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S.B. 21 Enrolled
This act modifies the Interlocal Cooperation Act including making technical changes.
The act adds definitions and modifies provisions related to project entity and generation
output requirements. The act modifies provisions related to powers and duties of
interlocal entities. For purposes of the payment of fee in lieu of ad valorem property tax,
this act provides that a fee base for a project can be determined by agreement. This act
provides for valuation by the State Tax Commission if a fee base is not determined by an
agreement. Portions of this act have retrospective operation to January 1, 2003.
This act affects sections of Utah Code Annotated 1953 as follows:
AMENDS:
11-13-103, as renumbered and amended by Chapter 286, Laws of Utah 2002
11-13-204, as enacted by Chapter 286, Laws of Utah 2002
11-13-301, as enacted by Chapter 286, Laws of Utah 2002
11-13-302, as renumbered and amended by Chapter 286, Laws of Utah 2002
11-13-310, as renumbered and amended by Chapter 286, Laws of Utah 2002
11-13-311, as renumbered and amended by Chapter 286, Laws of Utah 2002
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 11-13-103 is amended to read:
11-13-103. Definitions.
As used in this chapter:
(1) "Additional project capacity" means electric generating capacity provided by a
generating unit that first produces electricity on or after May 6, 2002 and that is constructed or
installed at or adjacent to the site of a project that first produced electricity before May 6, 2002,
regardless of whether:
(a) the owners of the new generating unit are the same as or different from the owner of
the project; and
(b) the purchasers of electricity from the new generating unit are the same as or different
from the purchasers of electricity from the project.
(2) "Board" means the Permanent Community Impact Fund Board created by Section
9-4-304 , and its successors.
(3) "Candidate" means one or more of:
(a) the state;
(b) a county, municipality, school district, special district, or other political subdivision
of the state; and
(c) a prosecution district.
(4) "Commercial project entity" means a project entity, defined in Subsection [
that:
(a) has no taxing authority; and
(b) is not supported in whole or in part by and does not expend or disburse tax revenues.
(5) "Direct impacts" means an increase in the need for public facilities or services that is
attributable to the project or facilities providing additional project capacity, except impacts
resulting from the construction or operation of a facility that is:
(a) owned by an owner other than the owner of the project or of the facilities providing
additional project capacity; and
(b) used to furnish fuel, construction, or operation materials for use in the project.
(6) "Electric interlocal entity" means an interlocal entity described in Subsection
11-13-203 (3).
(7) "Energy services interlocal entity" means an interlocal entity that is described in
Subsection 11-13-203 (4).
(8) (a) "Estimated electric requirements," when used with respect to a qualified energy
services interlocal entity, includes any of the following that meets the requirements of Subsection
(8)(b):
(i) generation capacity;
(ii) generation output; or
(iii) an electric energy production facility.
(b) An item listed in Subsection (8)(a) is included in "estimated electric requirements" if
it is needed by the qualified energy services interlocal entity to perform the qualified energy
services interlocal entity's contractual or legal obligations to any of its members.
[
(a) a Utah interlocal entity, an electric interlocal entity, or an energy services interlocal
entity; or
(b) a separate legal or administrative entity created under Section 11-13-205 .
[
[
[
(i) means an electric generation and transmission facility owned by a Utah interlocal
entity or an electric interlocal entity; and
(ii) includes fuel or fuel transportation facilities and water facilities owned by that Utah
interlocal entity or electric interlocal entity and required for the generation and transmission
facility.
(b) "Project" includes a project entity's ownership interest in:
(i) facilities that provide additional project capacity; and
(ii) additional generating, transmission, fuel, fuel transportation, water, or other facilities
added to a project.
[
that owns a project.
[
(a) a city, town, county, school district, special district, or other political subdivision of
the state;
(b) the state or any department, division, or agency of the state;
(c) any agency of the United States;
(d) any political subdivision or agency of another state or the District of Columbia
including any interlocal cooperation or joint powers agency formed under the authority of the law
of the other state or the District of Columbia; and
(e) any Indian tribe, band, nation, or other organized group or community which is
recognized as eligible for the special programs and services provided by the United States to
Indians because of their status as Indians.
