As Introduced

128th General Assembly
Regular Session
2009-2010
S. B. No. 232


Senator Widener 

Cosponsors: Senators Goodman, Jones, Wagoner 

A BILL
To amend sections 3706.01 and 3706.041 of the Revised 1
Code to exempt from property taxation renewable 2
energy facilities that are not financed through 3
the Ohio Air Quality Development Authority and to 4
require a payment in lieu of taxes on the basis of 5
each megawatt of production capacity of such 6
facilities.7


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1.  That sections 3706.01 and 3706.041 of the Revised 8
Code be amended to read as follows:9

       Sec. 3706.01.  As used in this chapter:10

       (A) "Governmental agency" means a department, division, or 11
other unit of state government, a municipal corporation, county, 12
township, and other political subdivision, or any other public 13
corporation or agency having the power to acquire, construct, or 14
operate air quality facilities, the United States or any agency 15
thereof, and any agency, commission, or authority established 16
pursuant to an interstate compact or agreement.17

       (B) "Person" means any individual, firm, partnership, 18
association, or corporation, or any combination thereof.19

       (C) "Air contaminant" means particulate matter, dust, fumes, 20
gas, mist, smoke, noise, vapor, heat, radioactivity, radiation, or 21
odorous substance, or any combination thereof.22

       (D) "Air pollution" means the presence in the ambient air of 23
one or more air contaminants in sufficient quantity and of such 24
characteristics and duration as to injure human health or welfare, 25
plant or animal life, or property, or that unreasonably interferes 26
with the comfortable enjoyment of life or property.27

       (E) "Ambient air" means that portion of the atmosphere 28
outside of buildings and other enclosures, stacks, or ducts that 29
surrounds human, plant, or animal life, or property.30

       (F) "Emission" means the release into the outdoor atmosphere 31
of an air contaminant.32

       (G) "Air quality facility" means any of the following:33

       (1) Any method, modification or replacement of property, 34
process, device, structure, or equipment that removes, reduces, 35
prevents, contains, alters, conveys, stores, disperses, or 36
disposes of air contaminants or substances containing air 37
contaminants, or that renders less noxious or reduces the 38
concentration of air contaminants in the ambient air, including, 39
without limitation, facilities and expenditures that qualify as 40
air pollution control facilities under section 103 (C)(4)(F) of 41
the Internal Revenue Code of 1954, as amended, and regulations 42
adopted thereunder;43

       (2) Motor vehicle inspection stations operated in accordance 44
with, and any equipment used for motor vehicle inspections 45
conducted under, section 3704.14 of the Revised Code and rules 46
adopted under it;47

       (3) Ethanol or other biofuel facilities, including any 48
equipment used at the ethanol or other biofuel facility for the 49
production of ethanol or other biofuels;50

       (4) Any property or portion thereof used for the collection, 51
storage, treatment, utilization, processing, or final disposal of 52
a by-product or solid waste resulting from any method, process, 53
device, structure, or equipment that removes, reduces, prevents, 54
contains, alters, conveys, stores, disperses, or disposes of air 55
contaminants, or that renders less noxious or reduces the 56
concentration of air contaminants in the ambient air;57

       (5) Any property, device, or equipment that promotes the 58
reduction of emissions of air contaminants into the ambient air 59
through improvements in the efficiency of energy utilization or 60
energy conservation;61

       (6) Any coal research and development project conducted under 62
Chapter 1555. of the Revised Code;63

        (7) As determined by the director of the Ohio coal 64
development office, any property or portion thereof that is used 65
for the collection, storage, treatment, utilization, processing, 66
or final disposal of a by-product resulting from a coal research 67
and development project as defined in section 1555.01 of the 68
Revised Code or from the use of clean coal technology, excluding 69
any property or portion thereof that is used primarily for other 70
subsequent commercial purposes;71

        (8) Any property or portion thereof that is part of the 72
FutureGen project of the United States department of energy or 73
related to the siting of the FutureGen project.74

       (9) Any property, device, or equipment that promotes the 75
reduction of emissions of air contaminants into the ambient air 76
through the generation of clean, renewable energy with renewable 77
energy resources or advanced energy resources as defined in 78
section 3706.25 of the Revised Code.79

