Senate Study Bill 3046 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON BOLKCOM) A BILL FOR An Act relating to the property tax assessments of certain 1 rental property for low-income and moderate income 2 residents. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5441XC (4) 84 md/sc

S.F. _____ Section 1. Section 441.21, subsection 2, Code Supplement 1 2011, is amended to read as follows: 2 2. In the event market value of the property being assessed 3 cannot be readily established in the foregoing manner, then 4 the assessor may determine the value of the property using the 5 other uniform and recognized appraisal methods including its 6 productive and earning capacity, if any, industrial conditions, 7 its cost, physical and functional depreciation and obsolescence 8 and replacement cost, and all other factors which would assist 9 in determining the fair and reasonable market value of the 10 property but the actual value shall not be determined by use 11 of only one such factor. The following shall not be taken into 12 consideration: Special value or use value of the property to 13 its present owner, and the goodwill or value of a business 14 which uses the property as distinguished from the value of the 15 property as property. However, in assessing property that 16 is rented or leased to low-income individuals and families 17 pursuant to criteria of the HOME investment partnerships 18 program of the federal National Affordable Housing Act of 19 1990 or as authorized by section 42 of the Internal Revenue 20 Code, as amended, and which section limits the amount that the 21 individual or family pays for the rental or lease of units 22 in the property, the assessor shall use the productive and 23 earning capacity from the actual rents received as a method of 24 appraisal and shall take into account the extent to which that 25 use and limitation reduces the market value of the property. 26 The assessor shall not consider any tax credit equity or other 27 subsidized financing as income provided to the property in 28 determining the assessed value. The property owner shall 29 notify the assessor when property is withdrawn from the federal 30 HOME investment partnership program eligibility or section 42 31 eligibility under the Internal Revenue Code. The property 32 shall not be subject to section 42 such assessment procedures 33 for the assessment year for which section 42 eligibility is 34 withdrawn. This notification must be provided to the assessor 35 -1- LSB 5441XC (4) 84 md/sc 1/ 2

S.F. _____ no later than March 1 of the assessment year or the owner 1 will be subject to a penalty of five hundred dollars for that 2 assessment year. The penalty shall be collected at the same 3 time and in the same manner as regular property taxes. Upon 4 adoption of uniform rules by the department of revenue or 5 succeeding authority covering assessments and valuations of 6 such properties, the valuation on such properties shall be 7 determined in accordance with such rules and in accordance with 8 forms and guidelines contained in the real property appraisal 9 manual prepared by the department as updated from time to time 10 for assessment purposes to assure uniformity, but such rules, 11 forms, and guidelines shall not be inconsistent with or change 12 the foregoing means of determining the actual, market, taxable , 13 and assessed values. 14 EXPLANATION 15 Under Code section 441.21(2), property that is rented or 16 leased to low-income individuals and families as authorized by 17 section 42 of the Internal Revenue Code and that is limited 18 in the amount that the individual or family pays for the 19 rental or lease, is assessed for property tax purposes based 20 on productive and earning capacity from the actual rents and 21 such assessment takes into account the extent to which that use 22 and limitation reduces the market value of the property. In 23 addition, the assessor is prohibited from considering any tax 24 credit equity or other subsidized financing as income provided 25 to the property in determining the assessed value. 26 This bill requires property that is rented or leased to 27 low-income individuals and families under criteria of the 28 HOME investment partnership program of the federal National 29 Affordable Housing Act of 1990 to be assessed in the same 30 manner as properties under section 42 of the 31 Internal Revenue Code are assessed. 32 -2- LSB 5441XC (4) 84 md/sc 2/ 2