H.B. 367

1

PROPERTY TAX ASSESSMENT OF CABLE
2 TELEVISION COMPANIES
3 2008 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Wayne A. Harper
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill amends the Property Tax Act relating to property assessed by the Utah State
11 Tax Commission.
12 Highlighted Provisions:
13 This bill:
14 . requires the Utah State Tax Commission to assess the property of cable;
15 . defines terms; and
16 . makes technical changes.
17 Monies Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 This bill takes effect on January 1, 2009.
21 Utah Code Sections Affected:
22 AMENDS:
23 59-2-102, as last amended by Laws of Utah 2007, Chapters 107, 234, and 329
24 59-2-201, as last amended by Laws of Utah 2007, Chapters 119 and 306
25
26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 59-2-102 is amended to read:

28 59-2-102. Definitions.
29 As used in this chapter and title:
30 (1) "Aerial applicator" means aircraft or rotorcraft used exclusively for the purpose of
31 engaging in dispensing activities directly affecting agriculture or horticulture with an
32 airworthiness certificate from the Federal Aviation Administration certifying the aircraft or
33 rotorcraft's use for agricultural and pest control purposes.
34 (2) "Air charter service" means an air carrier operation which requires the customer to
35 hire an entire aircraft rather than book passage in whatever capacity is available on a scheduled
36 trip.
37 (3) "Air contract service" means an air carrier operation available only to customers
38 who engage the services of the carrier through a contractual agreement and excess capacity on
39 any trip and is not available to the public at large.
40 (4) "Aircraft" is as defined in Section 72-10-102 .
41 (5) "Airline" means any air carrier operating interstate routes on a scheduled basis
42 which offers to fly passengers or cargo on the basis of available capacity on regularly scheduled
43 routes.
44 (6) "Assessment roll" means a permanent record of the assessment of property as
45 assessed by the county assessor and the commission and may be maintained manually or as a
46 computerized file as a consolidated record or as multiple records by type, classification, or
47 categories.
48 (7) (a) "Cable system" means a system of providing television, voice, data, or Internet
49 access to consumers via radio frequency signals transmitted through fixed optical fibers or
50 coaxial cables.
51 (b) "Cable system" does not include a system of providing television, voice, data, or
52 Internet access to consumers via an over-the-air method used in traditional television
53 broadcasting (via radio waves) in which a television antenna is required.
54 (8) "CATV" means Community Antenna Television:
55 (a) that is provided in areas where over-the-air reception is limited by mountainous
56 terrain;
57 (b) where a large community antenna is constructed; and
58 (c) where cable is run from the community antenna to a residence.

59 [(7)] (9) (a) "Certified revenue levy" means a property tax levy that provides the same
60 amount of ad valorem property tax revenue as was collected for the prior year, plus new
61 growth, but exclusive of revenue from collections from redemptions, interest, and penalties.
62 (b) For purposes of this Subsection [(7)] (9), "ad valorem property tax revenue" does
63 not include property tax revenue received by a taxing entity from personal property that is:
64 (i) assessed by a county assessor in accordance with Part 3, County Assessment; and
65 (ii) semiconductor manufacturing equipment.
66 [(8)] (10) "County-assessed commercial vehicle" means:
67 (a) any commercial vehicle, trailer, or semitrailer which is not apportioned under
68 Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or
69 property in furtherance of the owner's commercial enterprise;
70 (b) any passenger vehicle owned by a business and used by its employees for
71 transportation as a company car or vanpool vehicle; and
72 (c) vehicles which are:
73 (i) especially constructed for towing or wrecking, and which are not otherwise used to
74 transport goods, merchandise, or people for compensation;
75 (ii) used or licensed as taxicabs or limousines;
76 (iii) used as rental passenger cars, travel trailers, or motor homes;
77 (iv) used or licensed in this state for use as ambulances or hearses;
78 (v) especially designed and used for garbage and rubbish collection; or
79 (vi) used exclusively to transport students or their instructors to or from any private,
80 public, or religious school or school activities.
81 [(9)] (11) (a) Except as provided in Subsection [(9)] (11)(b), for purposes of Section
82 59-2-801 , "designated tax area" means a tax area created by the overlapping boundaries of only
83 the following taxing entities:
84 (i) a county; and
85 (ii) a school district.
86 (b) Notwithstanding Subsection [(9)] (11)(a), "designated tax area" includes a tax area
87 created by the overlapping boundaries of:
88 (i) the taxing entities described in Subsection [(9)] (11)(a); and
89 (ii) (A) a city or town if the boundaries of the school district under Subsection [(9)]

