Constitutional Amendment C provides a property tax exemption for certain property owned by nonprofit entities if the property is used to irrigate land, provide domestic water, or provide water to a public water supplier. It also provides an exemption for land occupied by or adjacent to some of that exempt property, under certain circumstances.

Current provisions of the Utah Constitution

The Utah Constitution currently provides a property tax exemption for all government owned and some privately owned water rights and facilities used to produce, treat, store, and distribute water in the state. Privately owned water rights and facilities are exempt only if the owner of the water rights and facilities uses them to irrigate the owner's own land within the state. The Utah Constitution does not presently provide a property tax exemption for privately owned water rights and facilities used to provide water for purposes other than the irrigation of land owned by the owner of the water rights and facilities.

Effect of Constitutional Amendment C

Constitutional Amendment C makes water rights and certain facilities owned by nonprofit entities exempt from property taxes if the water rights and facilities are used within the state to irrigate land, provide domestic water, or provide water to a public water supplier. Under a bill that becomes effective if Constitutional Amendment C is approved by voters, domestic water is defined as water used for a residential or commercial use, including the outdoor watering of vegetation.

Constitutional Amendment C also provides an exemption for land that is occupied by an exempt reservoir, ditch, canal, or pipe if that land is owned by the same nonprofit entity that owns the reservoir, ditch, canal, or pipe. The Amendment also makes land exempt from property taxes if the land: is adjacent to an exempt reservoir, ditch, canal, or pipe; is owned by the same nonprofit entity that owns the reservoir, ditch, canal, or pipe; and is reasonably necessary for the maintenance of the reservoir, ditch, canal, or pipe or is reasonably necessary for supporting their operation.

Effective date

If approved by voters, Constitutional Amendment C takes effect January 1, 2011.

Fiscal impact

Constitutional Amendment C will reduce the property tax liability of certain water-providing nonprofit entities by an estimated cumulative amount of $400,000 per year. These tax savings could potentially translate into a cost saving for local water authorities that use water provided by the nonprofit entities. The reduction of the nonprofit entities' tax liability will not decrease local government revenue because the $400,000 tax burden will shift from the nonprofit entities to other taxpayers. The Amendment will have no direct, measurable impact on state government costs or revenues.