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S.B. 21
House Committee Amendments 2-5-2003 bh/po
Senate Committee Amendments 1-23-2003 rd/po
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6 This act modifies the Interlocal Cooperation Act including making technical changes.
7 The act adds definitions and modifies provisions related to project entity and generation
8 output requirements. S THE ACT MODIFIES PROVISIONS RELATED TO POWERS AND DUTIES OF
8a INTERLOCAL ENTITIES. s For purposes of the payment of fee in lieu of ad valorem property
9 tax, this act provides that a fee base for a project can be determined by agreement. This
10 act provides for valuation by the State Tax Commission if a fee base is not determined by
11 an agreement. h PORTIONS OF THIS ACT HAVE RETROSPECTIVE OPERATION TO JANUARY 1,
11a 2003. h
12 This act affects sections of Utah Code Annotated 1953 as follows:
13 AMENDS:
14 11-13-103, as renumbered and amended by Chapter 286, Laws of Utah 2002
14a S 11-13-204, AS ENACTED BY CHAPTER 286, LAWS OF UTAH 2002 s
15 11-13-301, as enacted by Chapter 286, Laws of Utah 2002
16 11-13-302, as renumbered and amended by Chapter 286, Laws of Utah 2002
17 11-13-310, as renumbered and amended by Chapter 286, Laws of Utah 2002
18 11-13-311, as renumbered and amended by Chapter 286, Laws of Utah 2002
19 Be it enacted by the Legislature of the state of Utah:
20 Section 1. Section 11-13-103 is amended to read:
21 11-13-103. Definitions.
22 As used in this chapter:
23 (1) "Additional project capacity" means electric generating capacity provided by a
24 generating unit that first produces electricity on or after May 6, 2002 and that is constructed or
25 installed at or adjacent to the site of a project that first produced electricity before May 6, 2002,
26 regardless of whether:
27 (a) the owners of the new generating unit are the same as or different from the owner of
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29 (b) the purchasers of electricity from the new generating unit are the same as or
30 different from the purchasers of electricity from the project.
31 (2) "Board" means the Permanent Community Impact Fund Board created by Section
32 9-4-304 , and its successors.
33 (3) "Candidate" means one or more of:
34 (a) the state;
35 (b) a county, municipality, school district, special district, or other political subdivision
36 of the state; and
37 (c) a prosecution district.
38 (4) "Commercial project entity" means a project entity, defined in Subsection [
39 (12), that:
40 (a) has no taxing authority; and
41 (b) is not supported in whole or in part by and does not expend or disburse tax
42 revenues.
43 (5) "Direct impacts" means an increase in the need for public facilities or services that
44 is attributable to the project or facilities providing additional project capacity, except impacts
45 resulting from the construction or operation of a facility that is:
46 (a) owned by an owner other than the owner of the project or of the facilities providing
47 additional project capacity; and
48 (b) used to furnish fuel, construction, or operation materials for use in the project.
49 (6) "Electric interlocal entity" means an interlocal entity described in Subsection
50 11-13-203 (3).
51 (7) "Energy services interlocal entity" means an interlocal entity that is described in
52 Subsection 11-13-203 (4).
53 (8) (a) "Estimated electric requirements," when used with respect to a qualified energy
54 services interlocal entity, includes any of the following that meets the requirements of
55 Subsection (8)(b):
56 (i) generation capacity;
57 (ii) generation output; or
58 (iii) an electric energy production facility.
59
60 if it is needed by the qualified energy services interlocal entity to perform the qualified energy
61 services interlocal entity's contractual or legal obligations to any of its members.
62 [
63 (a) a Utah interlocal entity, an electric interlocal entity, or an energy services interlocal
64 entity; or
65 (b) a separate legal or administrative entity created under Section 11-13-205 .
66 [
67 [
68 [
69 (i) means an electric generation and transmission facility owned by a Utah interlocal
70 entity or an electric interlocal entity; and
71 (ii) includes fuel or fuel transportation facilities and water facilities owned by that Utah
72 interlocal entity or electric interlocal entity and required for the generation and transmission
73 facility.
