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7 LONG TITLE
8 General Description:
9 This bill amends the property tax exemptions in the Property Tax Act.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms to provide the circumstances under which property leased to a
13 government entity qualifies for a property tax exemption; and
14 ▸ makes technical and conforming changes.
15 Money Appropriated in this Bill:
16 None
17 Other Special Clauses:
18 This bill provides retrospective operation.
19 Utah Code Sections Affected:
20 AMENDS:
21 59-2-1101, as last amended by Laws of Utah 2023, Chapters 16, 147 and 471
22 59-2-1102, as last amended by Laws of Utah 2023, Chapter 471
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24 Be it enacted by the Legislature of the state of Utah:
25 Section 1. Section 59-2-1101 is amended to read:
26 59-2-1101. Definitions -- Exemption of certain property -- Proportional payments
27 for certain property -- Exception -- County legislative body authority to adopt rules or
28 ordinances.
29 (1) As used in this section:
30 (a) "Charitable purposes" means:
31 (i) for property used as a nonprofit hospital or a nursing home, the standards outlined in
32 Howell v. County Board of Cache County ex rel. IHC Hospitals, Inc., 881 P.2d 880 (Utah
33 1994); and
34 (ii) for property other than property described in Subsection (1)(a)(i), providing a gift
35 to the community.
36 (b) "Compliance period" means a period equal to 15 taxable years beginning with the
37 first taxable year for which the taxpayer claims a tax credit under Section 42, Internal Revenue
38 Code, or Section 59-7-607 or 59-10-1010.
39 (c) (i) "Educational purposes" means purposes carried on by an educational
40 organization that normally:
41 (A) maintains a regular faculty and curriculum; and
42 (B) has a regularly enrolled body of pupils and students.
43 (ii) "Educational purposes" includes:
44 (A) the physical or mental teaching, training, or conditioning of competitive athletes by
45 a national governing body of sport recognized by the United States Olympic Committee that
46 qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
47 (B) an activity in support of or incidental to the teaching, training, or conditioning
48 described in this Subsection (1)(c)(ii).
49 (d) "Exclusive use exemption" means a property tax exemption under Subsection
50 (3)(a)(iv), for property owned by a nonprofit entity used exclusively for one or more of the
51 following purposes:
52 (i) religious purposes;
53 (ii) charitable purposes; or
54 (iii) educational purposes.
55 (e) (i) "Farm machinery and equipment" means tractors, milking equipment and storage
56 and cooling facilities, feed handling equipment, irrigation equipment, harvesters, choppers,
57 grain drills and planters, tillage tools, scales, combines, spreaders, sprayers, haying equipment,
58 including balers and cubers, and any other machinery or equipment used primarily for
59 agricultural purposes.
60 (ii) "Farm machinery and equipment" does not include vehicles required to be
61 registered with the Motor Vehicle Division or vehicles or other equipment used for business
62 purposes other than farming.
63 (f) "Gift to the community" means:
64 (i) the lessening of a government burden; or
65 (ii) (A) the provision of a significant service to others without immediate expectation
66 of material reward;
67 (B) the use of the property is supported to a material degree by donations and gifts
68 including volunteer service;
69 (C) the recipients of the charitable activities provided on the property are not required
70 to pay for the assistance received, in whole or in part, except that if in part, to a material
71 degree;
72 (D) the beneficiaries of the charitable activities provided on the property are
73 unrestricted or, if restricted, the restriction bears a reasonable relationship to the charitable
74 objectives of the nonprofit entity that owns the property; and
75 (E) any commercial activities provided on the property are subordinate or incidental to
76 charitable activities provided on the property.
77 (g) "Government exemption" means a property tax exemption provided under
78 Subsection (3)(a)(i), (ii), or (iii).
79 (h) (i) "Nonprofit entity" means an entity:
80 (A) that is organized on a nonprofit basis, that dedicates the entity's property to the
81 entity's nonprofit purpose, and that makes no dividend or other form of financial benefit
82 available to a private interest;
83 (B) for which, upon dissolution, the entity's assets are distributable only for exempt
84 purposes under state law or to the government for a public purpose; and
85 (C) for which none of the net earnings or donations made to the entity inure to the
86 benefit of private shareholders or other individuals, as the private inurement standard has been
87 interpreted under Section 501(c)(3), Internal Revenue Code.
