HOUSE BILL No. 2684

      An Act relating to taxation; concerning the procedures of the state board of tax appeals;
      concerning certain property tax exemptions; amending K.S.A. 74-2426, 77-529, 79-201a,
      79-213, as amended by section 36 of 1998 Senate Bill No. 493, 79-251, 79-1448 and 79-
      1611 and K.S.A. 1997 Supp. 74-2433 and repealing the existing sections; also repealing
      K.S.A. 79-252.

Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 79-201a is hereby amended to read as follows:
79-201a. The following described property, to the extent herein specified,
shall be exempt from all property or ad valorem taxes levied under the
laws of the state of Kansas:

    First. All property belonging exclusively to the United States, except
property which congress has expressly declared to be subject to state and
local taxation.

    Second. All property used exclusively by the state or any municipality
or political subdivision of the state. All property owned, being acquired
pursuant to a lease-purchase agreement or operated by the state or any
municipality or political subdivision of the state, including property which
is vacant or lying dormant, which is used or is to be used for any govern-
mental or proprietary function and for which bonds may be issued or
taxes levied to finance the same, shall be considered to be used exclusively
by the state, municipality or political subdivision for the purposes of this
section. The lease by a municipality or political subdivision of the state
of any real property owned or being acquired pursuant to a lease-purchase
agreement for the purpose of providing office space necessary for the
performance of medical services by a person licensed to practice medicine
and surgery or osteopathic medicine by the board of healing arts pursuant
to K.S.A. 65-2801 et seq., and amendments thereto, dentistry services by
a person licensed by the Kansas dental board pursuant to K.S.A. 65-1401
et seq., and amendments thereto, optometry services by a person licensed
by the board of examiners in optometry pursuant to K.S.A. 65-1501 et
seq., and amendments thereto, or K.S.A. 74-1501 et seq., and amend-
ments thereto or, podiatry services by a person licensed by the board of
healing arts pursuant to K.S.A. 65-2001 et seq., and amendments thereto,
or the practice of psychology by a person licensed by the behavioral sci-
ences regulatory board pursuant to K.S.A. 74-5301 et seq., and amend-
ments thereto, shall be construed to be a governmental function, and such
property actually and regularly used for such purpose shall be deemed to
be used exclusively for the purposes of this paragraph. The lease by a
municipality or political subdivision of the state of any real property, or
portion thereof, owned or being acquired pursuant to a lease-purchase
agreement to any entity for the exclusive use by it for an exempt purpose,
including the purpose of displaying or exhibiting personal property by a
museum or historical society, if no portion of the lease payments include
compensation for return on the investment in such leased property shall
be deemed to be used exclusively for the purposes of this paragraph. All
property leased, other than property being acquired pursuant to a
lease-purchase agreement, to the state or any municipality or political
subdivision of the state by any private entity shall not be considered to
be used exclusively by the state or any municipality or political subdivision
of the state for the purposes of this section except that the provisions of
this sentence shall not apply to any such property subject to lease on the
effective date of this act until the term of such lease expires but property
taxes levied upon any such property prior to tax year 1989, shall not be
abated or refunded. Any property constructed or purchased with the pro-
ceeds of industrial revenue bonds issued prior to July 1, 1963, as author-
ized by K.S.A. 12-1740 to 12-1749, or purchased with proceeds of im-
provement district bonds issued prior to July 1, 1963, as authorized by
K.S.A. 19-2776, or with proceeds of bonds issued prior to July 1, 1963,
as authorized by K.S.A. 19-3815a and 19-3815b, or any property im-
proved, purchased, constructed, reconstructed or repaired with the pro-
ceeds of revenue bonds issued prior to July 1, 1963, as authorized by
K.S.A. 13-1238 to 13-1245, inclusive, or any property improved, reim-
proved, reconstructed or repaired with the proceeds of revenue bonds
issued after July 1, 1963, under the authority of K.S.A. 13-1238 to 13-
1245, inclusive, which had previously been improved, reconstructed or
repaired with the proceeds of revenue bonds issued under such act on or
before July 1, 1963, shall be exempt from taxation for so long as any of
the revenue bonds issued to finance such construction, reconstruction,
improvement, repair or purchase shall be outstanding and unpaid. Any
property constructed or purchased with the proceeds of any revenue
bonds authorized by K.S.A. 13-1238 to 13-1245, inclusive, 19-2776, 19-
3815a and 19-3815b, and amendments thereto, issued on or after July 1,
1963, shall be exempt from taxation only for a period of 10 calendar years
after the calendar year in which the bonds were issued. Any property, all
or any portion of which is constructed or purchased with the proceeds of
revenue bonds authorized by K.S.A. 12-1740 to 12-1749, inclusive, and
amendments thereto, issued on or after July 1, 1963 and prior to July 1,
1981, shall be exempt from taxation only for a period of 10 calendar years
after the calendar year in which the bonds were issued. Except as here-
inafter provided, any property constructed or purchased wholly with the
proceeds of revenue bonds issued on or after July 1, 1981, under the
authority of K.S.A. 12-1740 to 12-1749, inclusive, and amendments
thereto, shall be exempt from taxation only for a period of 10 calendar
years after the calendar year in which the bonds were issued. Except as
hereinafter provided, any property constructed or purchased in part with
the proceeds of revenue bonds issued on or after July 1, 1981, under the
authority of K.S.A. 12-1740 to 12-1749, inclusive, and amendments
thereto, shall be exempt from taxation to the extent of the value of that
portion of the property financed by the revenue bonds and only for a
period of 10 calendar years after the calendar year in which the bonds
were issued. The exemption of that portion of the property constructed
or purchased with the proceeds of revenue bonds shall terminate upon
the failure to pay all taxes levied on that portion of the property which is
not exempt and the entire property shall be subject to sale in the manner
prescribed by K.S.A. 79-2301 et seq., and amendments thereto. Property
constructed or purchased in whole or in part with the proceeds of revenue
bonds issued on or after January 1, 1995, under the authority of K.S.A.
12-1740 to 12-1749, inclusive, and amendments thereto, and used in any
retail enterprise identified under the standard industrial classification
codes, major groups 52 through 59, inclusive, except facilities used exclu-
sively to house the headquarters or back office operations of such retail
enterprises identified thereunder, shall not be exempt from taxation. For
the purposes of the preceding provision ``standard industrial classification
code'' means a standard industrial classification code published in the
Standard Industrial Classification manual, 1987, as prepared by the sta-
tistical policy division of the office of management and budget of the
office of the president of the United States. ``Headquarters or back office
operations'' means a facility from which the enterprise is provided direc-
tion, management, administrative services, or distribution or warehousing
functions in support of transactions made by the enterprise. Property
purchased, constructed, reconstructed, equipped, maintained or repaired
with the proceeds of industrial revenue bonds issued under the authority
of K.S.A. 12-1740 et seq., and amendments thereto, which is located in a
redevelopment project area established under the authority of K.S.A. 12-
1770 et seq. shall not be exempt from taxation. Property purchased, ac-
quired, constructed, reconstructed, improved, equipped, furnished, re-
paired, enlarged or remodeled with all or any part of the proceeds of
revenue bonds issued under authority of K.S.A. 12-1740 to 12-1749a,
inclusive, and amendments thereto for any poultry confinement facility
on agricultural land which is owned, acquired, obtained or leased by a
corporation, as such terms are defined by K.S.A. 17-5903 and amend-
ments thereto, shall not be exempt from such taxation. Property pur-
chased, acquired, constructed, reconstructed, improved, equipped, fur-
nished, repaired, enlarged or remodeled with all or any part of the
proceeds of revenue bonds issued under the authority of K.S.A. 12-1740
to 12-1749a, inclusive, and amendments thereto, for a rabbit confinement
facility on agricultural land which is owned, acquired, obtained or leased
by a corporation, as such terms are defined by K.S.A. 17-5903 and amend-
ments thereto, shall not be exempt from such taxation.

