HLS 18RS-142 ORIGINAL
2018 Regular Session
HOUSE BILL NO. 382
BY REPRESENTATIVE CONNICK
TAX/AD VALOREM TAX: Provides with respect to the development of appraisals and
assessments of public service properties by the La. Tax Commission
1 AN ACT
2To amend and reenact R.S. 47:1853 and 1855(E) and (G), and to enact R.S. 47:1852(F) and
3 1855(I), relative to ad valorem property tax; to provide with respect to the appraisal
4 of public service properties by the Louisiana Tax Commission; to require the
5 development of an audit program; to require that certain methods and procedures be
6 established by administrative rule; to require a report by the Legislative Auditor; and
7 to provide for related matters.
8Be it enacted by the Legislature of Louisiana:
9 Section 1. R.S. 47:1853 and 1855(E) and (G) are hereby amended and reenacted and
10R.S. 47:1852(F) and 1855(I) are hereby enacted to read as follows:
11 §1852. Duty to file annual reports
12 * * *
13 F. The Louisiana Tax Commission shall establish a risk-based audit program
14 to verify the accuracy of self-reported information which is not known or cannot
15 reasonably be assumed to have been audited by any other entity. Any such program
16 shall adhere to standards established by the National Conference of Unit Value States
17 to the degree practicable given the resources of the commission.
18 * * *
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1 §1853. Appraisal of public service properties
2 A. In accordance with the provisions of this Section and Sections 1854 and
3 1855 R.S. 47:1854 and 1855, the Louisiana Tax Commission, hereinafter referred
4 to in this Section as "commission", shall, on or before September first of each
5 calendar year, appraise, for taxation, public service properties based upon each
6 company's report, as defined in Section 1852(A) and such other information as may
7 be available to the Louisiana Tax Commission commission. In the absence of a
8 report, the Louisiana Tax Commission commission shall appraise the properties of
9 any company failing to file such a report upon any information which the Louisiana
10 Tax Commission commission, in its best judgment, deems sufficient.
11 B.(1) In appraising public service properties, the Louisiana Tax Commission
12 commission shall:
13 (a) Employ all of the following nationally recognized techniques of
14 appraisal, where applicable, to best determine fair market value:
15 (i) The market approach.
16 (ii) The cost approach.
17 (iii) The income approach, which includes an accounting for expected future
18 income growth.
19 (b) Assign such weight to each approach as is appropriate to best determine
20 fair market value.
21 (2)(a) However, all public service properties of the same nature and kind
22 shall be appraised in the same manner. The appraised value of all lands owned by
23 the company in this state shall be deducted from the total appraised value of the
24 public service properties and shall be assessed by the Louisiana Tax Commission
25 commission and shown as a separate item on the tax roll.
26 (b) To facilitate adherence to a consistent equitable statewide appraisal
27 process, the commission shall establish by administrative rule, minimum standards
28 for procedures, methods, and formulas to be used in appraisals required under this
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HB NO. 382
1 Section, which shall include guidance as to the apportionment of property as required
2 under R.S. 47:1855.
3 (3) Notwithstanding any other law to the contrary, for the years 1993 and
4 1994, the commission shall allocate the value of all inventories of natural gas owned
5 by a pipeline company in this state to each tax jurisdiction in which the inventories
6 are located according to its long-held administrative construction and interpretation
7 of the law. At the expiration of the time provided herein, the commission shall
8 develop a fair, equitable, and consistent system of valuation of such inventories for
9 all parishes affected by any revisions to ad valorem property tax procedures,
10 including but not limited to the parishes of Bienville, East Carroll, Lincoln, and West
11 Carroll.
12 (3) The commission shall maintain within its record for each appraisal, the
13 rationale for the determination of the appraisal approach utilized in the valuation.
14 C. For purposes of accurate appraisal utilizing contemporary methods and
15 information, the commission shall conduct a capitalization rate study at least once
16 every three years, beginning in 2019, for each type of public service property for
17 which it is responsible for appraisal pursuant to law and the Constitution of
18 Louisiana. The studies for the various types of property shall reflect the unit
19 valuation standards established by the National Conference of Unit Value States and
20 shall set forth the specific capitalization rates to be utilized with the respective direct
21 or yield capitalization methods as such may be employed in the appraisal of each
22 type of property for a certain time period. The studies shall be available on the
23 commission's website.
24 D. For purposes of annual appraisals for computation of assessments, the
25 capitalization rates to be utilized with the respective direct or yield capitalization
26 methods and the range of growth rates to be used in income approach valuations for
27 the prospective year shall be established by rule promulgated in accordance with the
28 Administrative Procedure Act at the same time that the commission issues rules for
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1 minimum standards for assessments and appraisals as authorized under R.S.
2 47:1837(D), or at any other time as may be determined by the commission.
3 E. The legislative auditor shall develop a schedule to conduct performance
4 audits of the appraisal methods used by the commission in valuation of public
5 service properties to provide a report to the legislature approximately every three
6 years, beginning 2019 through 2030. An audit report may include recommendations
7 as to methods and procedures utilized in the appraisal process, as well as conclusions
8 as to the material correctness of capitalization rates derived from capitalization rate
9 studies, and comparisons of this information over time. In addition to the Legislative
10 Audit Advisory Committee, the performance audit shall be submitted to every
11 member of the legislature, and to the legislative fiscal office.
