COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 133
(By Senator Plymale)
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[Originating in the Committee on Education;
reported February 8, 2008.]
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A BILL to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §11-3-9a, relating
generally to payment in lieu of property tax agreements;
prescribing uniform minimum reporting and content requirements
for payment in lieu of property tax agreements; requiring that
agreements be filed in county clerk's office and with chief
inspector and Secretary of Revenue and updated annually;
requiring authorized representative of certain entities,
including each local levying body, to execute payment in lieu
of property tax agreements; permitting chief inspector to
specify content of agreement and summaries by procedural
rules; specifying method for allocation and distribution of
payments in lieu of property taxes, whether payment is
received in money or other property; specifying how in lieu of
property tax payments received by a board of education are
treated for purpose of state school aid formula; defining
certain terms; specifying when and how these rules apply and exempting certain agreements from their application; and
providing effective dates.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §11-3-9a, to read as
follows:
ARTICLE 3. ASSESSMENTS GENERALLY.
§11-3-9a. Payment in lieu of property tax agreements.
(a)
In general. -- Local levying bodies that enter into
payment in lieu of tax agreements with lessees of exempt property
shall comply with the provisions of this section.
(b)
Pilot agreement requirements. -- The following
requirements apply to payment in lieu of tax agreements executed
after the effective date of this section:
(1) A payment in lieu of tax agreement may not be executed
unless the property to which the payment in lieu of tax relates is
or, on the effectiveness of the implementing transactions, is
expected to be exempt property.
(2) The payment in lieu of tax agreement shall be executed by
an authorized representative of the following entities after
discussion of the agreement at a regular or special meeting of the
levying body:
(A) Each local levying body having taxing jurisdiction;
(B) The owner of the exempt property or the tax-exempt person
that, on the effectiveness of the implementing transactions, is expected to own the exempt property to the extent that it is not an
entity described in paragraph (A) of this subdivision;
(C) The lessee of the exempt property or the person that, on
the effectiveness of the implementing transactions, is expected to
be the lessee of the exempt property; and
(D) The person that is obligated to make the payment in lieu
of tax or the person that, on the effectiveness of the implementing
transactions, is expected to be obligated to make the payment in
lieu of tax to the extent that the person is not an entity
described in paragraph (C) of this subdivision.
(3) The payment in lieu of tax agreement shall contain a
summary statement in the form prescribed by the chief inspector in
procedural rules promulgated as provided in article three, chapter
twenty-nine-a of this code showing:
(A) The fair market value, as of the first day of the most
recently concluded assessment year preceding the date of the
payment in lieu of tax agreement of: (i) The exempt real property
or the real property that, on the effectiveness of the implementing
transactions, will be exempt real property; and (ii) the exempt
personal property or the tangible personal property that, on the
effectiveness of the implementing transactions, will be exempt
personal property to the extent the tangible personal property
existed as of that date;
(B) A projection of the fair market value of the tangible
personal property that, on the effectiveness of the implementing
transactions, is expected to be exempt personal property to the extent the tangible personal property did not exist as of the first
day of the most recently concluded assessment year preceding the
date of the payment in lieu of taxes agreement;
(C) A description of the exempt real property or the real
property that, on the effectiveness of the implementing
transactions, is expected to be exempt real property;
(D) A description of the exempt personal property or the
tangible personal property that, on the effectiveness of the
implementing transactions, is expected to be exempt personal
property;
(E) The amount of the annual payment in lieu of tax or if the
payment in lieu of tax is to be paid or made, in whole or in part,
in property other than money or in a form of consideration other
than money, a complete description of the annual payment in lieu of
tax and the fair market value of the property other than money;
(F) The term of the payment in lieu of tax agreement; and
(G) Any other information the chief inspector may by
procedural rule require to be included in the summary statement.
(4) The reporting party shall file a copy of the payment in
lieu of tax agreement, including the summary statement, and such
other documentation and information as the chief inspector may
require by procedural rule, with the clerk of the county commission
of the county or counties in which the exempt property is located,
the chief inspector and the Secretary of Revenue. The reporting
party shall make these filings not later than the first day of
November next succeeding the end of the reporting party's fiscal year during which the payment in lieu of taxes agreement is dated.
The Secretary of Revenue shall make a copy of the payment in lieu
of tax agreement available to any member of the public upon
request.