88 (ii) "Nonprofit entity" includes an entity:
89 (A) if the entity is treated as a disregarded entity for federal income tax purposes and
90 wholly owned by, and controlled under the direction of, a nonprofit entity; and
91 (B) for which none of the net earnings and profits of the entity inure to the benefit of
92 any person other than a nonprofit entity.
93 (iii) "Nonprofit entity" includes an entity that is not an entity described in Subsection
94 (1)(h)(i) if the entity jointly owns a property that:
95 (A) is used for the purpose of providing permanent supportive housing;
96 (B) has an owner that is an entity described in Subsection (1)(h)(i) or that is a housing
97 authority that operates the permanent supportive housing;
98 (C) has an owner that receives public funding from a federal, state, or local government
99 entity to provide support services and rental subsidies to the permanent supportive housing;
100 (D) is intended to be transferred at or before the end of the compliance period to an
101 entity described in Subsection (1)(h)(i) or a housing authority that will continue to operate the
102 property as permanent supportive housing; and
103 (E) has been certified by the Utah Housing Corporation as meeting the requirements
104 described in Subsections (1)(h)(iii)(A) through (D).
105 (i) "Permanent supportive housing" means a housing facility that:
106 (i) provides supportive services;
107 (ii) makes a 15-year commitment to provide rent subsidies to tenants of the housing
108 facility when the housing facility is placed in service;
109 (iii) receives an allocation of federal low-income housing tax credits in accordance
110 with 26 U.S.C. Sec. 42; and
111 (iv) leases each unit to a tenant:
112 (A) who, immediately before leasing the housing, was homeless as defined in 24
113 C.F.R. 583.5; and
114 (B) whose rent is capped at no more than 30% of the tenant's household income.
115 (j) (i) "Property of" means property that an entity listed in Subsection (3)(a)(ii) or (iii)
116 has a legal right to possess.
117 (ii) "Property of" includes a lease of real property if:
118 (A) the property is wholly leased to a federal, state, or political subdivision entity listed
119 in Subsection (3)(a)(ii) or (iii) under a triple net lease; and
120 (B) the lease is in effect for the entire calendar year.
121 [
122 578.53.
123 (l) "Triple net lease" means a lease agreement under which the lessee is responsible for
124 the real estate taxes, building insurance, and maintenance of the property separate from and in
125 addition to the rental price.
126 (2) (a) Except as provided in Subsection (2)(b), an exemption under this part may be
127 allowed only if the claimant is the owner of the property as of January 1 of the year the
128 exemption is claimed.
129 (b) [
130 proportional tax based upon the length of time that the property was not owned by the claimant
131 if:
132 (i) the claimant is a federal, state, or political subdivision entity described in
133 Subsection (3)(a)(i), (ii), or (iii); or
134 (ii) pursuant to Subsection (3)(a)(iv):
135 (A) the claimant is a nonprofit entity; and
136 (B) the property is used exclusively for religious, charitable, or educational purposes.
137 (3) (a) The following property is exempt from taxation:
138 (i) property exempt under the laws of the United States;
139 (ii) property of:
140 (A) the state;
141 (B) school districts; and
142 (C) public libraries;
143 (iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
144 (A) counties;
145 (B) cities;
146 (C) towns;
147 (D) special districts;
148 (E) special service districts; and
149 (F) all other political subdivisions of the state;
150 (iv) except as provided in Subsection (6) or (7), property owned by a nonprofit entity
151 used exclusively for one or more of the following purposes:
152 (A) religious purposes;
153 (B) charitable purposes; or
154 (C) educational purposes;
155 (v) places of burial not held or used for private or corporate benefit;
156 (vi) farm machinery and equipment;
157 (vii) a high tunnel, as defined in Section 10-9a-525;
158 (viii) intangible property; and
159 (ix) the ownership interest of an out-of-state public agency, as defined in Section
160 11-13-103:
161 (A) if that ownership interest is in property providing additional project capacity, as
162 defined in Section 11-13-103; and
163 (B) on which a fee in lieu of ad valorem property tax is payable under Section
164 11-13-302.
