SB 149 Text

Introduced Version Senate Bill 149 History

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sb149 intr Senate Bill No. 149
(By Senator Plymale)
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[Introduced February 10, 2005; referred to the Committee
on the Judiciary; and then to the Committee on Finance.]
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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 tax agreements; requiring that agreements be filed in county clerk's office and with Chief Inspector and Secretary of Tax and Revenue and updated annually; requiring that local levying bodies approve payment in lieu of 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: Provided, That any payment in lieu of tax agreement under which a public entity receives the entire amount of moneys that otherwise would be paid as ad valorem property tax for use in financing the acquisition and construction of public infrastructure improvements shall be subject only to the provisions of subsection (h) or (i) of this section and to no other 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 tax and 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.
(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 tax and 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) Application of this section. -- This section applies to all payments in lieu of tax agreements executed after the thirtieth day of June, two thousand five. This section also applies to any payment in lieu of tax agreement executed on or before the date that is amended after the ninth day of March, two thousand three, so as to extend the original term thereof.
(d) 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 five, 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 taxes are distributed for the tax year in which the payment is received among all local levying bodies that would have received tax 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.
(e) 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.
(f) 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.
(g) 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.
(h) Application to certain public infrastructure projects. --
In any payment in lieu of tax agreement under which a public entity receives the entire amount of moneys that otherwise would be paid as ad valorem property tax for use in financing the acquisition and construction of public infrastructure improvements, the lessee shall file 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 tax and revenue: (i) The lease agreement between the lessee and the tax-exempt person that owns or is expected to own the exempt property; (ii) the agreement by which the lessee is obligated to make payments to the public entity for use in financing the acquisition and construction of public infrastructure improvements; and (iii) the information required in the summary statement described in subdivision (3), subsection (b) of this section to the extent the property tax division of the Department of Revenue has performed an appraisal or updated appraisal, as the case may be, of the exempt property. The lessee shall make an initial filing not later than the date set forth in subdivision (4), subsection (b) of this section and subsequent annual filings during the term of the lease agreement to the extent the property tax division has performed an updated appraisal of the exempt property covered by the lease agreement not later than the date set forth in subdivision (5), subsection (b) of this section.
(i) PILOT agreements executed before the first day of July, two thousand five. - The owner or the lessee of any exempt property that is subject to a payment in lieu of tax agreement executed at any time prior to the first day of July, two thousand five, that remains in effect on and after that day shall, on or before the first day of November, two thousand five, file a copy of the agreement with the clerk of the county commission of the county in which the exempt property is located, the chief inspector and the secretary of tax and revenue.
(j) Effective date. -- This section takes effect the first day of July, two thousand five, and applies to all payment in lieu of tax agreements executed on or after that date, except as otherwise expressly provided in this section, and to agreements executed before that date, but only to the extent expressly provided in this section.

NOTE: The purpose of this bill is to prescribe uniform minimum reporting and content requirements for payment in lieu of tax agreements, to require that all local levying bodies approve a payment in lieu of tax agreement and to provide for allocation and distribution of payments in lieu of property tax. These rules would apply to payment in lieu of property tax agreements executed after June 30, 2005.

This section is new; therefore, strike-throughs and underscoring have been omitted.