Bill Summary – FastDemocracy

67th Legislature                                                                                                       SB 293.1
                                                    SENATE BILL NO. 293
                                                 INTRODUCED BY C. POPE
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   A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING PROPERTY TAX LAWS RELATED TO
   ELECTRICAL GENERATION FACILITIES; PROVIDING PROPERTY TAX INCENTIVES FOR CERTAIN NEW
   ELECTRICAL GENERATION FACILITIES; ALLOWING A PROPERTY TAX EXEMPTION UNDER CERTAIN
   CONDITIONS; AUTHORIZING A LOCAL GOVERNMENTAL UNIT TO ASSESS AN IMPACT FEE FOR LOCAL
   GOVERNMENTAL UNITS AND SCHOOL DISTRICTS THAT ARE IMPACTED BY A FACILITY EXEMPTED
   FROM PROPERTY TAXATION; PROVIDING FOR INTERLOCAL IMPACT AGREEMENTS; REQUIRING THE
   DEPARTMENT OF ENVIRONMENTAL QUALITY TO PROVIDE CERTIFICATION; PROVIDING FOR A
   ROLLBACK TAX; PROVIDING RULEMAKING AUTHORITY; PROVIDING DEFINITIONS; AMENDING
   SECTIONS 75-20-104, 75-20-201, 75-20-207, 75-20-208, 75-20-211, 75-20-301, 75-20-303, 75-20-304, AND
   75-20-1202, MCA; REPEALING SECTIONS 15-24-3001, 15-24-3002, 15-24-3004, 15-24-3005, 15-24-3006,
   AND 15-24-3007, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND A CONTINGENT
   TERMINATION DATE.”
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   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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              NEW SECTION. Section 1.         Short title. [Sections 1 through 10] may be cited as the "Energy
   Enterprise Corridor Opportunity Act".
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              NEW SECTION. Section 2.         Policy. (1) It is the policy of the state that the tax abatement in [sections
   1 through 10] is to be strictly limited to new investments that qualify under the standards established in
   [sections 1 through 10]. The provisions of [sections 1 through 10] do not apply to any previously existing
   properties or to any new investments or property that does not qualify under [sections 1 through 10].
              (2)   It is also the policy of the state that the abatement in [sections 1 through 10] is to encourage
   investment in an established energy corridor in the state that may not otherwise occur without [sections 1
   through 10].
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              (3)   [Sections 1 through 10] are not to be interpreted as a precedent for reducing the taxation of any
   other property in the state or for affecting the use of any property valuation method for tax purposes established
   under law to meet the standards of the Montana constitution and law. The department of environmental quality
   and the department of revenue are directed to administer and interpret [sections 1 through 10] strictly in
   accordance with this policy. Any ambiguities in [sections 1 through 10] are to be resolved in favor of the strict
   reading of this policy.
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              NEW SECTION. Section 3.            Definitions. As used in [sections 1 through 10], unless the context
   requires otherwise, the following definitions apply:
              (1)   "Commencement of construction" means initiation of onsite fabrication, erection, or installation of
   infrastructure, including but not limited to the following:
              (a)   building supports or foundations;
              (b)   laying of underground pipework; or
              (c)   construction of storage structures.
              (2)   "Electrical generation facility" means:
              (a)   any combination of a physically connected generator or generators, associated prime movers, and
   other associated property, including appurtenant land and improvements and personal property, that are
   normally operated together to produce electric power with a nameplate capacity of 100 megawatts or greater;
              (b)   energy storage facilities;
              (c)   a transmission line necessary to interconnect directly with a qualifying transmission line; or
              (d)   any combination of subsections (2)(a) through (2)(c).
              (3)   "Eligible electrical generation facility" means an electrical generation facility interconnected to a
   qualifying transmission line.
              (4)   "Energy storage facilities" means hydroelectric pumped storage property, compressed air energy
   storage property, regenerative fuel cells, batteries, flywheel storage property, or any combination of energy
   storage facilities directly connected to the electrical power grid and associated property, appurtenant land and
   improvements, and personal property that are designed to:
              (a)   receive and store electrical energy as potential energy; and
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              (b)   convert the stored energy into electrical energy for sale as an energy commodity or as electricity
   services to balance energy flow on the electrical power grid in order to maintain a stable transmission grid,
   including but not limited to frequency regulation ancillary services and frequency control.
