SESSION OF 2022
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2416
As Amended by Senate Committee of the Whole
Brief*
Senate Sub. for HB 2416, as amended, would create
law regarding compensation for the use, restriction of use,
loss, or destruction of property as a result of governmental
actions related to the prevention of or response to contagious
or infectious disease. The bill also would amend law related
to property tax relief for businesses affected by governmental
shutdowns or restrictions related to certain emergencies and
would enact the COVID-19 Retail Storefront Property Tax
Relief Act.
The bill would become effective upon publication in the
Kansas Register.
Compensation for Property Affected by Governmental
Actions
The bill would state compensation would be provided to
property owners affected by governmental actions:
● Taken on and after the bill’s effective date; and
● Only if property was commandeered, restricted for
use, or otherwise used pursuant to a governmental
action; and
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
● The destruction, use, or restriction on use of such
property was ordered by a public official pursuant
to such governmental action.
The bill would provide a claimant would not be eligible
for compensation if the claimant knew or should have known
of a dangerous condition and failed to respond in a
reasonable manner to address the dangerous condition that
resulted in the use, restriction on use, damage, loss, or
destruction of property, including, but not limited to,
sanitization or food safety.
Any person claiming compensation under this section as
a result of a governmental action would be required to file a
civil action in district court, and the court would determine the
validity of the claim in the same manner and under the same
procedures as a condemnation action pursuant to the
Eminent Domain Procedure Act. The bill would provide any
award of compensation would:
● Be paid by the governmental entity ordering the
contested action;
● Be limited to the actual cost of such use or
restriction on use as determined by the board of
appraisers; and
● Not include loss of present or future profits,
opportunity cost, or other extraordinary damages.
The bill would provide personal services could not be
compensated by the State or political subdivision except
pursuant to statute or ordinance.
The bill would define “governmental action” to mean an
order, resolution, or ordinance related to a contagious or
infectious disease in humans issued or adopted by the State,
county, city, or other political subdivision of the state,
including, but not limited to, an order, resolution, or ordinance
issued or adopted pursuant to a declared state of disaster
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emergency or state of local disaster emergency under the
Kansas Emergency Management Act (KEMA) that limits the
size of gatherings of individuals, restricts the operation of
business, controls the movement of persons, or limits
religious gatherings. The bill would define “restriction on use”
or “restricted for use” to mean:
● Any taking as defined in the Private Property
Protection Act;
● Any restriction, limitation on access to, or operation
of private property, as defined by the bill;
● Exertion of control over any private property for any
amount of time pursuant to a governmental action;
or
● Substantially burdening the operation of any
religious, civic, business, or commercial entity,
whether for-profit or not-for-profit.
Property Tax Relief for Business Affected by
Governmental Shutdown or Restriction Related to
Contagious or Infectious Disease
The bill would amend law governing reimbursement of
property taxes levied upon property on which the owner
maintains a business that was shut down or restricted by the
State, county, city, or other political subdivision related to an
executive order, state of disaster emergency, or state of local
disaster emergency under KEMA, to allow such
reimbursement for businesses that were shut down or
restricted because of any action taken by:
● The State, county, city, or other political subdivision
of the state related to an executive order, state of
disaster emergency, or state of local disaster
emergency under KEMA; or
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● A county, city, or other political subdivision of the
state related to contagious or infectious disease
pursuant to statutes governing public health.
An owner would not be eligible for reimbursement if the
owner knew or should have known of a dangerous condition
and failed to respond in a reasonable manner to address the
dangerous condition that resulted in the shutdown or
restriction, including, but not limited to, sanitization or food
safety.
The bill would remove the effective date of the original
enactment of this section.
COVID-19 Retail Storefront Property Tax Relief Act
The bill would enact the Retail Storefront Property Tax
Relief Act (Act) to provide for claims for refunds to be paid for
tax years 2020 and 2021 for certain claimants that were
operationally shut down or restricted at their retail storefront
by a COVID-19-related order or action imposed by the State,
a local unit of government, or a local health officer.
Refund Amounts
The refund would be equal to 33.0 percent of the sum of
the COVID-19 ordered shutdown days gross rebate amount
and the COVID-19 ordered restricted operations days gross
rebate amount, as those terms are defined by the bill.
Refunds would be limited to $7,500 per tax year.
The COVID-19 ordered shutdown days gross rebate
amount would be the amount of property taxes accrued or
15.0 percent of gross rent actually paid in cash for the tax
year, divided by 3 for businesses shut down for 91 or more
days, divided by 4 for businesses shut down for 61 to 90
days, divided by 6 for businesses shut down for 31 to 60
days, and divided by 12 for businesses shut down for 1 to 30
days.