74 (b) "Project" includes a project entity's ownership interest in:
75 (i) facilities that provide additional project capacity; and
76 (ii) additional generating, transmission, fuel, fuel transportation, water, or other
77 facilities added to a project.
78 [
79 that owns a project.
80 [
81 (a) a city, town, county, school district, special district, or other political subdivision of
82 the state;
83 (b) the state or any department, division, or agency of the state;
84 (c) any agency of the United States;
85 (d) any political subdivision or agency of another state or the District of Columbia
86 including any interlocal cooperation or joint powers agency formed under the authority of the
87 law of the other state or the District of Columbia; and
88 (e) any Indian tribe, band, nation, or other organized group or community which is
89 recognized as eligible for the special programs and services provided by the United States to
Senate Committee Amendments 1-23-2003 rd/po
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Indians because of their status as Indians.90
91 (14) "Qualified energy services interlocal entity" means an energy services interlocal
92 entity that at the time that the energy services interlocal entity acquires its interest in facilities
93 providing additional project capacity has at least five members that are Utah public agencies.
94 [
95 (a) means an interlocal entity described in Subsection 11-13-203 (2); and
96 (b) includes a separate legal or administrative entity created under Chapter 47, Laws of
97 Utah 1977, Section 3, as amended.
98 [
99 (13)(a) or (b).
99a S Section 2. Section 11-13-204 is amended to read:
99b 11-13-204. Powers and duties of interlocal entities -- Additional powers of energy services
99c interlocal entities -- Length of term of agreement and interlocal entity -- Notice to State Tax
99d Commission.
99e (1) (a) An interlocal entity:
99f (i) may:
99g (A) adopt, amend, and repeal rules, bylaws, policies, and procedures for the regulation of its
99h affairs and the conduct of its business;
99i (B) sue and be sued;
99j (C) have an official seal and alter that seal at will;
99k (D) make and execute contracts and other instruments necessary or convenient for the
99l performance of its duties and the exercise of its powers and functions;
99m (E) acquire real or personal property, or an undivided, fractional, or other interest in real or
99n personal property, necessary or convenient for the purposes contemplated in the agreement creating
99o the interlocal entity and sell, lease, or otherwise dispose of that property;
99p (F) directly or by contract with another:
99q (I) own and acquire facilities and improvements or an undivided, fractional, or other interest in
99r facilities and improvements;
99s (II) construct, operate, maintain, and repair facilities and improvements; and
99t (III) provide the services contemplated in the agreement creating the interlocal entity;
99u (G) borrow money, incur indebtedness, and issue revenue bonds, notes, or other obligations
99v and secure their payment by an assignment, pledge, or other conveyance of all or any part of the
99w revenues and receipts from the facilities, improvements, or services that the interlocal entity provides;
99x (H) offer, issue, and sell warrants, options, or other rights related to the bonds, notes, or other
99y obligations issued by the interlocal entity; and
99z (I) sell or contract for the sale of the services, output, product, or other benefits provided by
99aa the interlocal entity to:
99ab (I) public agencies inside or outside the state; and
99ac (II) with respect to any excess services, output, product, or benefits, any person on terms that
99ad the interlocal entity considers to be in the best interest of the public agencies that are parties to the
99ae agreement creating the interlocal entity; and
99af (ii) may not levy, assess, or collect ad valorem property taxes. s
Senate Committee Amendments 1-23-2003 rd/po
99ag
S (b) An assignment, pledge, or other conveyance under Subsection (1)(a)(i)(G) may, to the99ag
99ah extent provided by the documents under which the assignment, pledge, or other conveyance is made,
99ai rank prior in right to any other obligation except taxes or payments in lieu of taxes payable to the state
99aj or its political subdivisions.
