Oklahoma 2022 Regular Session

Oklahoma House Bill HB2777 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1
2	2
3		-	SENATE FLOOR VERSION - HB2777 SFLR Page 1
4		-	(Bold face denotes Committee Amendments) 1
	3	+	ENGR. H. B. NO. 2777 Page 1 1
5	4		2
6	5		3
7	6		4
8	7		5
9	8		6
10	9		7
11	10		8
12	11		9
13	12		10
14	13		11
15	14		12
16	15		13
17	16		14
18	17		15
19	18		16
20	19		17
21	20		18
22	21		19
23	22		20
24	23		21
25	24		22
26	25		23
27	26		24
28	27
29		-	SENATE FLOOR VERSION
30		-	April 6, 2021
31		-	AS AMENDED
32		-
33	28		ENGROSSED HOUSE
34	29		BILL NO. 2777 By: Pfeiffer of the House
35	30
36	31		and
37	32
38	33		Montgomery of the Senate
39	34
40	35
41	36
42	37
	38	+
	39	+
43	40		[ revenue and taxation - providing for determination
44	41		of values with respect to wind power assets -
45	42		effective date ]
	43	+
	44	+
	45	+
46	46
47	47
48	48
49	49		BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
50	50		SECTION 1. AMENDATORY 68 O.S. 2011, Section 2817, as
51	51		last amended by Section 1, Chapter 176, O.S.L. 2016 (68 O.S. Supp.
52	52		2020, Section 2817), is amended to read as follows:
53	53		Section 2817. A. All taxable personal property, except
54	54		intangible personal property, personal property exempt from ad
55	55		valorem taxation, or household personal property, shall be listed
56	56		and assessed each year at its fair cash value, estimated at the
57	57		price it would bring at a fair voluntary sale , as of January 1.
58	58		The fair cash value of household personal property shall be
59	59		valued at ten percent (10%) of the appraised value of the
60	60		improvement to the residential real property within which such
61		-	personal property is located as of January 1 each year. The
62		-	assessment of household personal property as provided by this
63	61
64		-	SENATE FLOOR VERSION - HB2777 SFLR Page 2
65		-	(Bold face denotes Committee Amendments) 1
	62	+	ENGR. H. B. NO. 2777 Page 2 1
66	63		2
67	64		3
68	65		4
69	66		5
70	67		6
71	68		7
72	69		8
73	70		9
74	71		10
75	72		11
76	73		12
77	74		13
78	75		14
79	76		15
80	77		16
81	78		17
82	79		18
83	80		19
84	81		20
85	82		21
86	83		22
87	84		23
88	85		24
89	86
	87	+	personal property is located as of January 1 each year. The
	88	+	assessment of household personal property as provided by this
90	89		section may be altered by the taxpayer listing such property at its
91	90		actual fair cash value. For purposes of establishing the value of
92	91		household personal property, pursuant to the requireme nt of Section
93	92		8 of Article X of the Oklahoma Constitution, the percentage of value
94	93		prescribed by this section for the household personal property shall
95	94		be presumed to constitute the fair cash value of the personal
96	95		property.
97	96		All unmanufactured farm products shall be assessed and valued as
98	97		of the preceding May 31. Every person, firm, company, association,
99	98		or corporation, in making the assessment, shall assess all
100	99		unmanufactured farm products owned by the person, firm, company,
101	100		association or corporation on t he preceding May 31, at its fair cash
102	101		value on that date instead of January 1.
103	102		Stocks of goods, wares and merchandise shall be assessed at the
104	103		value of the average amount on hand during the preceding year, or
105	104		the average amount on hand during the part of t he preceding year the
106	105		stock of goods, wares or merchandise was at its January 1 location.
107	106		Provided, persons primarily engaged in selling lumber and other
108	107		building materials, including cement and concrete, except for home
109	108		centers classified under Industry No. 444110 of the North American
110	109		Industrial Industry Classification Systems System (NAICS) Manual,
111	110		shall be assessed at the average value of the inventory on hand as
112		-	of January 1 of each year and the value of the inventory on hand as
113		-	of December 31 of the same year.
