Bill Summary – FastDemocracy

Enrolled Copy                                                                            S.B. 20
                               PROPERTY TAX AMENDMENTS
                                      2022 GENERAL SESSION
                                            STATE OF UTAH
                               Chief Sponsor: Curtis S. Bramble
                                House Sponsor: Adam Robertson
 6
 LONG TITLE
 General Description:
        This bill modifies property tax and fee in lieu of property tax provisions.
 Highlighted Provisions:
        This bill:
        < clarifies the formula for calculating an energy supplier's fee in lieu of property tax;
        < requires an interlocal entity that owns an electric generation and transmission
 facility to report to the State Tax Commission information about sales of electricity
 to energy suppliers and public agencies;
        < modifies the circumstances under which a county has to require a written
 declaration to qualify for the primary residential property tax exemption;
        < modifies a property owner's right to appeal a determination about the owner's
 eligibility for the primary residential property tax exemption;
        < defines "public utility" and "telecommunications service provider";
        < provides that the State Tax Commission may not assess property owned by a
 telecommunications service provider;
        < creates a process for the Multicounty Appraisal Trust to value personal property of a
 telecommunications service provider before forwarding the information to county
 assessors for assessment;
        < modifies the calculation of the centrally assessed benchmark value for purposes of
 property tax new growth;
        < modifies the rate of the multicounty assessing and collecting levy; and
        < makes technical and conforming changes.
       S.B. 20                                                                        Enrolled Copy
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
        This bill provides retrospective operation.
 Utah Code Sections Affected:
 AMENDS:
        11-13-302, as last amended by Laws of Utah 2018, Chapters 415 and 456
        59-2-102, as last amended by Laws of Utah 2021, Chapter 314
        59-2-103.5, as last amended by Laws of Utah 2021, Chapters 367 and 389
        59-2-201, as last amended by Laws of Utah 2017, Chapter 425
        59-2-306, as last amended by Laws of Utah 2010, Chapter 131
        59-2-307, as last amended by Laws of Utah 2021, Chapter 389
        59-2-308, as enacted by Laws of Utah 1987, Chapter 4
        59-2-924, as last amended by Laws of Utah 2021, Chapters 214 and 388
        59-2-1005, as last amended by Laws of Utah 2010, Chapter 131
        59-2-1602, as last amended by Laws of Utah 2021, Chapter 367
 ENACTS:
        59-2-306.5, Utah Code Annotated 1953
49
 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 11-13-302 is amended to read:
        11-13-302. Payment of fee in lieu of ad valorem property tax by certain energy
 suppliers -- Method of calculating -- Collection -- Extent of tax lien.
        (1) (a) Each project entity created under this chapter that owns a project and that sells
 any capacity, service, or other benefit from it to an energy supplier or suppliers whose tangible
 property is not exempted by Utah Constitution Article XIII, Section 3, from the payment of ad
 valorem property tax, shall pay an annual fee in lieu of ad valorem property tax as provided in
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       Enrolled Copy                                                                               S.B. 20
 this section to each taxing jurisdiction within which the project or any part of it is located.
         (b) For purposes of this section, "annual fee" means the annual fee described in
 Subsection (1)(a) that is in lieu of ad valorem property tax.
         (c) The requirement to pay an annual fee shall commence:
         (i) with respect to each taxing jurisdiction that is a candidate receiving the benefit of
 impact alleviation payments under contracts or determination orders provided for in Sections
 11-13-305 and 11-13-306, with the fiscal year of the candidate following the fiscal year of the
 candidate in which the date of commercial operation of the last generating unit, other than any
 generating unit providing additional project capacity, of the project occurs, or, in the case of
 any facilities providing additional project capacity, with the fiscal year of the candidate
 following the fiscal year of the candidate in which the date of commercial operation of the
 generating unit providing the additional project capacity occurs; and
         (ii) with respect to any taxing jurisdiction other than a taxing jurisdiction described in
 Subsection (1)(c)(i), with the fiscal year of the taxing jurisdiction in which construction of the
 project commences, or, in the case of facilities providing additional project capacity, with the
 fiscal year of the taxing jurisdiction in which construction of those facilities commences.
         (d) The requirement to pay an annual fee shall continue for the period of the useful life
 of the project or facilities.
         (2) (a) The annual fees due a school district shall be as provided in Subsection (2)(b)
 because the ad valorem property tax imposed by a school district and authorized by the
 Legislature represents both:
         (i) a levy mandated by the state for the state minimum school program under Section
 53F-2-301 or 53F-2-301.5, as applicable; and
         (ii) local levies for capital outlay and other purposes under Sections 53F-8-303,
 53F-8-301, and 53F-8-302.