    Third. All works, machinery and fixtures used exclusively by any rural
water district or township water district for conveying or production of
potable water in such rural water district or township water district, and
all works, machinery and fixtures used exclusively by any entity which
performed the functions of a rural water district on and after January 1,
1990, and the works, machinery and equipment of which were exempted
hereunder on March 13, 1995.

    Fourth. All fire engines and other implements used for the extinguish-
ment of fires, with the buildings used exclusively for the safekeeping
thereof, and for the meeting of fire companies, whether belonging to any
rural fire district, township fire district, town, city or village, or to any fire
company organized therein or therefor.

    Fifth. All property, real and personal, owned by county fair associations
organized and operating under the provisions of K.S.A. 2-125 et seq. and
amendments thereto.

    Sixth. Property acquired and held by any municipality under the mu-
nicipal housing law (K.S.A. 17-2337 et seq.) and amendments thereto,
except that such exemption shall not apply to any portion of the project
used by a nondwelling facility for profit making enterprise.

    Seventh. All property of a municipality, acquired or held under and for
the purposes of the urban renewal law (K.S.A. 17-4742 et seq.) and
amendments thereto except that such tax exemption shall terminate when
the municipality sells, leases or otherwise disposes of such property in an
urban renewal area to a purchaser or lessee which is not a public body
entitled to tax exemption with respect to such property.

    Eighth. All property acquired and held by the Kansas armory board for
armory purposes under the provisions of K.S.A. 48-317, and amendments
thereto.

    Ninth. All property acquired and used by the Kansas turnpike authority
under the authority of K.S.A. 68-2001 et seq., and amendments thereto,
K.S.A. 68-2030 et seq., and amendments thereto, K.S.A. 68-2051 et seq.,
and amendments thereto, and K.S.A. 68-2070 et seq., and amendments
thereto.