90 (11)(a) and the boundaries of the city or town are identical; or
91 (B) a special service district if the boundaries of the school district under Subsection
92 [(9)] (11)(a) are located entirely within the special service district.
93 [(10)] (12) "Eligible judgment" means a final and unappealable judgment or order
94 under Section 59-2-1330 :
95 (a) that became a final and unappealable judgment or order no more than 14 months
96 prior to the day on which the notice required by Subsection 59-2-919 (4) is required to be
97 mailed; and
98 (b) for which a taxing entity's share of the final and unappealable judgment or order is
99 greater than or equal to the lesser of:
100 (i) $5,000; or
101 (ii) 2.5% of the total ad valorem property taxes collected by the taxing entity in the
102 previous fiscal year.
103 [(11)] (13) (a) "Escaped property" means any property, whether personal, land, or any
104 improvements to the property, subject to taxation and is:
105 (i) inadvertently omitted from the tax rolls, assigned to the incorrect parcel, or assessed
106 to the wrong taxpayer by the assessing authority;
107 (ii) undervalued or omitted from the tax rolls because of the failure of the taxpayer to
108 comply with the reporting requirements of this chapter; or
109 (iii) undervalued because of errors made by the assessing authority based upon
110 incomplete or erroneous information furnished by the taxpayer.
111 (b) Property which is undervalued because of the use of a different valuation
112 methodology or because of a different application of the same valuation methodology is not
113 "escaped property."
114 [(12)] (14) "Fair market value" means the amount at which property would change
115 hands between a willing buyer and a willing seller, neither being under any compulsion to buy
116 or sell and both having reasonable knowledge of the relevant facts. For purposes of taxation,
117 "fair market value" shall be determined using the current zoning laws applicable to the property
118 in question, except in cases where there is a reasonable probability of a change in the zoning
119 laws affecting that property in the tax year in question and the change would have an
120 appreciable influence upon the value.

121 [(13)] (15) "Farm machinery and equipment," for purposes of the exemption provided
122 under Section 59-2-1101 , means tractors, milking equipment and storage and cooling facilities,
123 feed handling equipment, irrigation equipment, harvesters, choppers, grain drills and planters,
124 tillage tools, scales, combines, spreaders, sprayers, haying equipment, and any other machinery
125 or equipment used primarily for agricultural purposes; but does not include vehicles required to
126 be registered with the Motor Vehicle Division or vehicles or other equipment used for business
127 purposes other than farming.
128 [(14)] (16) "Geothermal fluid" means water in any form at temperatures greater than
129 120 degrees centigrade naturally present in a geothermal system.
130 [(15)] (17) "Geothermal resource" means:
131 (a) the natural heat of the earth at temperatures greater than 120 degrees centigrade;
132 and
133 (b) the energy, in whatever form, including pressure, present in, resulting from, created
134 by, or which may be extracted from that natural heat, directly or through a material medium.
135 [(16)] (18) (a) "Goodwill" means:
136 (i) acquired goodwill that is reported as goodwill on the books and records:
137 (A) of a taxpayer; and
138 (B) that are maintained for financial reporting purposes; or
139 (ii) the ability of a business to:
140 (A) generate income:
141 (I) that exceeds a normal rate of return on assets; and
142 (II) resulting from a factor described in Subsection [(16)] (18)(b); or
143 (B) obtain an economic or competitive advantage resulting from a factor described in
144 Subsection [(16)] (18)(b).
145 (b) The following factors apply to Subsection [(16)] (18)(a)(ii):
146 (i) superior management skills;
147 (ii) reputation;
148 (iii) customer relationships;
149 (iv) patronage; or
150 (v) a factor similar to Subsections [(16)] (18)(b)(i) through (iv).
151 (c) "Goodwill" does not include:

