2013 -- S 1022

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LC02863

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO TAXATION -- EXEMPT PROPERTY

     Introduced By: Senators DaPonte, and Conley

     Date Introduced: June 25, 2013

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 44-3-3 of the General Laws in Chapter 44-3 entitled "Property

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Subject to Taxation" is hereby amended to read as follows:

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     44-3-3. Property exempt. -- The following property is exempt from taxation.

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      (1) Property belonging to the state except as provided in section 44-4-4.1;

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      (2) Lands ceded or belonging to the United States;

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      (3) Bonds and other securities issued and exempted from taxation by the government of

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the United States, or of this state;

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      (4) Real estate, used exclusively for military purposes, owned by chartered or

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incorporated organizations approved by the adjutant general, and composed of members of the

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national guard, the naval militia, or the independent chartered military organizations;

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      (5) Buildings for free public schools, buildings for religious worship, and the land upon

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which they stand and immediately surrounding them, to an extent not exceeding five (5) acres so

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far as the buildings and land are occupied and used exclusively for religious or educational

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purposes;

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      (6) Dwellings houses and the land on which they stand, not exceeding one acre in size,

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or the minimum lot size for zone in which the dwelling house is located, whichever is the greater,

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owned by or held in trust for any religious organization and actually used by its officiating clergy;

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provided, further that in the town of Charlestown, where the property previously described in this

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paragraph is exempt in total, along with dwelling houses and the land on which they stand in

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Charlestown, not exceeding one acre in size, or the minimum lot size for zone in which the

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dwelling house is located, whichever is the greater, owned by or held in trust for any religious

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organization and actually used by its officiating clergy, or used as a convent, nunnery, or retreat

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center by its religious order.

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      (7) Intangible personal property owned by, or held in trust for, any religious or charitable

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organization, if the principal or income is used or appropriated for religious or charitable

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purposes;

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      (8) Buildings and personal estate owned by any corporation used for a school, academy,

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or seminary of learning, and of any incorporated public charitable institution, and the land upon

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which the buildings stand and immediately surrounding them to an extent not exceeding one acre,

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so far as they are used exclusively for educational purposes, but no property or estate whatever is

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hereafter exempt from taxation in any case where any part of its income or profits or of the

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business carried on there is divided among its owners or stockholders;

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      (9) Estates, persons, and families of the president and professors for the time being of

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Brown University for not more than ten thousand dollars ($ 10,000) for each officer, the officer's

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estate, person, and family included, but only to the extent that any person had claimed and

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utilized the exemption prior to, and for a period ending either on or after December 31, 1996;

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      (10) Property especially exempt by charter unless the exemption has been waived in

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whole or in part.

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      (11) Lots of land exclusively for burial grounds;

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      (12) Property, real and personal, held for or by an incorporated library, society, or any

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free public library, or any free public library society, so far as the property is held exclusively for

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library purposes, or for the aid or support of the aged poor, or poor friendless children, or the poor

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generally, or for a hospital for the sick or disabled;

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      (13) Real or personal estate belonging to or held in trust for the benefit of incorporated

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organizations of veterans of any war in which the United States has been engaged, the parent

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body of which has been incorporated by act of congress, to the extent of four hundred thousand

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dollars ($ 400,000) if actually used and occupied by the association; provided, that the city

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council of the city of Cranston may by ordinance exempt the real or personal estate as previously

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described in this subdivision located within the city of Cranston to the extent of five hundred

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thousand dollars ($500,000);

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      (14) Property, real and personal, held for or by the fraternal corporation, association, or

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body created to build and maintain a building or buildings for its meetings or the meetings of the

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general assembly of its members, or subordinate bodies of the fraternity, and for the

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accommodation of other fraternal bodies or associations, the entire net income of which real and

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personal property is exclusively applied or to be used to build, furnish, and maintain an asylum or

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asylums, a home or homes, a school or schools, for the free education or relief of the members of

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the fraternity, or the relief, support, and care of worthy and indigent members of the fraternity,

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their wives, widows, or orphans, and any fund given or held for the purpose of public education,

