1     
PROPERTY TAX AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Steve Eliason

5     
Senate Sponsor: Curtis S. Bramble

6     

7     LONG TITLE
8     General Description:
9          This bill modifies the Property Tax Act.
10     Highlighted Provisions:
11          This bill:
12          ▸     modifies the definition of incremental value to include project areas created under
13     Title 11, Chapter 58, Utah Inland Port Authority Act; Title 63H, Chapter 1, Military
14     Installation Development Authority Act; and Title 63N, Chapter 2, Part 5, New
15     Convention Facility Development Incentives;
16          ▸     defines related terms;
17          ▸     modifies the definitions of charitable purposes, educational purposes, and exclusive
18     use for purposes of claiming a property tax exemption;
19          ▸     provides activities that exclude a person from claiming an exemption for charitable
20     purposes, educational purposes, or religious purposes; and
21          ▸     changes the effective date of Section 59-2-1101 in S.B. 263, Property Tax
22     Definition Amendment, Chapter 496, 2019 General Session.
23     Money Appropriated in this Bill:
24          None
25     Other Special Clauses:
26          This bill provides a special effective date.
27          This bill provides retrospective operation.
28     Utah Code Sections Affected:

29     AMENDS:
30          59-2-924, as last amended by Laws of Utah 2018, Chapters 101, 368, and 415
31          59-2-1101 (Effective 07/01/20), as last amended by Laws of Utah 2019, Chapters 453
32     and 496
33     Uncodified Material Affected:
34     AMENDS UNCODIFIED MATERIAL:
35      Uncodified Section 2, Laws of Utah 2019, Chapter 496
36          This uncodified section affects Section 59-2-1101 (Effective 07/01/20).
37     

38     Be it enacted by the Legislature of the state of Utah:
39          Section 1. Section 59-2-924 is amended to read:
40          59-2-924. Definitions -- Report of valuation of property to county auditor and
41     commission -- Transmittal by auditor to governing bodies -- Calculation of certified tax
42     rate -- Rulemaking authority -- Adoption of tentative budget -- Notice provided by the
43     commission.
44          (1) As used in this section:
45          (a) (i) "Ad valorem property tax revenue" means revenue collected in accordance with
46     this chapter.
47          (ii) "Ad valorem property tax revenue" does not include:
48          (A) interest;
49          (B) penalties;
50          (C) collections from redemptions; or
51          (D) revenue received by a taxing entity from personal property that is semiconductor
52     manufacturing equipment assessed by a county assessor in accordance with Part 3, County
53     Assessment.
54          (b) "Adjusted tax increment" means the same as that term is defined in Section
55     17C-1-102.

56          [(b)] (c) (i) "Aggregate taxable value of all property taxed" means:
57          (A) the aggregate taxable value of all real property a county assessor assesses in
58     accordance with Part 3, County Assessment, for the current year;
59          (B) the aggregate taxable value of all real and personal property the commission
60     assesses in accordance with Part 2, Assessment of Property, for the current year; and
61          (C) the aggregate year end taxable value of all personal property a county assessor
62     assesses in accordance with Part 3, County Assessment, contained on the prior year's tax rolls
63     of the taxing entity.
64          (ii) "Aggregate taxable value of all property taxed" does not include the aggregate year
65     end taxable value of personal property that is:
66          (A) semiconductor manufacturing equipment assessed by a county assessor in
67     accordance with Part 3, County Assessment; and
68          (B) contained on the prior year's tax rolls of the taxing entity.
69          (d) "Base taxable value" means:
70          (i) for an authority created under Section 11-58-201, the same as that term is defined in
71     Section 11-58-102;
72          (ii) for an agency created under Section 17C-1-201.5, the same as that term is defined
73     in Section 17C-1-102;
74          (iii) for an authority created under Section 63H-1-201, the same as that term is defined
75     in Section 63H-1-102; or
76          (iv) for a host local government, the same as that term is defined in Section 63N-2-502.
77          [(c)] (e) "Centrally assessed benchmark value" means an amount equal to the highest
78     year end taxable value of real and personal property the commission assesses in accordance
79     with Part 2, Assessment of Property, for a previous calendar year that begins on or after
80     January 1, 2015, adjusted for taxable value attributable to:
81          (i) an annexation to a taxing entity; or
82          (ii) an incorrect allocation of taxable value of real or personal property the commission