(14) "Qualified energy services interlocal entity" means an energy services interlocal
entity that at the time that the energy services interlocal entity acquires its interest in facilities
providing additional project capacity has at least five members that are Utah public agencies.
[
(a) means an interlocal entity described in Subsection 11-13-203 (2); and
(b) includes a separate legal or administrative entity created under Chapter 47, Laws of
Utah 1977, Section 3, as amended.
[
or (b).
Section 2. Section 11-13-204 is amended to read:
11-13-204. Powers and duties of interlocal entities -- Additional powers of energy
services interlocal entities -- Length of term of agreement and interlocal entity -- Notice to
State Tax Commission.
(1) (a) An interlocal entity:
(i) may:
(A) adopt, amend, and repeal rules, bylaws, policies, and procedures for the regulation of
its affairs and the conduct of its business;
(B) sue and be sued;
(C) have an official seal and alter that seal at will;
(D) make and execute contracts and other instruments necessary or convenient for the
performance of its duties and the exercise of its powers and functions;
(E) acquire real or personal property, or an undivided, fractional, or other interest in real
or personal property, necessary or convenient for the purposes contemplated in the agreement
creating the interlocal entity and sell, lease, or otherwise dispose of that property;
(F) directly or by contract with another:
(I) own and acquire facilities and improvements or an undivided, fractional, or other
interest in facilities and improvements;
(II) construct, operate, maintain, and repair facilities and improvements; and
(III) provide the services contemplated in the agreement creating the interlocal entity;
(G) borrow money, incur indebtedness, and issue revenue bonds, notes, or other
obligations and secure their payment by an assignment, pledge, or other conveyance of all or any
part of the revenues and receipts from the facilities, improvements, or services that the interlocal
entity provides;
(H) offer, issue, and sell warrants, options, or other rights related to the bonds, notes, or
other obligations issued by the interlocal entity; and
(I) sell or contract for the sale of the services, output, product, or other benefits provided
by the interlocal entity to:
(I) public agencies inside or outside the state; and
(II) with respect to any excess services, output, product, or benefits, any person on terms
that the interlocal entity considers to be in the best interest of the public agencies that are parties
to the agreement creating the interlocal entity; and
(ii) may not levy, assess, or collect ad valorem property taxes.
(b) An assignment, pledge, or other conveyance under Subsection (1)(a)(i)(G) may, to the
extent provided by the documents under which the assignment, pledge, or other conveyance is
made, rank prior in right to any other obligation except taxes or payments in lieu of taxes payable
to the state or its political subdivisions.
(2) An energy services interlocal entity:
(a) except with respect to any ownership interest it has in facilities providing additional
project capacity, is not subject to:
(i) Part 3, Project Entity Provisions; or
(ii) Title 59, Chapter 8, Gross Receipts Tax on Certain Corporations Not Required to Pay
Corporate Franchise or Income Tax Act; and
(b) may:
(i) own, acquire, and, by itself or by contract with another, construct, operate, and
maintain a facility or improvement for the generation, transmission, and transportation of electric
energy or related fuel supplies;
(ii) enter into a contract to obtain a supply of electric power and energy and ancillary
services, transmission, and transportation services, and supplies of natural gas and fuels
necessary for the operation of generation facilities;
(iii) enter into a contract with public agencies, investor-owned or cooperative utilities,
and others, whether located in or out of the state, for the sale of [
by the energy services interlocal entity; and
(iv) adopt and implement risk management policies and strategies and enter into
transactions and agreements to manage the risks associated with the purchase and sale of energy
[
swap agreements, and other instruments.
(3) Notwithstanding Section 11-13-216 , an agreement creating an interlocal entity or an
amendment to that agreement may provide that the agreement may continue and the interlocal
entity may remain in existence until the latest to occur of:
(a) 50 years after the date of the agreement or amendment;
(b) five years after the interlocal entity has fully paid or otherwise discharged all of its
indebtedness;
(c) five years after the interlocal entity has abandoned, decommissioned, or conveyed or
transferred all of its interest in its facilities and improvements; or
(d) five years after the facilities and improvements of the interlocal entity are no longer
useful in providing the service, output, product, or other benefit of the facilities and
improvements, as determined under the agreement governing the sale of the service, output,
product, or other benefit.