    Tenth. All property acquired and used for state park purposes by the
Kansas department of wildlife and parks.

    Eleventh. The state office building constructed under authority of
K.S.A. 75-3607 et seq., and amendments thereto, and the site upon which
such building is located.

    Twelfth. All buildings erected under the authority of K.S.A. 76-6a01 et
seq., and amendments thereto, and all other student union buildings and
student dormitories erected upon the campus of any institution men-
tioned in K.S.A. 76-6a01, and amendments thereto, by any other non-
profit corporation.

    Thirteenth. All buildings, as the same is defined in subsection (c) of
K.S.A. 76-6a13, and amendments thereto, which are erected, constructed
or acquired under the authority of K.S.A. 76-6a13 et seq., and amend-
ments thereto, and building sites acquired therefor.

    Fourteenth. All that portion of the waterworks plant and system of the
city of Kansas City, Missouri, now or hereafter located within the territory
of the state of Kansas pursuant to the compact and agreement adopted
by chapter 304 of the 1921 Session Laws of the state of Kansas. [See
K.S.A. 79-205].

    Fifteenth. All property, real and personal, owned by a groundwater
management district organized and operating pursuant to K.S.A. 82a-
1020, and amendments thereto.

    Sixteenth. All property, real and personal, owned by the joint water
district organized and operating pursuant to K.S.A. 80-1616 et seq., and
amendments thereto.

    Seventeenth. All property, including interests less than fee ownership,
acquired for the state of Kansas by the secretary of transportation or a
predecessor in interest which is used in the administration, construction,
maintenance or operation of the state system of highways, regardless of
how or when acquired.

    Eighteenth. Any building used primarily as an industrial training center
for academic or vocational education programs designed for and operated
under contract with private industry, and located upon a site owned,
leased or being acquired by or for an area vocational school, an area
vocational-technical school, a technical college, or a community college,
as defined by K.S.A. 72-4412, and amendments thereto, and the site upon
which any such building is located.

    Except as otherwise specifically provided, the provisions of this section
shall apply to all taxable years commencing after December 31, 1996
1997.

    Sec. 2. K.S.A. 1997 Supp. 74-2433 is hereby amended to read as
follows: 74-2433. (a) There is hereby created a state board of tax appeals,
referred to in this act as the board. The board shall be composed of five
members who shall be appointed by the governor, subject to confirmation
by the senate as provided in K.S.A. 75-4315b, and amendments thereto.
After January 15, 1999, three of such members shall: (1) Have been reg-
ularly admitted to practice law in the state of Kansas; and (2) for a period
of at least five years, have engaged in the active practice of law as a lawyer,
judge of a court of record or any other court in this state, or as a certified
public accountant who has maintained registration as an active attorney
with the Kansas supreme court, or any combination thereof. Except as
provided by K.S.A. 1997 Supp. 46-2601, no person appointed to the board
shall exercise any power, duty or function as a member of the board until
confirmed by the senate. Not more than three members of the board
shall be of the same political party. Except as provided by subsection (b),
members Members of the board shall be residents of the state. Subject
to the provisions of K.S.A. 75-4315c, and amendments thereto, one shall
be appointed from each of the congressional districts of Kansas and the
remainder from the state at large. The members of the board shall be
selected with special reference to training and experience for duties im-
posed by this act. Members appointed after the effective date of this act
and shall be individuals with legal, accounting or appraisal training and
experience. Members shall be subject to the supreme court rules of judicial
conduct applicable to all judges of the district court. The board shall be
bound by the doctrine of stare decisis limited to published decisions of an
appellate court other than a district court. Members shall hold office for
terms of four years and until their successors are appointed and con-
firmed. Such terms of office shall expire on January 15 of the last year of
such term. If a vacancy occurs on the board, the governor shall appoint a
successor to fill the vacancy for the unexpired term. The governor shall
select one of its members to serve as chairperson. The votes of three
members shall be required for any action to be taken by the board. Meet-
ings may be called by the chairperson and shall be called on request of a
majority of the members of the board and when otherwise prescribed by
statute.

    (b) Any member of the state board of tax appeals may be removed
by the governor for cause, after public hearing conducted in accordance
with the provisions of the Kansas administrative procedure act.

    (b) The terms of members who are serving on the board on the ef-
fective date of this act shall expire on January 15, of the year in which
such member's term would have expired under the provisions of this
section prior to amendment by this act. Thereafter, members shall be
appointed for terms of four years and until their successors are appointed
and confirmed.

    (c) The state board of tax appeals shall appoint, subject to approval
by the governor, an executive director of the board, to serve at the pleasure
of the board. The executive director shall: (1) Be in the unclassified service
under the Kansas civil service act; (2) devote full time to the executive
director's assigned duties; (3) receive such compensation as determined
by the board, subject to the limitations of appropriations thereof; and (4)
have familiarity with the tax appeals process sufficient to fulfill the duties
of the office of executive director. The executive director shall perform
such duties as directed by the board.