         (b) The annual fees due a school district shall be as follows:
         (i) the project entity shall pay to the school district an annual fee for the state minimum
 school program at the rate imposed by the school district and authorized by the Legislature
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        S.B. 20                                                                             Enrolled Copy
 under Section 53F-2-301 or 53F-2-301.5, as applicable; and
         (ii) for all other local property tax levies authorized to be imposed by a school district,
 the project entity shall pay to the school district either:
         (A) an annual fee; or
         (B) impact alleviation payments under contracts or determination orders provided for
 in Sections 11-13-305 and 11-13-306.
         (3) (a) An annual fee due a taxing jurisdiction for a particular year shall be calculated
 by multiplying the tax rate or rates of the jurisdiction for that year by the product obtained by
 multiplying the fee base or value determined in accordance with Subsection (4) for that year of
 the portion of the project located within the jurisdiction by the percentage of the project which
 is used to produce the capacity, service, or other benefit sold to the energy supplier or suppliers.
         (b) As used in this section, "tax rate," when applied in respect to a school district,
 includes any assessment to be made by the school district under Subsection (2) or Section
 63M-5-302.
         (c) There is to be credited against the annual fee due a taxing jurisdiction for each year,
 an amount equal to the debt service, if any, payable in that year by the project entity on bonds,
 the proceeds of which were used to provide public facilities and services for impact alleviation
 in the taxing jurisdiction in accordance with Sections 11-13-305 and 11-13-306.
         (d) The tax rate for the taxing jurisdiction for that year shall be computed so as to:
         (i) take into account the fee base or value of the percentage of the project located
 within the taxing jurisdiction determined in accordance with Subsection (4) used to produce the
 capacity, service, or other benefit sold to the supplier or suppliers; and
         (ii) reflect any credit to be given in that year.
         (4) (a) Except as otherwise provided in this section, the annual fees required by this
 section shall be paid, collected, and distributed to the taxing jurisdiction as if:
         (i) the annual fees were ad valorem property taxes; and
         (ii) the project were assessed at the same rate and upon the same measure of value as
 taxable property in the state.
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        Enrolled Copy                                                                               S.B. 20
          (b) (i) Notwithstanding Subsection (4)(a), for purposes of an annual fee required by
 this section, the fee base of a project may be determined in accordance with an agreement
 among:
          (A) the project entity; and
          (B) any county that:
          (I) is due an annual fee from the project entity; and
          (II) agrees to have the fee base of the project determined in accordance with the
 agreement described in this Subsection (4).
          (ii) The agreement described in Subsection (4)(b)(i):
          (A) shall specify each year for which the fee base determined by the agreement shall be
 used for purposes of an annual fee; and
          (B) may not modify any provision of this chapter except the method by which the fee
 base of a project is determined for purposes of an annual fee.
          (iii) For purposes of an annual fee imposed by a taxing jurisdiction within a county
 described in Subsection (4)(b)(i)(B), the fee base determined by the agreement described in
 Subsection (4)(b)(i) shall be used for purposes of an annual fee imposed by that taxing
 jurisdiction.
          (iv) (A) If there is not agreement as to the fee base of a portion of a project for any
 year, for purposes of an annual fee, the State Tax Commission shall determine the value of that
 portion of the project for which there is not an agreement:
          (I) for that year; and
          (II) using the same measure of value as is used for taxable property in the state.
          (B) The valuation required by Subsection (4)(b)(iv)(A) shall be made by the State Tax
 Commission in accordance with rules made by the State Tax Commission.
          (c) Payments of the annual fees shall be made from:
          (i) the proceeds of bonds issued for the project; and
          (ii) revenues derived by the project entity from the project.
          (d) (i) The contracts of the project entity with the purchasers of the capacity, service, or
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        S.B. 20                                                                            Enrolled Copy
 other benefits of the project whose tangible property is not exempted by Utah Constitution
 Article XIII, Section 3, from the payment of ad valorem property tax shall require each
 purchaser, whether or not located in the state, to pay, to the extent not otherwise provided for,
 its share, determined in accordance with the terms of the contract, of these fees.
         (ii) It is the responsibility of the project entity to enforce the obligations of the
 purchasers.
