Representative Kim F. Coleman proposes the following substitute bill:


1     
EXTRA-JURISDICTIONAL MUNICIPAL PROPERTY

2     
2018 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Kim F. Coleman

5     
Senate Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill addresses municipal ownership of property outside the municipality's
10     boundaries.
11     Highlighted Provisions:
12          This bill:
13          ▸     limits the circumstances in which a municipality may own property outside the
14     municipality's boundaries;
15          ▸     applies certain property tax liability to property that a city owns regardless of that
16     city's extraterritorial jurisdiction;
17          ▸     creates an exception to the property tax exemption for certain property that a
18     municipality owns;
19          ▸     authorizes a municipality to levy a property tax on certain property that another
20     municipality owns within the taxing municipality's boundaries;
21          ▸     prohibits a municipality that owns property within another municipality's
22     boundaries from levying a tax within the other municipality's boundaries; and
23          ▸     makes technical and conforming changes.
24     Money Appropriated in this Bill:
25          None
26     Other Special Clauses:
27          This bill provides a coordination clause.
28     Utah Code Sections Affected:
29     AMENDS:
30          10-8-2, as last amended by Laws of Utah 2014, Chapter 59
31          10-8-15, as last amended by Laws of Utah 2016, Chapter 348
32          59-2-1101, as last amended by Laws of Utah 2015, Chapters 129 and 261
33     Utah Code Sections Affected by Coordination Clause:
34          10-8-15, as last amended by Laws of Utah 2016, Chapter 348
35     

36     Be it enacted by the Legislature of the state of Utah:
37          Section 1. Section 10-8-2 is amended to read:
38          10-8-2. Appropriations -- Acquisition and disposal of property -- Municipal
39     authority -- Corporate purpose -- Procedure -- Notice of intent to acquire real property.
40          (1) (a) A municipal legislative body may:
41          (i) appropriate money for corporate purposes only;
42          (ii) provide for payment of debts and expenses of the corporation;
43          (iii) subject to Subsections (4) and (5), purchase, receive, hold, sell, lease, convey, and
44     dispose of real and personal property for the benefit of the municipality, [whether the property
45     is within or without the municipality's corporate boundaries,] if the action is in the public
46     interest and complies with other law[;]:
47          (A) within the municipality's corporate boundaries; or
48          (B) if the municipal legislative body makes a finding in a public hearing that no land
49     within the municipality's corporate boundaries exists that is reasonably suitable to address a
50     compelling interest related to health, safety, or welfare within the municipality for the
51     municipality's inhabitants, outside the municipality's corporate boundaries to address the
52     compelling interest;
53          (iv) improve, protect, and do any other thing in relation to [this] the property described
54     in Subsection (1)(a)(iii) that an individual could do; and
55          (v) subject to Subsection (2) and after first holding a public hearing, authorize
56     municipal services or other nonmonetary assistance to be provided to or waive fees required to
57     be paid by a nonprofit entity, whether or not the municipality receives consideration in return.
58          (b) A municipality may:
59          (i) furnish all necessary local public services within the municipality;
60          (ii) purchase, hire, construct, own, maintain [and], operate, or lease public utilities
61     located and operating within and operated by the municipality; and
62          (iii) subject to Subsection (1)(c), acquire by eminent domain, or otherwise, property
63     [located inside or outside the corporate limits of the municipality and] necessary for any of the
64     purposes stated in Subsections (1)(b)(i) and (ii), subject to restrictions imposed by Title 78B,
65     Chapter 6, Part 5, Eminent Domain, and general law for the protection of other communities[.],
66     if the property is located:
67          (A) within the municipality's corporate boundaries; or
68          (B) if the municipal legislative body makes a finding in a public hearing that no land
69     within the municipality's corporate boundaries exists that is reasonably suitable to address a
70     compelling interest related to health, safety, or welfare within the municipality for the
71     municipality's inhabitants, outside the municipality's corporate boundaries to address the
72     compelling interest.
73          (c) Each municipality that intends to acquire property by eminent domain under
74     Subsection (1)(b) shall comply with the requirements of Section 78B-6-505.
75          (d) [Subsection (1)(b) may not be construed to] Except as provided in Subsection
76     (1)(b)(iii)(B), Subsection (1)(b) does not diminish any other authority a municipality [may
77     claim to have] has under the law to acquire by eminent domain property located inside or
78     outside the municipality.
79          (2) (a) Services or assistance provided [pursuant to] under Subsection (1)(a)(v) is not
80     subject to the provisions of Subsection (3).