114	111
115		-	SENATE FLOOR VERSION - HB2777 SFLR Page 3
116		-	(Bold face denotes Committee Amendments) 1
	112	+	ENGR. H. B. NO. 2777 Page 3 1
117	113		2
118	114		3
119	115		4
120	116		5
121	117		6
122	118		7
123	119		8
124	120		9
125	121		10
126	122		11
127	123		12
128	124		13
129	125		14
130	126		15
131	127		16
132	128		17
133	129		18
134	130		19
135	131		20
136	132		21
137	133		22
138	134		23
139	135		24
140	136
	137	+	of January 1 of each year and the value of the inventory on hand as
	138	+	of December 31 of the same year.
141	139		B. All taxable real property shall be assessed annually as of
142	140		January 1, at its fair cash value, estimated at the price it would
143	141		bring at a fair voluntary sale for:
144	142		1. The highest and best use for which the property was actually
145	143		used during the preceding calendar year; or
146	144		2. The highest and best use for which the property was last
147	145		classified for use if not actually used during the preceding
148	146		calendar year.
149	147		When improvements upon residential real property are divided by
150	148		a taxing jurisdiction lin e, those improvements shall be valued and
151	149		assessed in the taxing jurisdiction in which the physical majority
152	150		of those improvements are located.
153	151		The Ad Valorem Division of the Oklahoma Tax Commission shall be
154	152		responsible for the promulgation of rules which shall be followed by
155	153		each county assessor of the state, for the purposes of providing for
156	154		the equitable use valuation of locally assessed real property in
157	155		this state. Agricultural land and nonresidential improvements
158	156		necessary or convenient for agricultur al purposes shall be assessed
159	157		for ad valorem taxation based upon the highest and best use for
160	158		which the property was actually used, or was previously classified
161	159		for use, during the calendar year next preceding January 1 on which
162	160		the assessment is made.
163		-	C. The use value of agricultural land shall be based on the
164		-	income capitalization approach using cash rent. The rental income
165	161
166		-	SENATE FLOOR VERSION - HB2777 SFLR Page 4
167		-	(Bold face denotes Committee Amendments) 1
	162	+	ENGR. H. B. NO. 2777 Page 4 1
168	163		2
169	164		3
170	165		4
171	166		5
172	167		6
173	168		7
174	169		8
175	170		9
176	171		10
177	172		11
178	173		12
179	174		13
180	175		14
181	176		15
182	177		16
183	178		17
184	179		18
185	180		19
186	181		20
187	182		21
188	183		22
189	184		23
190	185		24
191	186
	187	+	C. The use value of agricultural land shall be based on the
	188	+	income capitalization approach using cash rent. The rental income
192	189		shall be calculated using the direct capitalization method based
193	190		upon factors including, but not limited to:
194	191		1. Soil types, as dep icted on soil maps published by the
195	192		Natural Resources Conservation Service of the United States
196	193		Department of Agriculture;
197	194		2. Soil productivity indices approved by the Ad Valorem
198	195		Division of the Tax Commission;
199	196		3. The specific agricultural purpose of the soil based on use
200	197		categories approved by the Ad Valorem Division of the Tax
201	198		Commission; and
202	199		4. A capitalization rate to be determined annually by the Ad
203	200		Valorem Division of the Tax Commission based on the sum of the
204	201		average first mortgage interest rate c harged by the Federal Land
205	202		Bank for the immediately preceding five (5) years, weighted with the
206	203		prevailing rate or rates for additional loans or equity, and the
207	204		effective tax rate.
208	205		The final use value will be calculated using the soil
209	206		productivity indices and the agricultural use classification as
210	207		defined by rules promulgated by the State Board of Equalization.
