130th Ohio General Assembly
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S. B. No. 232  As Introduced
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 Code to exempt from property taxation renewable energy facilities that are not financed through the Ohio Air Quality Development Authority and to require a payment in lieu of taxes on the basis of each megawatt of production capacity of such facilities.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1.  That sections 3706.01 and 3706.041 of the Revised Code be amended to read as follows:
Sec. 3706.01.  As used in this chapter:
(A) "Governmental agency" means a department, division, or other unit of state government, a municipal corporation, county, township, and other political subdivision, or any other public corporation or agency having the power to acquire, construct, or operate air quality facilities, the United States or any agency thereof, and any agency, commission, or authority established pursuant to an interstate compact or agreement.
(B) "Person" means any individual, firm, partnership, association, or corporation, or any combination thereof.
(C) "Air contaminant" means particulate matter, dust, fumes, gas, mist, smoke, noise, vapor, heat, radioactivity, radiation, or odorous substance, or any combination thereof.
(D) "Air pollution" means the presence in the ambient air of one or more air contaminants in sufficient quantity and of such characteristics and duration as to injure human health or welfare, plant or animal life, or property, or that unreasonably interferes with the comfortable enjoyment of life or property.
(E) "Ambient air" means that portion of the atmosphere outside of buildings and other enclosures, stacks, or ducts that surrounds human, plant, or animal life, or property.
(F) "Emission" means the release into the outdoor atmosphere of an air contaminant.
(G) "Air quality facility" means any of the following:
(1) Any method, modification or replacement of property, process, device, structure, or equipment that removes, reduces, prevents, contains, alters, conveys, stores, disperses, or disposes of air contaminants or substances containing air contaminants, or that renders less noxious or reduces the concentration of air contaminants in the ambient air, including, without limitation, facilities and expenditures that qualify as air pollution control facilities under section 103 (C)(4)(F) of the Internal Revenue Code of 1954, as amended, and regulations adopted thereunder;
(2) Motor vehicle inspection stations operated in accordance with, and any equipment used for motor vehicle inspections conducted under, section 3704.14 of the Revised Code and rules adopted under it;
(3) Ethanol or other biofuel facilities, including any equipment used at the ethanol or other biofuel facility for the production of ethanol or other biofuels;
(4) Any property or portion thereof used for the collection, storage, treatment, utilization, processing, or final disposal of a by-product or solid waste resulting from any method, process, device, structure, or equipment that removes, reduces, prevents, contains, alters, conveys, stores, disperses, or disposes of air contaminants, or that renders less noxious or reduces the concentration of air contaminants in the ambient air;
(5) Any property, device, or equipment that promotes the reduction of emissions of air contaminants into the ambient air through improvements in the efficiency of energy utilization or energy conservation;
(6) Any coal research and development project conducted under Chapter 1555. of the Revised Code;
(7) As determined by the director of the Ohio coal development office, any property or portion thereof that is used for the collection, storage, treatment, utilization, processing, or final disposal of a by-product resulting from a coal research and development project as defined in section 1555.01 of the Revised Code or from the use of clean coal technology, excluding any property or portion thereof that is used primarily for other subsequent commercial purposes;
(8) Any property or portion thereof that is part of the FutureGen project of the United States department of energy or related to the siting of the FutureGen project.
(9) Any property, device, or equipment that promotes the reduction of emissions of air contaminants into the ambient air through the generation of clean, renewable energy with renewable energy resources or advanced energy resources as defined in section 3706.25 of the Revised Code.
(10) Any property, device, structure or equipment necessary for the manufacture and production of equipment described as an air quality facility under this chapter.
"Air quality facility" further includes any property or system to be used in whole or in part for any of the purposes in divisions (G)(1) to (10) of this section, whether another purpose is also served, and any property or system incidental to or that has to do with, or the end purpose of which is, any of the foregoing. Air quality facilities that are defined in this division for industry, commerce, distribution, or research, including public utility companies, are hereby determined to be those that qualify as facilities for the control of air pollution and thermal pollution related to air under Section 13 of Article VIII, Ohio Constitution.
(H) "Project" or "air quality project" means any air quality facility, including undivided or other interests therein, acquired or to be acquired or constructed or to be constructed by the Ohio air quality development authority under this chapter, or acquired or to be acquired or constructed or to be constructed by a governmental agency or person with all or a part of the cost thereof being paid from a loan or grant from the authority under this chapter or otherwise paid from the proceeds of air quality revenue bonds, including all buildings and facilities that the authority determines necessary for the operation of the project, together with all property, rights, easements, and interests that may be required for the operation of the project.