99ak (2) An energy services interlocal entity:
99al (a) except with respect to any ownership interest it has in facilities providing additional
99am project capacity, is not subject to:
99an (i) Part 3, Project Entity Provisions; or
99ao (ii) Title 59, Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to Pay
99ap Corporate Franchise or Income Tax Act; and
99aq (b) may:
99ar (i) own, acquire, and, by itself or by contract with another, construct, operate, and maintain a
99as facility or improvement for the generation, transmission, and transportation of electric energy or
99at related fuel supplies;
99au (ii) enter into a contract to obtain a supply of electric power and energy and ancillary services,
99av transmission, and transportation services, and supplies of natural gas and fuels necessary for the
99aw operation of generation facilities;
99ax (iii) enter into a contract with public agencies, investor-owned or cooperative utilities, and
99ay others, whether located in or out of the state, for the sale of [
99az the energy services interlocal entity; and
99ba (iv) adopt and implement risk management policies and strategies and enter into transactions
99bb and agreements to manage the risks associated with the purchase and sale of energy [
99bc
99bd other instruments.
99be (3) Notwithstanding Section 11-13-216, an agreement creating an interlocal entity or an
99bf amendment to that agreement may provide that the agreement may continue and the interlocal entity
99bg may remain in existence until the latest to occur of:
99bh (a) 50 years after the date of the agreement or amendment;
99bi (b) five years after the interlocal entity has fully paid or otherwise discharged all of its
99bj indebtedness;
99bk (c) five years after the interlocal entity has abandoned, decommissioned, or conveyed or
99bl transferred all of its interest in its facilities and improvements; or
99bm (d) five years after the facilities and improvements of the interlocal entity are no longer useful
99bn in providing the service, output, product, or other benefit of the facilities and improvements, as
99bo determined under the agreement governing the sale of the service, output, product, or other benefit.
99bp (4) (a) The governing body of each interlocal entity created under Section 11-13-203 on or after
99bq May 4, 1998, shall, within 30 days of the creation, file a written notice of the creation with the State Tax
99br Commission.
99bs (b) Each written notice required under Subsection (4)(a) shall:
99bt (i) be accompanied by:
99bu (A) a copy of the agreement creating the interlocal entity; and
99bv (B) if less than all of the territory of any Utah public agency that is a party to the agreement is
99bw included within the interlocal entity, a plat that delineates a metes and bounds description of the area
99bx affected or a map of the area affected and evidence that the information has been recorded by s
Senate Committee Amendments 1-23-2003 rd/po
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S the recorder of the county in which the Utah public agency is located; and99by
99bz (ii) contain a certification by the governing body that all necessary legal requirements relating
99ca to the creation have been completed.
99cb (5) NOTHING IN THIS SECTION 11-13-204 SHALL BE CONSTRUED AS EXPANDING THE
99cc RIGHTS OF ANY MUNICIPALITY OR INTERLOCAL ENTITY TO SELL OR PROVIDE RETAIL SERVICE. s
100 Section 2. Section 11-13-301 is amended to read:
101 11-13-301. Project entity and generation output requirements.
102 (1) Each project entity shall:
103 (a) before undertaking the construction of a project or of facilities to provide additional
104 project capacity, offer to sell or make available at least 50% of the generation output of or
105 electric energy produced by the project or additional project capacity, respectively;
106 (b) establish rules and procedures for an offer under Subsection (1)(a) that provide at
107 least 60 days for a prospective power purchaser to accept the offer before [
108 considered rejected; and
109 (c) make each offer under Subsection (1)(a):
110 (i) under a long-term arrangement that may be an undivided ownership interest, a
111 participation interest, a power sales agreement, or otherwise; and
112 (ii) to one or more power purchasers in the state that supply electric energy at
113 wholesale or retail.
114 (2) (a) The generation output or electric energy production available to power
115 purchasers in the state from a project shall be at least 5% of the total generation output or
116 electric energy production of the project.
117 (b) (i) Subject to Subsection (2)(b)(ii), at least a majority of the generation capacity,
118 generation output, or electric energy production [
119 capacity shall be:
120 (A) made available as needed to meet the estimated electric requirements of entities or
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122 (B) owned, purchased, or consumed by entities or consumers within the state.
