2017 -- H 6074

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LC002384

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO TAXATION - LEVY AND ASSESSMENT OF LOCAL TAXES

     Introduced By: Representative Robert A. Nardolillo

     Date Introduced: April 05, 2017

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-5-3 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

     44-5-3. Ratable property of a city or town -- Definitions. Ratable property of a city

or town -- Definition.

     (a) The ratable property of the city or town consists of the ratable real estate. and the

ratable tangible personal property (which do not include manufacturer's manufacturing machinery

and equipment of a manufacturer) and the ratable tangible personal property of manufacturers

consisting of manufacturer's manufacturing machinery and equipment of a manufacturer.

     (b) (1) For the purposes of this section and §§ 44-5-20, 44-5-22, 44-5-38, and § 9 of

chapter 245, public laws of Rhode Island, 1966, "manufacturing" includes the handling and

storage of manufacturer's inventories as defined in § 44-3-3(20)(ii).

     (2) "Manufacturer's machinery and equipment" or "manufacturing machinery and

equipment" is defined as:

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

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

44-3-3(20) and machinery, fixtures, and equipment used exclusively by a manufacturer for

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

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

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

in § 44-3-3(20) and machinery, fixtures, and equipment used by a manufacturer for research and

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

machinery and equipment is used for the manufacturing processes, research, and development or

quality assurance. In the instances where machinery and equipment is used in both manufacturing

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

usage of the equipment for manufacturing, research, and development and quality assurance

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

the value used for manufacturing, research, and development and quality assurance is exempt

from taxation. The burden of demonstrating this percentage usage of machinery and equipment

for manufacturing and for research and development and/or quality assurance of its manufactured

products rests with the manufacturer.

     (3) This definition of "manufacturing" or "manufacturer's machinery and equipment"

does not include:

     (i) Motor vehicles required by law to be registered with the division of motor vehicles;

     (ii) Store fixtures and other equipment situated in or upon a retail store or other similar

selling place operated by a manufacturer, whether or not the retail establishment store or other

similar selling place is located in the same building in which the manufacturer operates his or her

manufacturing plant; and

     (iii) Fixtures or other equipment situated in or upon premises used to conduct a business

which is unrelated to the manufacture of finished products for trade and their sale by the

manufacturer of the products, whether or not the premises where the unrelated business is

conducted is in the same building in which the manufacturer has his or her manufacturing plant.

The levy on tangible personal property of manufacturers consisting of manufacturer's

manufacturing machinery and equipment of a manufacturer is at the rate provided in § 44-5-38.

     (c) Notwithstanding any exemption provided by this section, and except for the

exemptions created by §§ 44-3-3(a)(22), 44-3-3(a)(48) and 44-3-3(a)(49), which exemptions shall

remain intact, cities and towns may, by ordinance or resolution, tax any renewable energy

resources, as defined in § 39-26-5, and associated equipment only pursuant to rules and

regulations that will be established by the office of energy resources in consultation with the

division of taxation after the rules are adopted, no later than November 30, 2016. The rules will

provide consistent and foreseeable tax treatment of renewable energy to facilitate and promote

installation of grid-connected generation of renewable energy and shall consider the following

criteria in adopting appropriate and reasonable, tangible property tax rates for commercial

renewable energy systems:

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     (1) State policy objectives to promote renewable energy development;

     (2) Tax agreements between municipalities and renewable energy developers executed

and effective after 2011, including net metering or lease agreements that address tax treatment;

     (3) The valuation of local property tax in the ceiling prices set for the distributed-

generation standard contract or renewable-energy-growth programs by the distributed-generation

board;

     (4) Assessment practices used by Rhode Island municipal property tax assessors; and

     (5) Five dollars ($5.00) per kilowatt of nameplate capacity and the average kilowatt value

of the tax agreements and associated payments executed between municipalities and renewable-

energy developers between 2011 and 2016 shall be the benchmarks for consideration of

reasonable revenue generated by a city or town from renewable-energy facilities provided that

evidence to the contrary may be incorporated in final rules and regulations.

     (d) The dollar amount adopted through the rules and regulations that municipalities will

be required to use for commercial renewable-energy systems shall be based on the alternating

current (AC) nameplate capacity of the renewable-energy resource.

     (e) Any renewable-energy resource projects that have executed interconnection service

agreements with the electric-distribution company as of December 31, 2016, shall not be subject

to the rules developed under subsection (c) and shall maintain the tax status applicable before the

rules are adopted, unless otherwise agreed pursuant to § 44-3-9(a).

     SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 159

STATE REIMBURSEMENT TO TOWNS AND CITIES FOR LOST REVENUE

     42-159-1. State reimbursement to towns and cities.

     The state shall reimburse each municipality for the revenue lost to each municipality by

virtue of the 2017 amendment of §44-5-3, commencing in each municipality's fiscal year next

following the passage of this act, and in each fiscal year thereafter, at the level of that

municipality's receipts in the fiscal year preceding the first fiscal year of such reimbursement.

     SECTION 3. 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 - LEVY AND ASSESSMENT OF LOCAL TAXES

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     This act would abolish city and town taxes on tangible personal property, and provide for

the state to reimburse each municipality for the lost revenue.

     This act would take effect upon passage.

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