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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 [
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 [
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 [
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 [
94 property tax revenue for a taxing entity as was budgeted by that taxing entity for the prior year.
95 [
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 [
109
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 [
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 [
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 [
157
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 [
273
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 [
290 [
291 (3)(a)(iv), for property owned by a nonprofit entity used exclusively for [
292
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 [
311 Subsection (3)(a)(i), (ii), or (iii).
312 [
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 [
325 [
326 (I) treated as a disregarded entity for federal income tax purposes; and
327 [
328 entity; and
329 [
330 inure to the benefit of any person other than a nonprofit entity.
331 [
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[
360 (B) charitable[
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 [
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 [
412 decision-making authority as described in Subsection [
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 [
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.