(4) (a) The governing body of each interlocal entity created under Section 11-13-203 on
or after May 4, 1998, shall, within 30 days of the creation, file a written notice of the creation
with the State Tax Commission.
(b) Each written notice required under Subsection (4)(a) shall:
(i) be accompanied by:
(A) a copy of the agreement creating the interlocal entity; and
(B) if less than all of the territory of any Utah public agency that is a party to the
agreement is included within the interlocal entity, a plat that delineates a metes and bounds
description of the area affected or a map of the area affected and evidence that the information
has been recorded by the recorder of the county in which the Utah public agency is located; and
(ii) contain a certification by the governing body that all necessary legal requirements
relating to the creation have been completed.
(5) Nothing in this section shall be construed as expanding the rights of any municipality
or interlocal entity to sell or provide retail service.
Section 3. Section 11-13-301 is amended to read:
11-13-301. Project entity and generation output requirements.
(1) Each project entity shall:
(a) before undertaking the construction of a project or of facilities to provide additional
project capacity, offer to sell or make available at least 50% of the generation output of or
electric energy produced by the project or additional project capacity, respectively;
(b) establish rules and procedures for an offer under Subsection (1)(a) that provide at
least 60 days for a prospective power purchaser to accept the offer before [
considered rejected; and
(c) make each offer under Subsection (1)(a):
(i) under a long-term arrangement that may be an undivided ownership interest, a
participation interest, a power sales agreement, or otherwise; and
(ii) to one or more power purchasers in the state that supply electric energy at wholesale
or retail.
(2) (a) The generation output or electric energy production available to power purchasers
in the state from a project shall be at least 5% of the total generation output or electric energy
production of the project.
(b) (i) Subject to Subsection (2)(b)(ii), at least a majority of the generation capacity,
generation output, or electric energy production [
capacity shall be:
(A) made available as needed to meet the estimated electric requirements of entities or
consumers within the state; and
(B) owned, purchased, or consumed by entities or consumers within the state.
(ii) (A) As used in this Subsection (2)(b)(ii), "default provision" means a provision
authorizing a nondefaulting party to succeed to or require the disposition of the rights and
interests of a defaulting party.
(B) The requirements of Subsection (2)(b)(i) do not apply to the extent that those
requirements are not met due to the operation of a default provision in an agreement providing
for ownership or other interests in facilities providing additional project capacity.
Section 4. 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) [
[
whose tangible property is not exempted by Utah Constitution Article XIII, Section 2, from the
payment of ad valorem property tax, shall pay an annual fee in lieu of ad valorem property tax as
provided in 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 [
[
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
[
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 [
the period of the useful life of the project or facilities.
(2) (a) [
(2)(b) because the ad valorem property tax imposed by a school district and authorized by the
Legislature under Section 53A-17a-135 represents both:
[
Section 53A-17a-135 ; and
[
under Sections 11-2-7 , 53A-16-107 , 53A-16-110 , 53A-17a-126 , 53A-17a-127 , 53A-17a-133 ,
53A-17a-134 , 53A-17a-143 , 53A-17a-145 , and 53A-21-103 [
(b) The annual [
as follows:
(i) the project entity shall pay to the school district [
district and authorized by the Legislature under Subsection 53A-17a-135 (1); 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 [
(B) impact alleviation payments under contracts or determination orders provided for in
Sections 11-13-305 and 11-13-306 [
(3) (a) [
calculated by multiplying the tax rate or rates of the jurisdiction for that year by the product
obtained by multiplying the [
(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
63-51-6 .
(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:
[
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
[
(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.
(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 [
State Tax Commission in accordance with rules [
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
other benefits of the project whose tangible property is not exempted by Utah Constitution
Article XIII, Section 2, 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, monies 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 [
(c) The project entity or any purchaser may contest the validity of [
the same extent as if the payment was a payment of the ad valorem property tax itself.
(d) The payments of [
successful.