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The COVID-19 ordered restricted operations days gross
rebate amount would be the amount of property taxes
accrued or 15.0 percent of gross rent actually paid in cash for
the tax year, divided by an amount ranging from 2 to 16,
depending on the number of ordered restricted operation
days.
Eligible Claimants
Claimants would be required to be for-profit businesses
in operation as of July 1, 2019, and March 1, 2020, and filing
a 2019 tax return with annual revenues between $10,000 and
$2,500,000 in 2019, with less gross revenue in 2020 or 2021
than in 2019. Businesses would not be permitted to be
claimants if they received more than a total of $150,000 in
prior COVID-19-related local, state, or federal funding, or any
combination thereof.
The bill would exclude as claimants grocery stores,
pharmacies, hardware stores or home improvement
businesses, retail liquor stores, manufacturers and food
processors, schools from pre-kindergarten through post-
secondary, hospitals and healthcare providers (not including
dentists), property management and real estate services,
professional services, agricultural and aquaculture producers,
hosts or operators of vacation or short-term rental units,
passive businesses, financial businesses primarily engaged
in the business of lending, cable companies, telephone
companies, utilities, and energy production, generation, and
distribution companies.
Only one claimant per retail storefront would be
permitted to receive a refund per tax year. “Retail storefront”
would be defined to be real property where the claimant
conducts retail sales through customers’ physical, on-site
presence and may consist as part of a multi-purpose or multi-
retail storefront building.
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Additional Provisions
The Act would require claims to be filed with the
Department of Revenue on or before April 15, 2023, in order
to be paid or allowed. The Act would direct the Director of
Taxation to make available suitable forms for filing claims and
would authorize the Secretary of Revenue to adopt rules and
regulations necessary for the administration of the Act.
The Act would require claimants to provide reasonable
proof of eligibility for a refund to the Director of Taxation,
including information concerning taxes levied and rent paid.
The Act would permit the amount of any claim to be applied to
outstanding tax liability owed by the claimant and would
require a refund amount to be paid to a county treasurer to be
applied to property taxes owed in the event a claimant has
delinquent property taxes for tax year 2020 or 2021.
Delinquent property taxes for any tax year prior to 2020 would
disallow a claimant from being eligible for a refund.
The Act would provide for the disallowance of any claims
filed with fraudulent intent or upon a finding that the claimant
received title to the retail storefront for the purpose of
applying for a refund. Filing a claim with fraudulent intent
would be a class B misdemeanor and any claim paid upon a
fraudulent filing would bear interest at a rate of 1 percent per
month until the claim was repaid or recovered.
The provisions of the Act would be subject to informal
conference and appeals to the State Board of Tax Appeals.
Each county would be required to pay the State an
amount equal to 33 percent of the amount of refund claims
paid pursuant to the Act for property located in such county.
Background
As referred to the Senate Committee on Judiciary on
March 10, 2021, HB 2416 contained provisions regarding the
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governmental response to certain emergencies. These
provisions were enacted in 2021 SB 40.
On March 9, 2022, the Senate Committee on Judiciary
removed the contents of HB 2416 enacted in SB 40, inserted
two sections of SB 541 regarding compensation for
governmental use of property and property tax relief for
certain businesses affected by governmental shutdowns or
restrictions related to contagious or infectious disease, and
recommended a substitute bill to be effective upon publication
in the Kansas Register.
On March 23, 2022, the Senate Committee of the Whole
adopted amendments to:
● Remove a provision concerning the obligation of
persons in the state to manage their affairs in ways
related to the prevention and response to
contagious or infectious disease;
● Clarify the provisions concerning compensation for
governmental actions affecting property be must be
related to infectious or contagious diseases in
humans;
● Further clarify when claimants and property owners
may not be awarded compensation or property tax
relief pursuant to the bill; and
● Add provisions from Senate Substitute for HB
2313, as amended by the Senate Committee of the
Whole, enacting the COVID-19 Retail Storefront
Property Tax Relief Act.
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SB 541 (Compensation and Property Tax Relief Related
to Governmental Actions Taken in Response to
Contagious or Infectious Disease )
Senate Committee on Judiciary
On March 3, 2022, the Senate Committee on Judiciary
held an informational hearing on potential legislation
regarding orders and actions by public officials relating to
vaccine passports, face mask mandates, gathering
limitations, business restrictions, and religious gathering
limitations. In the hearing, 19 private citizens provided
testimony in support of such potential legislation; 36 private
citizens provided written-only support. One private citizen
provided neutral testimony.
