Category Archives: Uncategorized

BendFilm Descends Upon Deschutes County

Native Wisdom

Bend, Oregon’s 16th annual independent film festival, BendFilm launches in less than two weeks! As a proud Screening Partner Sponsor, Karnopp Petersen is excited to support the four-day festival that showcases the unique voices and some of the best independent films in the Pacific Northwest.

The festival of films presents a variety of genres and topics throughout regional theaters and local venues including Bend’s historic Tower Theater, Regal Cinemas, McMenamins, Redmond’s Odem Theater, Tin PAN Theater, and the Madras Performing Arts Center.

This year, BendFilm welcomes IndieWoman of the Year – Christine Vachon, producer of Oscar-winning films, Carol and Boys Don’t Cry. The festival’s First Features Honoree – Ron Shelton is the Oscar-Nominated Writer/Director of films, Bull Durham, White Men Can’t Jump, and Tin Cup.

Festival screenings explore topics and issues from a range of viewpoints, many of special relevance to the communities of Central Oregon. These thought-provoking films provide an opportunity for our clients and community to learn from different voices and engage in discussion.

View the full Bend Film Festival 2019 schedule of films and get your Festival Pass for the 16th Annual BendFilm Festival, October 10-13, 2019 here: https://www.bendfilm.org/2019-bendfilm-festival/.

 

KP Proud to be a Sponsor of the Bend Energy Challenge; Official Launch January 14, 2015

January 14, 2015 marked the official “launch” of the Bend Energy Challenge. Karnopp Petersen is a business partner and sponsor of the Challenge which gives the community an opportunity to win $5 million to put toward energy savings and improvements.

A national competition among 50 cities; the city that reduces its energy usage the most over 2015 and 2016 will likely win. In other words, the “biggest loser” wins! The winner will be evaluated based on utility accounts for residences, the city of Bend, Bend Metro Parks and Recreation District and the Bend LaPine School District. Luckily the city, parks and school districts have indicated they are up for the Challenge, but the ability to win $5 million will really rely on individuals. The Challenge is looking for “Energy Heroes” by engaging individuals to take an “Energy Pledge.”

So why is Karnopp Petersen a sponsor? The short answer is because we live here. We believe that energy efficiency and renewable energy are ways to make our community more livable, will create family wage jobs and will help ourselves, our employees, our clients and neighbors save money and be more comfortable at home. Plus, wouldn’t it be wonderful to win $5 million to improve our city? The Challenge will provide all sorts of no and low cost energy saving tools and other ideas and information on its website  and Facebook page. If you “like” the Facebook page you’ll even be entered to win a free home energy audit! As the Challenge gets underway, KP also looks forward to sharing information and ideas here. We hope you stay tuned and take the pledge.

Harvesting The Opportunity To Say Thank You!

As Thanksgiving approaches, we would like to extend our gratitude to those who have made this past year so memorable. We look forward to new opportunities and experiences in the coming year.

Leaving a Legacy – A Team Approach

Gifting is the cornerstone of a comprehensive estate plan for many families.  Planned giving can create a legacy by providing benefits to loved ones and meaningful causes, while also reaping significant tax savings.  But actually achieving those ends requires careful planning. Your needs, values, and whether you wish to retain control over gifted assets are all important considerations in a gifting plan.

As you consider gifting, keep in mind that because of the differing effects of income, capital gain and estate taxes on various types of assets, not all gifts have the same tax impact—even if the gifted assets have the same value (more on that in a future post). Your attorney, accountant, and financial advisor can help you identify appropriate assets for gifting to maximize your tax savings while preserving wealth to maintain your standard of living.  Outright gifts may be the simplest approach, but other methods such as gifting through a trust, foundation, or donor advised fund can yield significant additional tax advantages and control.  For gifts to friends and family, you may also consider making direct payments to education and medical providers or contributing to an education savings plan.  Your attorney can help you determine the appropriate gifting vehicle given your individual circumstances.

If you are unsure about a fitting charitable recipient, a private philanthropy advisor or community foundation can help you identify charitable organizations that align with your interest and intent. Such advisors can help you identify and vet charitable organizations, draw up a gift agreement, and then periodically review and assess your gift for alignment with your intent.

Depending on the kinds of gifts you make, your accountant or attorney can assist you with tax compliance by proper documentation and reporting to ensure completion of the tax planning aspect of your gifts.  Faulty documentation can reduce or eliminate the benefits a well-planned gift ought to achieve. The importance of careful and accurate tax reporting cannot be overemphasized.

There are many twists, turns, and caveats in the gifting world.  Relying on your team of professionals is a sure way to leave a lasting legacy.

Happy 4th of July!