211	208		This subsection shall not be construed in a manner which is
212	209		inconsistent with the duties, powers and authority of the Board as
213		-	to valuation of the counties as fixed and defined by Section 21 of
214		-	Article X of the Oklahoma Constitution.
215	210
216		-	SENATE FLOOR VERSION - HB2777 SFLR Page 5
217		-	(Bold face denotes Committee Amendments) 1
	211	+	ENGR. H. B. NO. 2777 Page 5 1
218	212		2
219	213		3
220	214		4
221	215		5
222	216		6
223	217		7
224	218		8
225	219		9
226	220		10
227	221		11
228	222		12
229	223		13
230	224		14
231	225		15
232	226		16
233	227		17
234	228		18
235	229		19
236	230		20
237	231		21
238	232		22
239	233		23
240	234		24
241	235
	236	+	to valuation of the counties as fixed and defined by Section 21 of
	237	+	Article X of the Oklahoma Constitution.
242	238		However, in calculating the use value of buffer strips as
243	239		defined in Section 2817.2 of this title, exclusive consideration
244	240		shall be based only on income from production agriculture from such
245	241		buffer strips, not including federal or state subsidies, when valued
246	242		as required by subsection C of Section 2817.2 of this title.
247	243		D. The use value of nonresidential improvements on agricultural
248	244		land shall be based on the cost approac h to value estimation using
249	245		currently updated cost manuals published by the Marshall and Swift
250	246		Company or similar cost manuals approved by the Ad Valorem Division
251	247		of the Tax Commission. The use value estimates for the
252	248		nonresidential improvements shall tak e obsolescence and depreciation
253	249		into consideration in addition to necessary adjustments for local
254	250		variations in the cost of labor and materials. This section shall
255	251		not be construed in a manner which is inconsistent with the duties,
256	252		powers and authority of the Board as to equalization of valuation of
257	253		the counties as determined and defined by Section 21 of Article X of
258	254		the Oklahoma Constitution.
259	255		The use value of facilities used for poultry production shall be
260	256		determined according to the following procedures:
261	257		1. The Ad Valorem Division of the Tax Commission is hereby
262	258		directed to develop a standard system of valuation of both real and
263	259		personal property of such facilities, which shall be used by all
264		-	county assessors in this state, under which valuation based on the
265	260
266		-	SENATE FLOOR VERSION - HB2777 SFLR Page 6
267		-	(Bold face denotes Committee Amendments) 1
	261	+	ENGR. H. B. NO. 2777 Page 6 1
268	262		2
269	263		3
270	264		4
271	265		5
272	266		6
273	267		7
274	268		8
275	269		9
276	270		10
277	271		11
278	272		12
279	273		13
280	274		14
281	275		15
282	276		16
283	277		17
284	278		18
285	279		19
286	280		20
287	281		21
288	282		22
289	283		23
290	284		24
291	285
	286	+	county assessors in this state, under which valuation based on the
292	287		following shall be presumed to be the fair cash value of the
293	288		property:
294	289		a. for real property, a ten -year depreciation schedule,
295	290		at the end of which the residual value is twenty
296	291		percent (20%) of the value of the facility during its
297	292		first year of operati on, and
298	293		b. for personal property, a five -year depreciation
299	294		schedule, at the end of which the residual value is
300	295		zero;
301	296		2. Such facilities shall be valued only in comparison to other
302	297		facilities used exclusively for poultry production. Such a facility
303	298		which is no longer used for poultry production shall be deemed to
304	299		have no productive use;
305	300		3. During the first year such a facility is placed on the tax
306	301		rolls, its fair cash value shall be presumed to be the lesser of the
307	302		actual purchase price or the actual docu mented cost of construction;
308	303		and
309	304		4. For the purpose of determining the valuation of
310	305		nonresidential improvements used for poultry production, the
311	306		provisions of this subsection shall be applicable and such
312	307		improvements shall not be considered to be commerci al property.
