Iowa Administrative Code › Agency 701 - Revenue Department › Title II - Property Tax › Chapter 107 - Determination of Value of Utility Companies › Rule 701-107.1 - Definition of Terms

Current through Register Vol. 47, No. 3, July 24, 2024
(1) The term
"utility company"
shall mean and include all persons engaged
				in the operating of gasworks, waterworks, telephones, including
				telecommunication companies and cities that own or operate a municipal utility
				providing local exchange services pursuant to Iowa Code chapter 476, pipelines,
				electric transmission lines, and electric light or power plants, as set forth
				in Iowa Code chapters 428, 433, 437, and 438. Any utility company subject to
				taxation under Iowa Code chapter 437A shall not be subject to valuation under
				this chapter. Beginning with property tax assessment years and replacement tax
				years beginning on or after January 1, 2013, any utility company subject to
				taxation under 2013 Iowa Acts, Senate File 451, sections 10 to 30, shall not be
				subject to valuation under this chapter.
(2) The term
"unit value"
or
"unit market value"
shall mean the market value arrived at by
				using the appraisal method of valuing an entire operating property, considered
				as a whole and capable of performing the function for which it was created,
				such as (by way of illustration and not limitation) (1) generating,
				transmitting and distributing electricity; or (2) transporting or distributing
				natural gas.
(3) The term
"operating property"
shall mean all property owned by or
				leased to a utility company, not otherwise taxed separately, made nontaxable by
				law, or property leased to companies valued and assessed pursuant to Iowa Code
				chapter 428, which is necessary to and without which the utility could not
				perform the activities for which the utility is formed, such as (by way of
				illustration and not limitation) (1) generating, transmitting and distributing
				electricity; or (2) transporting or distributing natural gas. With regard to
				property whose identity as "operating" or "nonoperating" property is not
				clearly ascertainable, the property shall be considered operating property if
				the utility could not reasonably be expected to perform the referenced
				activities in the absence of such property.
(4) The term
"nonoperating
				property"
shall mean all property owned by a utility not defined by
				subrule 77.1(3) as "operating property."
(5) The term
"comparable
				sales"
shall mean actual sales transactions, between willing buyers
				and willing sellers, neither being under any compulsion to buy or sell, of
				property which is similar in purpose, function and design to the property to
				which the comparison is being made. Where the determination of value is being
				made, the sale of a portion of a unit which is nominally similar in purpose and
				function to the unit being valued shall not be considered a comparable sale,
				absent proof by evidence other than the terms of the sale itself, that the
				sales price was based on some unit of measurement which is common both to the
				property sold and the property being valued and which is not affected by the
				fact that less than the entire unit is being sold, such as (by way of
				illustration and not limitation) the price per square foot of the
				property.
(6) The term
"income approach to unit value"
shall mean the estimate of
				unit market value obtained by dividing an appropriate income stream by an
				appropriate discount rate.
(7) The
				term
"stock and debt approach to unit value"
shall mean the
				estimate of unit market value determined by combining the market value of the
				stock, debt, current liabilities, other liabilities, including leases, except
				those leases of companies valued and assessed pursuant to Iowa Code chapter
				428, and deferred credits associated with the operating property of a utility
				company.
(8) The term
"cost
				approach to unit value"
shall mean the estimate of value determined by
				combining the original cost less a depreciation allowance for the operating
				property of a utility company.
(9)
				The term
"respondent"
shall include the utility company whose
				property is to be valued.
(10) The
				term
"leased assets"
shall mean both operational and capital
				leases.
(11) The term
"original cost"
shall mean the actual cost of the property to
				its present owner, not the first cost at the time it was originally constructed
				and placed in service.
(12)
"Long distance telephone company"
means an entity that
				provides telephone service and facilities between local exchanges and has been
				classified as such by the utilities board of the department of commerce, but
				does not include a cellular service provider or a local exchange utility
				holding a certificate issued under Iowa Code section
				476.29(12). The
				rules contained in 701-Chapter 71, rather than this chapter, apply to the
				assessment of long distance telephone company property first assessed for
				taxation on or after January 1, 1996.
(13) The term
"replacement cost new
				less depreciation"
or
"RCNLD"
shall mean the cost to
				the present owner of acquiring or constructing at current prices a property
				that is the functional equivalent of an existing property less an allowance for
				depreciation.
This rule is intended to implement Iowa Code chapters 428,
				  437, and 438 and sections
				  433.12 and
				  476.1D(10).