“From every mountain side, let freedom ring…”

~Samuel Francis Smith

Employment Legislation Update

The Oregon Legislature recently completed a short (even-numbered year) session, passing just two bills that may impact employers.

House Bill 4010 authorizes Oregon’s Employment Department to make public all decisions of the Employment Appeals Board. As you may know, the Employment Appeals Board hears appeals from decisions that are made by the Employment Department—such as appeals concerning claims for unemployment benefits. The Employment Department had previously directed the Appeals Board to refrain from publishing decisions, due to concerns relating to confidentiality. Following House Bill 4010, we expect to see more published decisions. That increased access will mean more guidance for employers (and employees, for that matter) on, say, what their chances for appeal might be and whether they might wish to invest their time and resources in pursuing the appellate process. On the flip side, it may also mean some unwanted publicity: names / circumstances in particular employee terminations may become published, if they are involved in a decision before the Appeals Board.

Senate Bill 1558 affects self-insured employer groups as relates to worker’s compensation claims. The Bill provides that, if a self-insured employer group is decertified before September 15, 2014, then the Director of the Department of Consumer and Business Services is permitted to provide money to injured workers who have not received the compensation that they are due because the claims funds and securities have been exhausted. The Bill also permits the Department of Consumer and Business services to set standards that self-insured employers will be required to meet to prove that they are financially viable.

RBDs, MRDs and QRPs, Oh My! Calculating Required Beginning Dates for Distributions from Multiple Retirement Plans

When must a participant in a qualified retirement plan (QRP) begin taking mandatory required distributions (MRDs)?  The rules governing retirement plans and mandatory distributions can be tricky.  Assuming the plan participant is not an owner of 5% or more of the company maintaining the plan, the required beginning date (RBD) is April 1 of the calendar year following the later of (1) the calendar year the participant attains age 70.5, or (2) the calendar year in which the participant retires from employment with the employer maintaining the plan.  The rules of the individual plan should be consulted because not all employer-sponsored plans are required to recognize the latter of the two rules, and may choose to require all employees to begin distributions by April 1 of the calendar year the participant attains age 70.5.  If the participant is an owner of 5% or more of the company maintaining the plan, then the RDB is April 1 of the calendar year in which the participant attains age 70.5.

Are the rules for the RBD the same for IRAs?  No.  The RBD for a distribution from a traditional IRA is April 1 of the calendar year following the calendar year in which the participant attains age 70.5.  For a Roth IRA, there are no RBDs because there are no MRDs for the participant.

What if the plan participant has two different employer sponsored plans, one from an existing employer and one from a former employer?  If the participant is still working at the time he or she attains the age of 70.5, he or she could potentially have two different start dates.  If the plan permits, the RBD for the current employer’s plan could be delayed until April 1 of the year following the year of retirement.  The RBD for the former employer’s plan would be April 1 of the calendar year following the calendar year the participant attains the age of 70.5.

If a participant has two different employer sponsored plans as described above, can the participant roll the proceeds from the former employer’s plan into the current employer’s plan to delay required distributions until retirement?  Maybe.  First, the current employer’s plan would have to permit such a rollover.  Second, it could depend on the age of the participant at the time of the rollover.  If the participant attains the age of 70.5 in the year the rollover is contemplated, the participant would still be required to take the first distribution from the former employer’s plan for that year (even though technically the first distribution could be delayed until April 1 of the following year).  Any distribution received from the plan in the year the participant attains age 70.5 would be considered a minimum distribution for that year and cannot be rolled over.  The balance of the account in excess of the minimum distribution may then be rolled over.  Again, the plan participant should consult with the individual plan to confirm that the plan would permit such a rollover.

Forest Owner Opportunities in California’s Cap and Trade Program

In 2006, California passed Assembly Bill (AB) 32, the Global Warming Solutions Act, directing the California Air Resources Board (ARB) to develop a program to reduce greenhouse gas emissions to 1990 levels by the year 2020 in California.  ARB developed its Cap and Trade Program, and 2013 saw the start of mandatory compliance obligations.  In general, the program sets emission caps which reduce over time and which trigger emission compliance obligations.  To comply with the program, covered entities such as electric utilities or fuel refineries must acquire either emission allowances (“Allowances”), issued by the ARB, or carbon emission offset credits (“Carbon Offsets Credits” or “COC”) from COC project owners/developers (collectively, “Compliance Instruments”) and then surrender these Compliance Instruments to the ARB for their covered emissions.