              (5)   "Large customer" means any premises, except subdivisions, with the estimated connected load for
   full operation at an individual service for the premises of 500 kilowatts or larger.
              (6)   "Local governmental unit" means a county, city, consolidated city-county, or town. If an exempt
   eligible electrical generation facility is located within a tax increment financing district, the tax increment
   financing district is considered a local governmental unit and is entitled to the distribution of impact fees under
   [section 7]. A tax increment financing district may not receive a distribution of impact fees if an exempt eligible
   electrical generation facility is not located within the district.
              (7)   "Qualifying period" means the construction period and the first 5 years after the facility
   commences operation. The total time of the qualifying period may not exceed 7 years.
              (8)   "Qualifying transmission line" means an electric transmission line with a design capacity of 500
   kilovolts or more constructed before [the effective date of this act] that is owned by a public utility or multiple
   public utilities.
              (9)   "Rollback" means the period of time that an owner or operator of an eligible electrical generation
   facility was exempt from property taxes pursuant to [section 4].
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              NEW SECTION. Section 4.          Energy production or development -- tax abatement -- eligibility. (1)
   (a) Eligible electrical generation facilities may qualify for an abatement of property tax liability pursuant to
   [sections 1 through 10].
              (b)   An eligible electrical generation facility may not qualify for an abatement of property tax liability
   pursuant to [sections 1 through 10] if the facility seeks or receives an abatement in accordance with 15-24-
   3111.
              (2)   (a) If the abatement is granted for an eligible electrical generation facility, the facility is exempt
   from property taxation for the qualifying period.
              (b)   The abatement applies to all mills levied against the eligible electrical generation facility.
              (3)   In order to qualify for the abatement under [sections 1 through 10], an eligible electrical generation
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67th Legislature                                                                                                      SB 293.1
   facility must meet the following requirements:
              (a)   commencement of construction of the facility must occur after July 1, 2021;
              (b)   the standard prevailing rate of wages for heavy construction, as provided in 18-2-401(13)(a), must
   be paid during the construction phase of the facility; and
              (c)   the project must be constructed to serve directly or through power purchase agreements:
              (i)   electric customers of any size located out of state; or
              (ii) large customers located in the state or located out of state.
              (4)   On termination of the qualifying period, the abatement ceases and the property for which the
   abatement had been granted must be assessed at 100% of its taxable value.
              (5)   The department of revenue shall appraise eligible electrical generation facilities for each year that
   the property is exempt and determine the taxable value of the property as if it were subject to property taxation.
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              NEW SECTION. Section 5.          Certification. (1) (a) Upon application by a taxpayer, the department of
   environmental quality shall determine whether a facility qualifies for a tax abatement under [section 4] or rules
   adopted under [section 6]. If the department determines that a facility qualifies for abatement, it shall issue a
   certification of eligibility.
              (b)   An application for certification must be made on forms available from the department.
              (c)   Certification remains in effect only as long as substantial compliance with [sections 1 through 10]
   continues.
              (2)   The department of environmental quality shall identify and track compliance with [sections 1
   through 10] in the use of certified property. The department may revoke a certification for failure to maintain
   substantial compliance with eligibility requirements in [section 4] or with rules adopted pursuant to [section 6].
   Revocation of a certificate must be reported to the department of revenue within 30 days of revocation.
              (3)   If a taxpayer's certification is revoked, the taxpayer forfeits the abatement. On revocation, the
   property must be assessed at 100% of its taxable value beginning on January 1 of the year or years for which
   the certification is revoked. Any remaining abatement must be forfeited. The taxpayer is immediately liable for
   any additional taxes, penalty, and interest resulting from the revocation.
              (4)   A taxpayer that has forfeited any portion of its abatement because of revocation may not reapply
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   for an abatement under [sections 1 through 10].
              (5)   A taxpayer aggrieved by a determination made by the department of environmental quality or the
   department of revenue has the right to the review procedures in 15-1-211 or to a hearing under Title 2, chapter
   4, part 6.
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              NEW SECTION. Section 6.          Rules. (1) The department of revenue shall adopt rules for the
   implementation of [sections 1 through 10], including the valuation of qualifying property and administration.
              (2)   The department of environmental quality shall adopt rules necessary for certification, compliance,
   and revocation of certificates, as provided in [section 5]. The rules may include specifying procedures, including
   timeframes for certification application, and definitions necessary to identify property for certification and
   compliance.