123 (ii) (A) As used in this Subsection (2)(b)(ii), "default provision" means a provision
124 authorizing a nondefaulting party to succeed to or require the disposition of the rights and
125 interests of a defaulting party.
126 (B) The requirements of Subsection (2)(b)(i) do not apply to the extent that those
127 requirements are not met due to the operation of a default provision in an agreement providing
128 for ownership or other interests in facilities providing additional project capacity.
129 Section 3. Section 11-13-302 is amended to read:
130 11-13-302. Payment of fee in lieu of ad valorem property tax by certain energy
131 suppliers -- Method of calculating -- Collection -- Extent of tax lien.
132 (1) [
133 and [
134 suppliers whose tangible property is not exempted by Utah Constitution Article XIII, Section 2,
135 from the payment of ad valorem property tax, shall pay an annual fee in lieu of ad valorem
136 property tax as provided in this section to each taxing jurisdiction within which the project or
137 any part of it is located.
138 (b) For purposes of this section, "annual fee" means the annual fee described in
139 Subsection (1)(a) that is in lieu of ad valorem property tax.
140 (c) The requirement to pay [
141 [
142 of impact alleviation payments under contracts or determination orders provided for in Sections
143 11-13-305 and 11-13-306 , with the fiscal year of the candidate following the fiscal year of the
144 candidate in which the date of commercial operation of the last generating unit, other than any
145 generating unit providing additional project capacity, of the project occurs, or, in the case of
146 any facilities providing additional project capacity, with the fiscal year of the candidate
147 following the fiscal year of the candidate in which the date of commercial operation of the
148 generating unit providing the additional project capacity occurs; and
149 [
150 taxing jurisdiction described in Subsection (1)(c)(i), with the fiscal year of the taxing
151 jurisdiction in which construction of the project commences, or, in the case of facilities
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153 construction of those facilities commences.
154 (d) The [
155 the period of the useful life of the project or facilities.
156 (2) (a) [
157 Subsection (2)(b) because the ad valorem property tax imposed by a school district and
158 authorized by the Legislature under Section 53A-17a-135 represents both:
159 [
160 Section 53A-17a-135 ; and
161 [
162 under Sections 11-2-7 , 53A-16-107 , 53A-16-110 , 53A-17a-126 , 53A-17a-127 , 53A-17a-133 ,
163 53A-17a-134 , 53A-17a-143 , 53A-17a-145 , and 53A-21-103 [
164 (b) The annual [
165 be as follows:
166 (i) the project entity shall pay to the school district [
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168 district and authorized by the Legislature under Subsection 53A-17a-135 (1); and
169 (ii) for all other local property tax levies authorized to be imposed by a school district,
170 the project entity shall pay to the school district either [
171 (A) an annual fee [
172 (B) impact alleviation payments under contracts or determination orders provided for
173 in Sections 11-13-305 and 11-13-306 [
174 (3) (a) [
175 calculated by multiplying the tax rate or rates of the jurisdiction for that year by the product
176 obtained by multiplying the [
177 Subsection (4) for that year of the portion of the project located within the jurisdiction by the
178 percentage of the project which is used to produce the capacity, service, or other benefit sold to
179 the energy supplier or suppliers.
180 (b) As used in this section, "tax rate," when applied in respect to a school district,
181 includes any assessment to be made by the school district under Subsection (2) or Section
182 63-51-6 .
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184 an amount equal to the debt service, if any, payable in that year by the project entity on bonds,
185 the proceeds of which were used to provide public facilities and services for impact alleviation
186 in the taxing jurisdiction in accordance with Sections 11-13-305 and 11-13-306 .