165 (b) For purposes of a property tax exemption for property of school districts under
166 Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
167 considered to be a school district.
168 (4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
169 a government exemption ceases to qualify for the exemption because of a change in the
170 ownership of the property:
171 (a) the new owner of the property shall pay a proportional tax based upon the period of
172 time:
173 (i) beginning on the day that the new owner acquired the property; and
174 (ii) ending on the last day of the calendar year during which the new owner acquired
175 the property; and
176 (b) the new owner of the property and the person from whom the new owner acquires
177 the property shall notify the county assessor, in writing, of the change in ownership of the
178 property within 30 days from the day that the new owner acquires the property.
179 (5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
180 (4)(a):
181 (a) is subject to any exclusive use exemption or government exemption that the
182 property is entitled to under the new ownership of the property; and
183 (b) applies only to property that is acquired after December 31, 2005.
184 (6) (a) A property may not receive an exemption under Subsection (3)(a)(iv) if:
185 (i) the nonprofit entity that owns the property participates in or intervenes in any
186 political campaign on behalf of or in opposition to any candidate for public office, including
187 the publishing or distribution of statements; or
188 (ii) a substantial part of the activities of the nonprofit entity that owns the property
189 consists of carrying on propaganda or otherwise attempting to influence legislation, except as
190 provided under Subsection 501(h), Internal Revenue Code.
191 (b) Whether a nonprofit entity is engaged in an activity described in Subsection (6)(a)
192 shall be determined using the standards described in Section 501, Internal Revenue Code.
193 (7) A property may not receive an exemption under Subsection (3)(a)(iv) if:
194 (a) the property is used for a purpose that is not religious, charitable, or educational;
195 and
196 (b) the use for a purpose that is not religious, charitable, or educational is more than de
197 minimis.
198 (8) A county legislative body may adopt rules or ordinances to:
199 (a) effectuate an exemption under this part; and
200 (b) designate one or more persons to perform the functions given to the county under
201 this part.
202 (9) If a person is dissatisfied with an exemption decision made under designated
203 decision-making authority as described in Subsection (8)(b), that person may appeal the
204 decision to the commission under Section 59-2-1006.
205 Section 2. Section 59-2-1102 is amended to read:
206 59-2-1102. Determination of exemptions by board of equalization -- Appeal --
207 Application for exemption -- Annual statement -- Exceptions.
208 (1) (a) For property assessed under Part 3, County Assessment, the county board of
209 equalization may, after giving notice in a manner prescribed by rule, determine whether certain
210 property within the county is exempt from taxation.
211 (b) The decision of the county board of equalization described in Subsection (1)(a)
212 shall:
213 (i) be in writing; and
214 (ii) include:
215 (A) a statement of facts; and
216 (B) the statutory basis for its decision.
217 (c) Except as provided in Subsection (10)(a), a copy of the decision described in
218 Subsection (1)(a) shall be sent on or before May 15 to the person applying for the exemption.
219 (2) Except as provided in Subsection (7) and subject to Subsection (8), [
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221 grant an exemption under this part unless the person affected or the person's agent:
222 (a) submits a written application to the county board of equalization; and
223 (b) verifies the application by signed statement.
224 (3) (a) The county board of equalization may require a person making an application
225 for exemption [
226 examined under oath.
227 (b) If the county board of equalization requires a person making an application for
228 exemption [
229
230 grant an exemption unless the person affected or the person's agent appears and answers all
231 questions pertinent to the inquiry.
232 (4) For the hearing on the application, the county board of equalization may subpoena
233 any witnesses, and hear and take any evidence in relation to the pending application.
234 (5) Except as provided in Subsection (10)(b), the county board of equalization shall
235 hold hearings and render a written decision to determine any exemption on or before May 1 in
236 each year.