In the Senate Committee hearing on March 7, 2022, an
attorney, a representative of the Kansas Chamber of
Commerce, and two private citizens provided proponent
testimony on the bill, stating various concerns over
governmental actions taken during the COVID-19 pandemic.
Written-only proponent testimony was provided by three
private citizens.
Representative Jacobs provided neutral testimony on
the bill, expressing concern that the bill does not adequately
protect the free exercise of religion guaranteed by the U.S.
Constitution.
Representatives of the Kansas Association of Counties,
Immunize Kansas Coalition, and the League of Kansas
Municipalities, and one private citizen testified as opponents
to the bill, stating concerns the bill will hinder the ability of
governmental actors to effectively respond to future
emergencies. Written-only opponent testimony was provided
by representatives of the Harvey County Health Department,
Kansas Academy of Family Physicians, Kansas Association
of Local Health Departments, Kansas Association of School
Boards, Kansas National Education Association, Kansas
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State Board of Education, and Nurture KC; a representative
of the cities of Merriam, Mission, Prairie Village, and
Westwood Hills; and three private citizens.
Senate Sub. for HB 2313 (COVID-19 Retail Storefront
Property Tax Relief Act)
On May 3, 2021, the Senate Committee on Assessment
and Taxation recommended a substitute bill containing the
COVID-19 Retail Storefront Property Tax Relief Act and
various other tax provisions. The provisions contained in the
COVID-19 Retail Storefront Property Tax Relief Act were
based on SB 149.
SB 149
The bill was introduced by the Senate Committee on
Assessment and Taxation at the request of Representative
Corbet.
Senate Committee on Assessment and Taxation
At the Senate Committee hearing on the bill, proponent
testimony was provided by representatives of the Kansas
Chamber of Commerce and the Kansas Restaurant and
Hospitality Association. Written-only proponent testimony was
provided by Representative Corbet and a private citizen.
Proponents stated the bill would reimburse business owners
for property taxes attributable to times when the businesses
were shut down due to governmental orders.
Opponent testimony was provided by a representative
of the Kansas Association of Counties. Written-only opponent
testimony was provided by a representative of the Kansas
Legislative Policy Group. Opponents stated the bill would
place an undue burden on county budgets.
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Written-only neutral testimony was provided by a
representative of the League of Kansas Municipalities.
Fiscal Information
SB 541
[Note: The fiscal note prepared by the Division of the
Budget references additional provisions of SB 541 not
included in the substitute bill.]
According to the fiscal note prepared by the Division of
the Budget on SB 541 as introduced, the Kansas Department
of Health and Environment states that enactment of the bill
would result in increased expenditures for the agency, if
found by a district court in a civil action to be responsible for
and directed to provide awards of compensation pertaining to
and resulting from restrictions on use of property due to a
governmental action related to a contagious or infectious
disease, and issued or adopted by the state, county, or other
political subdivision. A total fiscal effect could not be
estimated.
The Kansas State Department of Education and the
Office of the Governor state enactment of the bill would not
have any fiscal effect on the operations of either agency. The
Kansas Board of Regents reported enactment of the bill
would not have a fiscal effect on higher education.
The Office of the Attorney General reports that while
enactment of SB 541 could reduce some of the state’s
potential legal liability in future cases, certain provisions could
be subject to legal challenge. The Office of the Attorney
General states some litigation defense could be handled by
the Office, but it is possible that specialized outside counsel
would need to be hired by the State. The total fiscal effect
could not be estimated.
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The Kansas Department of Revenue states the effects
of any future shutdowns or restrictions that would result in the
State paying back a portion of a property owner’s property
taxes cannot be estimated.
The Office of Judicial Administration (OJA) states
enactment of SB 541 could increase the number of cases
filed in district court, requiring more time spent by court
personnel. The OJA estimates enactment of the bill could
result in the collection of docket fees and fines assessed in
those cases filed under the bill’s provisions. According to
OJA, a fiscal effect cannot be estimated.
Any fiscal effect associated with enactment of SB 541 is
not reflected in The FY 2023 Governor’s Budget Report.
The Kansas Association of Counties and the League of
Kansas Municipalities both state that enactment of SB 541
would increase costs for local governments related to the
defense of potential litigation and would subject local
governments to claims for compensation under the bill. A total
fiscal effect could not be estimated by either organization.
Senate Sub. for SB 2313 (COVID-19 Retail Storefront
Property Tax Relief Act)
According to informat