H.B. 306

1

MUNICIPAL LICENSE FEES AND TAXES
2 AMENDMENTS
3 2007 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Gregory H. Hughes
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill modifies a provision relating to municipal license fees and taxes.
11 Highlighted Provisions:
12 This bill:
13 . limits a disproportionate rental fee to $21 per unit; and
14 . relieves a municipality of an obligation to update its municipal services study every
15 four years if it has not raised its disproportionate rental fee since the last municipal
16 services study.
17 Monies Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 None
21 Utah Code Sections Affected:
22 AMENDS:
23 10-1-203, as last amended by Chapter 193, Laws of Utah 2005
24
25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 10-1-203 is amended to read:
27 10-1-203. License fees and taxes -- Disproportionate rental fee -- Application

28 information to be transmitted to the county assessor.
29 (1) For the purpose of this section:
30 (a) "business" means any enterprise carried on for the purpose of gain or economic
31 profit, except that the acts of employees rendering services to employers are not included in
32 this definition;
33 (b) "telecommunications provider" is as defined in Section 10-1-402 ; and
34 (c) "telecommunications tax or fee" is as defined in Section 10-1-402 .
35 (2) Except as provided in Subsections (3) through (5), the governing body of a
36 municipality may license for the purpose of regulation and revenue any business within the
37 limits of the municipality and may regulate that business by ordinance.
38 (3) (a) The governing body of a municipality may raise revenue by levying and
39 collecting a municipal energy sales or use tax as provided in Part 3, Municipal Energy Sales
40 and Use Tax Act, except a municipality may not levy or collect a franchise tax or fee on an
41 energy supplier other than the municipal energy sales and use tax provided in Part 3, Municipal
42 Energy Sales and Use Tax Act.
43 (b) (i) Subsection (3)(a) does not affect the validity of a franchise agreement as defined
44 in Subsection 10-1-303 (6), that is in effect on July 1, 1997, or a future franchise.
45 (ii) A franchise agreement as defined in Subsection 10-1-303 (6) in effect on January 1,
46 1997, or a future franchise shall remain in full force and effect.
47 (c) A municipality that collects a contractual franchise fee pursuant to a franchise
48 agreement as defined in Subsection 10-1-303 (6) with an energy supplier that is in effect on July
49 1, 1997, may continue to collect that fee as provided in Subsection 10-1-310 (2).
50 (d) (i) Subject to the requirements of Subsection (3)(d)(ii), a franchise agreement as
51 defined in Subsection 10-1-303 (6) between a municipality and an energy supplier may contain
52 a provision that:
53 (A) requires the energy supplier by agreement to pay a contractual franchise fee that is
54 otherwise prohibited under Part 3, Municipal Energy Sales and Use Tax Act; and
55 (B) imposes the contractual franchise fee on or after the day on which Part 3,
56 Municipal Energy Sales and Use Tax is:
57 (I) repealed, invalidated, or the maximum allowable rate provided in Section 10-1-305
58 is reduced; and

59 (II) is not superseded by a law imposing a substantially equivalent tax.
60 (ii) A municipality may not charge a contractual franchise fee under the provisions
61 permitted by Subsection (3)(b)(i) unless the municipality charges an equal contractual franchise
62 fee or a tax on all energy suppliers.
63 (4) (a) Subject to Subsection (4)(b), beginning July 1, 2004, the governing body of a
64 municipality may raise revenue by levying and providing for the collection of a municipal
65 telecommunications license tax as provided in Part 4, Municipal Telecommunications License
66 Tax Act.
67 (b) A municipality may not levy or collect a telecommunications tax or fee on a
68 telecommunications provider except as provided in Part 4, Municipal Telecommunications
69 License Tax Act.
70 (5) (a) The governing body of a municipality may by ordinance raise revenue by
71 levying and collecting a license fee or tax on:
72 (i) a parking service business in an amount that is less than or equal to:
73 (A) $1 per vehicle that parks at the parking service business; or
74 (B) 2% of the gross receipts of the parking service business;
75 (ii) a public assembly facility in an amount that is less than or equal to $1 per ticket
76 purchased from the public assembly facility; and
77 (iii) subject to the limitations of Subsections (5)(c), (d), and (e) a business that causes
78 disproportionate costs of municipal services or for which the municipality provides an
79 enhanced level of municipal services in an amount that is reasonably related to the costs of the
80 municipal services provided by the municipality.
81 (b) For purposes of this Subsection (5):
82 (i) "Municipal services" include:
83 (A) public utilities; or
84 (B) services for:
85 (I) police;
86 (II) fire;
87 (III) storm water runoff;
88 (IV) traffic control;
89 (V) parking;

