2016 -- S 3076

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LC006176

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

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A N   A C T

RELATING TO TAXATION -- PROPERTY SUBJECT TO TAXATION

     

     Introduced By: Senator Maryellen Goodwin

     Date Introduced: June 09, 2016

     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. -- (a) The following property is exempt from taxation.

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      (1) Property belonging to the state except as provided in § 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

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clergy; provided, further, that in the town of Charlestown, where the property previously

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described in this paragraph is exempt in total, along with dwelling houses and the land on which

 

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

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

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

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retreat 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; provided, however, that

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unless any private nonprofit corporation organized as a college or university located in the town

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of Smithfield reaches a memorandum of agreement with the town of Smithfield, the town of

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Smithfield shall bill the actual costs for police, fire, and rescue services supplied, unless

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otherwise reimbursed, to said corporation commencing March 1, 2014;

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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 nonprofit 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 § 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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that 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 § 1-4-6 has been paid to the tax administrator;

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      (20) Manufacturer's inventory

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

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be a manufacturer within a city or town within this state if that person uses any premises, room,

 

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or place in it primarily for the purpose of transforming raw materials into a finished product for

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trade through any or all of the following operations: adapting, altering, finishing, making, and

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ornamenting; provided, that public utilities; non-regulated power producers commencing

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commercial operation by selling electricity at retail or taking title to generating facilities on or

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after July 1, 1997; building and construction contractors; warehousing operations, including

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distribution bases or outlets of out-of-state manufacturers; and fabricating processes incidental to

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warehousing or distribution of raw materials, such as alteration of stock for the convenience of a

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customer; are excluded from this definition;

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      (ii) For the purposes of §§ 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 § 44-11-2, a "manufacturer" is a person whose principal business

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in this state consists of transforming raw materials into a finished product for trade through any or

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all of the operations described in paragraph (i) of this subdivision. A person will be deemed to be

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principally engaged if the gross receipts that person derived from the manufacturing operations in

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this state during the calendar year or fiscal year mentioned in § 44-11-1 amounted to more than

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fifty percent (50%) of the total gross receipts that person derived from all the business activities

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in which that person engaged in this state during the taxable year. For the purpose of computing

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the percentage, gross receipts derived by a manufacturer from the sale, lease, or rental of finished

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products manufactured by the manufacturer in this state, even though the manufacturer's store or

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other selling place may be at a different location from the location of the manufacturer's

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manufacturing plant in this state, are 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

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of 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; and

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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 that 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 non-

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

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

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quality assurance activity to the value of the machinery and equipment for purposes of taxation,

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and the portion of the value used for manufacturing, research and development, and quality

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assurance is exempt from taxation. The burden of demonstrating this percentage usage of

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machinery and equipment for manufacturing and for research and development, and/or quality

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assurance of its manufactured products rests with the manufacturer; and

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

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

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

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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

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any 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 that 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 that has been put through a

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process of melting or refining, and that 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 that 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 or that owns or leases a dam and utilizes the

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equipment 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 § 18-9-4, as amended, or an organization incorporated under the not for profits statutes of

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another state or the District of Columbia, the purpose of which is the conserving of open space, as

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

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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 § 44-18-30(24)(ii) and (iii)), from

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

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are generated primarily by the same taxpayer and where the personal property is located at, in, or

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adjacent to a generating facility of the taxpayer. The taxpayer may, but need not, procure an order

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from the director of the department of environmental management certifying that the tangible

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

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personal property qualifies for the exemption under this subdivision. If any information relating

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to secret processes or methods of manufacture, production, or treatment is disclosed to the

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department of environmental management only to procure an order, and is a "trade secret" as

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defined in § 28-21-10(b), it shall not be open to public inspection or publicly disclosed unless

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disclosure is otherwise required under chapter 21 of title 28 or chapter 24.4 of title 23;

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      (27) Motorboats as defined in § 46-22-2 for which the annual fee required in § 46-22-4

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has been paid;

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      (28) Real and personal property of the Providence Performing Arts Center, a non-

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business 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 that is formed in connection with, or to facilitate the acquisition of, the

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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 that 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, that 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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      (33) The Stadium Theatre Performing Arts Centre building located in Monument Square,

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Woonsocket, Rhode Island, so long as said Stadium Theatre Performing Arts Center is owned by

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the Stadium Theatre Foundation, a Rhode Island nonprofit corporation.