83     assesses in accordance with Part 2, Assessment of Property.
84          [(d)] (f) (i) "Centrally assessed new growth" means the greater of:
85          (A) zero; or
86          (B) the amount calculated by subtracting the centrally assessed benchmark value
87     adjusted for prior year end incremental value from the taxable value of real and personal
88     property the commission assesses in accordance with Part 2, Assessment of Property, for the
89     current year, adjusted for current year incremental value.
90          (ii) "Centrally assessed new growth" does not include a change in value as a result of a
91     change in the method of apportioning the value prescribed by the Legislature, a court, or the
92     commission in an administrative rule or administrative order.
93          [(e)] (g) "Certified tax rate" means a tax rate that will provide the same ad valorem
94     property tax revenue for a taxing entity as was budgeted by that taxing entity for the prior year.
95          [(f)] (h) "Eligible new growth" means the greater of:
96          (i) zero; or
97          (ii) the sum of:
98          (A) locally assessed new growth;
99          (B) centrally assessed new growth; and
100          (C) project area new growth or hotel property new growth.
101          (i) "Host local government" means the same as that term is defined in Section
102     63N-2-502.
103          (j) "Hotel property" means the same as that term is defined in Section 63N-2-502.
104          (k) "Hotel property new growth" means an amount equal to the incremental value that
105     is no longer provided to a host local government as incremental property tax revenue.
106          (l) "Incremental property tax revenue" means the same as that term is defined in
107     Section 63N-2-502.
108          [(g)] (m) "Incremental value" means [the same as that term is defined in Section
109     17C-1-102.]:

110          (i) for an authority created under Section 11-58-201, the amount calculated by
111     multiplying:
112          (A) the difference between the taxable value and the base taxable value of the property
113     that is located within a project area and on which property tax differential is collected; and
114          (B) the number that represents the percentage of the property tax differential that is
115     paid to the authority;
116          (ii) for an agency created under Section 17C-1-201.5, the amount calculated by
117     multiplying:
118          (A) the difference between the taxable value and the base taxable value of the property
119     located within a project area and on which tax increment is collected; and
120          (B) the number that represents the adjusted tax increment from that project area that is
121     paid to the agency;
122          (iii) for an authority created under Section 63H-1-201, the amount calculated by
123     multiplying:
124          (A) the difference between the taxable value and the base taxable value of the property
125     located within a project area and on which property tax allocation is collected; and
126          (B) the number that represents the percentage of the property tax allocation from that
127     project area that is paid to the authority; or
128          (iv) for a host local government, an amount calculated by multiplying:
129          (A) the difference between the taxable value and the base taxable value of the hotel
130     property on which incremental property tax revenue is collected; and
131          (B) the number that represents the percentage of the incremental property tax revenue
132     from that hotel property that is paid to the host local government.
133          [(h)] (n) (i) "Locally assessed new growth" means the greater of:
134          (A) zero; or
135          (B) the amount calculated by subtracting the year end taxable value of real property the
136     county assessor assesses in accordance with Part 3, County Assessment, for the previous year,