152 (i) the intangible property described in Subsection [(20)] (22)(a) or (b);
153 (ii) locational attributes of real property, including:
154 (A) zoning;
155 (B) location;
156 (C) view;
157 (D) a geographic feature;
158 (E) an easement;
159 (F) a covenant;
160 (G) proximity to raw materials;
161 (H) the condition of surrounding property; or
162 (I) proximity to markets;
163 (iii) value attributable to the identification of an improvement to real property,
164 including:
165 (A) reputation of the designer, builder, or architect of the improvement;
166 (B) a name given to, or associated with, the improvement; or
167 (C) the historic significance of an improvement; or
168 (iv) the enhancement or assemblage value specifically attributable to the interrelation
169 of the existing tangible property in place working together as a unit.
170 [(17)] (19) "Governing body" means:
171 (a) for a county, city, or town, the legislative body of the county, city, or town;
172 (b) for a local district under Title 17B, Limited Purpose Local Government Entities -
173 Local Districts, the local district's board of trustees;
174 (c) for a school district, the local board of education; or
175 (d) for a special service district under Title 17A, Chapter 2, Part 13, Utah Special
176 Service District Act:
177 (i) the legislative body of the county or municipality that created the special service
178 district, to the extent that the county or municipal legislative body has not delegated authority
179 to an administrative control board established under Section 17A-2-1326 ; or
180 (ii) the administrative control board, to the extent that the county or municipal
181 legislative body has delegated authority to an administrative control board established under
182 Section 17A-2-1326 .

183 [(18)] (20) (a) For purposes of Section 59-2-103 :
184 (i) "household" means the association of persons who live in the same dwelling,
185 sharing its furnishings, facilities, accommodations, and expenses; and
186 (ii) "household" includes married individuals, who are not legally separated, that have
187 established domiciles at separate locations within the state.
188 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
189 commission may make rules defining the term "domicile."
190 [(19)] (21) (a) Except as provided in Subsection [(19)] (21)(c), "improvement" means a
191 building, structure, fixture, fence, or other item that is permanently attached to land, regardless
192 of whether the title has been acquired to the land, if:
193 (i) (A) attachment to land is essential to the operation or use of the item; and
194 (B) the manner of attachment to land suggests that the item will remain attached to the
195 land in the same place over the useful life of the item; or
196 (ii) removal of the item would:
197 (A) cause substantial damage to the item; or
198 (B) require substantial alteration or repair of a structure to which the item is attached.
199 (b) "Improvement" includes:
200 (i) an accessory to an item described in Subsection [(19)] (21)(a) if the accessory is:
201 (A) essential to the operation of the item described in Subsection [(19)] (21)(a); and
202 (B) installed solely to serve the operation of the item described in Subsection [(19)]
203 (21)(a); and
204 (ii) an item described in Subsection [(19)] (21)(a) that:
205 (A) is temporarily detached from the land for repairs; and
206 (B) remains located on the land.
207 (c) Notwithstanding Subsections [(19)] (21)(a) and (b), "improvement" does not
208 include:
209 (i) an item considered to be personal property pursuant to rules made in accordance
210 with Section 59-2-107 ;
211 (ii) a moveable item that is attached to land:
212 (A) for stability only; or
213 (B) for an obvious temporary purpose;

214 (iii) (A) manufacturing equipment and machinery; or
215 (B) essential accessories to manufacturing equipment and machinery;
216 (iv) an item attached to the land in a manner that facilitates removal without substantial
217 damage to:
218 (A) the land; or
219 (B) the item; or
220 (v) a transportable factory-built housing unit as defined in Section 59-2-1502 if that
221 transportable factory-built housing unit is considered to be personal property under Section
222 59-2-1503 .
223 [(20)] (22) "Intangible property" means:
224 (a) property that is capable of private ownership separate from tangible property,
225 including:
226 (i) moneys;
227 (ii) credits;
228 (iii) bonds;
229 (iv) stocks;
230 (v) representative property;
231 (vi) franchises;
232 (vii) licenses;
233 (viii) trade names;
234 (ix) copyrights; and
235 (x) patents;
236 (b) a low-income housing tax credit; or
237 (c) goodwill.
238 [(21)] (23) "Low-income housing tax credit" means:
239 (a) a federal low-income housing tax credit under Section 42, Internal Revenue Code;
240 or
241 (b) a low-income housing tax credit under:
242 (i) Section 59-7-607 ; or
243 (ii) Section 59-10-1010 .
244 [(22)] (24) "Metalliferous minerals" includes gold, silver, copper, lead, zinc, and