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      (34) Real and tangible personal property of St. Mary Academy -- Bay View, located in

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East Providence, Rhode Island.

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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 § 501(c)(3) of the United States Internal Revenue Code.

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      (36) Real and personal property located within the city of East Providence of the

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Columbus Club of East Providence, a Rhode Island charitable nonprofit corporation.

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      (37) Real and personal property located within the city of East Providence of the

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Columbus Club of Barrington, a Rhode Island charitable nonprofit corporation.

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      (38) Real and personal property located within the city of East Providence of Lodge

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2337 BPO Elks, a Rhode Island nonprofit corporation.

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      (39) Real and personal property located within the city of East Providence of the St.

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Andrews Lodge No. 39, a Rhode Island charitable nonprofit corporation.

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      (40) Real and personal property located within the city of East Providence of the

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Trustees of Methodist Health and Welfare service a/k/a United Methodist Elder Care, a Rhode

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Island nonprofit corporation.

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      (41) Real and personal property located on the first floor of 90 Leonard Avenue within

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the city of East Providence of the Zion Gospel Temple, Inc., a religious nonprofit corporation.

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      (42) Real and personal property located within the city of East Providence of the Cape

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Verdean Museum Exhibit, a Rhode Island nonprofit corporation.

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      (43) The real and personal property owned by a qualified 501(c)(3) organization that is

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affiliated and in good standing with a national, congressionally chartered organization and

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thereby adheres to that organization's standards and provides activities designed for recreational,

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educational, and character building purposes for children from ages six (6) years to seventeen

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(17) years.

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      (44) Real and personal property of the Rhode Island Philharmonic Orchestra and Music

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School; provided, that the organization is qualified as a tax exempt corporation under § 501(c)(3)

 

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of the United States Internal Revenue Code.

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      (45) The real and personal property located within the town of West Warwick at 211

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Cowesett Avenue, Plat 29-Lot 25, which consists of approximately twenty-eight thousand seven

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hundred and fifty (28,750) square feet and is owned by the Station Fire Memorial Foundation of

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East Greenwich, a Rhode Island nonprofit corporation.

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      (46) Real and personal property of the Comprehensive Community Action Program, a

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qualified tax exempt corporation under § 501(c)(3) of the United States Internal Revenue Code.

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      (47) Real and personal property located at 52 Plain Street, within the city of Pawtucket

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of the Pawtucket Youth Soccer Association, a Rhode Island nonprofit corporation.

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     (48) Real and personal property of Home Care & Hospice of New England, a Rhode

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Island nonprofit corporation, its successors and affiliates, each a qualified tax exempt corporation

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

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      (b) Except as provided below, when a city or town taxes a for-profit hospital facility, the

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value of its real property shall be the value determined by the most recent full revaluation or

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statistical property update performed by the city or town; provided, however, in the year a

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nonprofit hospital facility converts to or otherwise becomes a for-profit hospital facility, or a for-

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profit hospital facility is initially established, the value of the real property and personal property

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of the for-profit hospital facility shall be determined by a valuation performed by the assessor for

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the purpose of determining an initial assessed value of real and personal property, not previously

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taxed by the city or town, as of the most recent date of assessment pursuant to § 44-5-1, subject to

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a right of appeal by the for-profit hospital facility which shall be made to the city or town tax

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assessor with a direct appeal from an adverse decision to the Rhode Island superior court business

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calendar.

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      A "for-profit hospital facility" includes all real and personal property affiliated with any

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hospital as identified in an application filed pursuant to chapters 23-17 and/or 23-17.14.

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Notwithstanding the above, a city or town may enter into a stabilization agreement with a for-

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profit hospital facility under § 44-3-9 or other laws specific to the particular city or town relating

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to stabilization agreements. In a year in which a nonprofit hospital facility converts to, or

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otherwise becomes, a for-profit hospital facility, or a for-profit hospital facility is otherwise

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established, in that year only the amount levied by the city or town and/or the amount payable

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under the stabilization agreement for that year related to the for-profit hospital facility shall not be

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counted towards determining the maximum tax levy permitted under § 44-5-2.

 

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- PROPERTY SUBJECT TO TAXATION

***

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     This act would exempt from taxation the real and personal property of Home Care &

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Hospice of New England, a Rhode Island nonprofit corporation.

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     This act would take effect upon passage.

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