137     adjusted for prior year end incremental value from the taxable value of real property the county
138     assessor assesses in accordance with Part 3, County Assessment, for the current year, adjusted
139     for current year incremental value.
140          (ii) "Locally assessed new growth" does not include a change in:
141          (A) value as a result of factoring in accordance with Section 59-2-704, reappraisal, or
142     another adjustment;
143          (B) assessed value based on whether a property is allowed a residential exemption for a
144     primary residence under Section 59-2-103;
145          (C) assessed value based on whether a property is assessed under Part 5, Farmland
146     Assessment Act; or
147          (D) assessed value based on whether a property is assessed under Part 17, Urban
148     Farming Assessment Act.
149          [(i)] (o) "Project area" means [the same as that term is defined in Section 17C-1-102.]:
150          (i) for an authority created under Section 11-58-201, the same as that term is defined in
151     Section 11-58-102;
152          (ii) for an agency created under Section 17C-1-201.5, the same as that term is defined
153     in Section 17C-1-102; or
154          (iii) for an authority created under Section 63H-1-201, the same as that term is defined
155     in Section 63H-1-102.
156          [(j)] (p) "Project area new growth" means [an amount equal to the incremental value
157     that is no longer provided to an agency as tax increment.]:
158          (i) for an authority created under Section 11-58-201, an amount equal to the
159     incremental value that is no longer provided to an authority as property tax differential;
160          (ii) for an agency created under Section 17C-1-201.5, an amount equal to the
161     incremental value that is no longer provided to an agency as tax increment; or
162          (iii) for an authority created under Section 63H-1-201, an amount equal to the
163     incremental value that is no longer provided to an authority as property tax allocation.

164          (q) "Property tax allocation" means the same as that term is defined in Section
165     63H-1-102.
166          (r) "Property tax differential" means the same as that term is defined in Section
167     11-58-102.
168          (s) "Tax increment" means the same as that term is defined in Section 17C-1-102.
169          (2) Before June 1 of each year, the county assessor of each county shall deliver to the
170     county auditor and the commission the following statements:
171          (a) a statement containing the aggregate valuation of all taxable real property a county
172     assessor assesses in accordance with Part 3, County Assessment, for each taxing entity; and
173          (b) a statement containing the taxable value of all personal property a county assessor
174     assesses in accordance with Part 3, County Assessment, from the prior year end values.
175          (3) The county auditor shall, on or before June 8, transmit to the governing body of
176     each taxing entity:
177          (a) the statements described in Subsections (2)(a) and (b);
178          (b) an estimate of the revenue from personal property;
179          (c) the certified tax rate; and
180          (d) all forms necessary to submit a tax levy request.
181          (4) (a) Except as otherwise provided in this section, the certified tax rate shall be
182     calculated by dividing the ad valorem property tax revenue that a taxing entity budgeted for the
183     prior year by the amount calculated under Subsection (4)(b).
184          (b) For purposes of Subsection (4)(a), the legislative body of a taxing entity shall
185     calculate an amount as follows:
186          (i) calculate for the taxing entity the difference between:
187          (A) the aggregate taxable value of all property taxed; and
188          (B) any adjustments for current year incremental value;
189          (ii) after making the calculation required by Subsection (4)(b)(i), calculate an amount
190     determined by increasing or decreasing the amount calculated under Subsection (4)(b)(i) by the

191     average of the percentage net change in the value of taxable property for the equalization
192     period for the three calendar years immediately preceding the current calendar year;
193          (iii) after making the calculation required by Subsection (4)(b)(ii), calculate the product
194     of:
195          (A) the amount calculated under Subsection (4)(b)(ii); and
196          (B) the percentage of property taxes collected for the five calendar years immediately
197     preceding the current calendar year; and
198          (iv) after making the calculation required by Subsection (4)(b)(iii), calculate an amount
199     determined by:
200          (A) multiplying the percentage of property taxes collected for the five calendar years
201     immediately preceding the current calendar year by eligible new growth; and
202          (B) subtracting the amount calculated under Subsection (4)(b)(iv)(A) from the amount
203     calculated under Subsection (4)(b)(iii).
204          (5) A certified tax rate for a taxing entity described in this Subsection (5) shall be
205     calculated as follows:
206          (a) except as provided in Subsection (5)(b), for a new taxing entity, the certified tax
207     rate is zero;
208          (b) for a municipality incorporated on or after July 1, 1996, the certified tax rate is:
209          (i) in a county of the first, second, or third class, the levy imposed for municipal-type
210     services under Sections 17-34-1 and 17-36-9; and
211          (ii) in a county of the fourth, fifth, or sixth class, the levy imposed for general county
212     purposes and such other levies imposed solely for the municipal-type services identified in
213     Section 17-34-1 and Subsection 17-36-3(22); and
214          (c) for debt service voted on by the public, the certified tax rate is the actual levy
215     imposed by that section, except that a certified tax rate for the following levies shall be
216     calculated in accordance with Section 59-2-913 and this section:
217          (i) a school levy provided for under Section 53F-8-301, 53F-8-302, or 53F-8-303; and

