Property Tax Exemption is the Tool

On June 13, Senate Bill (SB) 311B took one of its final steps to passage by being amended and approved by the House Committee on Revenue. The bill had passed the Senate with no “nay” votes, and the House Committee action was also without objection.

SB 311B authorizes a city or county to adopt an ordinance or resolution providing exemption or partial exemption from ad valorem property taxation to an eligible property that will be seismically retrofitted. The bill requires the adopted ordinance or resolution to state the percentage of the exemption to be applied to the real market value of the eligible property, and allows for a 15 year exemption period. Exemption eligibility ends at the earlier of specified period of years or the date on which the dollar amount of the tax benefit of the exemption equals the eligible costs for the property. SB 311B defines eligible property as improvements built before January 1, 1993 that constitute a commercial, industrial, or multifamily building that is not centrally assessed or state appraised industrial property. It defines eligible costs as costs directly related to the work necessary to seismically retrofit the eligible property and incurred after an application relating to retrofit has been approved. It specifies costs not to be included as eligible costs, and reduces the amount of eligible costs by the amount of other government incentives received.

SB 311B requires a high standard of agreement among local taxing districts by requiring rates of taxation of the taxing districts located within the territory of the city or county, when combined with city/county rate of taxation, to equal or exceed 75percent of the total combined rate of taxation within the territory of the city or county for exemption to become effective. The bill requires taxing district governing bodies agreeing to the exemption or partial exemption to impose a limit on the total amount of exemptions and partial exemptions that may be approved. It specifies administrative and filing responsibilities of city/county, county assessor, and property owner. The bill provides authority to the city/county to further restrict eligible property by property type, impose any other non-conflicting conditions, and impose an application fee.

Other bill requirements:

– A fee to be paid to the assessor to compensate the assessor for specified duties.
– Proposed seismic retrofitting to meet specified performance standard.
– Reporting of other government retrofitting incentives received.
– Back taxes to be imposed and collected in instances of exemption disqualification.
– Computation of maximum assessed value and assessed value in certain circumstances.
– Sunsets the initial application for exemption on January 2, 2028 with eligible property granted exemption before the sunset date allowed to qualify for exemption for duration of the qualification period.

Contributed by: Gil Riddell | AOC Policy Director