12 C. F. All taxable immovable, major movable, and other movable public
13 service properties of a company that is nonoperating or nonutility shall be appraised
14 and assessed by the local tax assessor in the same manner and by the same standards
15 as similar property in the parish in which it is located.
16 D. G. In no event, however, shall the Louisiana Tax Commission commission
17 adopt schedules that reflect average life values of the property instead of appraising
18 the individual companies.
19 E. H. The appraisal for the first year only shall be accomplished by the
20 Louisiana Tax Commission commission through the use of an independent appraisal
21 firm or firms qualified in the appraisal of public service properties.
22 * * *
23 §1855. Allocation of assessed value
24 * * *
25 E. Provided, however, that the Louisiana Tax Commission shall eliminate
26 or adjust one or more of the above factors in any instance in which the use thereof
27 does not accurately reflect the fair market value assignable to company property
28 within this state. In such instance, the commission shall retain in the record of the
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1 appraisal the analysis used to make the determination that one or more of the factors
2 established in Subsection D where not utilized in the appraisal.
3 * * *
4 G.(1) Major movable or other movable property owned or used in Louisiana
5 by a barge line or , towing company, or any other company that is not a resident of,
6 nor domiciled in Louisiana, and having no agent or office in Louisiana shall be
7 allocated for the purpose of ad valorem taxation to the local taxing unit in which the
8 company has its primary business connections. Any value not allocated to any other
9 parish shall be allocated to East Baton Rouge Parish. based upon time spent in the
10 jurisdiction. For this purpose, with respect to the property of each company, each
11 assessor shall certify to the tax commission that, as of January first, any identifiable
12 major movables that were present in their parish. Business connections shall include
13 but shall not be limited to use of port facilities, repair facilities, storage facilities, and
14 the like. The Louisiana Tax Commission may adopt rules and regulations to further
15 define business connections, and define primary business connections, and methods
16 and data to be used to determine time spent in a jurisdiction.
17 (2) For those companies not provided for in Paragraph (1) of this Subsection,
18 major movable or other movable property owned or used in Louisiana by a company
19 not a resident of, nor domiciled in Louisiana, and having no agent or office in this
20 state shall be allocated to East Baton Rouge Parish; provided, that in the event an
21 assessor shall certify to the tax commission that, as of January first, certain
22 identifiable major movables were present in his parish, the tax commission shall
23 allocate the value of that major movable to the certifying parish.
24 * * *
25 I. The method of allocation of the value of property of a company that
26 provides and transmits electricity or natural gas utility service shall be uniform
27 throughout the state.
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HB NO. 382
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 382 Original 2018 Regular Session Connick
Abstract: Various revisions concerning the La. Tax Commission's appraisal of public
service properties for purposes of property tax, including requirements for an audit
program, apportionment of property among parishes, capitalization rates used in
valuations, and record retention.
Present constitution and present law require that the La. Tax Commission (commission)
assess public service properties for purposes of property tax. Public service properties
include airlines, barge lines, electric companies, transportation companies, gas companies,
insurance companies, and financial institutions.
Present law provides for procedures for the annual self-reporting of information by public
service companies.
Proposed law retains present law and adds a requirement for the commission to establish a
risk-based audit program to verify the accuracy of self-reported information.
Present law requires the commission to annually appraise each public service company by
September 1
st
, based on the self-reported information. The commission uses the following
techniques to appraise the fair market value of these properties: market approach, cost
approach, and income approach. All public service properties of the same nature and kind
shall be appraised in the same manner.
Proposed law retains present law and adds a requirement that use of the income approach
shall include an accounting for expected future income growth. Further adds a requirement
for the commission to establish by administrative rule, minimum standards for procedures,
methods, and formulas to be used in appraisals. Proposed law requires that the commission
maintain within its record for each appraisal, the rationale for the determination of the
appraisal approach utilized in each valuation.
Proposed law requires that at least every three years, beginning in 2019, the commission
conduct a capitalization rate study for each type of public service property for which it is
responsible for appraisal. The commission is required to annually establish the capitalization
rates and growth rates that it may use with the various capitalization rate approaches it may
use prospectively in its appraisals at the same time as the commission issues rules for the
minimum assessment standards for the assessors.
Present law establishes specific factors to be used in the allocation of assessed value of
public service properties which involve property used both inside and outside of La. The
commission has discretion to utilize specific factors as it deems appropriate.
Proposed law retains present law and requires that the commission retain in its record of
each appraisal the analysis used to make a determination to use certain factors in favor of
other factors.
Proposed law requires that the method of allocation of value of property of a company that
provides and transmits electricity or natural gas utility service shall be uniform throughout
the state.
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HB NO. 382
Proposed law requires that the legislative auditor develop a schedule to conduct performance
audits of the appraisal methods used by the commission in valuation of public service
properties and to provide a report to the legislature approximately every three years,
beginning 2019 through 2030.
(Amends R.S. 47:1853 and 1855(E) and (G); Adds R.S. 47:1852(F) and 1855(I))
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