The Carbon Offset Credit component of the program creates opportunities for forest owners in the lower 48 states to participate and receive revenue for being a COC provider.  As part of the Compliance Offset Program, the ARB has adopted four Compliance Offset Protocols under which projects can be developed, implemented and verified for issuance and sale of Carbon Offset Credits:  Ozone Depleting Substances Projects Protocol, Livestock Projects Protocol, Urban Forest Projects Protocol, and US Forest Projects Protocol (the “Forest Protocol”).

The COC creation market has the potential to be significant.  Unlike voluntary carbon credit markets, California Carbon Offset Credit prices are responsive to regulatory floors and requirements—namely, the ARB sets a price floor for the Allowance auctions which helps to support COC prices.  COC prices are discounted to the Allowance price because Carbon Offset Credits may comprise only 8 percent of a covered entity’s compliance obligation.   For example, the 2014 floor price for an Allowance is set at $11.34, and the 2014 Allowance budget is 159.7 million Allowances—meaning there is an opportunity in 2014 to market approximately 13 million offset credits at prices that could range from $8-10 per offset (or higher if the allowances trade higher than the floor price).  This annual market opportunity grows in later years due to additional covered entities entering the regulatory program (for example, the Allowance budget jumps to 394 million Allowances in 2015).  Further, there is flexibility in the market as Carbon Offset Credits may be banked for future year compliance obligations.

Eligibility of forest lands for the Forest Protocol depends on the project type.  The Forest Protocol identifies three different project types: 1) Reforestation; 2) Improved Forest Management; and 3) Avoided Conversion.

  • Avoided Conversion projects may only occur on privately owned (including tribal) land, unless the land is transferred to public ownership as part of the project.  Lands are only eligible if it can be demonstrated that there is a significant threat of conversion of project land to non-forest land use.
  • Reforestation projects are limited to lands that have had less than 10 percent tree canopy cover for a minimum of 10 years or have been subject to a Significant Disturbance removing at least 20 percent of the land’s above ground live biomass in trees.  The projects may occur on private land, tribal land or on state or municipal public land.
  • Similarly, Improved Forest Management projects may occur on private, tribal or state/municipal lands.  These projects involve management activities that maintain or increase carbon stocks on forested land relative to baseline levels of carbon stocks.  To be eligible, these lands must contain more than 10 percent tree canopy cover.

Notably, federal lands, except for tribal lands, are not eligible for any of the projects.  The exclusion of federal lands creates a significant opportunity for private and tribal forest owners to participate in the carbon market and create additional asset value.  The Carbon Offset Credits create opportunity for an annual revenue stream. And, importantly, some of the Forest Protocol projects are not incompatible with ongoing timber management objectives, but may, in fact, help generate revenues that can assist in overall forest health and timber management objectives such as through thinning projects and/or biomass removal.  The Carbon Offset Credit revenues could also be rolled into other management objectives, for example, forest land acquisition.  However, there is a cost to entry and ongoing management costs for reporting and verification which should be factored into any project projection.

Any forest owner interested in the program should contact a reputable professional to assist them in a feasibility review of the Forest Protocol and the forest owner’s lands, forest composition and management practices and objectives.  This would evaluate potential size of project, credit generation and revenue and cost projections.  For example, under the Improved Forest Management protocol, project sizes under 5,000 acres may not make financial sense standing alone, but could perhaps be aggregated with other land holdings.  In addition, invalidation and other legal risks should be evaluated.

In summary, the California Cap and Trade Program is large enough and valuable enough to entice interest in forest carbon offset project development on private and tribal lands.  These offset projects can create additional value for forest owners, but only if they are consistent with existing overall management objectives. While the market is regulated, it is also still emerging.  Accordingly, it is important to evaluate the risks as well as the opportunities before committing to a project.

Ninth Circuit Decision in Chehalis Tribes v. Thurston County is Final

On July 30, 2013, a three judge panel of the U.S. Ninth Circuit Court of Appeals issued a decision in Confederated Tribes of the Chehalis Reservation v. Thurston County Board of Equalization, in which it held that the exemption of trust lands from state and local taxation under 25 U.S.C. § 465 extends to permanent improvements on trust lands regardless of the particular form in which the tribe chooses to conduct its business (here, a limited liability company majority owned by the tribe).  As a result of this decision, Thurston County was foreclosed from taxing the Great Wolf Lodge, which is located on land held in trust for the Chehalis Tribe.  Thurston County petitioned the Ninth Circuit for rehearing by the full court, which the court denied on September 23, 2013.  Thurston County did not file a request to hear an appeal of the case with the United States Supreme Court within the required 90 day period.  Thus, the Ninth Circuit’s decision is now final and binding within its jurisdiction.  This decision has major implications for tribal economic development, as it will enable tribes to attract business partners to work with tribes to build improvements and locate businesses on trust lands.

Read additional analysis on the case here.