218          (ii) a levy to pay for the costs of state legislative mandates or judicial or administrative
219     orders under Section 59-2-1602.
220          (6) (a) A judgment levy imposed under Section 59-2-1328 or 59-2-1330 may be
221     imposed at a rate that is sufficient to generate only the revenue required to satisfy one or more
222     eligible judgments.
223          (b) The ad valorem property tax revenue generated by a judgment levy described in
224     Subsection (6)(a) may not be considered in establishing a taxing entity's aggregate certified tax
225     rate.
226          (7) (a) For the purpose of calculating the certified tax rate, the county auditor shall use:
227          (i) the taxable value of real property:
228          (A) the county assessor assesses in accordance with Part 3, County Assessment; and
229          (B) contained on the assessment roll;
230          (ii) the year end taxable value of personal property:
231          (A) a county assessor assesses in accordance with Part 3, County Assessment; and
232          (B) contained on the prior year's assessment roll; and
233          (iii) the taxable value of real and personal property the commission assesses in
234     accordance with Part 2, Assessment of Property.
235          (b) For purposes of Subsection (7)(a), taxable value does not include eligible new
236     growth.
237          (8) (a) On or before June 30, a taxing entity shall annually adopt a tentative budget.
238          (b) If a taxing entity intends to exceed the certified tax rate, the taxing entity shall
239     notify the county auditor of:
240          (i) the taxing entity's intent to exceed the certified tax rate; and
241          (ii) the amount by which the taxing entity proposes to exceed the certified tax rate.
242          (c) The county auditor shall notify property owners of any intent to levy a tax rate that
243     exceeds the certified tax rate in accordance with Sections 59-2-919 and 59-2-919.1.
244          (9) (a) Subject to Subsection (9)(d), the commission shall provide notice, through

245     electronic means on or before July 31, to a taxing entity and the Revenue and Taxation Interim
246     Committee if:
247          (i) the amount calculated under Subsection (9)(b) is 10% or more of the year end
248     taxable value of the real and personal property the commission assesses in accordance with
249     Part 2, Assessment of Property, for the previous year, adjusted for prior year end incremental
250     value; and
251          (ii) the amount calculated under Subsection (9)(c) is 50% or more of the total year end
252     taxable value of the real and personal property of a taxpayer the commission assesses in
253     accordance with Part 2, Assessment of Property, for the previous year.
254          (b) For purposes of Subsection (9)(a)(i), the commission shall calculate an amount by
255     subtracting the taxable value of real and personal property the commission assesses in
256     accordance with Part 2, Assessment of Property, for the current year, adjusted for current year
257     incremental value, from the year end taxable value of the real and personal property the
258     commission assesses in accordance with Part 2, Assessment of Property, for the previous year,
259     adjusted for prior year end incremental value.
260          (c) For purposes of Subsection (9)(a)(ii), the commission shall calculate an amount by
261     subtracting the total taxable value of real and personal property of a taxpayer the commission
262     assesses in accordance with Part 2, Assessment of Property, for the current year, from the total
263     year end taxable value of the real and personal property of a taxpayer the commission assesses
264     in accordance with Part 2, Assessment of Property, for the previous year.
265          (d) The notification under Subsection (9)(a) shall include a list of taxpayers that meet
266     the requirement under Subsection (9)(a)(ii).
267          Section 2. Section 59-2-1101 (Effective 07/01/20) is amended to read:
268          59-2-1101 (Effective 07/01/20). Definitions -- Exemption of certain property --
269     Proportional payments for certain property -- Exception -- County legislative body
270     authority to adopt rules or ordinances.
271          (1) As used in this section:

272          [(a) (i) "Educational purposes" means the same as that term is used in Section
273     501(c)(3), Internal Revenue Code, and interpreted according to federal law.]
274          (a) "Charitable purposes" means:
275          (i) for property used as a nonprofit hospital or a nursing home, the standards outlined in
276     Howell v. County Board of Cache County ex rel. IHC Hospitals, Inc., 881 P.2d 880 (Utah
277     1994); and
278          (ii) for property other than property described in Subsection (1)(a)(i), providing a gift
279     to the community.
280          (b) (i) "Educational purposes" means purposes carried on by an educational
281     organization that normally:
282          (A) maintains a regular faculty and curriculum; and
283          (B) has a regularly enrolled body of pupils and students.
284          (ii) "Educational purposes" includes:
285          (A) the physical or mental teaching, training, or conditioning of competitive athletes by
286     a national governing body of sport recognized by the United States Olympic Committee that
287     qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
288          (B) an activity in support of or incidental to the teaching, training, or conditioning
289     described in Subsection [(1)(a)(i)] (1)(b)(ii).
290          [(b)] (c) "Exclusive use exemption" means a property tax exemption under Subsection
291     (3)(a)(iv), for property owned by a nonprofit entity used exclusively for [religious, charitable,
292     or educational purposes.] one or more of the following purposes:
293          (i) religious purposes;
294          (ii) charitable purposes; or
295          (iii) educational purposes.
296          (d) "Gift to the community" means:
297          (i) the lessening of a government burden; or
298          (ii) (A) the provision of a significant service to others without immediate expectation

299     of material reward;
300          (B) the use of the property is supported to a material degree by donations and gifts
301     including volunteer service;
302          (C) the recipients of the charitable activities provided on the property are not required
303     to pay for the assistance received, in whole or in part, except that if in part, to a material
304     degree;
305          (D) the beneficiaries of the charitable activities provided on the property are
306     unrestricted or, if restricted, the restriction bears a reasonable relationship to the charitable
307     objectives of the nonprofit entity that owns the property; and
308          (E) any commercial activities provided on the property are subordinate or incidental to
309     charitable activities provided on the property.
310          [(c)] (e) "Government exemption" means a property tax exemption provided under
311     Subsection (3)(a)(i), (ii), or (iii).
312          [(d)] (f) (i) "Nonprofit entity" means an entity:
313          (A) that is organized on a nonprofit basis, that dedicates the entity's property to the
314     entity's nonprofit purpose, and that makes no dividend or other form of financial benefit
315     available to a private interest;
316          (B) for which, upon dissolution, the entity's assets are distributable only for exempt
317     purposes under state law or to the government for a public purpose;
318          (C) that does not receive income from any source, including gifts, donations, or
319     payments from recipients of products or services, that produces a profit to the entity in the
320     sense that the income exceeds operating and long-term maintenance expenses; and
321          (D) for which none of the net earnings or donations made to the entity inure to the
322     benefit of private shareholders or other individuals, as the private inurement standard has been
323     interpreted under Section 501(c)(3), Internal Revenue Code.
324          (ii) "Nonprofit entity" includes an entity [if the]:
325          [(i)] (A) if the entity is:

326          (I) treated as a disregarded entity for federal income tax purposes; and
327          [(ii) entity is] (II) wholly owned by, and controlled under the direction of, a nonprofit
328     entity; and
329          [(iii)] (B) for which none of the net earnings and profits of the entity [irrevocably]
330     inure to the benefit of any person other than a nonprofit entity.
331          [(e)] (g) "Tax relief" means an exemption, deferral, or abatement that is authorized by
332     this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
333          (2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
334     the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
335          (b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
336     tax based upon the length of time that the property was not owned by the claimant if:
337          (i) the claimant is a federal, state, or political subdivision entity described in
338     Subsection (3)(a)(i), (ii), or (iii); or
339          (ii) pursuant to Subsection (3)(a)(iv):
340          (A) the claimant is a nonprofit entity; and
341          (B) the property is used exclusively for religious, charitable, or educational purposes.
342          (c) Subsection (2)(a) does not apply to an exemption described in Part 19, Armed
343     Forces Exemptions .
344          (3) (a) The following property is exempt from taxation:
345          (i) property exempt under the laws of the United States;
346          (ii) property of:
347          (A) the state;
348          (B) school districts; and
349          (C) public libraries;
350          (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
351          (A) counties;
352          (B) cities;

