Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 231 (2023GS)

Sponsor

Rep. Eliason, S.

Final action

Governor Signed 3/14/2023

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• provides the circumstances under which a private owner of property used as permanent supportive housing qualifies as a "nonprofit entity" for purposes of the exclusive use property tax exemption.

Every vote on this bill

Bill text

LOW INCOME HOUSING PROPERTY TAX EXEMPTION
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Steve Eliason
Senate Sponsor: 
Lincoln Fillmore
LONG TITLE
General Description:
This bill amends the definitions related to property tax exemptions in the Property Tax
Act.
Highlighted Provisions:
This bill:
▸ provides the circumstances under which a private owner of property used as
permanent supportive housing qualifies as a "nonprofit entity" for purposes of the
exclusive use property tax exemption.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
59-2-1101
, as last amended by Laws of Utah 2022, Chapter 235
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
59-2-1101
 is amended to read:
59-2-1101.
Definitions -- Exemption of certain property -- Proportional payments
for certain property -- Exception -- County legislative body authority to adopt rules or
ordinances.
(1) As used in this section:
(a) "Charitable purposes" means:
(i) for property used as a nonprofit hospital or a nursing home, the standards outlined in
Howell v. County Board of Cache County ex rel. IHC Hospitals, Inc., 881 P.2d 880 (Utah
1994); and
(ii) for property other than property described in Subsection (1)(a)(i), providing a gift
to the community.
(b) "Compliance period" means a period equal to 15 taxable years beginning with the
first taxable year for which the taxpayer claims a tax credit under Section 42, Internal Revenue
Code, or Section 
59-7-607
 or 
59-10-1010
.
[
(b)
] 
(c)
 (i) "Educational purposes" means purposes carried on by an educational
organization that normally:
(A) maintains a regular faculty and curriculum; and
(B) has a regularly enrolled body of pupils and students.
(ii) "Educational purposes" includes:
(A) the physical or mental teaching, training, or conditioning of competitive athletes by
a national governing body of sport recognized by the United States Olympic Committee that
qualifies as being tax exempt under Section 501(c)(3), Internal Revenue Code; and
(B) an activity in support of or incidental to the teaching, training, or conditioning
described in this Subsection [
(1)(b)(ii)
] 
(1)(c)(ii)
.
[
(c)
] 
(d)
 "Exclusive use exemption" means a property tax exemption under Subsection
(3)(a)(iv), for property owned by a nonprofit entity used exclusively for one or more of the
following purposes:
(i) religious purposes;
(ii) charitable purposes; or
(iii) educational purposes.
[
(d)
] 
(e)
 (i) "Farm machinery and equipment" means tractors, milking equipment and
storage and cooling facilities, feed handling equipment, irrigation equipment, harvesters,
choppers, grain drills and planters, tillage tools, scales, combines, spreaders, sprayers, haying
equipment, including balers and cubers, and any other machinery or equipment used primarily
for agricultural purposes.
(ii) "Farm machinery and equipment" does not include vehicles required to be
registered with the Motor Vehicle Division or vehicles or other equipment used for business
purposes other than farming.
[
(e)
] 
(f)
 "Gift to the community" means:
(i) the lessening of a government burden; or
(ii) (A) the provision of a significant service to others without immediate expectation
of material reward;
(B) the use of the property is supported to a material degree by donations and gifts
including volunteer service;
(C) the recipients of the charitable activities provided on the property are not required
to pay for the assistance received, in whole or in part, except that if in part, to a material
degree;
(D) the beneficiaries of the charitable activities provided on the property are
unrestricted or, if restricted, the restriction bears a reasonable relationship to the charitable
objectives of the nonprofit entity that owns the property; and
(E) any commercial activities provided on the property are subordinate or incidental to
charitable activities provided on the property.
[
(f)
] 
(g)
 "Government exemption" means a property tax exemption provided under
Subsection (3)(a)(i), (ii), or (iii).
[
(g)
] 
(h)
 (i) "Nonprofit entity" means an entity:
(A) that is organized on a nonprofit basis, that dedicates the entity's property to the
entity's nonprofit purpose, and that makes no dividend or other form of financial benefit
available to a private interest;
(B) for which, upon dissolution, the entity's assets are distributable only for exempt
purposes under state law or to the government for a public purpose; and
(C) for which none of the net earnings or donations made to the entity inure to the
benefit of private shareholders or other individuals, as the private inurement standard has been
interpreted under Section 501(c)(3), Internal Revenue Code.
(ii) "Nonprofit entity" includes an entity:
(A) if the entity is treated as a disregarded entity for federal income tax purposes and
wholly owned by, and controlled under the direction of, a nonprofit entity; and
(B) for which none of the net earnings and profits of the entity inure to the benefit of
any person other than a nonprofit entity.
(iii) "Nonprofit entity" includes an entity that is not an entity described in Subsection
(1)(h)(i) if the entity jointly owns a property that:
(A) is used for the purpose of providing permanent supportive housing;
(B) has an owner that is an entity described in Subsection (1)(h)(i) or that is a housing
authority that operates the permanent supportive housing;
(C) has an owner that receives public funding from a federal, state, or local government
entity to provide support services and rental subsidies to the permanent supportive housing;
