OAR 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 (Minimum cost of qualified property)(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 (Enterprise zone exemption).

(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 (General Employment Terminology and Issues)(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 (Sponsor’s addendum)(4)(d) for the first exemption year, as described in OAR 123-674-6100 (Mandatory First-year Claim with Property Schedule), 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 (Disqualification)(1) if a requirement is not met, in order to avoid penalties under ORS 285C.240 (Disqualification)(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 (Allowably Late Applications)(4) or as requested by the county assessor.

Source: Rule 123-674-5500 — Obligations for All Leases, Lessors and Lessees, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=123-674-5500.

123‑674‑0001
Purpose, Scope and General Process for Businesses Seeking Exemption 123‑674‑0100
Definitions 123‑674‑0200
General Employment Terminology and Issues 123‑674‑0500
EXTENDED TAX ABATEMENT — General Points 123‑674‑0600
Compensation & Wage Standards 123‑674‑0700
Written Agreement between Sponsor and Eligible Business Firm 123‑674‑1000
BUSINESS ELIGIBILITY — Special Business Distinctions 123‑674‑1100
Basic Eligibility of Firms and Operations 123‑674‑1200
Ineligible Activities 123‑674‑1300
Eligible Business Firm with Ineligible Activities 123‑674‑1400
Gross Receipts Test 123‑674‑1600
Call Centers and Like Operations 123‑674‑1700
Headquarter Facilities 123‑674‑2000
AUTHORIZATION PROCESS — Timely Submission 123‑674‑2100
Allowably Late Applications 123‑674‑2300
Initial Processing by Local Zone Manager 123‑674‑2500
Final Processing 123‑674‑3000
AUTHORIZATION’S COVERAGE & EFFECT — Being An Authorized Firm 123‑674‑3100
Limitations on Exemption Relative to Authorization 123‑674‑3200
Amending the Application/Authorization 123‑674‑3500
Additional, Concurrent Authorizations 123‑674‑3700
Renewal of Active Status and Inactive Authorization 123‑674‑4000
EMPLOYMENT OF FIRMS — Computation of Averages 123‑674‑4100
Employment Requirement to Qualify Initially 123‑674‑4200
Diminishing Employment Well beyond the Zone 123‑674‑4300
Local Waiver of Employment Increase inside Zone 123‑674‑4600
Maintaining Sufficient Employment 123‑674‑4800
Sale or Leasing of Exempt Property 123‑674‑5000
QUALIFIED PROPERTY— Critical Terms 123‑674‑5100
Eligible Utilization 123‑674‑5200
Mechanical, Personal and Unqualified Property 123‑674‑5300
Buildings, Structures and Other Real Property 123‑674‑5400
Property Already Entered on Rolls 123‑674‑5500
Obligations for All Leases, Lessors and Lessees 123‑674‑6000
FILING & COMPLIANCE — Exemption Prior To ‘In Service’ 123‑674‑6100
Mandatory First-year Claim with Property Schedule 123‑674‑6200
Filing Latter-year Claims 123‑674‑6300
Disqualification of Particular Property 123‑674‑6400
General Firm Disqualification 123‑674‑6600
PAYBACK IN LIEU OF DISQUALIFICATION — Applicability 123‑674‑6610
Payment of Tax Savings 123‑674‑6620
Distribution of Payment among Cosponsors 123‑674‑6630
Utilization of Payments 123‑674‑6880
Deferral during Recession 123‑674‑6885
Additional Conditions with Deferral 123‑674‑7200
GENERAL LAWFULNESS — Terminology 123‑674‑7210
Declarations and Responsibilities 123‑674‑7220
Effect of Event of Noncompliance 123‑674‑7230
Materiality 123‑674‑7240
Cure 123‑674‑7250
Interpretation 123‑674‑7700
FIRST SOURCE HIRING AGREEMENTS — Coverage 123‑674‑7710
First-Source Procedures 123‑674‑7720
Handling Exemption Claims 123‑674‑7730
Allowing Late Execution of First-Source Agreement 123‑674‑8000
ZONE BEGINNINGS & ENDS — Designation or Amendment 123‑674‑8100
Authorization and Zone Termination 123‑674‑8200
Grandfathering in a Terminated Zone 123‑674‑8300
Timely Completion of Construction
Last Updated

Jun. 24, 2021

Rule 123-674-5500’s source at or​.us