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almshouses, and the land and buildings used in connection therewith;

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      (15) Real estate and personal property of any incorporated volunteer fire engine

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company or incorporated volunteer ambulance or rescue corps in active service;

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      (16) The estate of any person who in the judgment of the assessors is unable from

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infirmity or poverty to pay the tax; providing, that in the town of Burrillville the tax shall

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constitute a lien for five (5) years on the property where the owner is entitled to the exemption. At

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the expiration of five (5) years, the lien shall be abated in full. Provided, if the property is sold or

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conveyed or if debt secured by the property is refinanced during the five (5) year period, the lien

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immediately becomes due and payable; any person claiming the exemption aggrieved by an

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adverse decision of an assessor shall appeal the decision to the local board of tax review, and

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thereafter according to the provisions of section 44-5-26;

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      (17) Household furniture and family stores of a housekeeper in the whole, including

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clothing, bedding, and other white goods, books, and all other tangible personal property items

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which are common to the normal household;

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      (18) Improvements made to any real property to provide a shelter and fallout protection

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from nuclear radiation, to the amount of one thousand five hundred dollars ($ 1,500); provided,

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that the improvements meet applicable standards for shelter construction established from time to

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time by the Rhode Island emergency management agency. The improvements are deemed to

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comply with the provisions of any building code or ordinance with respect to the materials or the

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methods of construction used and any shelter or its establishment is deemed to comply with the

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provisions of any zoning code or ordinance;

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      (19) Aircraft for which the fee required by section 1-4-6 has been paid to the tax

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administrator;

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      (20) Manufacturer's inventory

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      (i) For the purposes of sections 44-4-10, 44-5-3, 44-5-20, and 44-5-38, a person is

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deemed to be a manufacturer within a city or town within this state if that person uses any

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premises, room, or place in it primarily for the purpose of transforming raw materials into a

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finished product for trade through any or all of the following operations: adapting, altering,

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finishing, making, and ornamenting; provided, that public utilities, non-regulated power

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producers commencing commercial operation by selling electricity at retail or taking title to

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generating facilities on or after July 1, 1997, building and construction contractors, warehousing

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operations including distribution bases or outlets of out-of-state manufacturers, and fabricating

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processes incidental to warehousing or distribution of raw materials such as alteration of stock for

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the convenience of a customer, are excluded from this definition.

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      (ii) For the purposes of sections 44-3-3, 44-4-10, and 44-5-38, the term "manufacturer's

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inventory" or any similar term means and includes the manufacturer's raw materials, the

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manufacturer's work in process, and finished products manufactured by the manufacturer in this

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state, and not sold, leased, or traded by the manufacturer or its title or right to possession

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divested; provided, that the term does not include any finished products held by the manufacturer

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in any retail store or other similar selling place operated by the manufacturer whether or not the

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retail establishment is located in the same building in which the manufacturer operates the

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manufacturing plant.

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      (iii) For the purpose of section 44-11-2, a "manufacturer" is a person whose principal

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business in this state consists of transforming raw materials into a finished product for trade

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through any or all of the operations described in paragraph (i) of this subdivision. A person will

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be deemed to be principally engaged if the gross receipts which that person derived from the

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manufacturing operations in this state during the calendar year or fiscal year mentioned in section

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44-11-1 amounted to more than fifty percent (50%) of the total gross receipts which that person

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derived from all the business activities in which that person engaged in this state during the

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taxable year. For the purpose of computing the percentage, gross receipts derived by a

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manufacturer from the sale, lease, or rental of finished products manufactured by the

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manufacturer in this state, even though the manufacturer's store or other selling place may be at a

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different location from the location of the manufacturer's manufacturing plant in this state, are

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deemed to have been derived from manufacturing.