         (5) (a) The responsibility of the project entity to make payment of the annual fees is
 limited to the extent that there is legally available to the project entity, from bond proceeds or
 revenues, money to make these payments, and the obligation to make payments of the annual
 fees is not otherwise a general obligation or liability of the project entity.
         (b) No tax lien may attach upon any property or money of the project entity by virtue of
 any failure to pay all or any part of an annual fee.
         (c) The project entity or any purchaser may contest the validity of an annual fee to the
 same extent as if the payment was a payment of the ad valorem property tax itself.
         (d) The payments of an annual fee shall be reduced to the extent that any contest is
 successful.
         (6) (a) The annual fee described in Subsection (1):
         (i) shall be paid by a public agency that:
         (A) is not a project entity; and
         (B) owns an interest in a facility providing additional project capacity if the interest is
 otherwise exempt from taxation pursuant to Utah Constitution, Article XIII, Section 3; and
         (ii) for a public agency described in Subsection (6)(a)(i), shall be calculated in
 accordance with Subsection (6)(b).
         (b) The annual fee required under Subsection (6)(a) shall be an amount equal to the tax
 rate or rates of the applicable taxing jurisdiction multiplied by the product of the following:
         (i) the fee base or value of the facility providing additional project capacity located
 within the jurisdiction;
         (ii) the percentage of the ownership interest of the public agency in the facility; and
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        Enrolled Copy                                                                                   S.B. 20
         (iii) the portion, expressed as a percentage, of the public agency's ownership interest
 that is attributable to the capacity, service, or other benefit from the facility that is sold,
 including any subsequent sale, resale, or layoff, by the public agency to an energy supplier or
 suppliers whose tangible property is not exempted by Utah Constitution, Article XIII, Section
 3, from the payment of ad valorem property tax.
         (c) A public agency paying the annual fee pursuant to Subsection (6)(a) shall have the
 obligations, credits, rights, and protections set forth in Subsections (1) through (5) with respect
 to its ownership interest as though it were a project entity.
         (d) On or before March 1 of each year, a project entity that owns a project and that
 provides any capacity, service, or other benefit to an energy supplier or a public agency shall
 file an electronic report with the State Tax Commission that identifies:
         (i) each energy supplier and public agency to which the project entity delivers capacity,
 service, or other benefit; and
         (ii) the amount of capacity, service, or other benefit delivered to each energy supplier
 and public agency.
         Section 2. Section 59-2-102 is amended to read:
         59-2-102. Definitions.
         As used in this chapter:
         (1) (a) "Acquisition cost" means any cost required to put an item of tangible personal
 property into service.
         (b) "Acquisition cost" includes:
         (i) the purchase price of a new or used item;
         (ii) the cost of freight, shipping, loading at origin, unloading at destination, crating,
 skidding, or any other applicable cost of shipping;
         (iii) the cost of installation, engineering, rigging, erection, or assembly, including
 foundations, pilings, utility connections, or similar costs; and
         (iv) sales and use taxes.
         (2) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
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        S.B. 20                                                                         Enrolled Copy
 engaging in dispensing activities directly affecting agriculture or horticulture with an
 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
 rotorcraft's use for agricultural and pest control purposes.
         (3) "Air charter service" means an air carrier operation that requires the customer to
 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
 trip.
         (4) "Air contract service" means an air carrier operation available only to customers
 that engage the services of the carrier through a contractual agreement and excess capacity on
 any trip and is not available to the public at large.
         (5) "Aircraft" means the same as that term is defined in Section 72-10-102.
         (6) (a) Except as provided in Subsection (6)(b), "airline" means an air carrier that:
         (i) operates:
         (A) on an interstate route; and
         (B) on a scheduled basis; and
         (ii) offers to fly one or more passengers or cargo on the basis of available capacity on a
 regularly scheduled route.
         (b) "Airline" does not include an:
         (i) air charter service; or
         (ii) air contract service.
         (7) "Assessment roll" or "assessment book" means a permanent record of the
 assessment of property as assessed by the county assessor and the commission and may be
 maintained manually or as a computerized file as a consolidated record or as multiple records
 by type, classification, or categories.
         (8) "Base parcel" means a parcel of property that was legally:
         (a) subdivided into two or more lots, parcels, or other divisions of land; or
         (b) (i) combined with one or more other parcels of property; and
         (ii) subdivided into two or more lots, parcels, or other divisions of land.
         (9) (a) "Certified revenue levy" means a property tax levy that provides an amount of
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        Enrolled Copy                                                                            S.B. 20
 ad valorem property tax revenue equal to the sum of:
        (i) the amount of ad valorem property