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S.B. 120

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Feb 3, 2004 at 3:16 PM by smaeser. -->              1     

RESIDENTIAL PROPERTY TAX EXEMPTION

             2     
2004 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: David L. Thomas


             5      Howard A. Stephenson

             6     

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Property Tax Act to amend residential property tax provisions.
             10      Highlighted Provisions:
             11          This bill:
             12          .    defines "household";
             13          .    grants rulemaking authority to the Utah State Tax Commission;
             14          .    provides that the residential property tax exemption is limited to one primary
             15      residence per household;
             16          .    addresses the application of the residential property tax exemption with respect to
             17      an owner of multiple residential properties located within the state; and
             18          .    makes technical changes.
             19      Monies Appropriated in this Bill:
             20          None
             21      Other Special Clauses:
             22          This bill takes effect on January 1, 2005.
             23          This bill provides a coordination clause.
             24      Utah Code Sections Affected:
             25      AMENDS:
             26          59-2-102, as last amended by Chapter 113, Laws of Utah 2003
             27          59-2-103, as last amended by Chapter 275, Laws of Utah 1995



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             28
    

             29      Be it enacted by the Legislature of the state of Utah:
             30          Section 1. Section 59-2-102 is amended to read:
             31           59-2-102. Definitions.
             32          As used in this chapter and title:
             33          (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
             34      engaging in dispensing activities directly affecting agriculture or horticulture with an
             35      airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
             36      rotorcraft's use for agricultural and pest control purposes.
             37          (2) "Air charter service" means an air carrier operation which requires the customer to
             38      hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
             39      trip.
             40          (3) "Air contract service" means an air carrier operation available only to customers
             41      who engage the services of the carrier through a contractual agreement and excess capacity on
             42      any trip and is not available to the public at large.
             43          (4) "Aircraft" is as defined in Section 72-10-102 .
             44          (5) "Airline" means any air carrier operating interstate routes on a scheduled basis
             45      which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
             46      routes.
             47          (6) "Assessment roll" means a permanent record of the assessment of property as
             48      assessed by the county assessor and the commission and may be maintained manually or as a
             49      computerized file as a consolidated record or as multiple records by type, classification, or
             50      categories.
             51          (7) "Certified revenue levy" means a property tax levy that provides the same amount
             52      of ad valorem property tax revenue as was collected for the prior year, plus new growth, but
             53      exclusive of revenue from collections from redemptions, interest, and penalties.
             54          (8) "County-assessed commercial vehicle" means:
             55          (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
             56      Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
             57      property in furtherance of the owner's commercial enterprise;
             58          (b) any passenger vehicle owned by a business and used by its employees for



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             59
     transportation as a company car or vanpool vehicle; and
             60          (c) vehicles which are:
             61          (i) especially constructed for towing or wrecking, and which are not otherwise used to
             62      transport goods, merchandise, or people for compensation;
             63          (ii) used or licensed as taxicabs or limousines;
             64          (iii) used as rental passenger cars, travel trailers, or motor homes;
             65          (iv) used or licensed in this state for use as ambulances or hearses;
             66          (v) especially designed and used for garbage and rubbish collection; or
             67          (vi) used exclusively to transport students or their instructors to or from any private,
             68      public, or religious school or school activities.
             69          (9) (a) Except as provided in Subsection (9)(b), for purposes of Section 59-2-801 ,
             70      "designated tax area" means a tax area created by the overlapping boundaries of only the
             71      following taxing entities:
             72          (i) a county; and
             73          (ii) a school district.
             74          (b) Notwithstanding Subsection (9)(a), "designated tax area" includes a tax area created
             75      by the overlapping boundaries of:
             76          (i) the taxing entities described in Subsection (9)(a); and
             77          (ii) (A) a city or town if the boundaries of the school district under Subsection (9)(a)
             78      and the boundaries of the city or town are identical; or
             79          (B) a special service district if the boundaries of the school district under Subsection
             80      (9)(a) are located entirely within the special service district.
             81          (10) "Eligible judgment" means a final and unappealable judgment or order under
             82      Section 59-2-1330 :
             83          (a) that became a final and unappealable judgment or order no more than 14 months
             84      prior to the day on which the notice required by Subsection 59-2-919 (4) is required to be
             85      mailed; and
             86          (b) for which a taxing entity's share of the final and unappealable judgment or order is
             87      greater than or equal to the lesser of:
             88          (i) $5,000; or
             89          (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the