        (10) Any property, device, structure or equipment necessary 80
for the manufacture and production of equipment described as an 81
air quality facility under this chapter.82

       "Air quality facility" further includes any property or 83
system to be used in whole or in part for any of the purposes in 84
divisions (G)(1) to (10) of this section, whether another purpose 85
is also served, and any property or system incidental to or that 86
has to do with, or the end purpose of which is, any of the 87
foregoing. Air quality facilities that are defined in this 88
division for industry, commerce, distribution, or research, 89
including public utility companies, are hereby determined to be 90
those that qualify as facilities for the control of air pollution 91
and thermal pollution related to air under Section 13 of Article 92
VIII, Ohio Constitution.93

       (H) "Project" or "air quality project" means any air quality 94
facility, including undivided or other interests therein, acquired 95
or to be acquired or constructed or to be constructed by the Ohio 96
air quality development authority under this chapter, or acquired 97
or to be acquired or constructed or to be constructed by a 98
governmental agency or person with all or a part of the cost 99
thereof being paid from a loan or grant from the authority under 100
this chapter or otherwise paid from the proceeds of air quality 101
revenue bonds, including all buildings and facilities that the 102
authority determines necessary for the operation of the project, 103
together with all property, rights, easements, and interests that 104
may be required for the operation of the project.105

       (I) "Cost" as applied to an air quality project means the 106
cost of acquisition and construction, the cost of acquisition of 107
all land, rights-of-way, property rights, easements, franchise 108
rights, and interests required for such acquisition and 109
construction, the cost of demolishing or removing any buildings or 110
structures on land so acquired, including the cost of acquiring 111
any lands to which such buildings or structures may be moved, the 112
cost of acquiring or constructing and equipping a principal office 113
and sub-offices of the authority, the cost of diverting highways, 114
interchange of highways, and access roads to private property, 115
including the cost of land or easements for such access roads, the 116
cost of public utility and common carrier relocation or 117
duplication, the cost of all machinery, furnishings, and 118
equipment, financing charges, interest prior to and during 119
construction and for no more than eighteen months after completion 120
of construction, engineering, expenses of research and development 121
with respect to air quality facilities, the cost of any commodity 122
contract, including fees and expenses related thereto, legal 123
expenses, plans, specifications, surveys, studies, estimates of 124
cost and revenues, working capital, other expenses necessary or 125
incident to determining the feasibility or practicability of 126
acquiring or constructing such project, administrative expense, 127
and such other expense as may be necessary or incident to the 128
acquisition or construction of the project, the financing of such 129
acquisition or construction, including the amount authorized in 130
the resolution of the authority providing for the issuance of air 131
quality revenue bonds to be paid into any special funds from the 132
proceeds of such bonds, and the financing of the placing of such 133
project in operation. Any obligation, cost, or expense incurred by 134
any governmental agency or person for surveys, borings, 135
preparation of plans and specifications, and other engineering 136
services, or any other cost described above, in connection with 137
the acquisition or construction of a project may be regarded as a 138
part of the cost of that project and may be reimbursed out of the 139
proceeds of air quality revenue bonds as authorized by this 140
chapter.141

       (J) "Owner" includes an individual, copartnership, 142
association, limited liability company, or corporation having any 143
title or interest in any property, rights, easements, or interests 144
authorized to be acquired by this chapter.145

       (K) "Revenues" means all rentals and other charges received 146
by the authority for the use or services of any air quality 147
project, any gift or grant received with respect to any air 148
quality project, any moneys received with respect to the lease, 149
sublease, sale, including installment sale or conditional sale, or 150
other disposition of an air quality project, moneys received in 151
repayment of and for interest on any loans made by the authority 152
to a person or governmental agency, whether from the United States 153
or any department, administration, or agency thereof, or 154
otherwise, proceeds of such bonds to the extent that use thereof 155
for payment of principal of, premium, if any, or interest on the 156
bonds is authorized by the authority, amounts received or 157
otherwise derived from a commodity contract or from the sale of 158
the related commodity under such a contract, proceeds from any 159
insurance, condemnation, or guaranty pertaining to a project or 160
property mortgaged to secure bonds or pertaining to the financing 161
of the project, and income and profit from the investment of the 162
proceeds of air quality revenue bonds or of any revenues.163

