Utah Code 11-13-302. Payment of fee in lieu of ad valorem property tax by certain energy suppliers — Method of calculating — Collection — Extent of tax lien
Superseded 7/1/2023 11-13-302. Payment of fee in lieu of ad valorem property tax by certain energy suppliers — Method of calculating — Collection — Extent of tax lien.
(1)
Terms Used In Utah Code 11-13-302
Additional project capacity: means electric generating capacity provided by a generating unit that first produces electricity on or after May 6, 2002, and that is constructed or installed at or adjacent to the site of a project that first produced electricity before May 6, 2002, regardless of whether:
(i)
the owners of the new generating unit are the same as or different from the owner of the project; and
(ii)
the purchasers of electricity from the new generating unit are the same as or different from the purchasers of electricity from the project. See Utah Code 11-13-103
Candidate: means one or more of:
(a)
the state;
(b)
a county, municipality, school district, special district, special service district, or other political subdivision of the state; and
Contract: A legal written agreement that becomes binding when signed.
Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
Lien: A claim against real or personal property in satisfaction of a debt.
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
Project: includes a project entity's ownership interest in:
(i)
facilities that provide additional project capacity;
Project entity: means a Utah interlocal entity or an electric interlocal entity that owns a project as defined in this section. See Utah Code 11-13-103
Public agency: means :
(a)
a city, town, county, school district, special district, special service district, an interlocal entity, or other political subdivision of the state;
(b)
the state or any department, division, or agency of the state;
(c)
any agency of the United States;
(d)
any political subdivision or agency of another state or the District of Columbia including any interlocal cooperation or joint powers agency formed under the authority of the law of the other state or the District of Columbia; or
(e)
any Indian tribe, band, nation, or other organized group or community which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. See Utah Code 11-13-103
State: when applied to the different parts of the United States, includes a state, district, or territory of the United States. See Utah Code 68-3-12.5
(a)
Each project entity created under this chapter that owns a project and that sells any capacity, service, or other benefit from it to an energy supplier or suppliers whose tangible property is not exempted by Utah Constitution Article XIII, Section 3, from the payment of ad valorem property tax, shall pay an annual fee in lieu of ad valorem property tax as provided in this section to each taxing jurisdiction within which the project or any part of it is located.
(b)
For purposes of this section, “annual fee” means the annual fee described in Subsection (1)(a) that is in lieu of ad valorem property tax.
(c)
The requirement to pay an annual fee shall commence:
(i)
with respect to each taxing jurisdiction that is a candidate receiving the benefit of impact alleviation payments under contracts or determination orders provided for in Sections 11-13-305 and 11-13-306, with the fiscal year of the candidate following the fiscal year of the candidate in which the date of commercial operation of the last generating unit, other than any generating unit providing additional project capacity, of the project occurs, or, in the case of any facilities providing additional project capacity, with the fiscal year of the candidate following the fiscal year of the candidate in which the date of commercial operation of the generating unit providing the additional project capacity occurs; and
(ii)
with respect to any taxing jurisdiction other than a taxing jurisdiction described in Subsection (1)(c)(i), with the fiscal year of the taxing jurisdiction in which construction of the project commences, or, in the case of facilities providing additional project capacity, with the fiscal year of the taxing jurisdiction in which construction of those facilities commences.
(d)
The requirement to pay an annual fee shall continue for the period of the useful life of the project or facilities.
(2)
(a)
The annual fees due a school district shall be as provided in Subsection (2)(b) because the ad valorem property tax imposed by a school district and authorized by the Legislature represents both:
(i)
a levy mandated by the state for the state minimum school program under Section 53F-2-301 or 53F-2-301.5, as applicable; and
The annual fees due a school district shall be as follows:
(i)
the project entity shall pay to the school district an annual fee for the state minimum school program at the rate imposed by the school district and authorized by the Legislature under Section 53F-2-301 or 53F-2-301.5, as applicable ; and
(ii)
for all other local property tax levies authorized to be imposed by a school district, the project entity shall pay to the school district either:
(A)
an annual fee; or
(B)
impact alleviation payments under contracts or determination orders provided for in Sections 11-13-305 and 11-13-306.
(3)
(a)
An annual fee due a taxing jurisdiction for a particular year shall be calculated by multiplying the tax rate or rates of the jurisdiction for that year by the product obtained by multiplying the fee base or value determined in accordance with Subsection (4) for that year of the portion of the project located within the jurisdiction by the percentage of the project which is used to produce the capacity, service, or other benefit sold to the energy supplier or suppliers.
(b)
As used in this section, “tax rate,” when applied in respect to a school district, includes any assessment to be made by the school district under Subsection (2) or Section 63M-5-302.
(c)
There is to be credited against the annual fee due a taxing jurisdiction for each year, an amount equal to the debt service, if any, payable in that year by the project entity on bonds, the proceeds of which were used to provide public facilities and services for impact alleviation in the taxing jurisdiction in accordance with Sections 11-13-305 and 11-13-306.