187 (d) The tax rate for the taxing jurisdiction for that year shall be computed so as to:
188 [
189 located within the taxing jurisdiction determined in accordance with Subsection (4) used to
190 produce the capacity, service, or other benefit sold to the supplier or suppliers; and
191 [
192 (4) (a) Except as otherwise provided in this section, the annual fees required by this
193 section shall be paid, collected, and distributed to the taxing jurisdiction as if:
194 (i) the annual fees were ad valorem property taxes; and
195 (ii) the project were assessed at the same rate and upon the same measure of value as
196 taxable property in the state.
197 (b) (i) Notwithstanding Subsection (4)(a), for purposes of an annual fee required by
198 this section, the fee base of a project may be determined in accordance with an agreement
199 among:
200 (A) the project entity; and
201 (B) any county that:
202 (I) is due an annual fee from the project entity; and
203 (II) agrees to have the fee base of the project determined in accordance with the
204 agreement described in this Subsection (4).
205 (ii) The agreement described in Subsection (4)(b)(i):
206 (A) shall specify each year for which the fee base determined by the agreement shall be
207 used for purposes of an annual fee; and
208 (B) may not modify any provision of this chapter except the method by which the fee
209 base of a project is determined for purposes of an annual fee.
210 (iii) For purposes of an annual fee imposed by a taxing jurisdiction within a county
211 described in Subsection (4)(b)(i)(B), the fee base determined by the agreement described in
212 Subsection (4)(b)(i) shall be used for purposes of an annual fee imposed by that taxing
213 jurisdiction.
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215 year, for purposes of an annual fee, the State Tax Commission shall determine the value of that
216 portion of the project for which there is not an agreement:
217 (I) for that year; and
218 (II) using the same measure of value as is used for taxable property in the state.
219 (B) The [
220 the State Tax Commission in accordance with rules [
221 Commission.
222 (c) Payments of the annual fees shall be made from:
223 (i) the proceeds of bonds issued for the project; and [
224 (ii) revenues derived by the project entity from the project[
225 (d) (i) The contracts of the project entity with the purchasers of the capacity, service, or
226 other benefits of the project whose tangible property is not exempted by Utah Constitution
227 Article XIII, Section 2, from the payment of ad valorem property tax shall require each
228 purchaser, whether or not located in the state, to pay, to the extent not otherwise provided for,
229 its share, determined in accordance with the terms of the contract, of these fees.
230 (ii) It is the responsibility of the project entity to enforce the obligations of the
231 purchasers.
232 (5) (a) The responsibility of the project entity to make payment of the annual fees is
233 limited to the extent that there is legally available to the project entity, from bond proceeds or
234 revenues, monies to make these payments, and the obligation to make payments of the annual
235 fees is not otherwise a general obligation or liability of the project entity.
236 (b) No tax lien may attach upon any property or money of the project entity by virtue of
237 any failure to pay all or any part of [
238 (c) The project entity or any purchaser may contest the validity of [
239 the same extent as if the payment was a payment of the ad valorem property tax itself.
240 (d) The payments of [
241 is successful.
242 (6) (a) Any public agency that is not a project entity and that owns an interest in
243 facilities providing additional project capacity which, if its tangible property is not exempted
244 by Utah Constitution, Article XIII, Section 2, from the payment of ad valorem property tax,
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246 benefit from it to an energy supplier or suppliers whose tangible property is not exempted by
247 Utah Constitution, Article XIII, Section 2, from the payment of ad valorem property tax, shall
248 pay an annual fee [
249 shall have the obligations, credits, rights, and protections set forth in Subsections (1) [
250 (2), (3), (4)(a), (4)(c), (4)(d), and (5) with respect to its ownership interest as though it were a
251 project entity.
252 (b) The ownership interest of a public agency upon which [
253
254 (i) ad valorem property taxes under Title 59, Chapter 2, Property Tax Act; or
255 (ii) privilege taxes under Title 59, Chapter 4, Privilege Tax.
256 (c) Each public agency and project entity that owns an interest in facilities providing
257 additional project capacity:
258 (i) is subject to [
259 respect to that ownership interest; and
260 (ii) is not subject to [
261 to any portion of the facilities providing additional project capacity that it does not own.
