1     
INTERLOCAL COOPERATION ACT AMENDMENTS

2     
2021 SECOND SPECIAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Derrin R. Owens

5     
House Sponsor: Carl R. Albrecht

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions related to project entities and taxed interlocal entities.
10     Highlighted Provisions:
11          This bill:
12          ▸     establishes a time after which a commercial project entity may no longer exercise
13     eminent domain;
14          ▸     clarifies that project entities and certain taxed interlocal entities are subject to audits
15     by the Office of the Legislative Auditor General;
16          ▸     establishes a time after which a taxed interlocal entity that is a project entity may no
17     longer create a segment;
18          ▸     modifies a provision that states that certain governmental laws do not apply to taxed
19     interlocal entities; and
20          ▸     makes technical changes.
21     Money Appropriated in this Bill:
22          None
23     Other Special Clauses:
24          This bill provides a special effective date.
25     Utah Code Sections Affected:
26     AMENDS:
27          11-13-314, as last amended by Laws of Utah 2014, Chapter 59
28          11-13-603, as last amended by Laws of Utah 2021, Chapter 84
29          11-13-604, as last amended by Laws of Utah 2020, Chapter 381

30     ENACTS:
31          11-13-316, Utah Code Annotated 1953
32     

33     Be it enacted by the Legislature of the state of Utah:
34          Section 1. Section 11-13-314 is amended to read:
35          11-13-314. Eminent domain authority of certain commercial project entities.
36          (1) (a) Subject to [Subsection (2)] Subsections (2) and (3), a commercial project entity
37     that existed as a project entity before January 1, 1980, may, with respect to a project or
38     facilities providing additional project capacity in which the commercial project entity has an
39     interest, acquire property within the state through eminent domain, subject to restrictions
40     imposed by Title 78B, Chapter 6, Part 5, Eminent Domain, and general law for the protection
41     of other communities.
42          (b) Subsection (1)(a) may not be construed to:
43          (i) give a project entity the authority to acquire water rights by eminent domain; or
44          (ii) diminish any other authority a project entity may claim to have under the law to
45     acquire property by eminent domain.
46          (2) Each project entity that intends to acquire property by eminent domain under
47     Subsection (1)(a) shall comply with the requirements of Section 78B-6-505.
48          (3) A commercial project entity that has not taken a final vote to approve the filing of
49     an eminent domain action as described in Subsection 78B-6-504(2)(c) prior to November 10,
50     2021, may not exercise the authority described in Subsection (1).
51          Section 2. Section 11-13-316 is enacted to read:
52          11-13-316. Project entity oversight.
53          (1) Notwithstanding any other provision of law, a project entity is a political
54     subdivision that:
55          (a) pursuant to Utah Constitution, Article VI, Section 33, is subject to the authority of
56     the legislative auditor to conduct audits of any funds, functions, and accounts in any political
57     subdivision of this state; and

58          (b) is subject to the requirement to provide the Office of the Legislative Auditor
59     General with all records, documents, and reports necessary for the legislative auditor general or
60     the office to fulfill the duties described in Subsection (1)(a).
61          (2) Subsection (1) takes precedence over Section 36-12-15.
62          Section 3. Section 11-13-603 is amended to read:
63          11-13-603. Taxed interlocal entity.
64          (1) [Notwithstanding] Except for purposes of an audit, examination, or review by the
65     Office of the Legislative Auditor General as described in Subsection (8) and notwithstanding
66     any other provision of law:
67          (a) the use of an asset by a taxed interlocal entity does not constitute the use of a public
68     asset;
69          (b) a taxed interlocal entity's use of an asset that was a public asset before the taxed
70     interlocal entity's use of the asset does not constitute a taxed interlocal entity's use of a public
71     asset;
72          (c) an official of a project entity is not a public treasurer; and
73          (d) a taxed interlocal entity's governing board shall determine and direct the use of an
74     asset by the taxed interlocal entity.
75          (2) A taxed interlocal entity is not subject to the provisions of Title 63G, Chapter 6a,
76     Utah Procurement Code.
77          (3) (a) A taxed interlocal entity is not a participating local entity as defined in Section
78     67-3-12.
79          (b) For each fiscal year of a taxed interlocal entity, the taxed interlocal entity shall
80     provide:
81          (i) the taxed interlocal entity's financial statements for and as of the end of the fiscal
82     year and the prior fiscal year, including:
83          (A) the taxed interlocal entity's statement of net position as of the end of the fiscal year
84     and the prior fiscal year, and the related statements of revenues and expenses and of cash flows
85     for the fiscal year; or