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              NEW SECTION. Section 7.          Eligible electrical generation facility impact fee -- local
   governments. (1) If an owner or operator of an eligible electrical generation facility is exempt from property
   taxation pursuant to [section 4], the owner or operator of the facility is subject to an initial local government and
   local school impact fee. In the first 3 years of construction, the impact fee may not exceed 0.5% of the total cost
   of constructing the eligible electrical generation facility.
              (2)   Except as provided in subsection (4), the jurisdictional area of a local governmental unit in which
   an eligible electrical generation facility is located is the local governmental unit that is authorized to assess the
   impact fee pursuant to subsection (1).
              (3)   The impact fee must be distributed to the local governmental unit for local impacts and to the
   impacted school districts.
              (4)   Subject to the conditions of [section 8], if the eligible electrical generation facility is located within
   the jurisdictional areas of multiple local governmental units of the county or contiguous counties, the local
   governmental units may enter into an interlocal agreement under Title 7, chapter 11, part 1, to determine how
   the fee should be distributed among the various local governmental units and impacted school districts
   pursuant to subsection (3). The county in which the eligible electrical generation facility is located is authorized
   to assess the fee under the interlocal agreement.
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              (5)   Impact fees imposed under subsection (4) must be deposited in a county's eligible electrical
   generation impact fee reserve account established in [section 8] for the county in which the eligible electrical
   generation facility is located. Money in the account may not be expended until the multiple local governmental
   units have entered into an interlocal agreement.
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              NEW SECTION. Section 8.        Eligible electrical generation impact fee reserve account. (1) The
   governing body of a county receiving impact fees under [section 7(4)] shall establish an eligible electrical
   generation impact fee reserve account to be used to hold the collections. Money held in the account may not be
   considered as cash balance for the purpose of reducing mill levies.
              (2)   Money may be expended from the account for any purpose of an interlocal agreement provided
   for in [section 7(4)]. The county treasurer shall distribute money in the account to each local governmental unit
   according to the terms of the interlocal agreement.
              (3)   Money in the account must be invested as provided by law. Interest and income from the
   investment of the eligible electrical generation impact fee reserve account must be credited to the account.
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              NEW SECTION. Section 9.        Eligible electrical generation impact fund. (1) A local governmental
   unit and a school district that receives impact fees pursuant to [section 7(1)] or [section 8] shall establish an
   eligible electrical generation impact fund for the deposit of the fees. A local governmental unit or school district
   may retain the money in the fund for any time period considered appropriate by the governing body of the local
   governmental unit or school district. Money retained in the fund may not be considered as fund balance for the
   purpose of reducing mill levies.
              (2)   Money may be expended from the fund for any purpose allowed by law.
              (3)   Money in the fund must be invested as provided by law. Interest and income earned on the
   investment of money in the fund must be credited to the fund.
              (4)   The fund must be financially administered as a nonbudgeted fund by a city, town, or county under
   the provisions of Title 7, chapter 6, part 40, or by a school district under the provisions of Title 20, chapter 9,
   part 5.
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              NEW SECTION. Section 10.         Rollback tax -- computation. (1) If the taxpayer fails to meet the
   requirements of [section 4], the property is subject to a rollback tax in addition to the property tax levied on the
   property. The rollback tax is a lien on the property and is due and payable by the owner of the property within
   180 days after failure to perform the contract.
              (2)   The department of revenue shall determine the amount of rollback tax due on the property by:
              (a)   determining the taxable value of the property;
              (b)   multiplying this value by the sum of the annual mill levies that would have been levied had the
   property exemption pursuant to [section 4] not been applied in the taxing jurisdiction in which the eligible
   electrical generation property is located during the rollback period; and
              (c)   subtracting from this figure any actual property tax paid on the property during this period less any
   impact fee paid pursuant to [section 7], if any.
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              Section 11. Section 75-20-104, MCA, is amended to read:
              "75-20-104. Definitions. In this chapter, unless the context requires otherwise, the following
   definitions apply:
              (1)   "Addition thereto" means the installation of new machinery and equipment that would significantly
   change the conditions under which the facility is operated.
              (2)   "Application" means an application for a certificate submitted in accordance with this chapter and
   the rules adopted under this chapter.