Second Substitute S.B. 63

Senator Ed P. Mayne proposes to substitute the following bill:

1 RESIDENTIAL PROPERTY TAX EXEMPTION
2 - SECONDARY RESIDENCES
3 2001 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Ed P. Mayne
6 This act modifies the Property Tax Act to provide for an exemption from taxation of a
7 portion of the fair market value of a qualifying secondary residence. This act defines
8 "qualifying secondary residence" and includes in the definition a limit that the qualifying
9 secondary residence may not be connected to a sewer or water system operated by certain
10 local entities or be rented to another person during a calendar year. S This act provides
10a procedures and requirements for the State Tax Commission to make distributions to a county from
10b the General Fund for amounts of an exemption for a qualifying secondary residence granted by the
10c county . s The act requires an
11 owner of a qualifying secondary residence to comply with certain requirements to receive
12 the property tax exemption, and makes technical changes.
13 This act affects sections of Utah Code Annotated 1953 as follows:
14 AMENDS:
15 59-2-102, as last amended by Chapter 61, Laws of Utah 2000
16 59-2-103, as last amended by Chapter 275, Laws of Utah 1995
17 ENACTS:
18 59-2-1115, Utah Code Annotated 1953
19 Be it enacted by the Legislature of the state of Utah:
20 Section 1. Section 59-2-102 is amended to read:
21 59-2-102. Definitions.
22 As used in this chapter and title:
23 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
24 engaging in dispensing activities directly affecting agriculture or horticulture with an airworthiness
25 certificate from the Federal Aviation Administration certifying the aircraft or rotorcraft's use for

26 agricultural and pest control purposes.
27 (2) "Air charter service" means an air carrier operation which requires the customer to hire
28 an entire aircraft rather than book passage in whatever capacity is available on a scheduled trip.
29 (3) "Air contract service" means an air carrier operation available only to customers who
30 engage the services of the carrier through a contractual agreement and excess capacity on any trip
31 and is not available to the public at large.
32 (4) "Aircraft" is as defined in Section 72-10-102 .
33 (5) "Airline" means any air carrier operating interstate routes on a scheduled basis which
34 offers to fly passengers or cargo on the basis of available capacity on regularly scheduled routes.
35 (6) "Assessment roll" means a permanent record of the assessment of property as assessed
36 by the county assessor and the commission and may be maintained manually or as a computerized
37 file as a consolidated record or as multiple records by type, classification, or categories.
38 (7) "Certified revenue levy" means a property tax levy that provides the same amount of
39 ad valorem property tax revenue as was collected for the prior year, plus new growth, but exclusive
40 of revenue from collections from redemptions, interest, and penalties.
41 (8) "County-assessed commercial vehicle" means:
42 (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under Section
43 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or property in
44 furtherance of the owner's commercial enterprise;
45 (b) any passenger vehicle owned by a business and used by its employees for
46 transportation as a company car or vanpool vehicle; and
47 (c) vehicles which are:
48 (i) especially constructed for towing or wrecking, and which are not otherwise used to
49 transport goods, merchandise, or people for compensation;
50 (ii) used or licensed as taxicabs or limousines;
51 (iii) used as rental passenger cars, travel trailers, or motor homes;
52 (iv) used or licensed in this state for use as ambulances or hearses;
53 (v) especially designed and used for garbage and rubbish collection; or
54 (vi) used exclusively to transport students or their instructors to or from any private,
55 public, or religious school or school activities.
56 (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,

57 "designated tax area" means a tax area created by the overlapping boundaries of only the following
58 taxing entities:
59 (i) a county; and
60 (ii) a school district.
61 (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
62 by the overlapping boundaries of:
63 (i) the taxing entities described in Subsection (9)(a); and
64 (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a) and
65 the boundaries of the city or town are identical; or
66 (B) a special service district if the boundaries of the school district under Subsection (9)(a)
67 are located entirely within the special service district.
68 (10) "Eligible judgment" means a judgment or final order under Section 59-2-1328 or
69 Section 59-2-1330 :
70 (a) that became a final and unappealable judgment or order no more than 14 months prior
71 to the day on which the notice required by Subsection 59-2-919 (4) is required to be mailed; and
72 (b) for which a taxing entity's share of the judgment or order is greater than or equal to the
73 lesser of:
74 (i) $1,000; or
75 (ii) 1% of the total ad valorem property taxes collected by the taxing entity in the previous
76 fiscal year.
77 (11) (a) "Escaped property" means any property, whether personal, land, or any
78 improvements to the property, subject to taxation and is:
79 (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
80 to the wrong taxpayer by the assessing authority;
81 (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
82 comply with the reporting requirements of this chapter; or
83 (iii) undervalued because of errors made by the assessing authority based upon incomplete
84 or erroneous information furnished by the taxpayer.
85 (b) Property which is undervalued because of the use of a different valuation methodology
86 or because of a different application of the same valuation methodology is not "escaped property."
87 (12) "Fair market value" means the amount at which property would change hands