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             90
     previous fiscal year.
             91          (11) (a) "Escaped property" means any property, whether personal, land, or any
             92      improvements to the property, subject to taxation and is:
             93          (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
             94      to the wrong taxpayer by the assessing authority;
             95          (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
             96      comply with the reporting requirements of this chapter; or
             97          (iii) undervalued because of errors made by the assessing authority based upon
             98      incomplete or erroneous information furnished by the taxpayer.
             99          (b) Property which is undervalued because of the use of a different valuation
             100      methodology or because of a different application of the same valuation methodology is not
             101      "escaped property."
             102          (12) "Fair market value" means the amount at which property would change hands
             103      between a willing buyer and a willing seller, neither being under any compulsion to buy or sell
             104      and both having reasonable knowledge of the relevant facts. For purposes of taxation, "fair
             105      market value" shall be determined using the current zoning laws applicable to the property in
             106      question, except in cases where there is a reasonable probability of a change in the zoning laws
             107      affecting that property in the tax year in question and the change would have an appreciable
             108      influence upon the value.
             109          (13) "Farm machinery and equipment," for purposes of the exemption provided under
             110      Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities, feed
             111      handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters, tillage
             112      tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery or
             113      equipment used primarily for agricultural purposes; but does not include vehicles required to be
             114      registered with the Motor Vehicle Division or vehicles or other equipment used for business
             115      purposes other than farming.
             116          (14) "Geothermal fluid" means water in any form at temperatures greater than 120
             117      degrees centigrade naturally present in a geothermal system.
             118          (15) "Geothermal resource" means:
             119          (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
             120      and



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Senate 2nd Reading Amendments 2-3-2004 sm/sch
             121
         (b) the energy, in whatever form, including pressure, present in, resulting from, created
             122      by, or which may be extracted from that natural heat, directly or through a material medium.
             123          (16) (a) For purposes of Section 59-2-103 :
             124          (i) "household" means the association of persons who live in the same dwelling,
             125      sharing its furnishings, facilities, accommodations, and expenses; and
             126          (ii) "household" includes married individuals S ,WHO ARE NOT LEGALLY SEPARATED, s
             126a      that have established domiciles at
             127      separate locations within the state.
             128          (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             129      commission may make rules defining the term "domicile."
             130          [(16)] (17) "Improvements" includes all buildings, structures, fixtures, fences, and
             131      improvements erected upon or affixed to the land, whether the title has been acquired to the
             132      land or not.
             133          [(17)] (18) "Intangible property" means:
             134          (a) property that is capable of private ownership separate from tangible property,
             135      including:
             136          (i) moneys;
             137          (ii) credits;
             138          (iii) bonds;
             139          (iv) stocks;
             140          (v) representative property;
             141          (vi) franchises;
             142          (vii) licenses;
             143          (viii) trade names;
             144          (ix) copyrights; and
             145          (x) patents; or
             146          (b) a low-income housing tax credit.
             147          [(18)] (19) "Low-income housing tax credit" means:
             148          (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
             149      or
             150          (b) a low-income housing tax credit under:
             151          (i) Section 59-7-607 ; or



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             152
         (ii) Section 59-10-129 .
             153          [(19)] (20) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and
             154      uranium.
             155          [(20)] (21) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
             156      valuable mineral.
             157          [(21)] (22) "Mining" means the process of producing, extracting, leaching, evaporating,
             158      or otherwise removing a mineral from a mine.
             159          [(22)] (23) (a) "Mobile flight equipment" means tangible personal property that is:
             160          (i) owned or operated by an:
             161          (A) air charter service;
             162          (B) air contract service; or
             163          (C) airline; and
             164          (ii) (A) capable of flight;
             165          (B) attached to an aircraft that is capable of flight; or
             166          (C) contained in an aircraft that is capable of flight if the tangible personal property is
             167      intended to be used:
             168          (I) during multiple flights;
             169          (II) during a takeoff, flight, or landing; and
             170          (III) as a service provided by an air charter service, air contract service, or airline.
             171          (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
             172      engine that is rotated:
             173          (A) at regular intervals; and
             174          (B) with an engine that is attached to the aircraft.
             175          (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             176      the commission may make rules defining the term "regular intervals."
             177          [(23)] (24) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal,
             178      salts, sand, rock, gravel, and all carboniferous materials.
             179          [(24)] (25) "Personal property" includes:
             180          (a) every class of property as defined in Subsection [(25)] (26) which is the subject of
             181      ownership and not included within the meaning of the terms "real estate" and "improvements";
             182          (b) gas and water mains and pipes laid in roads, streets, or alleys;