    (d) Appeals decided by the state board of tax appeals which are
deemed of sufficient importance to be published shall be prepared and
delivered to the director of printing, who shall as speedily as possible print
and publish such number of copies as shall be specified by the board.

    (e) After appointment, members of the state board of tax appeals shall
complete the following course requirements: (1) A tested appraisal course
of not less than 30 clock hours of instruction consisting of the fundamen-
tals of real property appraisal with an emphasis on the cost and sales
approaches to value; (2) a tested appraisal course of not less than 30 clock
hours of instruction consisting of the fundamentals of real property ap-
praisal with an emphasis on the income approach to value; (3) a tested
appraisal course of not less than 30 clock hours of instruction with an
emphasis on mass appraisal; (4) an appraisal course with an emphasis on
Kansas property tax laws and; (5) an appraisal course on the techniques
and procedures for the valuation of state assessed properties with an em-
phasis on unit valuation; and (6) a tested appraisal course on the tech-
niques and procedures for the valuation of land devoted to agricultural
use pursuant to K.S.A. 79-1476, and amendments thereto. The executive
director shall adopt rules and regulations prescribing a timetable for the
completion of the course requirements and prescribing continued educa-
tion requirements for members of the board.

    (c) (f) The state board of tax appeals shall have no capacity or power
to sue or be sued.

    Sec. 3. K.S.A. 74-2426 is hereby amended to read as follows: 74-
2426. (a) Orders of the board of tax appeals on any appeal, in any pro-
ceeding under the tax protest, tax grievance or tax exemption statutes or
in any other original proceeding before the board shall be rendered and
served in accordance with the provisions of the Kansas administrative
procedure act. Notwithstanding the provisions of subsection (g) of K.S.A.
77-526 and amendments thereto, a final order of the board shall be ren-
dered in writing and served within 120 days after the matter was fully
submitted to the board unless this period is waived or extended with the
written consent of all parties or for good cause shown.

    (b) No final order of the board shall be subject to review pursuant to
subsection (c) unless the aggrieved party first files a petition for recon-
sideration of that order with the board in accordance with the provisions
of K.S.A. 77-529 and amendments thereto.

    (c) Any action of the board pursuant to this section is subject to re-
view in accordance with the act for judicial review and civil enforcement
of agency actions, except that:

    (1) The parties to the action for judicial review shall be the same
parties as appeared before the board in the administrative proceedings
before the board. The board shall not be a party to any action for judicial
review of an action of the board.

    (2) There is no right to review of any order issued by the board in a
no-fund warrant proceeding pursuant to K.S.A. 12-110a, 12-1662 et seq.,
19-2752a, 79-2938, 79-2939 and 79-2951, and amendments thereto, and
statutes of a similar character.

    (3) The court of appeals has jurisdiction of any action for review per-
taining to property appraised and assessed by the director of property
valuation or, excise, income or inheritance taxes assessed by the director
of taxation and the exemption of any property from property taxation.
The district court of the proper county has jurisdiction in all other cases.

    (4) Review of orders issued by the board of tax appeals relating to
the valuation or assessment of property for ad valorem tax purposes or
relating to the tax protest shall be conducted by the district court of the
county in which the property is located or, if located in more than one
county, the district court of any county in which any portion of the prop-
erty is located. Review of orders relating to tax exemption under K.S.A.
79-201 et seq., and amendments thereto, shall be conducted by the district
court of Shawnee county.

    (5) In addition to the cost of the preparation of the transcript, the
appellant shall pay to the board the other costs of certifying the record
to the reviewing court. Such payment shall be made prior to the trans-
mission of the agency record to the reviewing court.

    (d) If review of an order of the board relating to excise, income or
inheritance taxes, is sought by a person other than the director of taxation,
such person shall give bond for costs at the time the petition is filed. The
bond shall be in the amount of 125% of the amount of taxes assessed or
a lesser amount approved by the court of appeals and shall be conditioned
on the petitioner's prosecution of the review without delay and payment
of all costs assessed against the petitioner.

    (e) If review of an order is sought by a party other than the director
of property valuation or a taxing subdivision and the order determines,
approves, modifies or equalizes the amount of valuation which is assess-
able and for which the tax has not been paid, a bond shall be given in the
amount of 125% of the amount of the taxes assessed or a lesser amount
approved by the reviewing court. The bond shall be conditioned on the
petitioner's prosecution of the review without delay and payment of all
costs assessed against the petitioner.

    Sec. 4. K.S.A. 77-529 is hereby amended to read as follows: 77-529.
(a) Any (1) Except as otherwise provided by paragraph (2), any party,
within 15 days after service of a final order, may file a petition for recon-
sideration with the agency head, stating the specific grounds upon which
relief is requested. The filing of the petition is not a prerequisite for
seeking administrative or judicial review except as provided in K.S.A.
44-1010 and 44-1115, and amendments thereto, concerning orders of the
Kansas human rights commission, K.S.A. 55-606 and 66-118b, and
amendments thereto, concerning orders of the corporation commission
and K.S.A. 74-2426, and amendments thereto, concerning orders of the
board of tax appeals.