88 between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and
89 both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair market
90 value" shall be determined using the current zoning laws applicable to the property in question,
91 except in cases where there is a reasonable probability of a change in the zoning laws affecting that
92 property in the tax year in question and the change would have an appreciable influence upon the
93 value.
94 (13) "Farm machinery and equipment," for purposes of the exemption provided under
95 Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
96 handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
97 tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
98 equipment used primarily for agricultural purposes; but does not include vehicles required to be
99 registered with the Motor Vehicle Division or vehicles or other equipment used for business
100 purposes other than farming.
101 (14) "Geothermal fluid" means water in any form at temperatures greater than 120 degrees
102 centigrade naturally present in a geothermal system.
103 (15) "Geothermal resource" means:
104 (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade; and
105 (b) the energy, in whatever form, including pressure, present in, resulting from, created by,
106 or which may be extracted from that natural heat, directly or through a material medium.
107 (16) "Improvements" includes all buildings, structures, fixtures, fences, and improvements
108 erected upon or affixed to the land, whether the title has been acquired to the land or not.
109 (17) "Intangible property":
110 (a) means property that is capable of private ownership separate from tangible property;
111 and
112 (b) includes:
113 (i) moneys;
114 (ii) credits;
115 (iii) bonds;
116 (iv) stocks;
117 (v) representative property;
118 (vi) franchises;

119 (vii) licenses;
120 (viii) trade names;
121 (ix) copyrights; and
122 (x) patents.
123 (18) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and uranium.
124 (19) "Mine" means a natural deposit of either metalliferous or nonmetalliferous valuable
125 mineral.
126 (20) "Mining" means the process of producing, extracting, leaching, evaporating, or
127 otherwise removing a mineral from a mine.
128 (21) (a) "Mobile flight equipment" means tangible personal property that is:
129 (i) owned or operated by an:
130 (A) air charter service;
131 (B) air contract service; or
132 (C) airline; and
133 (ii) (A) capable of flight;
134 (B) attached to an aircraft that is capable of flight; or
135 (C) contained in an aircraft that is capable of flight if the tangible personal property is
136 intended to be used:
137 (I) during multiple flights;
138 (II) during a takeoff, flight, or landing; and
139 (III) as a service provided by an air charter service, air contract service, or airline.
140 (b) (i) "Mobile flight equipment" does not include a spare part other than a spare engine
141 that is rotated:
142 (A) at regular intervals; and
143 (B) with an engine that is attached to the aircraft.
144 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
145 commission may make rules defining the term "regular intervals."
146 (22) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal, salts, sand,
147 rock, gravel, and all carboniferous materials.
148 (23) "Personal property" includes:
149 (a) [every] each class of property as defined in Subsection [(24)] (25) which is the subject

150 of ownership and not included within the meaning of the terms "real estate" and "improvements";
151 (b) gas and water mains and pipes laid in roads, streets, or alleys;
152 (c) bridges and ferries; and
153 (d) livestock which, for the purposes of the exemption provided under Section 59-2-1112 ,
154 means all domestic animals, honeybees, poultry, fur-bearing animals, and fish.
155 (24) (a) "Primary residence" means property used:
156 (i) for residential purposes; and
157 (ii) as a domicile.
158 (b) "Primary residence" does not include:
159 (i) property used as a transient residence; or
160 (ii) a condominium used in a rental pool.
161 [(24)] (25) (a) "Property" means property that is subject to assessment and taxation
162 according to its value.
163 (b) "Property" does not include intangible property as defined in this section.
164 [(25)] (26) "Public utility," for purposes of this chapter, means the operating property of
165 a railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
166 company, electrical corporation, telephone corporation, sewerage corporation, or heat corporation
167 where the company performs the service for, or delivers the commodity to, the public generally
168 or companies serving the public generally, or in the case of a gas corporation or an electrical
169 corporation, where the gas or electricity is sold or furnished to any member or consumers within
170 the state for domestic, commercial, or industrial use. Public utility also means the operating
171 property of any entity or person defined under Section 54-2-1 except water corporations.
172 (27) (a) "Qualifying secondary residence" means property that:
173 (i) is used for residential purposes;
174 (ii) is not a primary residence;
175 (iii) is not connected to a sewer system or water system that is operated by:
176 (A) a county;
177 (B) a city;
178 (C) a town;
179 (D) a special district created under Title 17A, Special Districts;
180 (E) a local district created under Title 17B, Chapter 2, Local Districts; or