313	308		E. The value of investment in property used exclusively by an
314	309		oil refinery that is used wholly as a facility, device or method for
315		-	the desulphurization of gasoline or diesel fuel as defined in
316	310
317		-	SENATE FLOOR VERSION - HB2777 SFLR Page 7
318		-	(Bold face denotes Committee Amendments) 1
	311	+	ENGR. H. B. NO. 2777 Page 7 1
319	312		2
320	313		3
321	314		4
322	315		5
323	316		6
324	317		7
325	318		8
326	319		9
327	320		10
328	321		11
329	322		12
330	323		13
331	324		14
332	325		15
333	326		16
334	327		17
335	328		18
336	329		19
337	330		20
338	331		21
339	332		22
340	333		23
341	334		24
342	335
	336	+	the desulphurization of gasoline or diesel fuel as defined in
343	337		Section 2817.3 of this title shall not be include d in the
344	338		capitalization used in the determination of fair market value of
345	339		such oil refinery if such property would qualify as exempt property
346	340		pursuant to Section 2902 of this title, whether or not an
347	341		application for such exemption is made by an otherwise q ualifying
348	342		manufacturing concern owning the property described by Section
349	343		2817.3 of this title.
350	344		F. The use value of a lot in any platted addition or a
351	345		subdivision in a city, town or county zoned for residential,
352	346		commercial, industrial or other use shall be deemed to be the fair
353	347		cash value of the underlying tract of land platted, divided by the
354	348		number of lots contained in the platted addition or subdivision
355	349		until the lot shall have been conveyed to a bona fide purchaser or
356	350		the lot with building or buildings located thereon shall have been
357	351		occupied other than as a sales office by the owner thereof, or shall
358	352		have been leased, whichever event shall first occur. One who
359	353		purchases a lot for the purposes of constructing and selling a
360	354		building on such lot shall not be deemed to be a bona fide purchaser
361	355		for purposes of this section. However, if the lot is held for a
362	356		period longer than two (2) years before construction, then the
363	357		assessor may consider the lot to have been conveyed to a bona fide
364	358		purchaser. The cost o f any land or improvements to any real
365	359		property required to be dedicated to public use, including, but not
366		-	limited to, streets, curbs, gutters, sidewalks, storm or sanitary
367	360
368		-	SENATE FLOOR VERSION - HB2777 SFLR Page 8
369		-	(Bold face denotes Committee Amendments) 1
	361	+	ENGR. H. B. NO. 2777 Page 8 1
370	362		2
371	363		3
372	364		4
373	365		5
374	366		6
375	367		7
376	368		8
377	369		9
378	370		10
379	371		11
380	372		12
381	373		13
382	374		14
383	375		15
384	376		16
385	377		17
386	378		18
387	379		19
388	380		20
389	381		21
390	382		22
391	383		23
392	384		24
393	385
	386	+	limited to, streets, curbs, gutters, sidewalks, storm or sanitary
394	387		sewers, utilities, detention or retention ponds, easements, parks or
395	388		reserves shall not be utilized by the county assessor in the
396	389		valuation of any real property for assessment purposes.
397	390		G. The transfer of real property without a change in its use
398	391		classification shall not require a reassessment thereof based
399	392		exclusively upon the sale val ue of the property. However, if the
400	393		county assessor determines:
401	394		1. That by reason of the transfer of a property there is a
402	395		change in the actual use or classification of the property; or
403	396		2. That by reason of the amount of the sales consideration it
404	397		is obvious that the use classification prior to the transfer of the
405	398		property is not commensurate with and would not justify the amount
406	399		of the sales consideration of the property;
407	400		then the assessor shall, in either event, reassess the property for
408	401		the new use classification for which the property is being used, or,
409	402		the highest and best use classification for which the property may,
410	403		by reason of the transfer, be classified for use.