(d)
The tax rate for the taxing jurisdiction for that year shall be computed so as to:
(i)
take into account the fee base or value of the percentage of the project located within the taxing jurisdiction determined in accordance with Subsection (4) used to produce the capacity, service, or other benefit sold to the supplier or suppliers; and
(ii)
reflect any credit to be given in that year.
(4)
(a)
Except as otherwise provided in this section, the annual fees required by this section shall be paid, collected, and distributed to the taxing jurisdiction as if:
(i)
the annual fees were ad valorem property taxes; and
(ii)
the project were assessed at the same rate and upon the same measure of value as taxable property in the state.
(b)
(i)
Notwithstanding Subsection (4)(a), for purposes of an annual fee required by this section, the fee base of a project may be determined in accordance with an agreement among:
(A)
the project entity; and
(B)
any county that:
(I)
is due an annual fee from the project entity; and
(II)
agrees to have the fee base of the project determined in accordance with the agreement described in this Subsection (4).
(ii)
The agreement described in Subsection (4)(b)(i):
(A)
shall specify each year for which the fee base determined by the agreement shall be used for purposes of an annual fee; and
(B)
may not modify any provision of this chapter except the method by which the fee base of a project is determined for purposes of an annual fee.
(iii)
For purposes of an annual fee imposed by a taxing jurisdiction within a county described in Subsection (4)(b)(i)(B), the fee base determined by the agreement described in Subsection (4)(b)(i) shall be used for purposes of an annual fee imposed by that taxing jurisdiction.
(iv)
(A)
If there is not agreement as to the fee base of a portion of a project for any year, for purposes of an annual fee, the State Tax Commission shall determine the value of that portion of the project for which there is not an agreement:
(I)
for that year; and
(II)
using the same measure of value as is used for taxable property in the state.
(B)
The valuation required by Subsection (4)(b)(iv)(A) shall be made by the State Tax Commission in accordance with rules made by the State Tax Commission.
(c)
Payments of the annual fees shall be made from:
(i)
the proceeds of bonds issued for the project; and
(ii)
revenues derived by the project entity from the project.
(d)
(i)
The contracts of the project entity with the purchasers of the capacity, service, or other benefits of the project whose tangible property is not exempted by Utah Constitution Article XIII, Section 3, from the payment of ad valorem property tax shall require each purchaser, whether or not located in the state, to pay, to the extent not otherwise provided for, its share, determined in accordance with the terms of the contract, of these fees.
(ii)
It is the responsibility of the project entity to enforce the obligations of the purchasers.
(5)
(a)
The responsibility of the project entity to make payment of the annual fees is limited to the extent that there is legally available to the project entity, from bond proceeds or revenues, money to make these payments, and the obligation to make payments of the annual fees is not otherwise a general obligation or liability of the project entity.
(b)
No tax lien may attach upon any property or money of the project entity by virtue of any failure to pay all or any part of an annual fee.
(c)
The project entity or any purchaser may contest the validity of an annual fee to the same extent as if the payment was a payment of the ad valorem property tax itself.
(d)
The payments of an annual fee shall be reduced to the extent that any contest is successful.
(6)
(a)
The annual fee described in Subsection (1):
(i)
shall be paid by a public agency that:
(A)
is not a project entity; and
(B)
owns an interest in a facility providing additional project capacity if the interest is otherwise exempt from taxation pursuant to Utah Constitution, Article XIII, Section 3; and
(ii)
for a public agency described in Subsection (6)(a)(i), shall be calculated in accordance with Subsection (6)(b).
(b)
The annual fee required under Subsection (6)(a) shall be an amount equal to the tax rate or rates of the applicable taxing jurisdiction multiplied by the product of the following:
(i)
the fee base or value of the facility providing additional project capacity located within the jurisdiction;
(ii)
the percentage of the ownership interest of the public agency in the facility; and
(iii)
the portion, expressed as a percentage, of the public agency’s ownership interest that is attributable to the capacity, service, or other benefit from the facility that is sold, including any subsequent sale, resale, or layoff, by the public agency to an energy supplier or suppliers whose tangible property is not exempted by Utah Constitution, Article XIII, Section 3, from the payment of ad valorem property tax.
(c)
A public agency paying the annual fee pursuant to Subsection (6)(a) shall have the obligations, credits, rights, and protections set forth in Subsections (1) through (5) with respect to its ownership interest as though it were a project entity.
(d)
On or before March 1 of each year, a project entity that owns a project and that provides any capacity, service, or other benefit to an energy supplier or a public agency shall file an electronic report with the State Tax Commission that identifies:
(i)
each energy supplier and public agency to which the project entity delivers capacity, service, or other benefit; and
(ii)
the amount of capacity, service, or other benefit delivered to each energy supplier and public agency.