       (L) "Public roads" includes all public highways, roads, and 164
streets in the state, whether maintained by the state, county, 165
city, township, or other political subdivision.166

       (M) "Public utility facilities" includes tracks, pipes, 167
mains, conduits, cables, wires, towers, poles, and other equipment 168
and appliances of any public utility.169

       (N) "Construction," unless the context indicates a different 170
meaning or intent, includes reconstruction, enlargement, 171
improvement, or providing furnishings or equipment.172

       (O) "Air quality revenue bonds," unless the context indicates 173
a different meaning or intent, includes air quality revenue notes, 174
air quality revenue renewal notes, and air quality revenue 175
refunding bonds, except that notes issued in anticipation of the 176
issuance of bonds shall have a maximum maturity of five years as 177
provided in section 3706.05 of the Revised Code and notes or 178
renewal notes issued as the definitive obligation may be issued 179
maturing at such time or times with a maximum maturity of forty 180
years from the date of issuance of the original note.181

       (P) "Solid waste" means any garbage; refuse; sludge from a 182
waste water treatment plant, water supply treatment plant, or air 183
pollution control facility; and other discarded material, 184
including solid, liquid, semisolid, or contained gaseous material 185
resulting from industrial, commercial, mining, and agricultural 186
operations, and from community activities, but not including solid 187
or dissolved material in domestic sewage, or solid or dissolved 188
material in irrigation return flows or industrial discharges that 189
are point sources subject to permits under section 402 of the 190
"Federal Water Pollution Control Act Amendments of 1972," 86 Stat. 191
880, 33 U.S.C.A. 1342, as amended, or source, special nuclear, or 192
byproduct material as defined by the "Atomic Energy Act of 1954," 193
68 Stat. 921, 42 U.S.C.A. 2011, as amended.194

       (Q) "Sludge" means any solid, semisolid, or liquid waste, 195
other than a recyclable by-product, generated from a municipal, 196
commercial, or industrial waste water treatment plant, water 197
supply plant, or air pollution control facility or any other such 198
wastes having similar characteristics and effects.199

       (R) "Ethanol or other biofuel facility" means a plant at 200
which ethanol or other biofuel is produced.201

       (S) "Ethanol" means fermentation ethyl alcohol derived from 202
agricultural products, including potatoes, cereal, grains, cheese 203
whey, and sugar beets; forest products; or other renewable or 204
biomass resources, including residue and waste generated from the 205
production, processing, and marketing of agricultural products, 206
forest products, and other renewable or biomass resources, that 207
meets all of the specifications in the American society for 208
testing and materials (ASTM) specification D 4806-88 and is 209
denatured as specified in Parts 20 and 21 of Title 27 of the Code 210
of Federal Regulations.211

       (T) "Biofuel" means any fuel that is made from cellulosic 212
biomass resources, including renewable organic matter, crop waste 213
residue, wood, aquatic plants and other crops, animal waste, solid 214
waste, or sludge, and that is used for the production of energy 215
for transportation or other purposes.216

       (U) "FutureGen project" means the buildings, equipment, and 217
real property and functionally related buildings, equipment, and 218
real property, including related research projects that support 219
the development and operation of the buildings, equipment, and 220
real property, designated by the United States department of 221
energy and the FutureGen industrial alliance, inc., as the 222
coal-fueled, zero-emissions power plant designed to prove the 223
technical and economic feasibility of producing electricity and 224
hydrogen from coal and nearly eliminating carbon dioxide emissions 225
through capture and permanent storage.226

       (V) "Commodity contract" means a contract or series of 227
contracts entered into in connection with the acquisition or 228
construction of air quality facilities for the purchase or sale of 229
a commodity that is eligible for prepayment with the proceeds of 230
federally tax exempt bonds under sections 103, 141, and 148 of the 231
Internal Revenue Code of 1986, as amended, and regulations adopted 232
under it.233

