies are paid in full. Each new loan
arrangement may be approved by the Department on a case by case basis. The
final maturity date of the loan may not exceed ten (10) years from the initial
note date.
(c) The loan
maturity date does not exceed ten years from the initial closing
date;
(d) The borrower has received
a tax credit certificate for an interest rate subsidy; and
(e) The loan applicant or the commercial
lending institution has provided the terms of the loan to the Department. The
terms of the loan include but are not limited to:
(A) Amount of loan;
(B) Down payment;
(C) The nonsubsidized rate calculated in
section (2) of this rule;
(D)
Interest rate; and
(E) The term of
the loan from the initial note date.
(4) Only one interest rate subsidy may be
issued to each facility.
(5) The
interest rate subsidy is limited to loans for work for soil remediation at a
facility where USTs contain motor fuel and work to upgrade or replace the
underground storage tank systems containing an accumulation of motor fuel
located at a facility where:
(a) The USTs are
regulated by OAR Chapter 340, Division 150 and
40 CFR 280
;
(b) UST system upgrading,
retrofitting and replacement is performed by licensed service providers in
accordance with OAR
340-160-0005 through
340-160-0150;
(c) UST tightness testing and/or soil
assessment was performed prior to application for a loan;
(d) UST tightness testing and soil assessment
was performed in accordance with Department regulations;
(e) Each regulated underground storage tank
has a valid UST permit; and
(f) The
loan is provided by a commercial lending institution.
(6) An Oregon income tax credit may be paid
on loans provided by a commercial lending institution that are not guaranteed
by the Department where the borrower has received a tax credit certificate from
the Department.
(7) The commercial
lending institution shall file for the Oregon income tax credit during their
regular state income tax filing.
NOTE:The funds available for Oregon tax credits
are estimated to total $3,874,000 over the life of the program, providing tax
credits for approximately 245 loans. These 245 loans may be the same as or
different from the proposed 245 loans guaranteed under OAR 340-180-070. When
the Department has issued tax credit certificates that create a demand of
approximately $3,874,000 on the UST Compliance and Corrective Action Fund the
Department will recommend to the Environmental Quality Commission to set the
maximum interest rate on loans at 7.5 percent. Since it is doubtful that any
commercial lending institution will issue a 7.5 percent loan, the effective
action will be to stop the subsidized interest rate program. The Department
believes that this intended action is consistent with the legislative intent to
fund the Oregon income tax credit out of the UST Compliance and Corrective
Action Fund.
(8) Income tax
credits may not be earned by a commercial lending institution after December
31, 1991. The commercial lending institution may file after December 31, 1991
for any Oregon income tax
credits earned before January 1, 1992 under these rules.
(9) This Division only applies to
projects for which soil remediation, UST upgrading and UST replacement work
started after September 1, 1989 and had received an interest rate subsidy
certificate or confirmation letter on or by October 1, 1991.