81          (b) The total amount of services or other nonmonetary assistance provided or fees
82     waived under Subsection (1)(a)(v) in any given fiscal year may not exceed 1% of the
83     municipality's budget for that fiscal year.
84          (3) It is considered a corporate purpose to appropriate money for any purpose that, in
85     the judgment of the municipal legislative body, provides for the safety, health, prosperity,
86     moral well-being, peace, order, comfort, or convenience of the inhabitants of the municipality
87     subject to the following:
88          (a) The net value received for any money appropriated [shall be] is measured on a
89     project-by-project basis over the life of the project.
90          [(b) The criteria for a determination under this Subsection (3) shall be established by
91     the municipality's legislative body. A determination of value received, made by the
92     municipality's legislative body, shall be presumed valid unless it can be shown that the
93     determination was arbitrary, capricious, or illegal.]
94          (b) (i) The municipal legislative body shall establish the criteria for a determination
95     under this Subsection (3).
96          (ii) The municipal legislative body's determination of value received is presumed valid
97     unless the determination was arbitrary, capricious, or illegal.
98          (c) The municipality may consider intangible benefits received by the municipality in
99     determining net value received.
100          (d) (i) [Prior to] Before the municipal legislative body [making any decision] decides
101     to appropriate any funds for a corporate purpose under this section, [a public hearing shall be
102     held] the municipal legislative body shall hold a public hearing.
103          (ii) [Notice] The municipal legislative body shall publish notice of the hearing
104     described in Subsection (3)(d)(i) [shall be published]:
105          (A) [(I)] in a newspaper of general circulation at least 14 days before the date of the
106     hearing[; or (II)], or if there is no newspaper of general circulation, [by posting notice] in at
107     least three conspicuous places within the municipality for the same time period; and
108          (B) on the Utah Public Notice Website created in Section 63F-1-701, at least 14 days
109     before the date of the hearing.
110          (e) (i) [A study shall be performed before] The municipal legislative body shall prepare
111     a study before giving notice of the public hearing [is given and shall be made] described in
112     Subsection (3)(d)(i) and make the study available at the municipality for review by interested
113     parties at least 14 days immediately [prior to] before the public hearing, setting forth an
114     analysis and demonstrating the purpose for the appropriation.
115          (ii) In making the study, the municipal legislative body shall consider the following
116     factors [shall be considered]:
117          [(i)] (A) [what] the identified benefit the municipality will receive in return for any
118     money or resources appropriated;
119          [(ii)] (B) the municipality's purpose for the appropriation, including an analysis of the
120     way the appropriation will be used to enhance the safety, health, prosperity, moral well-being,
121     peace, order, comfort, or convenience of the inhabitants of the municipality; and
122          [(iii)] (C) whether the appropriation is necessary and appropriate to accomplish the
123     reasonable goals and objectives of the municipality in the area of economic development, job
124     creation, affordable housing, blight elimination, job preservation, the preservation of historic
125     structures and property, and any other public purpose.
126          (f) (i) [An appeal may be taken from] An individual may appeal a final decision of the
127     municipal legislative body[,] to make an appropriation.
128          (ii) [The appeal shall be filed] An individual shall file the appeal described in
129     Subsection (3)(f)(i) in the district court within 30 days after the date of [that decision, to the
130     district court] the decision described in Subsection (3)(f)(i).
131          (iii) Any appeal [shall be] is based on the record of the proceedings before the
132     municipal legislative body.
133          (iv) [A decision of the municipal legislative body shall be presumed to be] The court
134     hearing the appeal shall presume that a decision of the municipal legislative body under this
135     section is valid unless the appealing party shows that the decision was arbitrary, capricious, or
136     illegal.
137          (g) The provisions of this Subsection (3) apply only to [those] appropriations [made] a
138     municipality makes after May 6, 2002.
139          (h) This section applies only to appropriations not otherwise approved [pursuant to]
140     under Title 10, Chapter 5, Uniform Fiscal Procedures Act for Utah Towns, or Title 10, Chapter
141     6, Uniform Fiscal Procedures Act for Utah Cities.
142          (4) (a) Before a municipality may dispose of a significant parcel of real property, the
143     municipality shall:
144          (i) provide reasonable notice of the proposed disposition at least 14 days before the
145     opportunity for public comment under Subsection (4)(a)(ii); and
146          (ii) allow an opportunity for public comment on the proposed disposition.
147          (b) Each municipality shall, by ordinance, define what constitutes:
148          (i) a significant parcel of real property for purposes of Subsection (4)(a); and
149          (ii) reasonable notice for purposes of Subsection (4)(a)(i).