    (2) Any party applying for an exemption under: (A) Section 13, of
article 11 of the Kansas Constitution, or (B) K.S.A. 79-201a Second, and
amendments thereto, for property constructed or purchased, in whole or
in part, with the proceeds of revenue bonds under the authority of K.S.A.
12-1740 to 12-1749, inclusive, and amendments thereto, may file a peti-
tion for reconsideration with the state board of tax appeals within 30 days
after service of a final order.

    (b) Within 20 days after the filing of the petition, the agency head
shall render a written order denying the petition, granting the petition
and dissolving or modifying the final order, or granting the petition and
setting the matter for further proceedings. The petition may be granted,
in whole or in part, only if the agency head states, in the written order,
findings of fact, conclusions of law and policy reasons for the decision if
it is an exercise of the state agency's discretion, to justify the order. In
proceedings before the Kansas corporation commission, the petition is
deemed to have been denied if the agency head does not dispose of it
within 30 days after the filing of the petition.

    An order under this section shall be served on the parties in the manner
prescribed by K.S.A. 77-531 and amendments thereto.

    (c) Any order rendered upon reconsideration or any order denying a
petition for reconsideration shall state the agency officer to receive service
of a petition for judicial review on behalf of the agency.

    (d) For the purposes of this section, ``agency head'' shall include a
presiding officer designated in accordance with subsection (g) of K.S.A.
77-514, and amendments thereto.

    Sec. 5. K.S.A. 79-213, as amended by section 36 of 1998 Senate Bill
No. 493, is hereby amended to read as follows: 79-213. (a) Any property
owner requesting an exemption from the payment of ad valorem property
taxes assessed, or to be assessed, against their property shall be required
to file an initial request for exemption, on forms approved by the board
of tax appeals and provided by the county appraiser.

    (b) The initial exemption request shall identify the property for which
the exemption is requested and state, in detail, the legal and factual basis
for the exemption claimed.

    (c) The request for exemption shall be filed with the county appraiser
of the county where such property is principally located.

    (d) After a review of the exemption request, and after a preliminary
examination of the facts as alleged, the county appraiser shall recommend
that the exemption request either be granted or denied, and, if necessary,
that a hearing be held. If a denial is recommended, a statement of the
controlling facts and law relied upon shall be included on the form.

    (e) The county appraiser, after making such written recommenda-
tion, shall file the request for exemption and the recommendations of the
county appraiser with the board of tax appeals.

    (f) Upon receipt of the request for exemption, the board shall docket
the same and notify the applicant and the county appraiser of such fact.

    (g) After examination of the request for exemption, and the county
appraiser's recommendation related thereto, the board may fix a time and
place for hearing, and shall notify the applicant and the county appraiser
of the time and place so fixed. A request for exemption pursuant to: (1)
Section 13 of article 11 of the Kansas constitution; or (2) K.S.A. 79-201a
Second, and amendments thereto, for property constructed or purchased,
in whole or in part, with the proceeds of revenue bonds under the au-
thority of K.S.A. 12-1740 to 12-1749, inclusive, and amendments thereto,
prepared in accordance with instructions and assistance which shall be
provided by the department of commerce and housing, shall be deemed
approved unless scheduled for hearing within 30 days after the date of
receipt of all required information and data relating to the request for
exemption, and such hearing shall be conducted within 90 days after such
date. Such time periods shall be determined without regard to any exten-
sion or continuance allowed to either party to such request. In any case
where a party to such request for exemption requests a hearing thereon,
the same shall be granted. Hearings shall be conducted in accordance
with the provisions of the Kansas administrative procedure act. In all
instances where the board sets a request for exemption for hearing, the
county shall be represented by its county attorney or county counselor.

    (h) In Except as otherwise provided by subsection (g), in the event
of a hearing, the same shall be originally set not later than 90 days after
the filing of the request for exemption with the board.

    (i) During the pendency of a request for exemption, no person, firm,
unincorporated association, company or corporation charged with real
estate or personal property taxes pursuant to K.S.A. 79-2004 and 79-
2004a, and amendments thereto, on the tax books in the hands of the
county treasurer shall be required to pay the tax from the date the request
is filed with the county appraiser until the expiration of 30 days after the
board issued its order thereon and the same becomes a final order. In
the event that taxes have been assessed against the subject property, no
interest shall accrue on any unpaid tax for the year or years in question
nor shall the unpaid tax be considered delinquent from the date the re-
quest is filed with the county appraiser until the expiration of 30 days
after the board issued its order thereon. In the event the board deter-
mines an application for exemption is without merit and filed in bad faith
to delay the due date of the tax, the tax shall be considered delinquent
as of the date the tax would have been due pursuant to K.S.A. 79-2004
and 79-2004a, and amendments thereto, and interest shall accrue as pre-
scribed therein.