(I) "Cost" as applied to an air quality project means the cost of acquisition and construction, the cost of acquisition of all land, rights-of-way, property rights, easements, franchise rights, and interests required for such acquisition and construction, the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which such buildings or structures may be moved, the cost of acquiring or constructing and equipping a principal office and sub-offices of the authority, the cost of diverting highways, interchange of highways, and access roads to private property, including the cost of land or easements for such access roads, the cost of public utility and common carrier relocation or duplication, the cost of all machinery, furnishings, and equipment, financing charges, interest prior to and during construction and for no more than eighteen months after completion of construction, engineering, expenses of research and development with respect to air quality facilities, the cost of any commodity contract, including fees and expenses related thereto, legal expenses, plans, specifications, surveys, studies, estimates of cost and revenues, working capital, other expenses necessary or incident to determining the feasibility or practicability of acquiring or constructing such project, administrative expense, and such other expense as may be necessary or incident to the acquisition or construction of the project, the financing of such acquisition or construction, including the amount authorized in the resolution of the authority providing for the issuance of air quality revenue bonds to be paid into any special funds from the proceeds of such bonds, and the financing of the placing of such project in operation. Any obligation, cost, or expense incurred by any governmental agency or person for surveys, borings, preparation of plans and specifications, and other engineering services, or any other cost described above, in connection with the acquisition or construction of a project may be regarded as a part of the cost of that project and may be reimbursed out of the proceeds of air quality revenue bonds as authorized by this chapter.
(J) "Owner" includes an individual, copartnership, association, limited liability company, or corporation having any title or interest in any property, rights, easements, or interests authorized to be acquired by this chapter.
(K) "Revenues" means all rentals and other charges received by the authority for the use or services of any air quality project, any gift or grant received with respect to any air quality project, any moneys received with respect to the lease, sublease, sale, including installment sale or conditional sale, or other disposition of an air quality project, moneys received in repayment of and for interest on any loans made by the authority to a person or governmental agency, whether from the United States or any department, administration, or agency thereof, or otherwise, proceeds of such bonds to the extent that use thereof for payment of principal of, premium, if any, or interest on the bonds is authorized by the authority, amounts received or otherwise derived from a commodity contract or from the sale of the related commodity under such a contract, proceeds from any insurance, condemnation, or guaranty pertaining to a project or property mortgaged to secure bonds or pertaining to the financing of the project, and income and profit from the investment of the proceeds of air quality revenue bonds or of any revenues.
(L) "Public roads" includes all public highways, roads, and streets in the state, whether maintained by the state, county, city, township, or other political subdivision.
(M) "Public utility facilities" includes tracks, pipes, mains, conduits, cables, wires, towers, poles, and other equipment and appliances of any public utility.
(N) "Construction," unless the context indicates a different meaning or intent, includes reconstruction, enlargement, improvement, or providing furnishings or equipment.
(O) "Air quality revenue bonds," unless the context indicates a different meaning or intent, includes air quality revenue notes, air quality revenue renewal notes, and air quality revenue refunding bonds, except that notes issued in anticipation of the issuance of bonds shall have a maximum maturity of five years as provided in section 3706.05 of the Revised Code and notes or renewal notes issued as the definitive obligation may be issued maturing at such time or times with a maximum maturity of forty years from the date of issuance of the original note.
(P) "Solid waste" means any garbage; refuse; sludge from a waste water treatment plant, water supply treatment plant, or air pollution control facility; and other discarded material, including solid, liquid, semisolid, or contained gaseous material resulting from industrial, commercial, mining, and agricultural operations, and from community activities, but not including solid or dissolved material in domestic sewage, or solid or dissolved material in irrigation return flows or industrial discharges that are point sources subject to permits under section 402 of the "Federal Water Pollution Control Act Amendments of 1972," 86 Stat. 880, 33 U.S.C.A. 1342, as amended, or source, special nuclear, or byproduct material as defined by the "Atomic Energy Act of 1954," 68 Stat. 921, 42 U.S.C.A. 2011, as amended.
(Q) "Sludge" means any solid, semisolid, or liquid waste, other than a recyclable by-product, generated from a municipal, commercial, or industrial waste water treatment plant, water supply plant, or air pollution control facility or any other such wastes having similar characteristics and effects.