(D) is intended to be transferred at or before the end of the compliance period to an
entity described in Subsection (1)(h)(i) or a housing authority that will continue to operate the
property as permanent supportive housing; and
(E) has been certified by the Utah Housing Corporation as meeting the requirements
described in Subsections (1)(h)(iii)(A) through (D).
(i) "Permanent supportive housing" means a housing facility that:
(i) provides supportive services;
(ii) makes a 15-year commitment to provide rent subsidies to tenants of the housing
facility when the housing facility is placed in service;
(iii) receives an allocation of federal low-income housing tax credits in accordance
with 26 U.S.C. Sec. 42; and
(iv) leases each unit to a tenant:
(A) who, immediately before leasing the housing, was homeless as defined in 24
C.F.R. 583.5; and
(B) whose rent is capped at no more than 30% of the tenant's household income.
(j) "Supportive service" means a service that is an eligible cost under 24 C.F.R. 578.53.
[
(h)
] 
(k)
 "Tax relief" means an exemption, deferral, or abatement that is authorized by
this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
(2) (a) Except as provided in Subsection (2)(b) or (c), tax relief may be allowed only if
the claimant is the owner of the property as of January 1 of the year the exemption is claimed.
(b) Notwithstanding Subsection (2)(a), a claimant shall collect and pay a proportional
tax based upon the length of time that the property was not owned by the claimant if:
(i) the claimant is a federal, state, or political subdivision entity described in
Subsection (3)(a)(i), (ii), or (iii); or
(ii) pursuant to Subsection (3)(a)(iv):
(A) the claimant is a nonprofit entity; and
(B) the property is used exclusively for religious, charitable, or educational purposes.
(c) Subsection (2)(a) does not apply to an exemption described in Part 19, Armed
Forces Exemptions .
(3) (a) The following property is exempt from taxation:
(i) property exempt under the laws of the United States;
(ii) property of:
(A) the state;
(B) school districts; and
(C) public libraries;
(iii) except as provided in Title 11, Chapter 13, Interlocal Cooperation Act, property of:
(A) counties;
(B) cities;
(C) towns;
(D) local districts;
(E) special service districts; and
(F) all other political subdivisions of the state;
(iv) except as provided in Subsection (6) or (7), property owned by a nonprofit entity
used exclusively for one or more of the following purposes:
(A) religious purposes;
(B) charitable purposes; or
(C) educational purposes;
(v) places of burial not held or used for private or corporate benefit;
(vi) farm machinery and equipment;
(vii) a high tunnel, as defined in Section 
10-9a-525
;
(viii) intangible property; and
(ix) the ownership interest of an out-of-state public agency, as defined in Section
11-13-103
:
(A) if that ownership interest is in property providing additional project capacity, as
defined in Section 
11-13-103
; and
(B) on which a fee in lieu of ad valorem property tax is payable under Section
11-13-302
.
(b) For purposes of a property tax exemption for property of school districts under
Subsection (3)(a)(ii)(B), a charter school under Title 53G, Chapter 5, Charter Schools, is
considered to be a school district.
(4) Subject to Subsection (5), if property that is allowed an exclusive use exemption or
a government exemption ceases to qualify for the exemption because of a change in the
ownership of the property:
(a) the new owner of the property shall pay a proportional tax based upon the period of
time:
(i) beginning on the day that the new owner acquired the property; and
(ii) ending on the last day of the calendar year during which the new owner acquired
the property; and
(b) the new owner of the property and the person from whom the new owner acquires
the property shall notify the county assessor, in writing, of the change in ownership of the
property within 30 days from the day that the new owner acquires the property.
(5) Notwithstanding Subsection (4)(a), the proportional tax described in Subsection
(4)(a):
(a) is subject to any exclusive use exemption or government exemption that the
property is entitled to under the new ownership of the property; and
(b) applies only to property that is acquired after December 31, 2005.
(6) (a) A property may not receive an exemption under Subsection (3)(a)(iv) if:
(i) the nonprofit entity that owns the property participates in or intervenes in any
political campaign on behalf of or in opposition to any candidate for public office, including
the publishing or distribution of statements; or
(ii) a substantial part of the activities of the nonprofit entity that owns the property
consists of carrying on propaganda or otherwise attempting to influence legislation, except as
provided under Subsection 501(h), Internal Revenue Code.
(b) Whether a nonprofit entity is engaged in an activity described in Subsection (6)(a)
shall be determined using the standards described in Section 501, Internal Revenue Code.
(7) A property may not receive an exemption under Subsection (3)(a)(iv) if:
(a) the property is used for a purpose that is not religious, charitable, or educational;
and
(b) the use for a purpose that is not religious, charitable, or educational is more than de
minimis.
(8) A county legislative body may adopt rules or ordinances to:
(a) effectuate the exemptions, deferrals, abatements, or other relief from taxation
provided in this part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces
Exemptions; and
(b) designate one or more persons to perform the functions given the county under this
part, Part 18, Tax Deferral and Tax Abatement, or Part 19, Armed Forces Exemptions.
(9) If a person is dissatisfied with a tax relief decision made under designated
decision-making authority as described in Subsection (8)(b), that person may appeal the
decision to the commission under Section 
59-2-1006
.
Section 2. 
Retrospective operation.
This bill has retrospective operation to January 1, 2023.