86          (B) financial statements that are equivalent to the financial statements described in
87     Subsection (3)(b)(i)(A) and, at the time the financial statements were created, were in
88     compliance with generally accepted accounting principles that are applicable to taxed interlocal
89     entities; and
90          (ii) the accompanying auditor's report and management's discussion and analysis with
91     respect to the taxed interlocal entity's financial statements for and as of the end of the fiscal
92     year.
93          (c) The taxed interlocal entity shall provide the information described in Subsection
94     (3)(b) within a reasonable time after the taxed interlocal entity's independent auditor delivers to
95     the taxed interlocal entity's governing board the auditor's report with respect to the financial
96     statements for and as of the end of the fiscal year.
97          (d) Notwithstanding Subsections (3)(b) and (c) or a taxed interlocal entity's compliance
98     with one or more of the requirements of Title 63A, Chapter 3, Division of Finance:
99          (i) the taxed interlocal entity is not subject to Title 63A, Chapter 3, Division of
100     Finance; and
101          (ii) the information described in Subsection (3)(b)(i) or (ii) does not constitute public
102     financial information as defined in Section 67-3-12.
103          (4) (a) A taxed interlocal entity's governing board is not a governing board as defined
104     in Section 51-2a-102.
105          (b) A taxed interlocal entity is not subject to the provisions of Title 51, Chapter 2a,
106     Accounting Reports from Political Subdivisions, Interlocal Organizations, and Other Local
107     Entities Act.
108          (5) Notwithstanding any other provision of law, a taxed interlocal entity is not subject
109     to the following provisions:
110          (a) Part 4, Governance;
111          (b) Part 5, Fiscal Procedures for Interlocal Entities;
112          (c) Subsection 11-13-204(1)(a)(i) or (ii)(J);
113          (d) Subsection 11-13-206(1)(f);

114          (e) Subsection 11-13-218(5)(a);
115          (f) Section 11-13-225;
116          (g) Section 11-13-226; or
117          (h) Section 53-2a-605.
118          (6) (a) In addition to having the powers described in Subsection 11-13-204(1)(a)(ii), a
119     taxed interlocal entity may, for the regulation of the entity's affairs and conduct of its business,
120     adopt, amend, or repeal bylaws, policies, or procedures.
121          (b) Nothing in Part 4, Governance, or Part 5, Fiscal Procedures for Interlocal Entities,
122     may be construed to limit the power or authority of a taxed interlocal entity.
123          (7) (a) A governmental law enacted after May 12, 2015, and on or before November
124     10, 2021, is not applicable to, is not binding upon, and does not have effect on a taxed
125     interlocal entity that is a project entity unless the governmental law expressly states the section
126     of governmental law to be applicable to and binding upon the taxed interlocal entity with the
127     following words: "[Applicable section or subsection number] constitutes an exception to
128     Subsection 11-13-603(7)(a) and is applicable to and binding upon a taxed interlocal entity."
129          (b) A governmental law enacted after May 12, 2015, is not applicable to, is not binding
130     upon, and does not have effect on a taxed interlocal entity that is an energy services interlocal
131     entity unless the governmental law expressly states the section of governmental law to be
132     applicable to and binding upon the energy services interlocal entity with the following words:
133     "[Applicable section or subsection number] constitutes an exception to Subsection
134     11-13-603(7)(a) and is applicable to and binding upon an energy services interlocal entity."
135          [(b)] (c) Sections 11-13-601 through 11-13-608 constitute an exception to [Subsection
136     (7)(a)] Subsections (7)(a) and (7)(b) and are applicable to and binding upon a taxed interlocal
137     entity.
138          (8) (a) Notwithstanding any other provision of law, a taxed interlocal entity that is a
139     project entity is a political subdivision that:
140          (i) pursuant to Utah Constitution, Article VI, Section 33, is subject to the authority of
141     the legislative auditor to conduct audits of any funds, functions, and accounts in any political