411	404		H. When the term "fair cash value" or the language "fair cash
412	405		value, estimated at the price it would bring at a fair voluntary
413	406		sale" is used in the Ad Valorem Tax Code, in connection with and in
414	407		relation to the assessment of real property, it is defined to mean
415	408		and shall be given the meaning ascribed and assigned to it in this
416	409		section and when the term or language is used in the Code in
417	410
418		-	SENATE FLOOR VERSION - HB2777 SFLR Page 9
419		-	(Bold face denotes Committee Amendments) 1
	411	+	ENGR. H. B. NO. 2777 Page 9 1
420	412		2
421	413		3
422	414		4
423	415		5
424	416		6
425	417		7
426	418		8
427	419		9
428	420		10
429	421		11
430	422		12
431	423		13
432	424		14
433	425		15
434	426		16
435	427		17
436	428		18
437	429		19
438	430		20
439	431		21
440	432		22
441	433		23
442	434		24
443	435
444	436		connection with the assessment of personal property it shall be
445	437		given its ordinary or literal meaning.
446	438		I. Where any real property is zoned for a use by a proper
447	439		zoning authority, and the use of the prope rty has not been changed,
448	440		the use and not zoning shall determine assessment. Any reassessment
449	441		required shall be effective January 1 following the change in use.
450	442		Taxable real property need not be listed annually with the county
451	443		assessor.
452	444		J. If any real property shall become taxable after January 1 of
453	445		any year, the county assessor shall assess the same and place it
454	446		upon the tax rolls for the next ensuing year. When any building is
455	447		constructed upon land after January 1 of any year, the value of the
456	448		building shall be added by the county assessor to the assessed
457	449		valuation of the land upon which the building is constructed at the
458	450		fair cash value thereof for the next ensuing year. However, after
459	451		the building has been completed it shall be deemed to have a valu e
460	452		for assessment purposes of the fair cash value of the materials used
461	453		in such building only, until the building and the land on which the
462	454		building is located shall have been conveyed to a bona fide
463	455		purchaser or shall have been occupied or used for any pur pose other
464	456		than as a sales office by the owner thereof, or shall have been
465	457		leased, whichever event shall first occur. The county assessor
466	458		shall continue to assess the building based upon the fair market
467	459		value of the materials used therein until the buildi ng and land upon
468	460
469		-	SENATE FLOOR VERSION - HB2777 SFLR Page 10
470		-	(Bold face denotes Committee Amendments) 1
	461	+	ENGR. H. B. NO. 2777 Page 10 1
471	462		2
472	463		3
473	464		4
474	465		5
475	466		6
476	467		7
477	468		8
478	469		9
479	470		10
480	471		11
481	472		12
482	473		13
483	474		14
484	475		15
485	476		16
486	477		17
487	478		18
488	479		19
489	480		20
490	481		21
491	482		22
492	483		23
493	484		24
494	485
495	486		which the building is located shall have been conveyed to a bona
496	487		fide purchaser or is occupied or used for any purpose other than as
497	488		a sales office by the owner thereof, or is leased, whichever event
498	489		shall first occur.
499	490		K. In the event imp rovements on land or personal property
500	491		located therein or thereon are destroyed or partially destroyed, or
501	492		the land itself is impaired or partially impaired by fire,
502	493		lightning, storm, winds, floodwaters, overflow of streams or other
503	494		cause (all such destruc tion or impairments being referred to herein
504	495		as "damage") during any year, the county assessor shall determine
505	496		the amount of damage and shall reassess the property for that year
506	497		at the fair cash value of the property, taking into account the
507	498		actual loss of functional use of the property occasioned by such
508	499		damage. The assessor shall make the appropriate value adjustments
509	500		to the property for that tax year up to the time at which the
510	501		assessor publishes the "Assessor's Report to the Excise Board" as
511	502		required by subsection D of Section 2867 of this title. After such
512	503		time, adjustments can be made only by the county board of tax roll
513	504		corrections and only after the assessor has certified the tax roll
514	505		for that year. The board secretary shall notify property owners in
515	506		advance of the time and place at which the value adjustment to their
516	507		property will be heard by the board. The board of tax roll
517	508		corrections is authorized only to approve or reject the value
518	509		adjustment submitted by the county assessor.