262 Section 4. Section 11-13-310 is amended to read:
263 11-13-310. Termination of impact alleviation contract.
264 If the project or any part of it or the facilities providing additional project capacity or
265 any part of them, or the output from the project or facilities providing additional project
266 capacity become subject, in addition to the requirements of Section 11-13-302 , to ad valorem
267 property taxation or other payments in lieu of ad valorem property taxation, or other form of
268 tax equivalent payments to any candidate which is a party to an impact alleviation contract with
269 respect to the project or facilities providing additional project capacity or is receiving impact
270 alleviation payments or means with respect to the project or facilities providing additional
271 project capacity pursuant to a determination by the board, then the impact alleviation contract
272 or the requirement to make impact alleviation payments or provide means therefor pursuant to
273 the determination, as the case may be, shall, at the election of the candidate, terminate. In any
274 event, each impact alleviation contract or determination order shall terminate upon the project,
275 or, in the case of facilities providing additional project capacity, those facilities becoming
276
277 agreement entered by a school district shall terminate because of in lieu ad valorem property
278 tax fees levied under Subsection 11-13-302 (2)[
279 taxes levied under Section 53A-17a-135 for the state minimum school program. In addition, if
280 the construction of the project, or, in the case of facilities providing additional project capacity,
281 of those facilities, is permanently terminated for any reason, each impact alleviation contract
282 and determination order, and the payments and means required thereunder, shall terminate. No
283 termination of an impact alleviation contract or determination order may terminate or reduce
284 any liability previously incurred pursuant to the contract or determination order by the
285 candidate beneficiary under it. If the provisions of Section 11-13-302 , or its successor, are held
286 invalid by a court of competent jurisdiction, and no ad valorem taxes or other form of tax
287 equivalent payments are payable, the remaining provisions of this chapter shall continue in
288 operation without regard to the commencement of commercial operation of the last generating
289 unit of that project or of facilities providing additional project capacity.
290 Section 5. Section 11-13-311 is amended to read:
291 11-13-311. Credit for impact alleviation payments against in lieu of ad valorem
292 property taxes -- Federal or state assistance.
293 (1) In consideration of the impact alleviation payments and means provided by the
294 project entity or other public agency pursuant to the contracts and determination orders, the
295 project entity or other public agency, as the case may be, shall be entitled to a credit against the
296 fees paid in lieu of ad valorem property taxes as provided by Section 11-13-302 , ad valorem
297 property or other taxation by, or other payments in lieu of ad valorem property taxation or other
298 form of tax equivalent payments required by any candidate which is a party to an impact
299 alleviation contract or board order.
300 (2) Each candidate may make application to any federal or state governmental authority
301 for any assistance that may be available from that authority to alleviate the impacts to the
302 candidate. To the extent that the impact was attributable to the project or to the facilities
303 providing additional project capacity, any assistance received from that authority shall be
304 credited to the alleviation obligation with respect to the project or the facilities providing
305 additional project capacity, as the case may be, in proportion to the percentage of impact
306 attributable to the project or facilities providing additional project capacity, but in no event
House Committee Amendments 2-5-2003 bh/po
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shall the candidate realize less revenues than would have been realized without receipt of any307
308 assistance.
309 (3) With respect to school districts the fee in lieu of ad valorem property tax for the
310 state minimum school program required to be paid by the project entity or other public agency
311 under Subsection 11-13-302 (2)[
312 any credits for alleviation payments received by the school districts under Subsection
313 11-13-302 (2)[
313a h Section 6. Retrospective operation.
313b THE AMENDMENTS IN THIS ACT TO SECTIONS 11-13-302, 11-13-310, AND 11-13-311 HAVE
313c RETROSPECTIVE OPERATION TO JANUARY 1, 2003. h
Legislative Review Note
as of 12-2-02 11:17 AM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.
Office of Legislative Research and General Counsel
Interim Committee Note
as of 12-12-02 2:10 PM
The Public Utilities and Technology Interim Committee recommended this bill.
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