181 (F) an interlocal cooperation entity created under Title 11, Chapter 13, Interlocal
182 Cooperation Act; and
183 (iv) an owner does not rent to another person during the calendar year.
184 (b) "Qualifying secondary residence" does not include:
185 (i) a condominium used in a rental pool;
186 (ii) a houseboat;
187 (iii) property:
188 (A) owned by a for-profit business entity; or
189 (B) owned by more than two persons, unless the persons are related S [ as described in Section
190 267(c)(4), Internal Revenue Code ] s ;
191 (iv) a recreational vehicle as defined in Section 13-14-102 ;
192 (v) a tent; or
193 (vi) property similar to property described in Subsections (27)(b)(i) through (v).
194 (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
195 commission may make rules defining the following terms:
196 (i) "houseboat"; or
197 (ii) "tent."
198 [(26)] (28) "Real estate or property" includes:
199 (a) the possession of, claim to, ownership of, or right to the possession of land;
200 (b) all mines, minerals, and quarries in and under the land, all timber belonging to
201 individuals or corporations growing or being on the lands of this state or the United States, and all
202 rights and privileges appertaining to these; and
203 (c) improvements.
203a S (29) FOR PURPOSES OF SUBSECTION (27), "RELATED" MEANS A RELATIONSHIP IN WHICH
203b EACH OWNER OF A RESIDENCE IS RELATED TO ALL OF THE OTHER OWNERS OF THE RESIDENCE AS:
203c (a) AN ANCESTOR;
203d (b) A BROTHER OR SISTER BY THE WHOLE OR HALF BLOOD;
203e (c) A LINEAL DESCENDANT;
203f (d) A SPOUSE;
203g (e) A STEPBROTHER OR STEPSISTER;
203h (f) A STEPFATHER OR STEPMOTHER;
203i (g) A STEPGRANDCHILD;
203j (h) A STEPSON OR STEPDAUGHTER; OR
203k (i) A SPOUSE OF AN OWNER DESCRIBED IN SUBSECTIONS (29)(a) THROUGH (h). s
204 [(27)] S [ (29) ] (30) s "Residential property," for the purposes of the reductions and
204a adjustments
205 under this chapter, means [any property used for residential purposes as]:
206 (a) a primary residence[. It does not include property used for transient residential use or

207 condominiums used in rental pools.]; or
208 (b) a qualifying secondary residence.
209 [(28)] S [ (30) ] (31) s For purposes of Subsection 59-2-801 (1)(e), "route miles" means the
209a number
210 of miles calculated by the commission that is:
211 (a) measured in a straight line by the commission; and

212 (b) equal to the distance between a geographical location that begins or ends:
213 (i) at a boundary of the state; and
214 (ii) where an aircraft:
215 (A) takes off; or
216 (B) lands.
217 [(29)] S [ (31) ] (32) s (a) "State-assessed commercial vehicle" means:
218 (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate to
219 transport passengers, freight, merchandise, or other property for hire; or
220 (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and transports
221 the vehicle owner's goods or property in furtherance of the owner's commercial enterprise.
222 (b) "State-assessed commercial vehicle" does not include vehicles used for hire which are
223 specified in Subsection (8)(c) as county-assessed commercial vehicles.
224 [(30)] S [ (32) ] (33) s "Taxable value" means fair market value less any applicable reduction
224a allowed
225 for residential property under Section 59-2-103 .
226 [(31)] S [ (33) ] (34) s "Tax area" means a geographic area created by the overlapping
226a boundaries of
227 one or more taxing entities.
228 [(32)] S [ (34) ] (35) s "Taxing entity" means any county, city, town, school district, special
228a taxing
229 district, or any other political subdivision of the state with the authority to levy a tax on property.
230 [(33)] S [ (35) ] (36) s "Tax roll" means a permanent record of the taxes charged on property,
230a as
231 extended on the assessment roll and may be maintained on the same record or records as the
232 assessment roll or may be maintained on a separate record properly indexed to the assessment roll.
233 It includes tax books, tax lists, and other similar materials.
234 Section 2. Section 59-2-103 is amended to read:
235 59-2-103. Rate of assessment of property -- Residential property.
236 (1) All tangible taxable property shall be assessed and taxed at a uniform and equal rate
237 on the basis of its fair market value, as valued on January 1, unless otherwise provided by law.
238 (2) [Beginning January 1, 1995, the] The fair market value of residential property [shall
239 be reduced by 45%, representing a residential exemption allowed under Utah Constitution Article
240 XIII, Section 2, Utah Constitution.] is subject to the following residential exemptions:
241 (a) beginning on January 1, 1995, 45% of the fair market value of a primary residence is
242 exempt; and