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      (iv) Within the meaning of the preceding paragraphs of this subdivision, the term

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"manufacturer" also includes persons who are principally engaged in any of the general activities

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coded and listed as establishments engaged in manufacturing in the standard industrial

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classification manual prepared by the technical committee on industrial classification, office of

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statistical standards, executive office of the president, United States bureau of the budget, as

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revised from time to time, but eliminating as manufacturers those persons, who, because of their

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limited type of manufacturing activities, are classified in the manual as falling within the trade

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rather than an industrial classification of manufacturers. Among those thus eliminated, and

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accordingly also excluded as manufacturers within the meaning of this paragraph, are persons

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primarily engaged in selling, to the general public, products produced on the premises from which

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they are sold, such as neighborhood bakeries, candy stores, ice cream parlors, shade shops, and

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custom tailors, except, that a person who manufactures bakery products for sale primarily for

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home delivery, or through one or more non-baking retail outlets, and whether or not retail outlets

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are operated by person, is a manufacturer within the meaning of this paragraph.

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      (v) The term "Person" means and includes, as appropriate, a person, partnership, or

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corporation.

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      (vi) The department of revenue shall provide to the local assessors any assistance that is

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necessary in determining the proper application of the definitions in this subdivision.

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      (21) Real and tangible personal property acquired to provide a treatment facility used

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primarily to control the pollution or contamination of the waters or the air of the state, as defined

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in chapter 12 of title 46 and chapter 25 of title 23, respectively, the facility having been

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constructed, reconstructed, erected, installed, or acquired in furtherance of federal or state

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requirements or standards for the control of water or air pollution or contamination, and certified

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as approved in an order entered by the director of environmental management. The property is

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exempt as long as it is operated properly in compliance with the order of approval of the director

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of environmental management; provided, that any grant of the exemption by the director of

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environmental management in excess of ten (10) years is approved by the city or town in which

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the property is situated. This provision applies only to water and air pollution control properties

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and facilities installed for the treatment of waste waters and air contaminants resulting from

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industrial processing; furthermore, it applies only to water or air pollution control properties and

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facilities placed in operation for the first time after April 13, 1970;

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      (22) New manufacturing machinery and equipment acquired or used by a manufacturer

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and purchased after December 31, 1974. Manufacturing machinery and equipment is defined as:

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      (i) Machinery and equipment used exclusively in the actual manufacture or conversion

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of raw materials or goods in the process of manufacture by a manufacturer as defined in

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subdivision (20) of this section, and machinery, fixtures, and equipment used exclusively by a

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manufacturer for research and development or for quality assurance of its manufactured products;

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      (ii) Machinery and equipment which is partially used in the actual manufacture or

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conversion of raw materials or goods in process of manufacture by a manufacturer as defined in

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subdivision (20) of this section, and machinery, fixtures, and equipment used by a manufacturer

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for research and development or for quality assurance of its manufactured products, to the extent

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to which the machinery and equipment is used for the manufacturing processes, research and

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development or quality assurance. In the instances where machinery and equipment is used in

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both manufacturing and/or research, and development, and/or quality assurance activities and

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non-manufacturing activities, the assessment on machinery and equipment is prorated by

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applying the percentage of usage of the equipment for the manufacturing, research, and

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development and quality assurance activity to the value of the machinery and equipment for

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purposes of taxation, and the portion of the value used for manufacturing, research, and

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development, and quality assurance is exempt from taxation. The burden of demonstrating this

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percentage usage of machinery and equipment for manufacturing and for research, and

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development and/or quality assurance of its manufactured products rests with the manufacturer;

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and

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      (iii) Machinery and equipment described in section 44-18-30(7) and (22) that was

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purchased after July 1, 1997; provided that the city or town council of the city or town in which

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the machinery and equipment is located adopts an ordinance exempting the machinery and

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equipment from taxation. For purposes of this subsection, city councils and town councils of any

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municipality may by ordinance wholly or partially exempt from taxation the machinery and

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equipment discussed in this subsection for the period of time established in the ordinance and

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may by ordinance establish the procedures for taxpayers to avail themselves of the benefit of any

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exemption permitted under this section; provided, that the ordinance does not apply to any

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machinery or equipment of a business, subsidiary or any affiliated business which locates or

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relocates from a city or town in this state to another city or town in the state.