150          (5) (a) Except as provided in Subsection (5)(d), each municipality intending to acquire
151     real property for the purpose of expanding the municipality's infrastructure or other facilities
152     used for providing services that the municipality offers or intends to offer shall provide written
153     notice, as provided in this Subsection (5), of [its] the municipality's intent to acquire the
154     property if:
155          (i) the property is located:
156          (A) outside the boundaries of the municipality; and
157          (B) in a county of the first or second class; and
158          (ii) the intended use of the property is contrary to:
159          (A) the anticipated use of the property under the general plan of the county in whose
160     unincorporated area or the municipality in whose boundaries the property is located; or
161          (B) the property's current zoning designation.
162          (b) [Each] The municipal legislative body shall:
163          (i) ensure that each notice under Subsection (5)(a) [shall]:
164          [(i)] (A) [indicate] indicates that the municipality intends to acquire real property;
165          [(ii)] (B) [identify] identifies the real property; and
166          (C) includes the findings the municipal legislative body makes in accordance with
167     Subsection (1)(a)(iii)(B) or (1)(b)(iii)(B); and
168          [(iii) be sent to:]
169          (ii) send the notice to:
170          (A) each county [in whose] with unincorporated area within which the property is
171     located and each municipality [in whose] with boundaries within which the property is located;
172     and
173          (B) each affected entity.
174          (c) A notice under this Subsection (5) is a protected record as provided in Subsection
175     63G-2-305(8).
176          (d) (i) The notice requirement of Subsection (5)(a) does not apply if the municipality
177     previously provided notice under Section 10-9a-203 identifying the general location within the
178     municipality or unincorporated part of the county where the property to be acquired is located.
179          (ii) If a municipality is not required to comply with the notice requirement of
180     Subsection (5)(a) because of application of Subsection (5)(d)(i), the municipality shall provide
181     the notice specified in Subsection (5)(a) as soon as practicable after its acquisition of the real
182     property.
183          Section 2. Section 10-8-15 is amended to read:
184          10-8-15. Waterworks -- Construction -- Extraterritorial jurisdiction.
185          [They may] (1) (a) A city may:
186          (i) construct or authorize the construction of waterworks within or without the city
187     limits[,]; and
188          (ii) exercise jurisdiction for the purpose of maintaining and protecting the [same]
189     waterworks described in Subsection (1)(a)(i) from injury and the water from pollution [their
190     jurisdiction shall extend] as described in this section.
191          (b) The jurisdiction described in Subsection (1)(a)(ii) extends over the territory
192     occupied by [such works] the waterworks described in Subsection (1)(a)(i), and over all
193     reservoirs, streams, canals, ditches, pipes and drains used in and necessary for the construction,
194     maintenance and operation of the [same] waterworks, and over the stream or source from
195     which the water is taken, for:
196          (i) 15 miles above the point from which it is taken and for a distance of 300 feet on
197     each side of such stream and over highways along such stream or watercourse within said 15
198     miles and said 300 feet; [provided, that the jurisdiction of] or
199          (ii) for cities of the first class [shall be over], the entire watershed[, except that].
200          (2) Notwithstanding Subsection (1):
201          (a) livestock [shall be permitted to] may graze beyond 1,000 feet from any such stream
202     or source; and [provided further, that]
203          (b) each city of the first class shall provide a highway in and through its corporate
204     limits, and so far as its jurisdiction extends, which may not be closed to cattle, horses, sheep or
205     hogs driven through any [such] city of the first class, or through any territory adjacent thereto
206     over which such city has jurisdiction, but the board of commissioners of such city may enact
207     ordinances placing under police regulations the manner of driving such cattle, sheep, horses
208     and hogs through such city, or any territory adjacent thereto over which it has jurisdiction.
209     [They may]
210          (3) A city may:
211          (a) enact all ordinances and regulations necessary to carry the power [herein conferred]
212     described in this section into effect[, and are authorized and empowered to]; and
213          (b) enact ordinances preventing pollution or contamination of the streams or
214     watercourses from which the inhabitants of cities derive their water supply, in whole or in part,
215     for domestic and culinary purposes[, and may];
216          (c) enact ordinances prohibiting or regulating the construction or maintenance of any
217     closet, privy, outhouse or urinal within the area over which the city has jurisdiction[, and];
218          (d) provide for permits for the construction and maintenance of the [same. In granting
219     such permits they may] items described in Subsection (3)(c); and
220          (e) in granting the permits described in Subsection (3)(d):
221          (i) annex thereto such reasonable conditions and requirements for the protection of the
222     public health as [they deem proper, and may,] the city considers proper; and
223          (ii) if deemed advisable, require that all closets, privies and urinals along [such]
224     streams [shall] be provided with effective septic tanks or other germ-destroying
225     instrumentalities.
