Determining the Facility Cost
(1)Facility Cost. The applicant shall provide documentation sufficient to substantiate the facility cost. The facility cost shall be reduced by the:
(a)Salvage value of a pre-existing facility if the applicant is replacing a facility. The salvage value shall never be less than zero and shall be the value of the pre-existing facility at the end of its useful life minus the cost to remove it from service;
(b)Amount of any government grants received to pay part of the facility cost;
(c)Present value of any other state tax credits for which the investment is eligible; and
(d)Ineligible facility costs as set forth in section (3) and as determined by comparing the actual facility costs with eligible costs as set forth in section (2).
(2)Eligible Costs. For costs to be eligible, they shall make a significant contribution to pollution control and shall directly relate to the acquisition and installation of the facility. Eligible costs may include:
(a)Machinery, equipment and devices;
(b)Structures and buildings;
(c)Design or engineering;
(d)Employee or contractor labor;
(e)Indirect costs limited to employees of the applicant’s business that directly performed the engineering, acquisition or installation work;
(f)Government fees associated with the installation of the equipment;
(i)Materials and supplies needed for installation;
(j)Travel directly related to purchased equipment;
(k)For underground and aboveground storage tank systems holding petroleum, waste oil and hazardous substances:
(A)Modification and decommissioning of existing tank systems; and
(B)Ninety percent of any automatic tank gauging system.
(l)Essential backup systems;
(m)Replacement or reconstruction of all or a part of any facility for which a pollution control facility certificate has previously been issued under ORS 468.170 (Action on application), limited to:
(A)An amount equal to the difference between the cost the new facility and the like-for-like replacement cost of the original facility if the facility is being replaced due to a new requirement imposed by the Department, the federal Environmental Protection Agency or a regional air pollution authority; or
(B)The remainder of the tax credit certified to the facility being replaced if a facility is replaced or reconstructed before the end of its useful life; and
(n)Other costs directly related to the principal or sole purpose of the facility.
(3)Ineligible Costs. The applicant and the Department shall reduce the facility cost by any ineligible costs. Ineligible costs are any distinct portion of a pollution control facility that makes an insignificant contribution to the principal or sole purpose of the facility; or provides benefits of economic value; or where the costs are not directly related to the operation of the industry or enterprise seeking the tax credit but were installed as a result of the facility. Ineligible costs include but are not limited to:
(a)Office buildings and furnishings;
(b)Parking lots and road improvements;
(f)Company or related signs;
(h)Property installed, constructed or used for clean up of emergency spills or unauthorized releases, as defined by the Commission;
(i)Septic tanks or other facilities for human waste including property installed, constructed or used for moving sewage to the collecting facilities of a public or quasi-public sewerage system;
(j)Removal of equipment replaced by the facility except for tanks as set forth in paragraph (2)(k)(A) of this rule;
(k)Replacement or reconstruction of all or a part of any facility for which a pollution control facility certificate has previously been issued under ORS 468.170 (Action on application), except as set forth in subsection (2)(m) of this rule;
(l)Application fees for a pollution control tax credit;
(o)Purchased equipment used to install the facility;
(p)Maintenance, operation, or repair of a facility, including spare parts;
(r)Interest, warranty charges, financing costs, capitalized costs (property taxes, capitalized interest, etc.), insurance premiums, legal fees, court costs, patent searches and feasibility studies; and
(s)Travel for research purposes.
(4)Statement of Facility Cost. The applicant shall provide an auditor’s statement that the facility cost claimed on the application for final certification is eligible and allocable as set forth in this rule and OAR 340-016-0070 (Determining the Facility Cost). The facility cost prior to any reductions, as set forth 340-016-0070 (Determining the Facility Cost)(1), shall determine the degree of independence of the auditor:
(a)The applicant may prepare the auditor’s statement when the facility cost:
(A)Does not exceed $50,000; or
(B)Exceeds $500,000. When the facility cost exceeds $500,000, the applicant shall also allow the Department to perform an independent accounting review to be paid by the Department.
(b)The applicant shall have the auditor’s statement prepared by an independent Certified Public Accountant when the facility cost exceeds $50,000 but does not exceed $500,000.
(5)Waiver of External CPA’s Audit. The applicant may submit a written request and the Department may grant a waiver of the independent accounting review:
(a)If the facility cost can be thoroughly documented by less than twenty invoices or canceled checks;
(b)If the facility is not part of a larger construction project; and
(c)If the facility consists of a single pollution control component or a single pollution control process.
(6)More Than One Owner. If there is more than one owner applying for tax relief for the same facility, each owner may be required to obtain a separate certification of cost as set forth in this section. The facility cost claimed by each owner separately shall not exceed the total cost of the facility.
Rule 340-016-0070 — Determining the Facility Cost,