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      (23) Precious metal bullion, meaning any elementary metal which has been put through a

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process of melting or refining, and which is in a state or condition that its value depends upon its

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content and not its form. The term does not include fabricated precious metal which has been

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processed or manufactured for some one or more specific and customary industrial, professional,

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or artistic uses;

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      (24) Hydroelectric power generation equipment, which includes, but is not limited to,

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turbines, generators, switchgear, controls, monitoring equipment, circuit breakers, transformers,

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protective relaying, bus bars, cables, connections, trash racks, headgates, and conduits. The

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hydroelectric power generation equipment must have been purchased after July 1, 1979, and

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acquired or used by a person or corporation who owns or leases a dam and utilizes the equipment

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to generate hydroelectric power;

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      (25) Subject to authorization by formal action of the council of any city or town, any real

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or personal property owned by, held in trust for, or leased to an organization incorporated under

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chapter 6 of title 7, as amended, or an organization meeting the definition of "charitable trust" set

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out in section 18-9-4, as amended, or an organization incorporated under the not for profits

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statutes of another state or the District of Columbia, the purpose of which is the conserving of

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open space, as that term is defined in chapter 36 of title 45, as amended, provided the property is

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used exclusively for the purposes of the organization;

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      (26) Tangible personal property, the primary function of which is the recycling, reuse, or

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recovery of materials (other than precious metals, as defined in section 44-18-30(24)(ii) and (iii)),

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from or the treatment of "hazardous wastes", as defined in section 23-19.1-4, where the

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"hazardous wastes" are generated primarily by the same taxpayer and where the personal property

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is located at, in, or adjacent to a generating facility of the taxpayer. The taxpayer may, but need

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not, procure an order from the director of the department of environmental management

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certifying that the tangible personal property has this function, which order effects a conclusive

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presumption that the tangible personal property qualifies for the exemption under this

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subdivision. If any information relating to secret processes or methods of manufacture,

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production, or treatment is disclosed to the department of environmental management only to

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procure an order, and is a "trade secret" as defined in section 28-21-10(b), it shall not be open to

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public inspection or publicly disclosed unless disclosure is otherwise required under chapter 21 of

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title 28 or chapter 24.4 of title 23;

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      (27) Motorboats as defined in section 46-22-2 for which the annual fee required in

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section 46-22-4 has been paid;

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      (28) Real and personal property of the Providence performing arts center, a non-business

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corporation as of December 31, 1986;

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      (29) Tangible personal property owned by, and used exclusively for the purposes of, any

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religious organization located in the city of Cranston;

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      (30) Real and personal property of the Travelers Aid Society of Rhode Island, a

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nonprofit corporation, the Union Mall Real Estate Corporation, and any limited partnership or

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limited liability company which is formed in connection with, or to facilitate the acquisition of,

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the Providence YMCA Building; and

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      (31) Real and personal property of Meeting Street Center or MSC Realty, Inc., both not-

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for-profit Rhode Island corporations, and any other corporation, limited partnership, or limited

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liability company which is formed in connection with, or to facilitate the acquisition of, the

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properties designated as the Meeting Street National Center of Excellence on Eddy Street in

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Providence, Rhode Island.

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      (32) The buildings, personal property and land upon which the buildings stand, located

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on Pomham Island, East Providence, currently identified as Assessor's Map 211, Block 01, Parcel

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001.00, which consists of approximately twenty-one thousand three hundred (21,300) square feet

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and is located approximately eight hundred sixty feet (860'), more or less, from the shore, and

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limited exclusively to these said buildings personal estate and land, provided that said property is

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owned by a qualified 501(c)(3) organization, such as the American Lighthouse Foundation, and is

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used exclusively for a lighthouse.

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     (35) Real and personal property of East Bay Community Action Program and its

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predecessor, Self Help, Inc; provided, that the organization is qualified as a tax exempt

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corporation under section 501 (c)(3) of the United States Internal Revenue Code.

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     SECTION 2. This act shall take effect upon passage.

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LC02863

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION -- EXEMPT PROPERTY

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     This act would exempt from taxation the real and personal property of the East Bay

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Community Action Program.

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     This act would take effect upon passage.

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LC02863

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