245 uranium.
246 [(23)] (25) "Mine" means a natural deposit of either metalliferous or nonmetalliferous
247 valuable mineral.
248 [(24)] (26) "Mining" means the process of producing, extracting, leaching, evaporating,
249 or otherwise removing a mineral from a mine.
250 [(25)] (27) (a) "Mobile flight equipment" means tangible personal property that is:
251 (i) owned or operated by an:
252 (A) air charter service;
253 (B) air contract service; or
254 (C) airline; and
255 (ii) (A) capable of flight;
256 (B) attached to an aircraft that is capable of flight; or
257 (C) contained in an aircraft that is capable of flight if the tangible personal property is
258 intended to be used:
259 (I) during multiple flights;
260 (II) during a takeoff, flight, or landing; and
261 (III) as a service provided by an air charter service, air contract service, or airline.
262 (b) (i) "Mobile flight equipment" does not include a spare part other than a spare
263 engine that is rotated:
264 (A) at regular intervals; and
265 (B) with an engine that is attached to the aircraft.
266 (ii) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
267 the commission may make rules defining the term "regular intervals."
268 [(26)] (28) "Nonmetalliferous minerals" includes, but is not limited to, oil, gas, coal,
269 salts, sand, rock, gravel, and all carboniferous materials.
270 [(27)] (29) "Personal property" includes:
271 (a) every class of property as defined in Subsection [(28)] (30) which is the subject of
272 ownership and not included within the meaning of the terms "real estate" and "improvements";
273 (b) gas and water mains and pipes laid in roads, streets, or alleys;
274 (c) bridges and ferries;
275 (d) livestock which, for the purposes of the exemption provided under Section

276 59-2-1112 , means all domestic animals, honeybees, poultry, fur-bearing animals, and fish; and
277 (e) outdoor advertising structures as defined in Section 72-7-502 .
278 [(28)] (30) (a) "Property" means property that is subject to assessment and taxation
279 according to its value.
280 (b) "Property" does not include intangible property as defined in this section.
281 [(29)] (31) "Public utility," for purposes of this chapter, means the operating property
282 of a railroad, gas corporation, oil or gas transportation or pipeline company, coal slurry pipeline
283 company, electrical corporation, telephone corporation, sewerage corporation, or heat
284 corporation where the company performs the service for, or delivers the commodity to, the
285 public generally or companies serving the public generally, or in the case of a gas corporation
286 or an electrical corporation, where the gas or electricity is sold or furnished to any member or
287 consumers within the state for domestic, commercial, or industrial use. Public utility also
288 means the operating property of any entity or person defined under Section 54-2-1 except water
289 corporations.
290 [(30)] (32) "Real estate" or "real property" includes:
291 (a) the possession of, claim to, ownership of, or right to the possession of land;
292 (b) all mines, minerals, and quarries in and under the land, all timber belonging to
293 individuals or corporations growing or being on the lands of this state or the United States, and
294 all rights and privileges appertaining to these; and
295 (c) improvements.
296 [(31)] (33) "Residential property," for the purposes of the reductions and adjustments
297 under this chapter, means any property used for residential purposes as a primary residence. It
298 does not include property used for transient residential use or condominiums used in rental
299 pools.
300 [(32)] (34) For purposes of Subsection 59-2-801 (1)(e), "route miles" means the number
301 of miles calculated by the commission that is:
302 (a) measured in a straight line by the commission; and
303 (b) equal to the distance between a geographical location that begins or ends:
304 (i) at a boundary of the state; and
305 (ii) where an aircraft:
306 (A) takes off; or

