House File 2467 - Introduced HOUSE FILE 2467 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 675) A BILL FOR An Act relating to Iowa’s urban renewal law by establishing 1 restrictions on the use of divided revenues, establishing 2 restrictions on the issuance of certain bonds and 3 indebtedness, modifying the methodology for calculating the 4 amount of divided revenues, and including effective date 5 provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 6172HV (2) 85 md/sc

H.F. 2467 Section 1. Section 403.5, subsection 2, paragraph b, 1 subparagraph (1), Code 2014, is amended to read as follows: 2 (1) Prior to its approval of an urban renewal plan which 3 provides for a division of revenue pursuant to section 403.19 , 4 the municipality shall mail the proposed plan by regular mail 5 to the affected taxing entities. The municipality shall 6 include with the proposed plan notification of a consultation 7 to be held between the municipality and affected taxing 8 entities prior to the public hearing on the urban renewal plan. 9 If For urban renewal plans and urban renewal projects approved 10 before the effective date of this Act, if the proposed urban 11 renewal plan or proposed urban renewal project within the urban 12 renewal area includes the use of taxes revenue resulting from a 13 division of revenue taxes under section 403.19 , subsection 2, 14 for a public building, including but not limited to a police 15 station, fire station, administration building, swimming 16 pool, hospital, library, recreational building, city hall, or 17 other public building that is exempt from taxation, including 18 the grounds of, and the erection, equipment, remodeling, or 19 reconstruction of, and additions or extensions to, such a 20 building, the municipality shall include with the proposed 21 plan notification an analysis of alternative development 22 options and funding for the urban renewal area or urban renewal 23 project and the reasons such options would be less feasible 24 than the proposed urban renewal plan or proposed urban renewal 25 project. A copy of the analysis required in this subparagraph 26 shall be included with the urban renewal report required under 27 section 331.403 or 384.22 , as applicable, and filed by December 28 1 following adoption of the urban renewal plan or project. 29 Urban renewal plans and urban renewal projects approved on or 30 after the effective date of this Act shall not include the use 31 of revenue resulting from a division of taxes under section 32 403.19, subsection 2, for a public building, including but 33 not limited to a police station, fire station, administration 34 building, swimming pool, hospital, library, recreational 35 -1- LSB 6172HV (2) 85 md/sc 1/ 8

H.F. 2467 building, city hall, or other public building that is exempt 1 from taxation, including the grounds of, and the erection, 2 equipment, remodeling, or reconstruction of, and additions or 3 extensions to, such a building. 4 Sec. 2. Section 403.9, subsection 2, Code 2014, is amended 5 to read as follows: 6 2. a. Bonds issued under this section shall not constitute 7 an indebtedness within the meaning of any constitutional or 8 statutory debt limitation or restriction, and shall not be 9 subject to the provisions of any other law or charter relating 10 to the authorization, issuance or sale of bonds. Bonds issued 11 under the provisions of this chapter are declared to be issued 12 for an essential public and governmental purpose and, together 13 with interest thereon and income therefrom, shall be exempted 14 from all taxes. 15 b. A municipality shall not incur indebtedness under this 16 chapter or under another provision of law that qualifies for 17 payment from the special fund created in section 403.19, 18 except for refunding or refinancing of indebtedness that 19 does not result in an increase in the municipality’s total 20 outstanding indebtedness payable from the special fund created 21 in section 403.19, if the sum of the municipality’s outstanding 22 indebtedness payable from the special fund created in section 23 403.19 plus any outstanding indebtedness of the municipality 24 that is subject to the debt limitation of Article XI, section 25 3, of the Constitution of the State of Iowa and that does not 26 qualify for payment from the special fund created in section 27 403.19 exceeds an amount equal to five percent of the value of 28 the taxable property within the municipality. 29 Sec. 3. Section 403.12, subsection 1, paragraph f, Code 30 2014, is amended to read as follows: 31 f. Cause Subject to the limitation in section 403.5, 32 subsection 2, paragraph “b” , subparagraph (1), cause public 33 buildings and public facilities, including parks, playgrounds, 34 and recreational, community, educational, water, sewer or 35 -2- LSB 6172HV (2) 85 md/sc 2/ 8