90 (VI) transportation;
91 (VII) beautification; or
92 (VIII) snow removal.
93 (ii) "Parking service business" means a business:
94 (A) that primarily provides off-street parking services for a public facility that is
95 wholly or partially funded by public moneys;
96 (B) that provides parking for one or more vehicles; and
97 (C) that charges a fee for parking.
98 (iii) "Public assembly facility" means a business operating an assembly facility that:
99 (A) is wholly or partially funded by public moneys; and
100 (B) requires a person attending an event at the assembly facility to purchase a ticket.
101 (c) Before the governing body of a municipality imposes a license fee or tax on a
102 business that causes disproportionate costs of municipal services under Subsection (5)(a)(iii),
103 the governing body of the municipality shall adopt an ordinance defining for purposes of the
104 tax under Subsection (5)(a)(iii) what constitutes disproportionate costs and what amounts are
105 reasonably related to the costs of the municipal services provided by the municipality.
106 (d) Before the governing body of a municipality imposes a license fee or tax on a
107 business for which it provides an enhanced level of municipal services under Subsection
108 (5)(a)(iii), the governing body of the municipality shall adopt an ordinance defining for
109 purposes of the tax under Subsection (5)(a)(iii) what constitutes the basic level of municipal
110 services in the municipality and what amounts are reasonably related to the costs of providing
111 an enhanced level of municipal services in the municipality.
112 (e) (i) [For purposes of] As used in this Subsection (5)(e):
113 (A) "Disproportionate rental fee" means a license fee or tax on rental housing based on
114 the disproportionate costs of municipal services caused by the rental housing or on an enhanced
115 level of municipal services provided to the rental housing.
116 (B) "Municipal services study" means a study conducted by a municipality of the cost
117 of all municipal services that the municipality provides to the applicable rental housing.
118 (C) "Rental housing cost" means the municipality's cost:
119 (I) of providing municipal services to the rental housing;
120 (II) that is reasonably attributable to the rental housing; and

121 (III) that would not have occurred in the absence of the rental housing.
122 (ii) A disproportionate rental fee may not exceed $21 per unit.
123 [(ii)] (iii) (A) Each municipality that levies and collects a disproportionate rental fee
124 that exceeds $17 per unit per year or that intends to impose a disproportionate rental fee for the
125 first time shall:
126 (I) before January 1, 2007 and except as provided in Subsection (5)(e)[(iv)](v), conduct
127 a municipal services study; and
128 (II) except as provided in Subsection (5)(e)(vi), conduct an updated municipal services
129 study every four years after the first municipal services study.
130 (B) Each municipality that levies and collects a disproportionate rental fee that is $17
131 or less per unit per year and that intends to increase its disproportionate rental fee shall conduct
132 a municipal services study before increasing its disproportionate rental fee.
133 [(iii)] (iv) (A) Beginning January 1, 2007, a disproportionate rental fee may not exceed
134 the rental housing cost, as determined in a municipal services study.
135 (B) Subsection (5)(e)[(iii)](iv)(A) does not apply to a municipality whose
136 disproportionate rental fee is $17 or less and that does not increase its disproportionate rental
137 fee.
138 [(iv)] (v) The requirement under Subsection (5)(e)[(ii)](iii)(A)(I) to conduct a
139 municipal services study before January 1, 2007, does not apply to a municipality that levies
140 and collects a disproportionate rental fee that exceeds $17 per unit per year if the municipality:
141 (A) has implemented, before January 1, 2005, a program that provides a reduction in
142 the disproportionate rental fee for each landlord that implements measures to reduce crime in
143 the rental housing;
144 (B) does not decrease the amount of the disproportionate rental fee reduction provided
145 in a program described in Subsection (5)(e)[(iv)](v)(A); and
146 (C) does not increase its disproportionate rental fee.
147 (vi) A municipality that has not changed its disproportionate rental fee since the last
148 time it conducted a municipal services study is relieved of the requirement under Subsection
149 (5)(e)(iii)(A)(II) to update its municipal services study until the municipality intends to increase
150 its disproportionate rental fee.
151 (6) All license fees and taxes shall be uniform in respect to the class upon which they

152 are imposed.
153 (7) The governing body shall transmit the information from each approved business
154 license application to the county assessor within 60 days following the approval of the
155 application.
156 (8) If challenged in court, an ordinance enacted by a municipality before January 1,
157 1994, imposing a business license fee or tax on rental dwellings under this section shall be
158 upheld unless the business license fee or tax is found to impose an unreasonable burden on the
159 fee or tax payer.




Legislative Review Note
as of 1-18-07 2:34 PM

Office of Legislative Research and General Counsel