    (j) In the event the board grants the initial request for exemption,
the same shall be effective beginning with the date of first exempt use
except that, with respect to property the construction of which com-
menced not to exceed 24 months prior to the date of first exempt use,
the same shall be effective beginning with the date of commencement of
construction.

    (k) In conjunction with its authority to grant exemptions, the board
shall have the authority to abate all unpaid taxes that have accrued from
and since the effective date of the exemption. In the event that taxes have
been paid during the period where the subject property has been deter-
mined to be exempt, the board shall have the authority to order a refund
of taxes for a period not to exceed three years.

    (l) The provisions of this section shall not apply to: (1) Farm machin-
ery and equipment exempted from ad valorem taxation by K.S.A. 79-201j,
and amendments thereto; (2) personal property exempted from ad valo-
rem taxation by K.S.A. 79-215, and amendments thereto; (3) wearing
apparel, household goods and personal effects exempted from ad valorem
taxation by K.S.A. 79-201c, and amendments thereto; (4) livestock; (5)
hay and silage exempted from ad valorem taxation by K.S.A. 79-201d, and
amendments thereto; (6) merchants' and manufacturers' inventories ex-
empted from ad valorem taxation by K.S.A. 79-201m and amendments
thereto; (7) grain exempted from ad valorem taxation by K.S.A. 79-201n,
and amendments thereto; (8) property exempted from ad valorem taxa-
tion by K.S.A. 79-201a Seventeenth and amendments thereto, including
all property previously acquired by the secretary of transportation or a
predecessor in interest, which is used in the administration, construction,
maintenance or operation of the state system of highways. The secretary
of transportation shall at the time of acquisition of property notify the
county appraiser in the county in which the property is located that the
acquisition occurred and provide a legal description of the property ac-
quired; (9) property exempted from ad valorem taxation by K.S.A. 79-
201a Ninth, and amendments thereto, including all property previously
acquired by the Kansas turnpike authority which is used in the adminis-
tration, construction, maintenance or operation of the Kansas turnpike.
The Kansas turnpike authority shall at the time of acquisition of property
notify the county appraiser in the county in which the property is located
that the acquisition occurred and provide a legal description of the prop-
erty acquired; (10) aquaculture machinery and equipment exempted from
ad valorem taxation by K.S.A. 79-201j, and amendments thereto. As used
in this section, ``aquaculture'' has the same meaning ascribed thereto by
K.S.A. 47-1901, and amendments thereto; (11) Christmas tree machinery
and equipment exempted from ad valorem taxation by K.S.A. 79-201j,
and amendments thereto; (12) property used exclusively by the state or
any municipality or political subdivision of the state for right-of-way pur-
poses. The state agency or the governing body of the municipality or
political subdivision shall at the time of acquisition of property for
right-of-way purposes notify the county appraiser in the county in which
the property is located that the acquisition occurred and provide a legal
description of the property acquired; (13) machinery, equipment, mate-
rials and supplies exempted from ad valorem taxation by K.S.A. 79-201w,
and amendments thereto; (14) vehicles owned by the state or by any
political or taxing subdivision thereof and used exclusively for govern-
mental purposes; and (15) property used for residential purposes which
is exempted pursuant to K.S.A. 79-201x from the property tax levied pur-
suant to K.S.A. 1997 Supp. 72-6431, and amendments thereto.

    (m) The provisions of this section shall apply to property exempt pur-
suant to the provisions of section 13 of article 11 of the Kansas consti-
tution.

    (n) The provisions of subsection (j) and (k) as amended by this act
shall be applicable to all taxable years commencing after December 31,
1995.

    Sec. 6. K.S.A. 79-251 is hereby amended to read as follows: 79-251.
Prior to the granting of an exemption for any property from ad valorem
taxation pursuant to the provisions of section 13 of article 11 of the Kansas
constitution, the board of county commissioners of any county or the
governing body of any city, as the case requires, shall be required to do
the following:

    (a) Develop and adopt official policies and procedures for the grant-
ing of such exemptions including:

    (1) The required preparation of an analysis of the costs and benefits
of each exemption, including the effect of the exemption on state reve-
nues, prior to the granting of such exemption;

    (2) a procedure for monitoring the compliance of a business receiving
an exemption with any terms or conditions established by the governing
body for the granting of the exemption; and

    (b) conduct a public hearing on the granting of such exemption. No-
tice of the public hearing shall be published at least once seven days prior
to the hearing in the official city or county newspaper, as the case re-
quires, and shall indicate the purpose, time and place thereof. In addition
to such publication notice, the city or county clerk, as the case requires,
shall notify in writing the governing body of the city or county and unified
school district within which the property proposed for exemption is lo-
cated; and

    (c) adopt a resolution containing the following findings of fact:

    (1) That the property for which the exemption is to be granted will
be used exclusively for the purposes specified in section 13 of article 11
of the Kansas constitution; and

    (2) if the business using the property is relocating from one city or
county to another within this state, that the business has received ap-
proval of the secretary of commerce and housing prior to qualifying for
the exemption upon a finding by the secretary that such relocation is
necessary to prevent the business from relocating outside this state.