H.F. 2467 drainage facilities, or any other works which it is otherwise 1 empowered to undertake to be furnished; 2 Sec. 4. NEW SECTION . 403.18A Urban renewal area and 3 division of revenue limitations. 4 1. Each municipality having an urban renewal area in 5 existence on the effective date of this Act that is subject 6 to a division of revenue under section 403.19 that is not 7 limited in duration under either section 403.17, subsection 8 10, or section 403.22, subsection 5, shall be subject to the 9 assessment roll limitation in subsection 2, as modified under 10 subsection 3, if applicable. 11 2. a. For each such urban renewal area described in 12 subsection 1, the urban renewal area, including all applicable 13 urban renewal plans, projects, and ordinances providing 14 for a division of revenue, shall continue in effect under 15 this chapter, until such time that the urban renewal area 16 is dissolved by the municipality or until the urban renewal 17 area terminates under the conditions of this section. The 18 municipality may continue to incur or issue additional costs 19 or indebtedness for such urban renewal area, including loans, 20 advances, and bonds, that qualify for payment from the special 21 fund created in section 403.19 on or after the effective date 22 of this Act and until dissolution or termination of the urban 23 renewal area. 24 b. Except as otherwise provided in subsection 3, and 25 notwithstanding any provision of this chapter to the contrary, 26 for fiscal years beginning on or after July 1, 2015, when 27 calculating a division of revenue for an urban renewal area 28 described in subsection 1, and for which the difference between 29 the year of the assessment roll referred to in section 403.19, 30 subsection 1, and the year of the assessment roll used to 31 calculate the total amount of property taxes under section 32 403.19 for the fiscal year in which the taxes are due and 33 payable, exceeds twenty years, the year of the assessment 34 roll referred to in section 403.19, subsection 1, shall be 35 -3- LSB 6172HV (2) 85 md/sc 3/ 8

H.F. 2467 adjusted by increasing the year of the assessment roll by two 1 assessment years. Following the initial adjustment under this 2 paragraph, the year of the assessment roll used to calculate 3 the amount of taxes referred to in section 403.19, subsection 4 1, shall be further increased in each subsequent fiscal year 5 by two assessment years until the assessment roll used to 6 calculate the amount of taxes referred to in section 403.19, 7 subsection 1, is later in time than the year of the assessment 8 roll used to calculate the total amount of property taxes under 9 section 403.19 for the fiscal year in which the taxes are due 10 and payable, at which time the urban renewal area, including 11 all applicable urban renewal plans, projects, and ordinances 12 providing for a division of revenue, shall terminate and be of 13 no further force and effect. 14 3. a. For an urban renewal area identified in subsection 15 1, following the first fiscal year for which the difference 16 between the year of the assessment roll used to calculate the 17 amount of taxes referred to in section 403.19, subsection 1, 18 and the year of the assessment roll used to calculate the total 19 amount of property taxes subject to division under section 20 403.19 for the fiscal year in which taxes are due and payable, 21 following an adjustment under subsection 2 of this section, is 22 less than twenty years, but before the difference between the 23 years of the assessment rolls, as adjusted under subsection 24 2, is less than fifteen years, if the governing bodies of all 25 affected taxing entities irrevocably authorize, by resolution, 26 the municipality to modify the year of the assessment roll used 27 to calculate the amount of taxes referred to in section 403.19, 28 subsection 1, the municipality may modify the year of the 29 applicable assessment roll in the manner provided in paragraph 30 “b” . 31 b. If authorized by resolution of all affected taxing 32 entities under paragraph “a” , the year of the assessment roll 33 used to calculate the amount of taxes referred to in section 34 403.19, subsection 1, shall be the assessment roll used to 35 -4- LSB 6172HV (2) 85 md/sc 4/ 8

H.F. 2467 calculate the amount of taxes referred to in section 403.19, 1 subsection 1, for the fiscal year in which the last affected 2 taxing entity adopted the resolution. The assessment roll 3 authorized to be used under this subsection shall be used to 4 calculate the amount of taxes referred to in section 403.19, 5 subsection 1, for each subsequent fiscal year following the 6 fiscal year in which the last affected taxing entity adopted 7 the resolution until such time that the urban renewal area is 8 dissolved or until such time that the urban renewal area is 9 terminated under this section, whichever is earlier. An urban 10 renewal area authorized for modification under this subsection, 11 including all applicable urban renewal plans, projects, 12 and ordinances providing for a division of revenue, shall 13 terminate and be of no further force and effect on the date for 14 termination that would, but for operation of this subsection, 15 be required under subsection 2. 16 4. The department of management shall adopt rules necessary 17 to implement and administer this section. 18 Sec. 5. Section 403.19, Code 2014, is amended by adding the 19 following new subsection: 20 NEW SUBSECTION . 3A. Except as provided in section 403.22, 21 an ordinance providing for a division of revenue under this 22 section that is adopted on or after the effective date of 23 this Act, including an ordinance providing for a division 24 of revenue for an economic development area under section 25 403.17, subsection 10, shall be limited to twenty years from 26 the calendar year following the calendar year in which the 27 municipality first certifies to the county auditor the amount 28 of any loans, advances, indebtedness, or bonds that qualify for 29 payment from the division of revenue provided in this section. 30 The urban renewal area, including all applicable urban renewal 31 plans, projects, and ordinances, shall terminate and be of 32 no further force and effect following the twenty-year period 33 provided in this subsection. 34 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 35 -5- LSB 6172HV (2) 85 md/sc 5/ 8