237 (6) Any [
238 with the decision of the county board of equalization regarding any [
239 may appeal to the commission under Section 59-2-1006.
240 (7) (a) [
241 require an owner of property to file an application in accordance with this section [
242 claim an exemption for the property under the following:
243 [
244 [
245 [
246 [
247 [
248 [
249 [
250 (b) A county board of equalization may not require an owner of property to file an
251 application in accordance with this section to claim an exemption for the property described in
252 Subsection 59-2-1101(3)(a)(ii) or (iii) unless the property is property described in Subsection
253 59-2-1101(1)(j)(ii).
254 (8) (a) Except as provided in Subsection (8)(b), for property described in Subsection
255 59-2-1101(3)(a)(iv) or (v), a county board of equalization shall, consistent with Subsection (9),
256 require an owner of that property to file an application in accordance with this section [
257
258 (b) [
259 require an owner of property described in Subsection 59-2-1101(3)(a)(iv) or (v) to file an
260 application under Subsection (8)(a) if:
261 (i) the owner filed an application under Subsection (8)(a);
262 (ii) the county board of equalization determines that the owner may claim an
263 exemption for that property; and
264 (iii) the exemption described in Subsection (8)(b)(ii) is in effect.
265 (c) (i) For the time period that an owner is granted an exemption in accordance with
266 this section for property described in Subsection 59-2-1101(3)(a)(iv) or (v), a county board of
267 equalization shall require the owner to file an annual statement on or before March 1 on a form
268 prescribed by the commission establishing that the property continues to be eligible for the
269 exemption.
270 (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
271 commission shall make rules providing:
272 (A) the form for the annual statement required by Subsection (8)(c)(i);
273 (B) the contents of the form for the annual statement required by Subsection (8)(c)(i);
274 and
275 (C) procedures and requirements for making the annual statement required by
276 Subsection (8)(c)(i).
277 (iii) The commission shall make the form described in Subsection (8)(c)(ii)(A)
278 available to counties.
279 (d) On or before April 1, a county board of equalization shall notify each property
280 owner [
281 of the county board of equalization's intent to revoke the exemption.
282 (e) An owner of exempt property described in Subsection 59-2-1101(3)(a)(iv) may file
283 the annual statement described in Subsection (8)(c) after March 1 if the property owner:
284 (i) files the annual statement on or before March 31; and
285 (ii) includes a statement of facts establishing that the property owner was unable to file
286 the annual statement on or before March 1 due to one of the following conditions and no other
287 responsible party was capable of filing the annual statement:
288 (A) a medical emergency of the property owner, an immediate family member of the
289 property owner, or the property owner's agent;
290 (B) the death of the property owner, an immediate family member of the property
291 owner, or the property owner's agent; or
292 (C) other extraordinary and unanticipated circumstances.
293 (9) (a) For purposes of this Subsection (9), "exclusive use exemption" means the same
294 as that term is defined in Section 59-2-1101.
295 (b) For purposes of Subsection (1)(a), when a person acquires property on or after
296 January 1 that qualifies for an exclusive use exemption, that person may apply for the exclusive
297 use exemption on or before the later of:
298 (i) the day set by rule as the deadline for filing a property tax exemption application; or
299 (ii) 120 days after the day on which the property is acquired.
300 (10) (a) Notwithstanding Subsection (1)(c), if a person files an application for an
301 exemption [
302 the decision described in Subsection (1)(c) to the person applying for the exemption on or
303 before the later of:
304 (i) May 15; or
305 (ii) 45 days after the day on which the application for the exemption is filed.
306 (b) Notwithstanding Subsection (5), if an application for an exemption is filed under
307 Subsection (9), a county board of equalization shall hold the hearing and render the decision
308 described in Subsection (5) on or before the later of:
309 (i) May 1; or
310 (ii) 30 days after the day on which the application for the exemption is filed.
311 Section 3. Effective date.
312 This bill takes effect on May 1, 2024.
313 Section 4. Retrospective operation.
314 This bill provides retrospective operation to January 1, 2024.