519	510
520		-	SENATE FLOOR VERSION - HB2777 SFLR Page 11
521		-	(Bold face denotes Committee Amendments) 1
	511	+	ENGR. H. B. NO. 2777 Page 11 1
522	512		2
523	513		3
524	514		4
525	515		5
526	516		6
527	517		7
528	518		8
529	519		9
530	520		10
531	521		11
532	522		12
533	523		13
534	524		14
535	525		15
536	526		16
537	527		17
538	528		18
539	529		19
540	530		20
541	531		21
542	532		22
543	533		23
544	534		24
545	535
546	536		L. All taxable personal property used in the exploration of
547	537		oil, natural gas, or other minerals, including drilling equipment
548	538		and rigs, shall be assessed annually at the value set forth in the
549	539		first Hadco International monthly bulletin published for the tax
550	540		year, using the appropriate depth rating assigned to the drawworks
551	541		by its manufacturer and the actual condition of the rig.
552	542		M. The value of taxable tangible personal property used in
553	543		commercial disposal systems of waste materials from the production
554	544		of oil and gas shall not include any contract rights or leases for
555	545		the use of such systems nor any value associated with the wellbore
556	546		or non-recoverable down-hole material, including casing.
557		-	N. A county assessor s hall use current market price information
558		-	to establish a fair cash value for r eal property and personal
559		-	property owned by any entity engaged in the production of electric
560		-	energy by means of wind as described by Industry No. 221115 of the
561		-	North American Industry Classification System (NAICS) Manual, latest
562		-	revision, which may include:
563		-	1. Current market price information available through the
564		-	Southwest Power Pool on the applicable January 1 date or speci fic to
565		-	the point of delivery of the facility ’s energy deliveries and
566		-	generation profile to the market; or
567		-	2. Data published by the Oklahoma Tax Commission for various
568		-	approaches to value.
	547	+	N. A county assessor may use information to establish a market -
	548	+	based value for real property and personal property owned by any
	549	+	entity engaged in the production of electric energy by means of wind
	550	+	as described by Industry No. 221115 of the North American Industry
	551	+	Classification System (NAICS) Manual, latest revision, which may
	552	+	include power-purchase agreements provided to the assessor by such
	553	+	entity or the current market price information available through the
	554	+	Southwest Power Pool on the applicable January 1 date used to
	555	+	determine fair cash value of such real or personal property.
	556	+	SECTION 2. This act shall become effective January 1, 2022 .
569	557
570	558
571		-	SENATE FLOOR VERSION - HB2777 SFLR Page 12
572		-	(Bold face denotes Committee Amendments) 1
	559	+	ENGR. H. B. NO. 2777 Page 12 1
573	560		2
574	561		3
575	562		4
576	563		5
577	564		6
578	565		7
579	566		8
580	567		9
581	568		10
582	569		11
583	570		12
584	571		13
585	572		14
586	573		15
587	574		16
588	575		17
589	576		18
590	577		19
591	578		20
592	579		21
593	580		22
594	581		23
595	582		24
596	583
597		-	SECTION 2. This act shall become effective January 1, 2022 .
598		-	COMMITTEE REPORT BY: COMMITTEE ON FINANCE
599		-	April 6, 2021 - DO PASS AS AMENDED
	584	+	Passed the House of Representatives the 10th day of March, 2021.
	585	+
	586	+
	587	+
	588	+
	589	+	Presiding Officer of the House
	590	+	of Representatives
	591	+
	592	+
	593	+	Passed the Senate the ___ day of __________, 2021.
	594	+
	595	+
	596	+
	597	+
	598	+	Presiding Officer of the Senate
	599	+
	600	+