307 (B) lands.
308 [(33)] (35) (a) "State-assessed commercial vehicle" means:
309 (i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate
310 to transport passengers, freight, merchandise, or other property for hire; or
311 (ii) any commercial vehicle, trailer, or semitrailer which operates interstate and
312 transports the vehicle owner's goods or property in furtherance of the owner's commercial
313 enterprise.
314 (b) "State-assessed commercial vehicle" does not include vehicles used for hire which
315 are specified in Subsection [(8)] (10)(c) as county-assessed commercial vehicles.
316 [(34)] (36) "Taxable value" means fair market value less any applicable reduction
317 allowed for residential property under Section 59-2-103 .
318 [(35)] (37) "Tax area" means a geographic area created by the overlapping boundaries
319 of one or more taxing entities.
320 [(36)] (38) "Taxing entity" means any county, city, town, school district, special taxing
321 district, local district under Title 17B, Limited Purpose Local Government Entities - Local
322 Districts, or other political subdivision of the state with the authority to levy a tax on property.
323 [(37)] (39) "Tax roll" means a permanent record of the taxes charged on property, as
324 extended on the assessment roll and may be maintained on the same record or records as the
325 assessment roll or may be maintained on a separate record properly indexed to the assessment
326 roll. It includes tax books, tax lists, and other similar materials.
327 Section 2. Section 59-2-201 is amended to read:
328 59-2-201. Assessment by commission -- Determination of value of mining
329 property -- Notification of assessment -- Local assessment of property assessed by the
330 unitary method.
331 (1) By May 1 of each year the following property, unless otherwise exempt under the
332 Utah Constitution or under Part 11, Exemptions, Deferrals, and Abatements, shall be assessed
333 by the commission at 100% of fair market value, as valued on January 1, in accordance with
334 this chapter:
335 (a) except as provided in Subsection (2), all property which operates as a unit across
336 county lines, if the values must be apportioned among more than one county or state;
337 (b) all property of public utilities;

338 (c) all operating property of an airline, air charter service, and air contract service;
339 (d) all geothermal fluids and geothermal resources;
340 (e) all mines and mining claims except in cases, as determined by the commission,
341 where the mining claims are used for other than mining purposes, in which case the value of
342 mining claims used for other than mining purposes shall be assessed by the assessor of the
343 county in which the mining claims are located; [and]
344 (f) all machinery used in mining, all property or surface improvements upon or
345 appurtenant to mines or mining claims. For the purposes of assessment and taxation, all
346 processing plants, mills, reduction works, and smelters which are primarily used by the owner
347 of a mine or mining claim for processing, reducing, or smelting minerals taken from a mine or
348 mining claim shall be considered appurtenant to that mine or mining claim, regardless of actual
349 location[.]; and
350 (g) all property of cable systems or CATV.
351 (2) The commission shall assess and collect property tax on state-assessed commercial
352 vehicles at the time of original registration or annual renewal.
353 (a) The commission shall assess and collect property tax annually on state-assessed
354 commercial vehicles which are registered pursuant to Section 41-1a-222 or 41-1a-228 .
355 (b) State-assessed commercial vehicles brought into the state which are required to be
356 registered in Utah shall, as a condition of registration, be subject to ad valorem tax unless all
357 property taxes or fees imposed by the state of origin have been paid for the current calendar
358 year.
359 (c) Real property, improvements, equipment, fixtures, or other personal property in this
360 state owned by the company shall be assessed separately by the local county assessor.
361 (d) The commission shall adjust the value of state-assessed commercial vehicles as
362 necessary to comply with 49 U.S.C. Sec. 14502, and the commission shall direct the county
363 assessor to apply the same adjustment to any personal property, real property, or improvements
364 owned by the company and used directly and exclusively in their commercial vehicle activities.
365 (3) The method for determining the fair market value of productive mining property is
366 the capitalized net revenue method or any other valuation method the commission believes, or
367 the taxpayer demonstrates to the commission's satisfaction, to be reasonably determinative of
368 the fair market value of the mining property. The rate of capitalization applicable to mines

369 shall be determined by the commission, consistent with a fair rate of return expected by an
370 investor in light of that industry's current market, financial, and economic conditions. In no
371 event may the fair market value of the mining property be less than the fair market value of the
372 land, improvements, and tangible personal property upon or appurtenant to the mining
373 property.
374 (4) Immediately following the assessment, the owner or operator of the assessed
375 property shall be notified of the assessment by certified mail. The assessor of the county in
376 which the property is located shall also be immediately notified of the assessment by certified
377 mail.
378 (5) Property assessed by the unitary method, which is not necessary to the conduct and
379 does not contribute to the income of the business as determined by the commission, shall be
380 assessed separately by the local county assessor.
381 Section 3. Effective date.
382 This bill takes effect on January 1, 2009.




Legislative Review Note
as of 1-18-08 2:05 PM

Office of Legislative Research and General Counsel