142     subdivision of this state; and
143          (ii) is subject to the requirement to provide the Office of the Legislative Auditor
144     General with all records, documents, and reports necessary of the legislative auditor general or
145     the office to fulfill the duties described in Subsection (8)(a)(i).
146          (b) Subsection (8)(a) takes precedence over Section 36-12-15.
147          Section 4. Section 11-13-604 is amended to read:
148          11-13-604. Segments authorized.
149          (1) (a) (i) [To] If a taxed interlocal entity is a project entity, and to the extent
150     authorized in a taxed interlocal entity's organization agreement or by a majority of the public
151     entities that are parties to a taxed interlocal entity's organization agreement , the governing
152     board of a taxed interlocal entity may by resolution adopted on or before November 10, 2021,
153     establish or provide for the establishment of one or more segments that have separate rights,
154     powers, privileges, authority or by a majority of the public entities that are parties to a taxed
155     interlocal entity's organization agreement , or duties with respect to, as specified in the
156     segment's organizing resolution, the taxed interlocal entity's:
157          [(i)] (A) property;
158          [(ii)] (B) assets;
159          [(iii)] (C) projects;
160          [(iv)] (D) undertakings;
161          [(v)] (E) opportunities;
162          [(vi)] (F) actions;
163          [(vii)] (G) debts;
164          [(viii)] (H) liabilities;
165          [(ix)] (I) obligations; or
166          [(x)] (J) any combination of the items listed in Subsections (1)(a)(i)(A) through [(viii)]
167     (H).
168          (ii) If a taxed interlocal entity is not a project entity, and to the extent authorized in a
169     taxed interlocal entity's organization agreement, the governing board of a taxed interlocal entity

170     may by resolution establish or provide for the establishment of one or more segments that have
171     separate rights, powers, privileges, authority, or by a majority of the public entities that are
172     parties to a taxed interlocal entity's organization agreement, or duties with respect to, as
173     specified in the segment's organizing resolution, the taxed interlocal entity's:
174          (A) property;
175          (B) assets;
176          (C) projects;
177          (D) undertakings;
178          (E) opportunities;
179          (F) actions;
180          (G) debts;
181          (H) liabilities;
182          (I) obligations; or
183          (J) any combination of the items listed in Subsections (1)(b)(ii)(A) through (H).
184          (b) To the extent provided in the organization agreement of a segment's associated
185     entity, a segment may have a separate purpose from the associated entity.
186          (c) The name of a segment shall:
187          (i) contain the name of the segment's associated entity; and
188          (ii) be distinguishable from the name of any other segment established by the
189     associated entity.
190          (2) Notwithstanding any other provision of law, the debts, liabilities, and obligations
191     incurred, contracted for, arising out of the conduct of or otherwise existing with respect to a
192     particular segment are only enforceable or chargeable against the assets of that segment, and
193     not against the assets of the segment's associated entity generally or any other segment
194     established by the segment's associated entity if:
195          (a) the segment is established by or in accordance with an organizing resolution;
196          (b) separate records are maintained for the segment to the extent necessary to avoid the
197     segment's records constituting a fraud upon the segment's creditors;