H.F. 2467 immediate importance, takes effect upon enactment. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill relates to Iowa’s urban renewal law. 5 The bill provides that urban renewal plans and urban renewal 6 projects approved on or after the effective date of the bill 7 shall not include the use of revenue resulting from a division 8 of taxes for a public building, including but not limited to a 9 police station, fire station, administration building, swimming 10 pool, hospital, library, recreational building, city hall, or 11 other public building that is exempt from taxation, including 12 the grounds of, and the erection, equipment, remodeling, or 13 reconstruction of, and additions or extensions to, such a 14 building. 15 The bill strikes provisions of Code section 403.9 relating 16 to whether the bonds issued under that Code section constitute 17 indebtedness for purposes of constitutional and statutory 18 debt limitations. The bill also provides that a municipality 19 shall not incur indebtedness under Code chapter 403 or under 20 another provision of law that qualifies for payment from 21 the municipality’s special fund created under Code section 22 403.19, with some exceptions, if the sum of the municipality’s 23 outstanding urban renewal indebtedness plus any outstanding 24 indebtedness of the municipality that is subject to the debt 25 limitation in Article XI, section 3, of the Iowa Constitution 26 and not payable from the municipality’s special fund exceeds an 27 amount equal to 5 percent of the value of the taxable property 28 within the municipality. 29 New Code section 403.18A provides that each municipality 30 having an urban renewal area in existence on the effective 31 date of the bill that is subject to a division of revenue 32 that is not limited in duration under either Code section 33 403.17, subsection 10 (20 years) or Code section 403.22, 34 subsection 5 (10 years) shall be subject to the limitation 35 -6- LSB 6172HV (2) 85 md/sc 6/ 8

H.F. 2467 provided for in the bill. Under the bill, when calculating 1 a division of revenue for such an urban renewal area for 2 a fiscal year beginning on or after July 1, 2015, and for 3 which the difference between the year of the assessment roll 4 referred to in Code section 403.19, subsection 1, and the year 5 of the assessment roll used to calculate the total amount of 6 property taxes under Code section 403.19 for the fiscal year 7 in which the taxes are due and payable, exceeds 20 years, 8 the year of the assessment roll referred to in Code section 9 403.19, subsection 1, shall be adjusted by increasing the year 10 of the assessment roll by two assessment years. Following 11 this initial adjustment, the year of the assessment roll 12 used to calculate the amount of taxes referred to in Code 13 section 403.19, subsection 1, shall be further increased in 14 each subsequent fiscal year by two assessment years until the 15 assessment roll to calculate the amount of taxes referred to in 16 Code section 403.19, subsection 1, is later in time than the 17 year of the assessment roll used to calculate the total amount 18 of property taxes under Code section 403.19 for the fiscal year 19 in which the taxes are due and payable, at which time the urban 20 renewal area including all applicable urban renewal plans, 21 projects, and ordinances providing for a division of revenue 22 shall terminate and be of no further force and effect. 23 For those urban renewal areas identified in the bill that 24 are subject to a division of revenue that is not limited in 25 duration under current law, following the fiscal year for which 26 the difference between the year of the assessment roll used 27 to calculate the amount of taxes referred to in Code section 28 403.19, subsection 1, and the year of the assessment roll 29 used to calculate the total amount of property taxes subject 30 to division under Code section 403.19 for the fiscal year in 31 which taxes are due and payable, following an adjustment under 32 the bill, is less than 20 years, but before the difference 33 between the years of the assessment rolls, as adjusted under 34 the bill, is less than 15 years, if the governing bodies of all 35 -7- LSB 6172HV (2) 85 md/sc 7/ 8

H.F. 2467 affected taxing entities irrevocably authorize, by resolution, 1 the municipality to modify the year of the assessment roll used 2 to calculate the amount of taxes referred to in Code section 3 403.19, subsection 1, the municipality may modify the year of 4 the applicable assessment roll to be the assessment roll used 5 to calculate the amount of taxes referred to in Code section 6 403.19, subsection 1, for the fiscal year in which the last 7 affected taxing entity adopted the resolution. That assessment 8 roll shall then be used for each subsequent fiscal year 9 following the fiscal year in which the last affected taxing 10 entity adopted the resolution until such time that the urban 11 renewal area is dissolved or until such time that the urban 12 renewal area is terminated under the provisions of the bill, 13 whichever is earlier. 14 The bill provides that except for certain divisions of 15 revenue authorized for certain housing and residential 16 development under Code section 403.22, an ordinance providing 17 for a division of revenue under Code section 403.19 that is 18 adopted on or after the effective date of the bill shall be 19 limited to 20 years from the calendar year following the 20 calendar year in which the municipality first certifies to the 21 county auditor the amount of any loans, advances, indebtedness, 22 or bonds which qualify for payment from the division of revenue 23 provided in Code section 403.19. Under the bill, the urban 24 renewal area, including all applicable urban renewal plans, 25 projects, and ordinances shall terminate and be of no further 26 force and effect following the 20-year period provided in the 27 bill. 28 The bill takes effect upon enactment. 29 -8- LSB 6172HV (2) 85 md/sc 8/ 8