(5) The reporting party shall annually update the summary
statement and file the updated summary statement with the clerk of
the county commission of the county or counties in which the exempt
property is located, the chief inspector and the Secretary of
Revenue. The updated summary statement shall include the appraised
value, as of the first day of the most recently concluded
assessment year preceding the date of the updated summary statement
of: (i) The exempt real property or the real property that, on the
effectiveness of the implementing transactions, will be exempt real
property; and (ii) the exempt personal property or the tangible
personal property that, on the effectiveness of the implementing
transactions, will be exempt personal property. The updated
summary statement shall also include additional information as the
chief inspector may require by procedural rule. The reporting
party shall file the updated summary statement after the first day
of July but before the first day of November of each year during
the term of the payment in lieu of tax agreement.
(6) For each filing of a summary statement or updated summary
statement pursuant to subdivision (4) or (5) of this subsection,
the appraised value of the exempt property is based on an appraisal
by the county assessor or the property Tax Division of the
Department of Revenue, as the nature of the exempt property may require, to the extent that the exempt property exists and has been
appraised.
(c)
Allocation and distribution of payments under Pilot
agreement. -- All payments in lieu of tax made to any county
commission, county board of education or municipality or to any
county sheriff pursuant to any payment in lieu of tax agreement
executed or entered into, or coming into existence on or after the
first day of July, two thousand eight, without regard to whether
the payment in lieu of tax related thereto is in conformance with
other requirements of this section, shall be distributed in the
same proportions as property tax revenues, including special levy
revenues, are distributed for the tax year in which the payment is
received among all local levying bodies that would have received
tax revenues, including special levy revenues, if the payment in
lieu of tax resulted from ad valorem property taxation of the
property to which the payment in lieu of tax relates. Payments in
lieu of tax made in the form of transfers of property other than
money, transfers of in-kind consideration or transfers of any
consideration other than money is valued at its then fair market
value and any entity receiving the in-kind consideration shall
promptly pay to the other levying bodies the money they would have
received had the in-lieu payment been paid in money to the county
sheriff.
(d)
Effect of in-lieu payments on state aid to public schools.
-- The allocated state aid share under the state school aid formula
set forth in article nine-a, chapter eighteen of this code is adjusted in any county receiving any payments in lieu of tax under
agreements subject to any provision of this section in accordance
with the requirements of section twelve, article nine-a, chapter
eighteen of this code.
(e)
Certain terms defined. -- When used in this section, or in
the administration of this section, the following terms shall have
the meanings ascribed to them by this subsection unless a different
meaning is clearly required by the context in which the term is
used.
(1) "Chief inspector" means the State Auditor acting in his or
her capacity as chief inspector and supervisor of local government
offices as described in section eleven, article nine, chapter six
of this code.
(2) "Exempt property" means exempt personal property and
exempt real property.
(3) "Exempt personal property" means, with respect to any
payment in lieu of tax agreement, tangible personal property that
is exempt from ad valorem property tax because it is owned by a
tax-exempt person as a result of an implementing transaction.
(4) "Exempt real property" means, with respect to any payment
in lieu of tax agreement, real property that is exempt from ad
valorem property tax because it is owned by a tax-exempt person as
a result of an implementing transaction.
(5) "Implementing transactions" means, collectively and with
respect to any parcel of real property or any item of tangible
personal property covered by a payment in lieu of tax agreement, the execution and delivery of any lease agreement, trust indenture,
deed of trust, security agreement, financing statement, request for
exchange or other related agreement or instrument, the issuance,
authentication, registration and delivery of any industrial
development bond or other revenue bond pursuant to any applicable
provision of this code, the enactment of any bond ordinance, the
adoption of any bond resolution, or the conveyance by deed of the
real property or the transfer by bill of sale of the tangible
personal property to a tax-exempt person, the intended effect all
of which is to transfer the property to a tax-exempt person and to
lease the property back to a lessee.