       (W) "Exempt energy air quality facility" means any renewable 234
energy project as defined by section 3706.25 of the Revised Code 235
for which an application is filed with the Ohio power siting 236
board, or upon which construction or installation is commenced, on 237
or after January 1, 2010, but on or before December 31, 2011, and 238
that is placed in service on or before December 31, 2012.239

       (X) "Job and economic development impact model" means the job 240
and economic development impact model published by the national 241
renewable energy laboratory of the United States department of 242
energy. "Job and economic development impact model" includes 243
economic models that project job creation and that are approved by 244
the air quality development authority in consultation with the 245
department of development for technologies for which the national 246
renewable energy laboratory has not developed an applicable model.247

       Sec. 3706.041.  (A) With respect to projects, and the 248
financing thereof, for industry, commerce, distribution, or 249
research, including public utility companies, under agreements 250
whereby the person to whom the project is to be leased, subleased, 251
or sold, or to whom a loan is to be made for the project, is to 252
make payments sufficient to pay all of the principal of, premium, 253
if any, and interest on the air quality revenue bonds issued for 254
the project, or the counterparty under any related commodity 255
contract agrees to make payments sufficient in amount to pay all 256
of the principal of, premium, if any, and interest on the related 257
air quality revenue bonds, the Ohio air quality development 258
authority shall make appropriate provision for adequate 259
maintenance of the project and may, in addition to other powers 260
under this chapter:261

       (1) Make loans for the acquisition or construction of the 262
project to such person upon such terms as the authority may 263
determine or authorize, including secured or unsecured loans, and, 264
in connection therewith, enter into loan agreements and other 265
agreements, including commodity contracts, accept notes and other 266
forms of obligation to evidence such indebtedness and mortgages, 267
liens, pledges, assignments, or other security interests to secure 268
such indebtedness, which may be prior or subordinate to or on a 269
parity with other indebtedness, obligations, mortgages, pledges, 270
assignments, other security interests, or liens or encumbrances, 271
and take such actions as may be considered by it appropriate to 272
protect such security and safeguard against losses, including, 273
without limitation thereto, foreclosure and the bidding upon and 274
purchase of property upon foreclosure or other sale.275

       (2) Sell such project under such terms as it may determine, 276
including, without limitation thereto, sale by conditional sale or 277
installment sale, under which title may pass prior to or after 278
completion of the project or payment or provisions for payment of 279
all principal of, premium, if any, and interest on such bonds, or 280
at any other time provided in such agreement pertaining to such 281
sale, and including sale under an option to purchase at a price 282
which may be a nominal amount or less than true value at the time 283
of purchase.284

       (3) Grant a mortgage, lien, or other encumbrance on, or 285
pledge or assignment of, or other security interest with respect 286
to, all or any part of the project, revenues, reserve funds, or 287
other funds established in connection with such bonds, or on, of, 288
or with respect to any lease, sublease, sale, conditional sale or 289
installment sale agreement, loan agreement, or other agreement 290
pertaining to the lease, sublease, sale, or other disposition of a 291
project or pertaining to a loan made for a project, or any 292
guaranty or insurance agreement made with respect thereto, or any 293
interest of the authority therein, or any other interest granted, 294
assigned, or released to secure payments of the principal of, 295
premium, if any, or interest on the bonds or to secure any other 296
payments to be made by the authority, which mortgage, lien, 297
encumbrance, pledge, assignment, or other security interest may be 298
prior or subordinate to or on a parity with any other mortgage, 299
assignment, other security interest, or lien or encumbrance.300

       (4) Provide that the interest on such bonds may be at a 301
variable rate or rates changing from time to time in accordance 302
with a base or formula as authorized by the authority.303

       (5) Contract for the acquisition or construction of such 304
project or any part thereof, including any related commodity 305
contracts, and for the leasing, subleasing, sale or other 306
disposition of such project in a manner determined by the 307
authority in its sole discretion, without necessity for 308
competitive bidding or performance bonds.309

       (B) Property comprising a project shall not be subject to 310
taxes or assessments and so long as the bonds or notes issued to 311
finance the costs of such project are outstanding, and the 312
transfer of title to or possession of such property to the person 313
to whom a loan or installment sale or conditional sale with 314
respect to such project is made shall not be subject to the taxes 315
levied pursuant to Chapters 5739. and 5741. of the Revised Code.316