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             183
         (c) bridges and ferries; and
             184          (d) livestock which, for the purposes of the exemption provided under Section
             185      59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish.
             186          [(25)] (26) (a) "Property" means property that is subject to assessment and taxation
             187      according to its value.
             188          (b) "Property" does not include intangible property as defined in this section.
             189          [(26)] (27) "Public utility," for purposes of this chapter, means the operating property
             190      of a railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
             191      company, electrical corporation, telephone corporation, sewerage corporation, or heat
             192      corporation where the company performs the service for, or delivers the commodity to, the
             193      public generally or companies serving the public generally, or in the case of a gas corporation
             194      or an electrical corporation, where the gas or electricity is sold or furnished to any member or
             195      consumers within the state for domestic, commercial, or industrial use. Public utility also
             196      means the operating property of any entity or person defined under Section 54-2-1 except water
             197      corporations.
             198          [(27)] (28) "Real estate" or "real 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
             202      all rights and privileges appertaining to these; and
             203          (c) improvements.
             204          [(28)] (29) "Residential property," for the purposes of the reductions and adjustments
             205      under this chapter, means any property used for residential purposes as a primary residence. It
             206      does not include property used for transient residential use or condominiums used in rental
             207      pools.
             208          [(29)] (30) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number
             209      of miles calculated by the commission that is:
             210          (a) measured in a straight line by the commission; and
             211          (b) equal to the distance between a geographical location that begins or ends:
             212          (i) at a boundary of the state; and
             213          (ii) where an aircraft:



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             214
         (A) takes off; or
             215          (B) lands.
             216          [(30)] (31) (a) "State-assessed commercial vehicle" means:
             217          (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
             218      to transport passengers, freight, merchandise, or other property for hire; or
             219          (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
             220      transports the vehicle owner's goods or property in furtherance of the owner's commercial
             221      enterprise.
             222          (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
             223      are specified in Subsection (8)(c) as county-assessed commercial vehicles.
             224          [(31)] (32) "Taxable value" means fair market value less any applicable reduction
             225      allowed for residential property under Section 59-2-103 .
             226          [(32)] (33) "Tax area" means a geographic area created by the overlapping boundaries
             227      of one or more taxing entities.
             228          [(33)] (34) "Taxing entity" means any county, city, town, school district, special taxing
             229      district, or any other political subdivision of the state with the authority to levy a tax on
             230      property.
             231          [(34)] (35) "Tax roll" means a permanent record of the taxes charged on property, as
             232      extended on the assessment roll and may be maintained on the same record or records as the
             233      assessment roll or may be maintained on a separate record properly indexed to the assessment
             234      roll. It includes tax books, tax lists, and other similar materials.
             235          Section 2. Section 59-2-103 is amended to read:
             236           59-2-103. Rate of assessment of property -- Residential property.
             237          (1) All tangible taxable property located within the state shall be assessed and taxed at
             238      a uniform and equal rate on the basis of its fair market value, as valued on January 1, unless
             239      otherwise provided by law.
             240          (2) [Beginning] Subject to Subsections (3) and (4), beginning on January 1, 1995, the
             241      fair market value of residential property located within the state shall be reduced by 45%,
             242      representing a residential exemption allowed under Utah Constitution Article XIII, Section 2[,
             243      Utah Constitution].
             244          (3) No more than one acre of land per residential unit may qualify for the residential



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             245
     exemption.
             246          (4) (a) Except as provided in Subsection (4)(b)(ii), beginning on January 1, 2005, the
             247      residential exemption in Subsection (2) is limited to one primary residence per household.
             248          (b) An owner of multiple residential properties located within the state is allowed a
             249      residential exemption under Subsection (2) for:
             250          (i) subject to Subsection (4)(a), the primary residence of the owner; and
             251          (ii) each residential property that is the primary residence of a tenant.
             252          Section 3. Effective date.
             253          This bill takes effect on January 1, 2005.
             254          Section 4. Coordinating S.B. 120 with S.B. 78.
             255          If this S.B. 120 and S.B 78, Exemptions to Residential Property Tax, both pass, it is the
             256      intent of the Legislature that the Office of Legislative Research and General Counsel shall
             257      prepare the database so that:
             258          (1) Subsection 59-2-103 (2) shall read:
             259          "(2) Subject to Subsection (3), the fair market value of residential property located
             260      within the state is subject to the following residential exemptions:
             261          (a) subject to Subsection (4), beginning on January 1, 1995, 45% of the fair market
             262      value of a primary residence located within the state is exempt; and
             263          (b) subject to Section 59-2-1115 , beginning on January 1, 2005, 25% of up to the first
             264      $100,000 of the fair market value of a qualifying secondary residence located within the state is
             265      exempt."; and
             266          (2) Subsection 59-2-103 (4) shall read:
             267          "(4) (a) Except as provided in Subsection (4)(b)(ii), beginning on January 1, 2005, the
             268      residential exemption in Subsection (2)(a) is limited to one primary residence per household.
             269          (b) An owner of multiple residential properties located within the state is allowed a
             270      residential exemption under Subsection (2)(a) for:
             271          (i) subject to Subsection (4)(a), the primary residence of the owner; and
             272          (ii) each residential property that is the primary residence of the tenant."



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Legislative Review Note
    as of 1-20-04 9:42 AM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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