243 (b) subject to Subsection (3)(b), beginning on January 1, 2002, 25% of the first $100,000
244 of the fair market value of a qualifying secondary residence is exempt as provided in Section
245 59-2-1115 .
246 (3) A person may claim a residential exemption for:
247 (a) each primary residence in the state; and
248 (b) notwithstanding Subsection (2)(b), one qualifying secondary residence in the state.
249 [(3)] (4) No more than one acre of land per residential unit may qualify for the residential
250 exemption.
251 Section 5. Section 59-2-1115 is enacted to read:
252 59-2-1115. Exemption for secondary residence -- Signed statement S _ Distributions to
252a county from General Fund . s
253 (1) An owner of a qualifying secondary residence may apply to claim a residential
254 exemption provided for in Section 59-2-103 for the qualifying secondary residence by filing a
255 signed statement with the county assessor:
256 (a) of the county in which the qualifying secondary residence is located;
257 (b) (i) subject to Subsection (3), in any year before the year in which the owner claims the
258 residential exemption for the qualifying secondary residence; or
259 (ii) subject to Subsection (3), in the year in which the owner claims a residential exemption
260 for the qualifying secondary residence if the owner files the signed statement on or before April
261 1; and
262 (c) certifying that:
263 (i) the property is a qualifying secondary residence;
264 (ii) the owner is not claiming a residential exemption for any other qualifying secondary
265 residence in the state; and
266 (iii) the owner shall notify the county assessor in writing within 30 days after the day on
267 which:
268 (A) there is a change of ownership of the property;
269 (B) the property does not meet the definition of a qualifying secondary residence under
270 Section 59-2-102 ; or
271 (C) the owner applies to claim a residential exemption for another qualifying secondary
272 residence in the state.
273 (2) A county assessor shall allow an owner a residential exemption for a qualifying

274 secondary residence if the county assessor determines that the owner meets the requirements of
275 Subsection (1).
276 (3) If a county assessor determines that an owner of a qualifying secondary residence is
277 eligible for a residential exemption under this section for the time period during which the
278 qualifying secondary residence is eligible for the residential exemption:
279 (a) the signed statement is valid; and
280 (b) the owner is not required to file another signed statement under Subsection (1).
280a S (4)(a) THE COMMISSION SHALL MAKE DISTRIBUTIONS FROM THE GENERAL FUND TO COUNTIES
280b IN ACCORDANCE WITH THIS SUBSECTION (4) TO FUND THE EXEMPTION A COUNTY GRANTS FOR A
280c QUALIFYING SECONDARY RESIDENCE IN ACCORDANCE WITH THIS SECTION AND SUBSECTION
280d 59-2-103(2)(b).
280e (b) TO OBTAIN A DISTRIBUTION FROM THE GENERAL FUND FOR AN EXEMPTION A COUNTY
280f GRANTS FOR A QUALIFYING SECONDARY RESIDENCE IN ACCORDANCE WITH THIS SECTION AND
280g SUBSECTION 59-2-103(2)(b), THE COUNTY LEGISLATIVE BODY SHALL COMPILE A LIST OF:
280h (i) OWNERS FOR WHICH THE COUNTY GRANTS AN EXEMPTION FOR A QUALIFYING
280i SECONDARY RESIDENCE;
280j (ii) FOR EACH PROPERTY FOR WHICH THE COUNTY GRANTS AN EXEMPTION FOR A
280k QUALIFYING SECONDARY RESIDENCE, THE AMOUNT OF THE REDUCTION OF TAX AS A RESULT
280l OF THE EXEMPTION; AND
280m (iii) FOR ALL OF THE PROPERTIES FOR WHICH THE COUNTY GRANTS AN EXEMPTION FOR
280n A QUALIFYING SECONDARY RESIDENCE, THE TOTAL AMOUNT OF THE REDUCTION OF TAX AS A
280o RESULT OF THE EXEMPTION.
280p (c) THE COMMISSION SHALL DISTRIBUTE TO A COUNTY THE AMOUNT DESCRIBED IN
280q SUBSECTION (4)(b)(iii):
280r (i) ON OR BEFORE JANUARY 1 IF THE COUNTY LEGISLATIVE BODY SUBMITS THE LIST
280s REQUIRED BY SUBSECTION (4)(b) TO THE COMMISSION ON OR BEFORE NOVEMBER 30 OF THE
280t YEAR IN WHICH THE EXEMPTIONS FOR A QUALIFYING SECONDARY RESIDENCE ARE GRANTED;
280u AND
280v (ii) WITHIN 30 DAYS AFTER THE DAY ON WHICH THE COUNTY LEGISLATIVE BODY SUBMITS
280w THE LIST REQUIRED BY SUBSECTION (4)(b) TO THE COMMISSION IF THE COUNTY LEGISLATIVE
280x BODY SUBMITS THE LIST REQUIRED BY SUBSECTION (4)(b) AFTER NOVEMBER 30 . s