(6) "Lessee" means and includes any person that enters upon,
holds, uses, occupies or operates any exempt property for any
commercial or for profit purpose, without regard to whether the
entry, holding, occupation, use or operation occurs pursuant to a
formal lease or other agreement:
Provided, That the term "lessee"
does not mean or include any tax-exempt person that owns exempt
property as a result of an implementing transaction. The term
"lessee" means and includes any lessee, sublessee, assignee,
subassignee, any affiliate, agent or representative of any lessee,
sublessee, assignee, subassignee or any person having a direct,
indirect or derivative right or privilege, granted by or agreed to
by any owner of exempt property, to enter upon, hold, occupy, use
or operate the exempt property, including, but not limited to, any
contract operator or other person engaged in entry, holding, use,
occupation or operation of the property for the purpose of directly or indirectly deriving gain, income or profit for such operator or
person, or for another person.
(7) "Local levying body having taxing jurisdiction" means a
county board of education and a county commission that has
jurisdiction to tax the property, or that would have jurisdiction
to tax the property if the property were not exempt property and
includes the governing body of a municipality when the exempt
property is located, in whole or in part, within the corporate
boundaries of the municipality.
(8) "Payment in lieu of tax" means any payment received as a
substitute for, or instead of, an ad valorem property tax. For
purposes of this definition, the term "payment" includes any
transfer or contribution of money, property, in-kind consideration
or any other consideration without regard to whether any formal or
written payment in lieu of tax agreement exists with relation to
the payment.
(A) Any payment, as defined in this section, made by a lessee
or any affiliate of a lessee to any local levying body having
taxing jurisdiction over the property entered upon, held, used,
occupied or operated by the lessee or any payment made to any other
person at the request or direction of any levying body or any
officer, employee, agent or representative thereof, constitutes a
payment in lieu of tax if the payment is made as a substitute for
property tax.
(B) Any payment not made as direct consideration for the
purchase of property or services, for payment of due and owing local, county or municipal service fees or for payment of due and
owing taxes, is presumed to be a payment in lieu of tax subject to
the requirements of this section. Payments characterized as
charitable, eleemosynary or public service contributions made by a
lessee or any affiliate of a lessee to any local levying body
having taxing jurisdiction over the exempt property held, used,
occupied or operated by the lessee, or payments made to any other
person at the request or direction of any levying body or at the
request or direction of any officer, employee, agent or
representative thereof, is presumed to be a payment in lieu of tax
subject to this section.
(9) "Payment in lieu of tax agreement" means any agreement,
arrangement or understanding for making payment in lieu of tax
between any lessee and any local levying body having taxing
jurisdiction over exempt property entered upon, held, used,
occupied or operated by the lessee.
(10) "Person" means and includes any individual, firm,
association, company, partnership, limited partnership,
corporation, joint-stock company, agency, syndicate, limited
liability company, trust, receiver, trustee, fiduciary,
conservator, other legal entity or any other group or combination
acting as a unit, in the plural as well as the singular number,
unless the intention to give a more limited meaning is disclosed by
the context in which the term is used.
(11) "Public infrastructure improvement" means waste disposal
systems, water and sewer line extensions, water distribution and
treatment facilities and sewage treatment facilities.
(12) "Reporting party" means the owner of exempt property or
the tax-exempt person that, on the effectiveness of the
implementing transactions, will own exempt property.
(13) "Tax-exempt person" means any person, organization,
entity or agency, including, but not limited to, the United States,
this state, any other state of the United States, any territory or
protectorate of the United States or any other governmental entity,
agency division or subdivision, that is authorized to own real
property and personal property on a tax-exempt basis.
(f)
Exceptions to application of this section. -- This section
does not apply to, or with relation to, property held in a foreign
trade zone that is exempt from tax under 19 U.S.C. §81o(e) or any
successor section thereto, or any interest therein, or to, or with
relation to, property exempt from tax under the freeport exemption
set forth in section one-c, article X of the Constitution of this
state and section thirteen, article five of this chapter, or with
relation to, any interest therein.
(g)
Effective date. -- This section takes effect the first day
of July, two thousand eight, and applies to all payment in lieu of
tax agreements executed on or after that date, subject to the
following:
(1) The information and filing requirements of subsection (b)
of this section also apply to payment in lieu of tax agreements that were executed before the first day of July, two thousand eight
and remain in effect on that date; and
(2) For payment in lieu of tax agreements that were executed
before the first day of July, two thousand eight and remain in
effect on that date, the reporting party shall file the agreement,
including the summary statement, and other required documentation
and information with the clerk of the county commission of the
county or counties in which the exempt property is located, the
chief inspector and the Secretary of Revenue on or before the first
day of November, two thousand eight.