353          (C) towns;
354          (D) local districts;
355          (E) special service districts; and
356          (F) all other political subdivisions of the state;
357          (iv) except as provided in Subsection (6) or (7), property owned by a nonprofit entity
358     used exclusively for one or more of the following purposes:
359          (A) religious[,] purposes;
360          (B) charitable[,] purposes; or
361          (C) educational purposes;
362          (v) places of burial not held or used for private or corporate benefit;
363          (vi) farm machinery and equipment;
364          (vii) a high tunnel, as defined in Section 10-9a-525;
365          (viii) intangible property; and
366          (ix) the ownership interest of an out-of-state public agency, as defined in Section
367     11-13-103:
368          (A) if that ownership interest is in property providing additional project capacity, as
369     defined in Section 11-13-103; and
370          (B) on which a fee in lieu of ad valorem property tax is payable under Section
371     11-13-302.
372          (b) For purposes of a property tax exemption for property of school districts under
373     Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
374     considered to be a school district.
375          (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
376     a government exemption ceases to qualify for the exemption because of a change in the
377     ownership of the property:
378          (a) the new owner of the property shall pay a proportional tax based upon the period of
379     time:

380          (i) beginning on the day that the new owner acquired the property; and
381          (ii) ending on the last day of the calendar year during which the new owner acquired
382     the property; and
383          (b) the new owner of the property and the person from whom the new owner acquires
384     the property shall notify the county assessor, in writing, of the change in ownership of the
385     property within 30 days from the day that the new owner acquires the property.
386          (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
387     (4)(a):
388          (a) is subject to any exclusive use exemption or government exemption that the
389     property is entitled to under the new ownership of the property; and
390          (b) applies only to property that is acquired after December 31, 2005.
391          (6) (a) A property may not receive an exemption under Subsection (3)(a)(iv) if:
392          (i) the nonprofit entity that owns the property participates in or intervenes in any
393     political campaign on behalf of or in opposition to any candidate for public office, including
394     the publishing or distribution of statements; or
395          (ii) a substantial part of the activities of the nonprofit entity that owns the property
396     consists of carrying on propaganda or otherwise attempting to influence legislation, except as
397     provided under Subsection 501(h), Internal Revenue Code.
398          (b) Whether a nonprofit entity is engaged in an activity described in Subsection (6)(a)
399     shall be determined using the standards described in Section 501, Internal Revenue Code.
400          (7) A property may not receive an exemption under Subsection (3)(a)(iv) if:
401          (a) the property is used for a purpose that is not religious, charitable, or educational;
402     and
403          (b) the use for a purpose that is not religious, charitable, or educational is more than de
404     minimis.
405          [(6)] (8) A county legislative body may adopt rules or ordinances to:
406          (a) effectuate the exemptions, deferrals, abatements, or other relief from taxation

407     provided in this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces
408     Exemptions; and
409          (b) designate one or more persons to perform the functions given the county under this
410     part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
411          [(7)] (9) If a person is dissatisfied with a tax relief decision made under designated
412     decision-making authority as described in Subsection [(6)] (8)(b), that person may appeal the
413     decision to the commission under Section 59-2-1006.
414          Section 3. Uncodified Section 2, Laws of Utah 2019, Chapter 496 is amended to
415     read:
416          Section 2. Effective date.
417          This bill takes effect on [July 1, 2020] January 1, 2021.
418          Section 4. Retrospective operation.
419          Section 59-2-924 has retrospective operation to January 1, 2020.
420          Section 5. Effective date.
421          (1) Except as provided in Subsection (2), this bill takes effect on May 12, 2020.
422          (2) The changes in this bill to Section 59-2-1101 (Effective 07/01/20) take effect on
423     January 1, 2021.