(R) "Ethanol or other biofuel facility" means a plant at which ethanol or other biofuel is produced.
(S) "Ethanol" means fermentation ethyl alcohol derived from agricultural products, including potatoes, cereal, grains, cheese whey, and sugar beets; forest products; or other renewable or biomass resources, including residue and waste generated from the production, processing, and marketing of agricultural products, forest products, and other renewable or biomass resources, that meets all of the specifications in the American society for testing and materials (ASTM) specification D 4806-88 and is denatured as specified in Parts 20 and 21 of Title 27 of the Code of Federal Regulations.
(T) "Biofuel" means any fuel that is made from cellulosic biomass resources, including renewable organic matter, crop waste residue, wood, aquatic plants and other crops, animal waste, solid waste, or sludge, and that is used for the production of energy for transportation or other purposes.
(U) "FutureGen project" means the buildings, equipment, and real property and functionally related buildings, equipment, and real property, including related research projects that support the development and operation of the buildings, equipment, and real property, designated by the United States department of energy and the FutureGen industrial alliance, inc., as the coal-fueled, zero-emissions power plant designed to prove the technical and economic feasibility of producing electricity and hydrogen from coal and nearly eliminating carbon dioxide emissions through capture and permanent storage.
(V) "Commodity contract" means a contract or series of contracts entered into in connection with the acquisition or construction of air quality facilities for the purchase or sale of a commodity that is eligible for prepayment with the proceeds of federally tax exempt bonds under sections 103, 141, and 148 of the Internal Revenue Code of 1986, as amended, and regulations adopted under it.
(W) "Exempt energy air quality facility" means any renewable energy project as defined by section 3706.25 of the Revised Code for which an application is filed with the Ohio power siting board, or upon which construction or installation is commenced, on or after January 1, 2010, but on or before December 31, 2011, and that is placed in service on or before December 31, 2012.
(X) "Job and economic development impact model" means the job and economic development impact model published by the national renewable energy laboratory of the United States department of energy. "Job and economic development impact model" includes economic models that project job creation and that are approved by the air quality development authority in consultation with the department of development for technologies for which the national renewable energy laboratory has not developed an applicable model.
Sec. 3706.041.  (A) With respect to projects, and the financing thereof, for industry, commerce, distribution, or research, including public utility companies, under agreements whereby the person to whom the project is to be leased, subleased, or sold, or to whom a loan is to be made for the project, is to make payments sufficient to pay all of the principal of, premium, if any, and interest on the air quality revenue bonds issued for the project, or the counterparty under any related commodity contract agrees to make payments sufficient in amount to pay all of the principal of, premium, if any, and interest on the related air quality revenue bonds, the Ohio air quality development authority shall make appropriate provision for adequate maintenance of the project and may, in addition to other powers under this chapter:
(1) Make loans for the acquisition or construction of the project to such person upon such terms as the authority may determine or authorize, including secured or unsecured loans, and, in connection therewith, enter into loan agreements and other agreements, including commodity contracts, accept notes and other forms of obligation to evidence such indebtedness and mortgages, liens, pledges, assignments, or other security interests to secure such indebtedness, which may be prior or subordinate to or on a parity with other indebtedness, obligations, mortgages, pledges, assignments, other security interests, or liens or encumbrances, and take such actions as may be considered by it appropriate to protect such security and safeguard against losses, including, without limitation thereto, foreclosure and the bidding upon and purchase of property upon foreclosure or other sale.
(2) Sell such project under such terms as it may determine, including, without limitation thereto, sale by conditional sale or installment sale, under which title may pass prior to or after completion of the project or payment or provisions for payment of all principal of, premium, if any, and interest on such bonds, or at any other time provided in such agreement pertaining to such sale, and including sale under an option to purchase at a price which may be a nominal amount or less than true value at the time of purchase.
(3) Grant a mortgage, lien, or other encumbrance on, or pledge or assignment of, or other security interest with respect to, all or any part of the project, revenues, reserve funds, or other funds established in connection with such bonds, or on, of, or with respect to any lease, sublease, sale, conditional sale or installment sale agreement, loan agreement, or other agreement pertaining to the lease, sublease, sale, or other disposition of a project or pertaining to a loan made for a project, or any guaranty or insurance agreement made with respect thereto, or any interest of the authority therein, or any other interest granted, assigned, or released to secure payments of the principal of, premium, if any, or interest on the bonds or to secure any other payments to be made by the authority, which mortgage, lien, encumbrance, pledge, assignment, or other security interest may be prior or subordinate to or on a parity with any other mortgage, assignment, other security interest, or lien or encumbrance.