226          (4) Regardless of the jurisdiction described in Subsection (1), property that a city of the
227     first class owns outside of the geographic boundaries of the city is subject to property tax in
228     accordance with Subsection 59-2-1101(3)(c).
229          Section 3. Section 59-2-1101 is amended to read:
230          59-2-1101. Definitions -- Exemption of certain property -- Proportional payments
231     for certain property -- County legislative body authority to adopt rules or ordinances.
232          (1) As used in this section:
233          (a) "Educational purposes" includes:
234          (i) the physical or mental teaching, training, or conditioning of competitive athletes by
235     a national governing body of sport recognized by the United States Olympic Committee that
236     qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
237          (ii) an activity in support of or incidental to the teaching, training, or conditioning
238     described in Subsection (1)(a)(i).
239          (b) "Exclusive use exemption" means a property tax exemption under Subsection
240     (3)(a)(iv), for property owned by a nonprofit entity used exclusively for religious, charitable, or
241     educational purposes.
242          (c) "Government exemption" means a property tax exemption provided under
243     Subsection (3)(a)(i), (ii), or (iii).
244          (d) "Nonprofit entity" includes an entity if the:
245          (i) entity is treated as a disregarded entity for federal income tax purposes;
246          (ii) entity is wholly owned by, and controlled under the direction of, a nonprofit entity;
247     and
248          (iii) net earnings and profits of the entity irrevocably inure to the benefit of a nonprofit
249     entity.
250          (e) "Tax relief" means an exemption, deferral, or abatement that is authorized by this
251     part.
252          (2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
253     the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
254          (b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
255     tax based upon the length of time that the property was not owned by the claimant if:
256          (i) the claimant is a federal, state, or political subdivision entity described in
257     Subsection (3)(a)(i), (ii), or (iii); or
258          (ii) pursuant to Subsection (3)(a)(iv):
259          (A) the claimant is a nonprofit entity; and
260          (B) the property is used exclusively for religious, charitable, or educational purposes.
261          (c) Subsection (2)(a) does not apply to an exemption under Section 59-2-1104.
262          (3) (a) The following property is exempt from taxation:
263          (i) property exempt under the laws of the United States;
264          (ii) property of:
265          (A) the state;
266          (B) school districts; and
267          (C) public libraries;
268          (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, or
269     Subsection (3)(c), property of:
270          (A) counties;
271          (B) cities;
272          (C) towns;
273          (D) local districts;
274          (E) special service districts; and
275          (F) all other political subdivisions of the state;
276          (iv) property owned by a nonprofit entity used exclusively for religious, charitable, or
277     educational purposes;
278          (v) places of burial not held or used for private or corporate benefit;
279          (vi) farm machinery and equipment;
280          (vii) a high tunnel, as defined in Section 10-9a-525;
281          (viii) intangible property; and
282          (ix) the ownership interest of an out-of-state public agency, as defined in Section
283     11-13-103:
284          (A) if that ownership interest is in property providing additional project capacity, as
285     defined in Section 11-13-103; and
286          (B) on which a fee in lieu of ad valorem property tax is payable under Section
287     11-13-302.
288          (b) For purposes of a property tax exemption for property of school districts under
289     Subsection (3)(a)(ii)(B), a charter school under Title 53A, Chapter 1a, Part 5, The Utah Charter
290     Schools Act, is considered to be a school district.
291          (c) Notwithstanding Subsection (3)(a)(iii):
292          (i) the property of a city or town that is located within the geographic boundaries of
293     another city or town and that the city or town acquired after the other city or town incorporated
294     is not exempt from a property tax that the other city or town levies on the property;
295          (ii) a city or town may levy a property tax on the property of a city or town described in
296     Subsection (3)(c)(ii); and
297          (iii) a city or town that owns property described in Subsection (3)(c)(ii) may not levy a
298     tax within the geographic boundaries of the city or town in which the property is located.
299          (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
300     a government exemption ceases to qualify for the exemption because of a change in the
301     ownership of the property:
302          (a) the new owner of the property shall pay a proportional tax based upon the period of
303     time:
304          (i) beginning on the day that the new owner acquired the property; and
305          (ii) ending on the last day of the calendar year during which the new owner acquired
306     the property; and
307          (b) the new owner of the property and the person from whom the new owner acquires
308     the property shall notify the county assessor, in writing, of the change in ownership of the
309     property within 30 days from the day that the new owner acquires the property.