    New Sec. 7. On and after January 1, 1999, (a) There shall be a di-
vision of the state board of tax appeals known as the small claims division.
Hearing officers appointed by the executive director shall have authority
to hear and decide cases heard in the small claims division.

    (b) At the election of the taxpayer, the small claims division shall have
jurisdiction over: (1) Any appeal of a decision, finding, order or ruling of
the director of taxation, except an appeal, finding, order or ruling relating
to an assessment issued pursuant to K.S.A. 79-5201 et seq., and amend-
ments thereto, in which the amount of tax in controversy does not exceed
$15,000; (2) hearing and deciding applications for the refund of protested
taxes under the provisions of K.S.A. 79-2005, and amendments thereto,
where the value of the property, other than property devoted to agricul-
tural use, is less than $2,000,000 as reflected on the valuation notice or
the property constitutes single family residential property; or (3) hearing
and deciding appeals from decisions rendered pursuant to the provisions
of article 16 or 17 of chapter 79 of the Kansas Statutes Annotated, and
acts amendatory thereof or supplemental thereto, other than those relat-
ing to land devoted to agricultural use, wherein the value of the property
is less than $2,000,000 as reflected on the valuation notice or the property
constitutes single family residental property.

    (c) In accordance with the provisions of K.S.A. 1997 Supp. 74-2438,
and amendments thereto, any party may elect to appeal any application
or decision referenced in subsection (b) to the state board of tax appeals.
The filing of an appeal with the small claims division shall not be a pre-
requisite for filing an appeal with the state board of tax appeals under
this section. Final decisions of the small claims division may be appealed
to the state board of tax appeals. An appeal of a decision of the small
claims division to the state board of tax appeals shall be de novo.

    (d) A taxpayer shall commence a proceeding in the small claims di-
vision by filing a notice of appeal in the form prescribed by the rules of
the state board of tax appeals which shall state the nature of the taxpayer's
claim. Notice of appeal shall be provided to the appropriate unit of gov-
ernment named in the notice of appeal by the taxpayer. In any valuation
appeal or tax protest commenced pursuant to Articles 14 and 20 of chap-
ter 79 of the Kansas Statutes Annotated, and amendments thereto, the
hearing shall be conducted in the county where the property is located
or a county adjacent thereto. In any appeal from a final determination by
the secretary of revenue, the hearing shall be conducted in the county in
which the taxpayer resides or a county adjacent thereto.

    (e) The hearing in the small claims division shall be informal. The
hearing officer may hear any testimony and receive any evidence the
hearing officer deems necessary or desirable for a just determination of
the case. A hearing officer shall have the authority to administer oaths in
all matters before the hearing officer. All testimony shall be given under
oath. A party may appear personally or may be represented by an attorney,
a certified public accountant, a certified general appraiser, a member of
the taxpayer's immediate family or an authorized employee of the tax-
payer. No transcript of the proceedings shall be kept.

    (f) The hearing in the small claims division shall be conducted within
60 days after the appeal is filed in the small claims division. A decision
shall be rendered by the hearing officer within 30 days after the hearing
is concluded. Documents provided by a taxpayer or county or district
appraiser shall be returned to the taxpayer or the county or district ap-
praiser by the hearing officer and shall not become a part of the board's
permanent records. Documents provided to the hearing officer shall be
confidential and may not be disclosed, except as otherwise specifically
provided.

    (g) With regard to any matter properly submitted to the division re-
lating to the determination of valuation of property for taxation purposes,
it shall be the duty of the county appraiser to initiate the production of
evidence to demonstrate, by a preponderance of the evidence, the validity
and correctness of such determination. No presumption shall exist in fa-
vor of the county appraiser with respect to the validity and correctness of
such determination.

    New Sec. 8. On and after January 1, 1999, (a) The hearing officers
of the small claims division shall be appointed by the executive director
of the state board of tax appeals.

    (b) Each hearing officer of the small claims division shall receive com-
pensation in an amount determined by the executive director and ap-
proved by the board.