(4) Provide that the interest on such bonds may be at a variable rate or rates changing from time to time in accordance with a base or formula as authorized by the authority.
(5) Contract for the acquisition or construction of such project or any part thereof, including any related commodity contracts, and for the leasing, subleasing, sale or other disposition of such project in a manner determined by the authority in its sole discretion, without necessity for competitive bidding or performance bonds.
(B) Property comprising a project shall not be subject to taxes or assessments and so long as the bonds or notes issued to finance the costs of such project are outstanding, and the transfer of title to or possession of such property to the person to whom a loan or installment sale or conditional sale with respect to such project is made shall not be subject to the taxes levied pursuant to Chapters 5739. and 5741. of the Revised Code.
The authority shall certify the property comprising a project which is exempt from taxes and assessments pursuant to this section, and shall send, by certified mail, copies of such certification to the owner of such exempt property, to the tax commissioner, and to the county auditor of the county or counties in which any such exempt property is located.
Each county auditor shall maintain a separate list of all property exempt pursuant to this section and sections 6121.044 and 6123.041 of the Revised Code, in addition to the list of exempt property required to be maintained pursuant to section 5713.07 of the Revised Code.
Any facility exempted from taxation under division (C) of this section shall not also be exempted under this division.
(C) The authority, in the lease, sale or loan agreement with respect to a project referred to in division (A) of this section, shall make appropriate provision for adequate maintenance of the project. (1) Real and tangible personal property constituting an exempt energy air quality facility shall not be subject to taxes or assessments if the air quality development authority certifies under this division that the construction and operation of the facility creates and maintains the number of jobs as projected by the job and economic development impact model during construction and each year the facility is in service. The owner of the facility shall apply to the authority for certification in the manner prescribed by the authority. The application shall include the facility's job creation and maintenance projection as estimated by the job and economic development impact model. Any facility exempted from taxation under division (B) of this section shall not also be exempted under this division.
Within sixty days after receiving an application under this division, the authority, in consultation with the department of development, shall determine whether the facility qualifies for exemption under this division and, if so, shall certify the qualification in writing and shall send, by certified mail, copies of the certification to the owner of the facility, to the tax commissioner, and to the county auditor of the county or counties in which any such exempt property is located.
(2) The owner of a facility that is exempted from taxes and assessments under division (C) of this section shall make annual service payments in lieu of taxes to the county treasurer of any county in which the exempted property is located. Service payments shall be required for each tax year for which the property is exempt. If the facility is not owned by one or more public utility companies, the payment shall equal six thousand dollars for each megawatt of name plate capacity of the exempted property. If the facility is owned by one or more public utility companies, the payment shall equal five thousand dollars for each megawatt of name plate capacity. The payment shall be charged, collected, and distributed at the same time and in the same manner as the taxes imposed on taxable property subject to assessment under Chapter 5727. of the Revised Code.
(3) The owner of an exempt energy air quality facility that is exempted from taxation under division (C) of this section shall do all of the following:
(a) Offer to sell power or renewable energy credits from the exempted facility to electric distribution utilities or electric service companies subject to renewable energy resource requirements under section 4928.64 of the Revised Code that have issued requests for proposal for such power or renewable energy credits. If no electric distribution utility or electric service company issues a request for proposal on or before December 31, 2010, or accepts an offer for power or renewable energy credits within forty-five days after the offer is submitted, the owner of the exempt energy air quality facility may sell the power or renewable energy credits to other persons. Contracts made for the sale of power or renewable energy credits before the effective date of ..... . B. ..... of the 128th general assembly are not subject to division (C)(3)(a) of this section.
(b) Repair all roads affected by construction as reasonably required to restore them to their preconstruction condition;
(c) Provide or facilitate training for fire and emergency responders to respond to emergency situations related to the facility and, at the facility owner's expense, equip such fire and emergency responders with proper equipment as reasonably required to enable them to respond to such events.
(D) With respect to the projects referred to in this section, the authority granted by this section is cumulative and supplementary to all other authority granted in this chapter. The authority granted by this section does not alter or impair any similar authority granted elsewhere in this chapter for or with respect to other projects.
Section 2.  That existing sections 3706.01 and 3706.041 of the Revised Code are hereby repealed.
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