310          (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
311     (4)(a):
312          (a) is subject to any exclusive use exemption or government exemption that the
313     property is entitled to under the new ownership of the property; and
314          (b) applies only to property that is acquired after December 31, 2005.
315          (6) A county legislative body may adopt rules or ordinances to:
316          (a) effectuate the exemptions, deferrals, abatements, or other relief from taxation
317     provided in this part; and
318          (b) designate one or more persons to perform the functions given the county under this
319     part.
320          Section 4. Coordinating H.B. 255 with H.B. 138 -- Substantive and technical
321     amendments.
322           If this H.B. 255 and H.B. 138, Extraterritorial Jurisdiction Amendments, both pass and
323     become law, it is the intent of the Legislature that the Office of Legislative Research General
324     Counsel shall prepare the Utah Code database for publication by:
325          (1) on May 8, 2018, amending Section 10-8-15 to read:
326          "10-8-15. Waterworks -- Construction -- Extraterritorial jurisdiction.
327          [They may] (1) (a) A city may:
328          (i) construct or authorize the construction of waterworks within or without the city
329     limits[,]; and
330          (ii) exercise jurisdiction for the purpose of maintaining and protecting the [same]
331     waterworks described in Subsection (1)(a)(i) from injury and the water from pollution [their
332     jurisdiction shall extend] as described in this section.
333          (b) The jurisdiction described in Subsection (1)(a)(ii) extends over the territory
334     occupied by [such works] the waterworks described in Subsection (1)(a)(i), and over all
335     reservoirs, streams, canals, ditches, pipes and drains used in and necessary for the construction,
336     maintenance and operation of the [same] waterworks, and over the stream or source from
337     which the water is taken, for:
338          (i) 15 miles above the point from which it is taken and for a distance of 300 feet on
339     each side of such stream and over highways along such stream or watercourse within said 15
340     miles and said 300 feet; [provided, that the jurisdiction of] or
341          (ii) for cities of the first class [shall be over], the entire watershed[, except that].
342          (2) Notwithstanding Subsection (1):
343          (a) livestock [shall be permitted to] may graze beyond 1,000 feet from any such stream
344     or source; and [provided further, that]
345          (b) each city of the first class shall provide a highway in and through its corporate
346     limits, and so far as its jurisdiction extends, which may not be closed to cattle, horses, sheep or
347     hogs driven through any [such] city of the first class, or through any territory adjacent thereto
348     over which such city has jurisdiction, but the board of commissioners of such city may enact
349     ordinances placing under police regulations the manner of driving such cattle, sheep, horses
350     and hogs through such city, or any territory adjacent thereto over which it has jurisdiction.
351     [They may]
352          (3) A city may:
353          (a) enact all ordinances and regulations necessary to carry the power [herein conferred]
354     described in this section into effect[, and are authorized and empowered to]; and
355          (b) enact ordinances preventing pollution or contamination of the streams or
356     watercourses from which the inhabitants of cities derive their water supply, in whole or in part,
357     for domestic and culinary purposes[, and may];
358          (c) enact ordinances prohibiting or regulating the construction or maintenance of any
359     closet, privy, outhouse or urinal within the area over which the city has jurisdiction[, and];
360          (d) provide for permits for the construction and maintenance of the [same. In granting
361     such permits they may] items described in Subsection (3)(c); and
362          (e) in granting the permits described in Subsection (3)(d):
363          (i) annex thereto such reasonable conditions and requirements for the protection of the
364     public health as [they deem proper, and may,] the city considers proper; and
365          (ii) if deemed advisable, require that all closets, privies and urinals along [such]
366     streams [shall] be provided with effective septic tanks or other germ-destroying
367     instrumentalities.
368          (4) Regardless of the jurisdiction described in Subsection (1), property that a city of the
369     first class owns outside of the geographic boundaries of the city is subject to property tax in
370     accordance with Subsection 59-2-1101(3)(c)."; and
371          (2) on July 1, 2020, modifying Subsection 10-8-15(1)(b) to read:
372          "(b) The jurisdiction described in Subsection (1)(a)(ii) extends over the territory
373     occupied by the waterworks described in Subsection (1)(a)(i), and over all reservoirs, streams,
374     canals, ditches, pipes and drains used in and necessary for the construction, maintenance and
375     operation of the waterworks, and over the stream or source from which the water is taken, for[:
376     (i)] 15 miles above the point from which it is taken and for a distance of 300 feet on each side
377     of such stream and over highways along such stream or watercourse within said 15 miles and
378     said 300 feet[; or (ii) for cities of the first class, the entire watershed]."