A. Except as provided in Subsection F [G] of this section, all pipelines, tanks, meters, lift stations, treatment facilities, plants and hydrants used in the collection, transmission, storage, measurement, treatment, discharge or distribution of water or wastewater subject to valuation for property taxation purposes shall be valued in accordance with the provisions of this section.

B. As used in this section:

1. (1) "commercial water property" means privately owned pipelines, tanks, meters, plants, hydrants, materials and supplies, whether in service, in stock or under construction, owned and operated as a utility for the purpose of transmitting, storing, measuring or distributing water for sale to the consuming public, excluding general buildings and improvements;
2. (2) "commercial wastewater property" means privately owned pipelines, collection systems, lift stations, meters, treatment facilities, materials and supplies, whether in service, in stock or under construction, owned and operated as a utility for the purpose of collecting, transmitting, measuring, treating or discharging wastewater used for the purpose of providing wastewater service to the public, excluding general buildings and improvements;
3. (3) "depreciation" means straight line depreciation over the useful life of the item of property;
4. (4) "general buildings and improvements" means buildings of the nature of offices, residential housing, warehouses, shops and associated improvements in general use by the taxpayer but not directly associated with the collection, transmission, storage, measurement, treatment, discharge or distribution of water or wastewater;
5. (5) "gallons" means the measurement of water sold or the measurement of wastewater discharged to a third party's treatment facility or the measurement of wastewater treated and discharged;
6. (6) "revenue" means gross utility operating revenue;
7. (7) "closed system" means a commercial water system in which water is gathered primarily by wells and stored in closed reservoirs and tanks; and

8. (8) "combination system" means a commercial water system in which water is gathered both in open reservoirs and by wells and is stored both in open reservoirs and closed reservoirs and tanks.

   C. The value of commercial water property shall be determined as follows:

9. (1) a factor of two and forty-nine one hundredths per thousand gallons is to be used for a closed system and three and twenty-five one hundredths is to be used for a combination system;
10. (2) the department shall determine the type of system into which the taxpayer's commercial water properties should be categorized;
11. (3) the department shall then ascertain the number of thousand gallons sold to consumers by the taxpayer during each of the three immediately preceding calendar years and the taxpayer's water revenue from the immediately preceding calendar year;
12. (4) a simple average of the three-year thousand gallon sales shall be computed and compared to the actual thousand gallons sold to consumers during the immediately preceding calendar year. The higher of the average thousand gallons or the immediately preceding year's actual thousand gallons shall be the basis for value calculations;
13. (5) the thousand gallon figure determined in Paragraph (4) of this subsection shall then be multiplied by the appropriate per thousand gallon factor from Paragraph (1) of this subsection. The result of this calculation is the value of commercial water property for property taxation purposes; and

14. (6) notwithstanding the calculations provided for in Paragraphs (1) through (5) of this subsection, the value of the taxpayer's commercial water property shall not be greater than four and one-half times the revenue derived during the immediately preceding calendar year from the operation of the commercial water property.

    D. The value of commercial wastewater property shall be determined as follows:

15. (1) a factor of two and forty-nine one hundredths per thousand gallons shall be used;
16. (2) the department shall then ascertain the number of thousand gallons wastewater discharged to a third party's treatment facility or the number of thousand gallons wastewater treated and discharged during each of the three immediately preceding calendar years and the taxpayer's wastewater revenue from the immediately preceding calendar year;
17. (3) a simple average of the three-year thousand gallons shall be computed and compared to the actual thousand gallons during the immediately preceding calendar year. The higher of the average thousand gallons or the immediately preceding year's actual thousand gallons shall be the basis for value calculations;
18. (4) the thousand gallon figure determined in Paragraph (3) of this subsection shall then be multiplied by the factor provided in Paragraph (1) of this subsection. The result of this calculation is the value of commercial wastewater property for property taxation purposes; and

19. (5) notwithstanding the calculations provided for in this subsection, the value of the taxpayer's commercial wastewater property shall not be greater than four and one-half times the revenue derived during the immediately preceding calendar year from the operation of the commercial wastewater property.

    E. Each item of property having a taxable situs in the state and valued pursuant to this section shall have its net taxable value allocated to the governmental units in which the property is located on the basis of the percentage of the taxpayer's total investment in each governmental unit.

    F. The department shall adopt regulations to implement the provisions of this section.

    G. Commercial water property owned or sold by a nonprofit mutual domestic water association is exempt from valuation for property taxation purposes.

History: Laws 1973, ch. 258, § 29; 1953 Comp., § 72-29-17; Laws 1975, ch. 165, § 9; 1978 Comp., § 7-36-28; 2009, ch. 246, § 1; 2009, ch. 247, § 1.

ANNOTATIONS

Bracketed material. — The bracketed material was inserted by the compiler and is not part of the law. The reference to "Subsection F" in Subsection A, appears to refer to Subsection G, which was former Subsection F prior to the 2009 amendment.

2009 Multiple Amendments. — Laws 2009, ch. 246, § 1 and Laws 2009, ch. 247, § 1 enacted different amendments to this section that can be reconciled. Pursuant to 12-1-8 NMSA 1978, Laws 2009, ch. 247, § 1, as the last act signed by the governor, is set out above and incorporates both amendments. The amendments enacted by Laws 2009, ch. 246, § 1 and Laws 2009, ch. 247, § 1 are described below. To view the session laws in their entirety, see the 2009 session laws on NMOneSource.com.

Laws 2009, ch. 247, § 1, effective April 7, 2009, in Subsection A, after "tanks", deleted "sales", after "meters", added "lift stations, treatment facilities"; after "used in the", added "collection"; after "measurement", added "treatment, discharge"; and after "distribution of water", added "or wastewater"; added Paragraph (2) of Subsection B; in Paragraph (4) of Subsection B, after "associated with the", added "collection"; after "measurement", added "treatment, discharge"; and after "distribution of water", added "or wastewater"; in Paragraph (5) of Subsection B, after "water sold", added the remainder of the sentence; in Paragraph (3) of Subsection C, after “taxpayer's, added "water"; in Paragraph (5) of Subsection C, after "purposes;", added "and"; in Paragraph (6) of Subsection C, after "provided for", deleted "above" and added "in Paragraphs (1) through (5) of this subsection"; added Subsection D; in Subsection E, after "valued", deleted "under" and added "pursuant to"; and in Subsection F, after "regulations", deleted "under Section 72-31-88 NMSA 1953".

Laws 2009, ch. 246, § 1, effective June 19, 2009, in Subsection A, added "Except as provided in Subsection F of this section"; in Paragraph (5) of Subsection C, after "purposes;", added "and"; in Subsection E, after "regulations", deleted "under Section 72-31-88 NMSA 1953"; and added Subsection F.

Mutual domestic water consumers associations are municipal corporations and are therefore exempt from property taxes. — Article VIII, § 3 of the New Mexico Constitution exempts from property taxes the property of municipal corporations, and under current law mutual domestic water consumers associations (MDWCA), organized pursuant to the Sanitary Projects Act, NMSA 1978, §§ 3-29-1 to 3-29-21, are municipal corporations, as they are local political entities created pursuant to statute and authorized to manage community water systems, and therefore the property of MDWCAs is constitutionally exempt from property taxation. 2024 Op. Att'y Gen. No. 24-06.