S.F. 25 Section 1. Section 364.19, Code 2015, is amended to read as 1 follows: 2 364.19 Contracts to provide services to tax-exempt property. 3 A city council or county board of supervisors may enter into 4 a contract with a person whose property is totally or partially 5 exempt from taxation under chapter 404 , chapter 404B , section 6 427.1 , or section 427B.1 , or section 427B.10, for the city or 7 county to provide specified services to that person including 8 but not limited to police protection, fire protection, 9 street maintenance, and waste collection. The contract shall 10 terminate as of the date previously exempt property becomes 11 subject to taxation. 12 Sec. 2. NEW SECTION . 427B.10 Residential nuisance property 13 —— value added exemption from tax. 14 1. A city council or a county board of supervisors may 15 provide by ordinance for an exemption from property taxation 16 of the actual value added by improvements made to residential 17 property if the property is deemed to be a public nuisance 18 prior to the improvements. A city council may provide for an 19 exemption to such property located within the boundaries of 20 the city and the county board of supervisors may provide for 21 an exemption to such property located outside the boundaries 22 of a city. 23 2. All property described in subsection 1 for which an 24 exemption has been approved by ordinance is eligible to receive 25 a one hundred percent exemption from taxation on the actual 26 value added by the improvements. The exemption is for a 27 period of ten years beginning not later than the first year 28 in which all improvements described in the application are 29 first assessed for taxation. A property tax exemption under 30 this section shall not be granted if the property for which 31 the exemption is claimed has received any other property tax 32 exemption authorized by law for the actual value added to the 33 property. 34 3. The ordinance approving the exemption from tax shall 35 -1- LSB 1492XS (3) 86 md/sc 1/ 5

S.F. 25 designate the length of time the exemption shall be available 1 and may provide for an exemption schedule in lieu of that 2 provided in subsection 2. However, an alternative exemption 3 schedule specified in the resolution shall not exceed a period 4 of ten years. 5 4. a. An application shall be filed for each new exemption 6 claimed. The first application for an exemption shall be filed 7 by the owner of the property with the governing body of the 8 city or county in which the property is located by February 9 1 of the assessment year for which the exemption is first 10 claimed, but not later than the year in which all improvements 11 included in the application are first assessed for taxation. 12 b. The application shall, at a minimum, contain the nature 13 of the improvements, the cost of the improvements, and the 14 estimated or actual date of completion of the improvements. 15 c. An owner may submit an application for an exemption 16 under this section to the governing body of the city or 17 county to receive prior approval for eligibility for a tax 18 exemption. Such prior approval shall not entitle the owner 19 to exemption from taxation until the improvements have been 20 completed, a physical review of the property has been conducted 21 by the assessor pursuant to subsection 5, and the assessor has 22 determined that the actual value of the property has increased 23 as a result of the improvements. 24 d. If an application for an exemption is not approved, the 25 owner may submit an amended application for the governing body 26 to approve or reject. 27 5. The local assessor shall review each first-year 28 application by making a physical review of the property to 29 determine if the improvements made increased the actual value 30 of the approved property. If the assessor determines that 31 the actual value of that property has increased, the assessor 32 shall proceed to determine the actual value of the property 33 and certify the valuation to the county auditor at the time 34 of transmitting the assessment rolls. If an application for 35 -2- LSB 1492XS (3) 86 md/sc 2/ 5

S.F. 25 exemption is denied as a result of failure to increase the 1 value of the property, the owner may, notwithstanding the 2 filing deadlines in subsection 4, file a first application in a 3 subsequent year when additional improvements are made. After 4 the tax exemption is granted, the local assessor shall continue 5 to grant the tax exemption, with periodic physical review by 6 the assessor, for the time period specified in subsection 2, or 7 specified in the different schedule if one has been adopted in 8 the resolution of the governing body under which the exemption 9 was granted. 10 6. When in the opinion of the city council or the county 11 board of supervisors continuation of the exemption granted by 12 this section ceases to be of benefit to the city or county, the 13 city council or the county board of supervisors may repeal the 14 ordinance, but all existing exemptions shall continue until 15 their expiration. 16 7. For the purposes of this section, unless the context 17 otherwise requires: 18 a. “Actual value added” means the actual value added as of 19 the first year for which the exemption is received. 20 b. “Owner” includes a person who is purchasing property 21 by installment contract or under a duly executed purchase 22 contract. 23 c. “Public nuisance” means a building that is a menace to 24 the public health, welfare, or safety, or that is structurally 25 unsafe, unsanitary, or not provided with adequate safe egress, 26 or that constitutes a fire hazard, or is otherwise dangerous to 27 human life, or that in relation to the existing use constitutes 28 a hazard to the public health, welfare, or safety by reason 29 of inadequate maintenance, dilapidation, obsolescence, or 30 abandonment. 31 Sec. 3. IMPLEMENTATION OF ACT. Section 25B.7 shall not 32 apply to the property tax exemption established in this Act. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -3- LSB 1492XS (3) 86 md/sc 3/ 5

S.F. 25 the explanation’s substance by the members of the general assembly. 1 This bill authorizes a city council or a county board of 2 supervisors to provide by ordinance for an exemption from 3 property taxation of the actual value added to residential 4 property by improvements to the property if the property is 5 deemed to be a public nuisance, as defined in the bill, prior 6 to the improvements. 7 If approved by the governing body of the city or the board of 8 supervisors of a county, the property is eligible to receive 9 a 100 percent exemption from taxation on the actual value 10 added by the improvements. The exemption is for a period of 11 10 years beginning not later than the first year in which all 12 improvements described in the application are first assessed 13 for taxation. The ordinance allowing the exemption from tax 14 may provide for an exemption schedule in lieu of the 10-year 15 exemption provided in the bill. An alternative exemption 16 schedule may not exceed a period of 10 years. 17 The application for an exemption must be filed by the 18 owner of the property with the governing body of the city or 19 county in which the property is located by February 1 of the 20 assessment year for which the exemption is first claimed, but 21 not later than the year in which all improvements included in 22 the application are first assessed for taxation. The bill 23 authorizes an owner to submit an application for an exemption 24 to receive prior approval for eligibility for a tax exemption. 25 Such prior approval does not entitle the owner to exemption 26 from taxation until the improvements have been completed, a 27 physical review of the property has been conducted by the 28 assessor, and the assessor has determined that the actual value 29 of the property has increased as a result of the improvements. 30 The bill requires the assessor to review each first-year 31 application by making a physical review of the property, to 32 determine if the improvements made increased the actual value 33 of the approved property. If an application for exemption 34 is denied as a result of failure to increase the value of 35 -4- LSB 1492XS (3) 86 md/sc 4/ 5

S.F. 25 the property, the owner may file a first application in a 1 subsequent year when additional improvements are made. After 2 the tax exemption is granted, the local assessor shall continue 3 to grant the tax exemption, with periodic physical review by 4 the assessor, for the time period authorized. 5 Code section 25B.7 does not apply to the property tax 6 exemption to the bill. Code section 25B.7 provides that for a 7 property tax credit or exemption enacted on or after January 8 1, 1997, if a state appropriation made to fund the credit 9 or exemption is not sufficient to fully fund the credit or 10 exemption, the political subdivision is required to extend 11 to the taxpayer only that portion of the credit or exemption 12 estimated by the department of revenue to be funded by the 13 state appropriation. 14 -5- LSB 1492XS (3) 86 md/sc 5/ 5