       The authority shall certify the property comprising a project 317
which is exempt from taxes and assessments pursuant to this 318
section, and shall send, by certified mail, copies of such 319
certification to the owner of such exempt property, to the tax 320
commissioner, and to the county auditor of the county or counties 321
in which any such exempt property is located.322

       Each county auditor shall maintain a separate list of all 323
property exempt pursuant to this section and sections 6121.044 and 324
6123.041 of the Revised Code, in addition to the list of exempt 325
property required to be maintained pursuant to section 5713.07 of 326
the Revised Code.327

       Any facility exempted from taxation under division (C) of 328
this section shall not also be exempted under this division.329

       (C) The authority, in the lease, sale or loan agreement with 330
respect to a project referred to in division (A) of this section, 331
shall make appropriate provision for adequate maintenance of the 332
project.(1) Real and tangible personal property constituting an 333
exempt energy air quality facility shall not be subject to taxes 334
or assessments if the air quality development authority certifies 335
under this division that the construction and operation of the 336
facility creates and maintains the number of jobs as projected by 337
the job and economic development impact model during construction 338
and each year the facility is in service. The owner of the 339
facility shall apply to the authority for certification in the 340
manner prescribed by the authority. The application shall include 341
the facility's job creation and maintenance projection as 342
estimated by the job and economic development impact model. Any 343
facility exempted from taxation under division (B) of this section 344
shall not also be exempted under this division.345

       Within sixty days after receiving an application under this 346
division, the authority, in consultation with the department of 347
development, shall determine whether the facility qualifies for 348
exemption under this division and, if so, shall certify the 349
qualification in writing and shall send, by certified mail, copies 350
of the certification to the owner of the facility, to the tax 351
commissioner, and to the county auditor of the county or counties 352
in which any such exempt property is located.353

       (2) The owner of a facility that is exempted from taxes and 354
assessments under division (C) of this section shall make annual 355
service payments in lieu of taxes to the county treasurer of any 356
county in which the exempted property is located. Service payments 357
shall be required for each tax year for which the property is 358
exempt. If the facility is not owned by one or more public utility 359
companies, the payment shall equal six thousand dollars for each 360
megawatt of name plate capacity of the exempted property. If the 361
facility is owned by one or more public utility companies, the 362
payment shall equal five thousand dollars for each megawatt of 363
name plate capacity. The payment shall be charged, collected, and 364
distributed at the same time and in the same manner as the taxes 365
imposed on taxable property subject to assessment under Chapter 366
5727. of the Revised Code.367

       (3) The owner of an exempt energy air quality facility that 368
is exempted from taxation under division (C) of this section shall 369
do all of the following:370

       (a) Offer to sell power or renewable energy credits from the 371
exempted facility to electric distribution utilities or electric 372
service companies subject to renewable energy resource 373
requirements under section 4928.64 of the Revised Code that have 374
issued requests for proposal for such power or renewable energy 375
credits. If no electric distribution utility or electric service 376
company issues a request for proposal on or before December 31, 377
2010, or accepts an offer for power or renewable energy credits 378
within forty-five days after the offer is submitted, the owner of 379
the exempt energy air quality facility may sell the power or 380
renewable energy credits to other persons. Contracts made for the 381
sale of power or renewable energy credits before the effective 382
date of ..... . B. ..... of the 128th general assembly are not 383
subject to division (C)(3)(a) of this section.384

       (b) Repair all roads affected by construction as reasonably 385
required to restore them to their preconstruction condition;386

       (c) Provide or facilitate training for fire and emergency 387
responders to respond to emergency situations related to the 388
facility and, at the facility owner's expense, equip such fire and 389
emergency responders with proper equipment as reasonably required 390
to enable them to respond to such events.391

       (D) With respect to the projects referred to in this section, 392
the authority granted by this section is cumulative and 393
supplementary to all other authority granted in this chapter. The 394
authority granted by this section does not alter or impair any 395
similar authority granted elsewhere in this chapter for or with 396
respect to other projects.397

       Section 2.  That existing sections 3706.01 and 3706.041 of 398
the Revised Code are hereby repealed.399