(6) (a) Any public agency that is not a project entity and that owns an interest in facilities
providing additional project capacity which, if its tangible property is not exempted by Utah
Constitution, Article XIII, Section 2, from the payment of ad valorem property tax, uses any
capacity, service, or other benefit from it or which 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 2, from the payment of ad valorem property tax, shall pay an
annual fee [
have the obligations, credits, rights, and protections set forth in Subsections (1) [
(3), (4)(a), (4)(c), (4)(d), and (5) with respect to its ownership interest as though it were a project
entity.
(b) The ownership interest of a public agency upon which [
(i) ad valorem property taxes under Title 59, Chapter 2, Property Tax Act; or
(ii) privilege taxes under Title 59, Chapter 4, Privilege Tax.
(c) Each public agency and project entity that owns an interest in facilities providing
additional project capacity:
(i) is subject to [
to that ownership interest; and
(ii) is not subject to [
to any portion of the facilities providing additional project capacity that it does not own.
Section 5. Section 11-13-310 is amended to read:
11-13-310. Termination of impact alleviation contract.
If the project or any part of it or the facilities providing additional project capacity or any
part of them, or the output from the project or facilities providing additional project capacity
become subject, in addition to the requirements of Section 11-13-302 , to ad valorem property
taxation or other payments in lieu of ad valorem property taxation, or other form of tax
equivalent payments to any candidate which is a party to an impact alleviation contract with
respect to the project or facilities providing additional project capacity or is receiving impact
alleviation payments or means with respect to the project or facilities providing additional project
capacity pursuant to a determination by the board, then the impact alleviation contract or the
requirement to make impact alleviation payments or provide means therefor pursuant to the
determination, as the case may be, shall, at the election of the candidate, terminate. In any event,
each impact alleviation contract or determination order shall terminate upon the project, or, in the
case of facilities providing additional project capacity, those facilities becoming subject to the
provisions of Section 11-13-302 , except that no impact alleviation contract or agreement entered
by a school district shall terminate because of in lieu ad valorem property tax fees levied under
Subsection 11-13-302 (2)[
53A-17a-135 for the state minimum school program. In addition, if the construction of the
project, or, in the case of facilities providing additional project capacity, of those facilities, is
permanently terminated for any reason, each impact alleviation contract and determination order,
and the payments and means required thereunder, shall terminate. No termination of an impact
alleviation contract or determination order may terminate or reduce any liability previously
incurred pursuant to the contract or determination order by the candidate beneficiary under it. If
the provisions of Section 11-13-302 , or its successor, are held invalid by a court of competent
jurisdiction, and no ad valorem taxes or other form of tax equivalent payments are payable, the
remaining provisions of this chapter shall continue in operation without regard to the
commencement of commercial operation of the last generating unit of that project or of facilities
providing additional project capacity.
Section 6. Section 11-13-311 is amended to read:
11-13-311. Credit for impact alleviation payments against in lieu of ad valorem
property taxes -- Federal or state assistance.
(1) In consideration of the impact alleviation payments and means provided by the
project entity or other public agency pursuant to the contracts and determination orders, the
project entity or other public agency, as the case may be, shall be entitled to a credit against the
fees paid in lieu of ad valorem property taxes as provided by Section 11-13-302 , ad valorem
property or other taxation by, or other payments in lieu of ad valorem property taxation or other
form of tax equivalent payments required by any candidate which is a party to an impact
alleviation contract or board order.
(2) Each candidate may make application to any federal or state governmental authority
for any assistance that may be available from that authority to alleviate the impacts to the
candidate. To the extent that the impact was attributable to the project or to the facilities
providing additional project capacity, any assistance received from that authority shall be
credited to the alleviation obligation with respect to the project or the facilities providing
additional project capacity, as the case may be, in proportion to the percentage of impact
attributable to the project or facilities providing additional project capacity, but in no event shall
the candidate realize less revenues than would have been realized without receipt of any
assistance.
(3) With respect to school districts the fee in lieu of ad valorem property tax for the state
minimum school program required to be paid by the project entity or other public agency under
Subsection 11-13-302 (2)[
credits for alleviation payments received by the school districts under Subsection
11-13-302 (2)[
Section 7. Retrospective operation.
The amendments in this act to Sections 11-13-302 , 11-13-310 , and 11-13-311 have
retrospective operation to January 1, 2003.
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