    Sec. 9. On and after January 1, 1999, K.S.A. 79-1448 is hereby
amended to read as follows: 79-1448. Any taxpayer may complain or ap-
peal to the county appraiser from the classification or appraisal of the
taxpayer's property by giving notice to the county appraiser within 30 days
subsequent to the date of mailing of the valuation notice required by
K.S.A. 79-1460, and amendments thereto, for real property, and on or
before May 15 for personal property. The county appraiser or the ap-
praiser's designee shall arrange to hold an informal meeting with the
aggrieved taxpayer with reference to the property in question. At such
meeting it shall be the duty of the county appraiser or the county ap-
praiser's designee to initiate production of evidence to substantiate the
valuation of such property. The county appraiser may extend the time in
which the taxpayer may informally appeal from the classification or ap-
praisal of the taxpayer's property for just and adequate reasons. Except
as provided in K.S.A. 79-1404, and amendments thereto, no informal
meeting regarding real property shall be scheduled to take place after
May 15, nor shall a final determination be given by the appraiser after
May 20. Any taxpayer who is aggrieved by the final determination of the
county appraiser may appeal to the hearing officer or panel appointed
pursuant to K.S.A. 79-1611, and amendments thereto, and such hearing
officer, or panel, for just cause shown and recorded, is authorized to
change the classification or valuation of specific tracts or individual items
of real or personal property in the same manner provided for in K.S.A.
79-1606, and amendments thereto. In lieu of appealing to a hearing of-
ficer or panel appointed pursuant to K.S.A. 79-1611, and amendments
thereto, any taxpayer aggrieved by the final determination of the county
appraiser, except with regard to land devoted to agricultural use, wherein
the value of the property, is less than $2,000,000, as reflected on the
valuation notice, or the property constitutes single family residential prop-
erty, may appeal to the small claims division of the state board of tax
appeals within the time period prescribed by K.S.A. 79-1606, and amend-
ments thereto. Any taxpayer who is aggrieved by the final determination
of a hearing officer or panel may appeal to the state board of tax appeals
as provided in K.S.A. 79-1609, and amendments thereto. An informal
meeting with the county appraiser or the appraiser's designee shall be a
condition precedent to an appeal to the county or district hearing panel.

    Sec. 10. On and after January 1, 1999, K.S.A. 79-1611 is hereby
amended to read as follows: 79-1611. The board of county commissioners
of each county having fewer than 10,000 parcels of real property may
appoint and the board of county commissioners of each county having
10,000 parcels of real property or more shall appoint at least one hearing
officer or county hearing panel of not fewer than three individuals to hear
and determine appeals from the final determination of classification and
appraised valuation of real or personal property by the county appraiser.
The board of county commissioners, with the approval of the director of
property valuation, may unite with the board of county commissioners of
one or more counties to form a district for the purpose of appointing at
least one hearing officer or district hearing panel of not fewer than three
individuals. In any county wherein a hearing officer or county or district
hearing panel is not appointed pursuant to this section any appeal from
the final determination of the county appraiser shall be filed directly with
the state board of tax appeals as provided in K.S.A. 79-1609, and amend-
ments thereto.

    The board of county commissioners shall fix the salary to be paid the
hearing officer or each member of the county hearing panel. In the case
of a district hearing officer or district hearing panel, the salary to be paid
shall be fixed by joint resolution by the boards of county commissioners
published in the official county newspaper of each county. The board of
county commissioners of each county is hereby authorized to levy a tax
upon all taxable tangible property in the county in an amount necessary
to pay all costs incurred in complying with this section and K.S.A. 79-
1494.

    No person may serve as a hearing officer or on a county or district
hearing panel who is not qualified by virtue of experience and training in
the field of property appraisal and property tax administration, such qual-
ifications to be determined by the director of property valuation who shall
prescribe guidelines governing the duties of the hearing officers or county
and district hearing panels. Each hearing officer and member of a county
or district hearing panel shall attend and complete a training program
conducted by the director of property valuation or the director's designee.
Any person who has performed an appraisal of any property the appraised
valuation of which is appealed to a hearing officer or the county or district
hearing panel shall not hear such appeal and may not participate in any
deliberations on such appeal. The board of county commissioners, or
individual members thereof, may serve as a hearing officer or as members
of the county or district hearing panel provided they meet the foregoing
requirements.

    Whenever the director of property valuation shall conclude that any
person appointed as a hearing officer or to a county or district hearing
panel has failed or neglected to discharge such person's duties as required
by law and that the interest of the public will be promoted by the removal
of such person, the director of property valuation shall issue an order
suspending or terminating such person as a hearing officer or member of
the hearing panel in the same manner and subject to the same conditions
provided in subsection (b) of K.S.A. 19-431, and amendments thereto.

    The provisions of this section shall apply to all taxable years commenc-
ing after December 31, 1992 1997.

    Sec. 11. On and after January 1, 1999, K.S.A. 79-1448 and 79-1611
are hereby repealed.

    Sec. 12. K.S.A. 74-2426, 77-529, 79-201a, 79-213, as amended by
section 36 of 1998 Senate Bill No. 493, 79-251 and 79-252 and K.S.A.
1997 Supp. 74-2433 are hereby repealed.

    Sec. 13. This act shall take effect and be in force from and after its
publication in the statute book.

I hereby certify that the above Bill originated in the
House, and passed that body

__________________________________

House adopted
Conference Committee Report __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Passed the Senate
as amended __________________________

Senate adopted
Conference Committe Report __________________________

__________________________________

President of the Senate

__________________________________

Secretary of the Senate.

Approved__________________________

__________________________________

Governor.