H.B. 54

1

PROPERTY TAX ASSESSMENT REVISIONS
2 2008 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Wayne A. Harper
5 Senate Sponsor: Wayne L. Niederhauser
6
7 LONG TITLE
8 Committee Note:
9 The Revenue and Taxation Interim Committee recommended this bill.
10 General Description:
11 This bill amends provisions in the Property Tax Act relating to the real property
12 appraisal requirements for county assessors.
13 Highlighted Provisions:
14 This bill:
15 . defines terms;
16 . requires a county assessor of a first, second, or third class county to use a computer
17 assisted mass appraisal system to conduct its annual update of property values;
18 . requires a county assessor to maintain a record of the last appraisal date for each
19 parcel of real property located within the county assessor's county on the county's
20 computer system;
21 . requires a county assessor to prepare a five-year plan to comply with the statutory
22 appraisal requirements;
23 . requires a county assessor to include the last appraisal date for a parcel of property
24 on the property owner's tax notice; and
25 . makes technical changes.
26 Monies Appropriated in this Bill:
27 None

28 Other Special Clauses:
29 This bill takes effect on January 1, 2009.
30 Utah Code Sections Affected:
31 AMENDS:
32 59-2-102, as last amended by Laws of Utah 2007, Chapters 107, 234, and 329
33 59-2-303.1, as last amended by Laws of Utah 1995, Chapter 271
34 59-2-505, as last amended by Laws of Utah 2003, Chapter 208
35 59-2-918.5, as last amended by Laws of Utah 2000, Chapter 61
36 59-2-918.6, as enacted by Laws of Utah 2007, Chapter 297
37 59-2-919, as last amended by Laws of Utah 2006, Chapters 26 and 104
38 59-2-1004, as last amended by Laws of Utah 2001, Chapter 106
39 59-2-1330, as last amended by Laws of Utah 2002, Chapters 196 and 240
40 ENACTS:
41 59-2-919.1, Utah Code Annotated 1953
42
43 Be it enacted by the Legislature of the state of Utah:
44 Section 1. Section 59-2-102 is amended to read:
45 59-2-102. Definitions.
46 As used in this chapter and title:
47 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
48 engaging in dispensing activities directly affecting agriculture or horticulture with an
49 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
50 rotorcraft's use for agricultural and pest control purposes.
51 (2) "Air charter service" means an air carrier operation which requires the customer to
52 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
53 trip.
54 (3) "Air contract service" means an air carrier operation available only to customers
55 who engage the services of the carrier through a contractual agreement and excess capacity on
56 any trip and is not available to the public at large.
57 (4) "Aircraft" is as defined in Section 72-10-102 .
58 (5) "Airline" means any air carrier operating interstate routes on a scheduled basis

59 which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
60 routes.
61 (6) "Assessment roll" means a permanent record of the assessment of property as
62 assessed by the county assessor and the commission and may be maintained manually or as a
63 computerized file as a consolidated record or as multiple records by type, classification, or
64 categories.
65 (7) (a) "Certified revenue levy" means a property tax levy that provides the same
66 amount of ad valorem property tax revenue as was collected for the prior year, plus new
67 growth, but exclusive of revenue from collections from redemptions, interest, and penalties.
68 (b) For purposes of this Subsection (7), "ad valorem property tax revenue" does not
69 include property tax revenue received by a taxing entity from personal property that is:
70 (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
71 (ii) semiconductor manufacturing equipment.
72 (8) "County-assessed commercial vehicle" means:
73 (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
74 Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
75 property in furtherance of the owner's commercial enterprise;
76 (b) any passenger vehicle owned by a business and used by its employees for
77 transportation as a company car or vanpool vehicle; and
78 (c) vehicles which are:
79 (i) especially constructed for towing or wrecking, and which are not otherwise used to
80 transport goods, merchandise, or people for compensation;
81 (ii) used or licensed as taxicabs or limousines;
82 (iii) used as rental passenger cars, travel trailers, or motor homes;
83 (iv) used or licensed in this state for use as ambulances or hearses;
84 (v) especially designed and used for garbage and rubbish collection; or
85 (vi) used exclusively to transport students or their instructors to or from any private,
86 public, or religious school or school activities.
87 (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
88 "designated tax area" means a tax area created by the overlapping boundaries of only the
89 following taxing entities:

90 (i) a county; and
91 (ii) a school district.
92 (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
93 by the overlapping boundaries of:
94 (i) the taxing entities described in Subsection (9)(a); and
95 (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
96 and the boundaries of the city or town are identical; or
97 (B) a special service district if the boundaries of the school district under Subsection
98 (9)(a) are located entirely within the special service district.
99 (10) "Eligible judgment" means a final and unappealable judgment or order under
100 Section 59-2-1330 :
101 (a) that became a final and unappealable judgment or order no more than 14 months
102 prior to the day on which the notice required by [Subsection 59-2-919 (4)] Section 59-2-919.1 is
103 required to be mailed; and
104 (b) for which a taxing entity's share of the final and unappealable judgment or order is
105 greater than or equal to the lesser of:
106 (i) $5,000; or
107 (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
108 previous fiscal year.
109 (11) (a) "Escaped property" means any property, whether personal, land, or any
110 improvements to the property, subject to taxation and is:
111 (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
112 to the wrong taxpayer by the assessing authority;
113 (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
114 comply with the reporting requirements of this chapter; or
115 (iii) undervalued because of errors made by the assessing authority based upon
116 incomplete or erroneous information furnished by the taxpayer.
117 (b) Property which is undervalued because of the use of a different valuation
118 methodology or because of a different application of the same valuation methodology is not
119 "escaped property."
120 (12) "Fair market value" means the amount at which property would change hands

121 between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
122 and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
123 market value" shall be determined using the current zoning laws applicable to the property in
124 question, except in cases where there is a reasonable probability of a change in the zoning laws
125 affecting that property in the tax year in question and the change would have an appreciable
126 influence upon the value.
127 (13) "Farm machinery and equipment," for purposes of the exemption provided under
128 Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
129 handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
130 tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
131 equipment used primarily for agricultural purposes; but does not include vehicles required to be
132 registered with the Motor Vehicle Division or vehicles or other equipment used for business
133 purposes other than farming.
134 (14) "Geothermal fluid" means water in any form at temperatures greater than 120
135 degrees centigrade naturally present in a geothermal system.
136 (15) "Geothermal resource" means:
137 (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
138 and
139 (b) the energy, in whatever form, including pressure, present in, resulting from, created
140 by, or which may be extracted from that natural heat, directly or through a material medium.
141 (16) (a) "Goodwill" means:
142 (i) acquired goodwill that is reported as goodwill on the books and records:
143 (A) of a taxpayer; and
144 (B) that are maintained for financial reporting purposes; or
145 (ii) the ability of a business to:
146 (A) generate income:
147 (I) that exceeds a normal rate of return on assets; and
148 (II) resulting from a factor described in Subsection (16)(b); or
149 (B) obtain an economic or competitive advantage resulting from a factor described in
150 Subsection (16)(b).
151 (b) The following factors apply to Subsection (16)(a)(ii):

152 (i) superior management skills;
153 (ii) reputation;
154 (iii) customer relationships;
155 (iv) patronage; or
156 (v) a factor similar to Subsections (16)(b)(i) through (iv).
157 (c) "Goodwill" does not include:
158 (i) the intangible property described in Subsection (20)(a) or (b);
159 (ii) locational attributes of real property, including:
160 (A) zoning;
161 (B) location;
162 (C) view;
163 (D) a geographic feature;
164 (E) an easement;
165 (F) a covenant;
166 (G) proximity to raw materials;
167 (H) the condition of surrounding property; or
168 (I) proximity to markets;
169 (iii) value attributable to the identification of an improvement to real property,
170 including:
171 (A) reputation of the designer, builder, or architect of the improvement;
172 (B) a name given to, or associated with, the improvement; or
173 (C) the historic significance of an improvement; or
174 (iv) the enhancement or assemblage value specifically attributable to the interrelation
175 of the existing tangible property in place working together as a unit.
176 (17) "Governing body" means:
177 (a) for a county, city, or town, the legislative body of the county, city, or town;
178 (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
179 Local Districts, the local district's board of trustees;
180 (c) for a school district, the local board of education; or
181 (d) for a special service district under Title 17A, Chapter 2, Part 13, Utah Special
182 Service District Act:

183 (i) the legislative body of the county or municipality that created the special service
184 district, to the extent that the county or municipal legislative body has not delegated authority
185 to an administrative control board established under Section 17A-2-1326 ; or
186 (ii) the administrative control board, to the extent that the county or municipal
187 legislative body has delegated authority to an administrative control board established under
188 Section 17A-2-1326 .
189 (18) (a) For purposes of Section 59-2-103 :
190 (i) "household" means the association of persons who live in the same dwelling,
191 sharing its furnishings, facilities, accommodations, and expenses; and
192 (ii) "household" includes married individuals, who are not legally separated, that have
193 established domiciles at separate locations within the state.
194 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
195 commission may make rules defining the term "domicile."
196 (19) (a) Except as provided in Subsection (19)(c), "improvement" means a building,
197 structure, fixture, fence, or other item that is permanently attached to land, regardless of
198 whether the title has been acquired to the land, if:
199 (i) (A) attachment to land is essential to the operation or use of the item; and
200 (B) the manner of attachment to land suggests that the item will remain attached to the
201 land in the same place over the useful life of the item; or
202 (ii) removal of the item would:
203 (A) cause substantial damage to the item; or
204 (B) require substantial alteration or repair of a structure to which the item is attached.
205 (b) "Improvement" includes:
206 (i) an accessory to an item described in Subsection (19)(a) if the accessory is:
207 (A) essential to the operation of the item described in Subsection (19)(a); and
208 (B) installed solely to serve the operation of the item described in Subsection (19)(a);
209 and
210 (ii) an item described in Subsection (19)(a) that:
211 (A) is temporarily detached from the land for repairs; and
212 (B) remains located on the land.
213 (c) Notwithstanding Subsections (19)(a) and (b), "improvement" does not include:

214 (i) an item considered to be personal property pursuant to rules made in accordance
215 with Section 59-2-107 ;
216 (ii) a moveable item that is attached to land:
217 (A) for stability only; or
218 (B) for an obvious temporary purpose;
219 (iii) (A) manufacturing equipment and machinery; or
220 (B) essential accessories to manufacturing equipment and machinery;
221 (iv) an item attached to the land in a manner that facilitates removal without substantial
222 damage to:
223 (A) the land; or
224 (B) the item; or
225 (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
226 transportable factory-built housing unit is considered to be personal property under Section
227 59-2-1503 .
228 (20) "Intangible property" means:
229 (a) property that is capable of private ownership separate from tangible property,
230 including:
231 (i) moneys;
232 (ii) credits;
233 (iii) bonds;
234 (iv) stocks;
235 (v) representative property;
236 (vi) franchises;
237 (vii) licenses;
238 (viii) trade names;
239 (ix) copyrights; and
240 (x) patents;
241 (b) a low-income housing tax credit; or
242 (c) goodwill.
243 (21) "Low-income housing tax credit" means:
244 (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;

245 or
246 (b) a low-income housing tax credit under:
247 (i) Section 59-7-607 ; or
248 (ii) Section 59-10-1010 .
249 (22) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
250 (23) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
251 valuable mineral.
252 (24) "Mining" means the process of producing, extracting, leaching, evaporating, or
253 otherwise removing a mineral from a mine.
254 (25) (a) "Mobile flight equipment" means tangible personal property that is:
255 (i) owned or operated by an:
256 (A) air charter service;
257 (B) air contract service; or
258 (C) airline; and
259 (ii) (A) capable of flight;
260 (B) attached to an aircraft that is capable of flight; or
261 (C) contained in an aircraft that is capable of flight if the tangible personal property is
262 intended to be used:
263 (I) during multiple flights;
264 (II) during a takeoff, flight, or landing; and
265 (III) as a service provided by an air charter service, air contract service, or airline.
266 (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
267 engine that is rotated:
268 (A) at regular intervals; and
269 (B) with an engine that is attached to the aircraft.
270 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
271 the commission may make rules defining the term "regular intervals."
272 (26) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts,
273 sand, rock, gravel, and all carboniferous materials.
274 (27) "Personal property" includes:
275 (a) every class of property as defined in Subsection (28) which is the subject of

276 ownership and not included within the meaning of the terms "real estate" and "improvements";
277 (b) gas and water mains and pipes laid in roads, streets, or alleys;
278 (c) bridges and ferries;
279 (d) livestock which, for the purposes of the exemption provided under Section
280 59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish; and
281 (e) outdoor advertising structures as defined in Section 72-7-502 .
282 (28) (a) "Property" means property that is subject to assessment and taxation according
283 to its value.
284 (b) "Property" does not include intangible property as defined in this section.
285 (29) "Public utility," for purposes of this chapter, means the operating property of a
286 railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
287 company, electrical corporation, telephone corporation, sewerage corporation, or heat
288 corporation where the company performs the service for, or delivers the commodity to, the
289 public generally or companies serving the public generally, or in the case of a gas corporation
290 or an electrical corporation, where the gas or electricity is sold or furnished to any member or
291 consumers within the state for domestic, commercial, or industrial use. Public utility also
292 means the operating property of any entity or person defined under Section 54-2-1 except water
293 corporations.
294 (30) "Real estate" or "real property" includes:
295 (a) the possession of, claim to, ownership of, or right to the possession of land;
296 (b) all mines, minerals, and quarries in and under the land, all timber belonging to
297 individuals or corporations growing or being on the lands of this state or the United States, and
298 all rights and privileges appertaining to these; and
299 (c) improvements.
300 (31) "Residential property," for the purposes of the reductions and adjustments under
301 this chapter, means any property used for residential purposes as a primary residence. It does
302 not include property used for transient residential use or condominiums used in rental pools.
303 (32) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number of
304 miles calculated by the commission that is:
305 (a) measured in a straight line by the commission; and
306 (b) equal to the distance between a geographical location that begins or ends:

307 (i) at a boundary of the state; and
308 (ii) where an aircraft:
309 (A) takes off; or
310 (B) lands.
311 (33) (a) "State-assessed commercial vehicle" means:
312 (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
313 to transport passengers, freight, merchandise, or other property for hire; or
314 (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
315 transports the vehicle owner's goods or property in furtherance of the owner's commercial
316 enterprise.
317 (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
318 are specified in Subsection (8)(c) as county-assessed commercial vehicles.
319 (34) "Taxable value" means fair market value less any applicable reduction allowed for
320 residential property under Section 59-2-103 .
321 (35) "Tax area" means a geographic area created by the overlapping boundaries of one
322 or more taxing entities.
323 (36) "Taxing entity" means any county, city, town, school district, special taxing
324 district, local district under Title 17B, Limited Purpose Local Government Entities - Local
325 Districts, or other political subdivision of the state with the authority to levy a tax on property.
326 (37) "Tax roll" means a permanent record of the taxes charged on property, as extended
327 on the assessment roll and may be maintained on the same record or records as the assessment
328 roll or may be maintained on a separate record properly indexed to the assessment roll. It
329 includes tax books, tax lists, and other similar materials.
330 Section 2. Section 59-2-303.1 is amended to read:
331 59-2-303.1. Mandatory cyclical appraisals.
332 (1) For purposes of this section:
333 (a) "Appraisal date" means the date a county assessor completes a detailed review of
334 the property characteristics of a parcel of real property in accordance with Subsection (3)(a).
335 (b) "Corrective action" includes:
336 (i) factoring pursuant to Section 59-2-704 ;
337 (ii) notifying the state auditor that the county failed to comply with the requirements of

338 this section; or
339 (iii) filing a petition for a court order requiring a county to take action.
340 (c) "Mass appraisal system" means a computer assisted mass appraisal system that a
341 county assessor uses to value real property.
342 [(1) Beginning January 1, 1994, each] (2) (a) The county assessor shall annually
343 update property values of property as provided in Section 59-2-301 based on a systematic
344 review of current market data. [In addition,]
345 (b) The county assessor of a county of the first, second, or third class shall conduct the
346 annual update described in Subsection (2)(a) by using a mass appraisal system on or before the
347 following:
348 (i) for a county of the first class, January 1, 2009;
349 (ii) for a county of the second class, January 1, 2010; and
350 (iii) for a county of the third class, January 1, 2011.
351 (3) (a) In addition to the requirements in Subsection (2) , the county assessor shall
352 complete a detailed review of property characteristics for each property at least once every five
353 years.
354 (b) The county assessor shall maintain on the county's computer system, a record of the
355 last appraisal date for each parcel of real property located within the county assessor's county.
356 [(a)] (4) The commission shall take corrective action if the commission determines
357 that:
358 [(i)] (a) a county assessor has not satisfactorily followed the current mass appraisal
359 standards, as provided by law;
360 [(ii)] (b) the sales-assessment ratio, coefficients of dispersion, or other statistical
361 measures of appraisal performance related to the studies required by Section 59-2-704 are not
362 within the standards provided by law; or
363 [(iii)] (c) the county assessor has failed to comply with the requirements of [Subsection
364 (1)] this section.
365 [(b) For purposes of this section, "corrective action" includes:]
366 [(i) factoring pursuant to Section 59-2-704 ;]
367 [(ii) notifying the state auditor that the county failed to comply with the requirements
368 of this section; or]

369 [(iii) filing a petition for a court order requiring a county to take action.]
370 [(2) (a) By July 1, 1993, each] (5) (a) On or before July 1, 2008, the county assessor
371 shall prepare a five-year plan to comply with the requirements of [Subsection (1)] Subsections
372 (2) and (3).
373 (b) The plan shall be available in the county assessor's office for review by the public
374 upon request.
375 (c) The plan shall be annually reviewed and revised as necessary.
376 Section 3. Section 59-2-505 is amended to read:
377 59-2-505. Indicia of value for agricultural use assessment -- Inclusion of fair
378 market value on certain property tax notices.
379 (1) (a) The county assessor shall consider only those indicia of value that the land has
380 for agricultural use as determined by the commission when assessing land:
381 (i) that meets the requirements of Section 59-2-503 to be assessed under this part; and
382 (ii) for which the owner has:
383 (A) made a timely application in accordance with Section 59-2-508 for assessment
384 under this part for the tax year for which the land is being assessed; and
385 (B) obtained approval of the application described in Subsection (1)(a)(ii)(A) from the
386 county assessor.
387 (b) If land that becomes subject to a conservation easement created in accordance with
388 Title 57, Chapter 18, Land Conservation Easement Act, meets the requirements of Subsection
389