198          (c) the assets associated with the segment are held and accounted for separately from
199     the assets of any other segment established by the associated entity to the extent necessary to
200     avoid the segment's accounting for the segment's assets constituting a fraud upon the segment's
201     creditors;
202          (d) the segment's organizing resolution provides for a limitation on liabilities of the
203     segment; and
204          (e) a notice of limitation on liabilities of the segment is recorded in accordance with
205     Section 11-13-605.
206          (3) Except as otherwise provided in the segment's organizing resolution, a segment that
207     satisfies the conditions described in Subsections (2)(a) through (e):
208          (a) is treated as a separate interlocal entity; and
209          (b) may:
210          (i) in its own name, contract, hold title to property, grant liens and security interests,
211     and sue and be sued;
212          (ii) exercise all or any part of the powers, privileges, rights, authority, and capacity of
213     the segment's associated entity; and
214          (iii) engage in any action in which the segment's associated entity may engage.
215          (4) Except as otherwise provided in the organization agreement of the segment's
216     associated entity or in the segment's organizing resolution, a segment is governed by the
217     organization agreement of the segment's associated entity.
218          (5) Subject to Subsection (4), a segment's organizing resolution:
219          (a) may address any matter relating to the segment, including the segment's governance
220     or operation, to the extent that the organization agreement of a segment's associated entity does
221     not address the matter; and
222          (b) to the extent not addressed in the organization agreement of the segment's
223     associated entity, shall address the following matters:
224          (i) the powers delegated to the segment;
225          (ii) the manner in which the segment is to be governed, including whether the

226     segment's governing body is the same as the governing board of the segment's associated
227     entity;
228          (iii) subject to Subsection (6), if the segment's governing body is different from the
229     governing board of the segment's associated entity, the manner in which the members of the
230     segment's governing body are appointed or selected;
231          (iv) the segment's purpose;
232          (v) the manner of financing the segment's actions;
233          (vi) how the segment will establish and maintain a budget;
234          (vii) how to partially or completely terminate the segment and, upon a partial or
235     complete termination, how to dispose of the segment's property;
236          (viii) the process, conditions, and terms for withdrawal of a participating public agency
237     from the segment; and
238          (ix) voting rights, including whether voting is weighted, and, if so, the basis upon
239     which the vote weight is determined.
240          (6) An organizing resolution shall provide that if a segment's governing body is
241     different from the governing board of the segment's associated entity, the Utah public agencies
242     that are parties to the organization agreement of the segment's associated entity may appoint or
243     select members of the segment's governing body with a majority of the voting power.
244          (7) A segment may not:
245          (a) transfer the segment's property or other assets to the segment's associated entity or
246     to another segment established by the segment's associated entity if the transfer impairs the
247     ability of the segment to pay the segment's debts that exist at the time of the transfer, unless the
248     segment's associated entity or the other segment gives fair value for the property or asset; or
249          (b) assign a tax or other liability imposed against the segment to the segment's
250     associated entity or to another segment established by the segment's associated entity if the
251     assignment impairs a creditor's ability to collect the amount due when owed.
252          (8) If a segment and a segment's associated entity or another segment established by the
253     segment's associated entity are involved in a joint action or have a common interest in a

254     facility, the segment's or the segment's associated entity's maintenance of records and accounts
255     related to the joint action or common interest does not constitute a violation of Subsection
256     (2)(b) or (c).
257          (9) Except as otherwise provided in this part or where clearly not applicable, the
258     provisions of law that apply to a segment's associated entity also apply to the segment,
259     including Subsection 11-13-205(5), as if the segment were a separate legal or administrative
260     entity.
261          (10) (a) To the extent an associated entity is a taxpayer as defined in Section 59-8-103,
262     the associated entity shall pay tax on the associated entity's gross receipts at the rate of tax that
263     would apply if all gross receipts of the associated entity and the associated entity's segments, in
264     the aggregate, were the gross receipts of a single taxpayer.
265          (b) Each segment of an associated entity that is a taxpayer as defined in Section
266     59-8-103 shall pay tax on the segment's gross receipts each period described in Subsection
267     59-8-105(1) at the same rate of tax as the rate of tax paid by the segment's associated entity for
268     the same period.
269          (c) Notwithstanding Subsections (10)(a) and (b):
270          (i) an associated entity is not liable for the tax imposed on a segment; and
271          (ii) a segment of an associated entity is not liable for the tax imposed on the segment's
272     associated entity or on another segment of the segment's associated entity.
273          [(11) Notwithstanding any other provision of law, a segment is a project entity if the
274     segment's associated entity is a project entity.]
275          Section 5. Effective date.
276          If approved by two-thirds of all the members elected to each house, this bill takes effect
277     upon approval by the governor, or the day following the constitutional time limit of Utah
278     Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
279     the date of veto override.