HF 2063 (LSB 5112YH (5) 87)

HOUSE FILE 2063

BY  MOHR

A BILL FOR

An Act relating to Iowa’s urban renewal law by modifying requirements for the annual report prepared by the legislative services agency, establishing restrictions on the use of divided taxes, modifying the conditions for establishing certain urban renewal areas, imposing duration limits on certain urban renewal areas, excluding certain property taxes from a division of taxes, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 260E.4, Code 2018, is amended to read as follows:
   260E.4  Incremental property taxes.
   If an agreement provides that all or part of program costs are to be paid for by incremental property taxes, the board of directors shall provide by resolution that taxes levied on the employer’s taxable business property, where new jobs are created as a result of a project, each year by or for the benefit of the state, city, county, school district, or other taxing district after the effective date of the resolution shall be divided as provided in section 403.19, subsections 1 and 2, in the same manner as if the employer’s business property, where new jobs are created as a result of a project, was taxable property in an urban renewal project and the resolution was an ordinance within the meaning of those subsections. The taxes received by the board of directors shall be allocated to and when collected be paid into a special fund of the community college and may be irrevocably pledged by the community college to pay the principal of and interest on the certificates issued by the community college to finance or refinance, in whole or in part, the project. However, with respect to any urban renewal project as to which an ordinance is in effect under section 403.19, the collection of incremental property taxes authorized by this chapter are suspended in favor of collection of incremental taxes under section 403.19. As used in this section, “taxes” includes, but is not limited to, all levies on an ad valorem basis upon land or real property of the employer’s business, where new jobs are created as a result of a project.  The urban renewal area duration limitations under section 403.18A and the limitations on the duration of ordinances under section 403.19, subsection 3A, shall not apply to resolutions adopted under this section.
    Sec. 2.  Section 331.403, subsection 3, paragraph d, Code 2018, is amended to read as follows:
   d.  The legislative services agency, in consultation with the department of management, shall annually prepare a report for submission to the governor and the general assembly that summarizes and analyzes the information contained in the reports submitted under this subsection, section 357H.9, subsection 2, and section 384.22, subsection 2.  The report shall contain a list of each county, city, or rural improvement zone that filed an annual report for the most recently ended fiscal year and each such entity’s amount reported under paragraph “b”, subparagraph (8), for counties and rural improvement zones, or section 384.22, subsection 2, paragraph “b”, subparagraph (8), for cities. The report prepared by the legislative services agency shall be submitted not later than February 15 following the most recently ended fiscal year for which the reports were filed.
    Sec. 3.  Section 357H.9, subsection 1, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0f.  The urban renewal area duration limitations under section 403.18A and the limitations on the duration of ordinances under section 403.19, subsection 3A, shall not apply to rural improvement zones established under this chapter and resolutions adopted under this section.
    Sec. 4.  Section 403.5, subsection 2, paragraph b, subparagraph (1), Code 2018, is amended to read as follows:
   (1)  Prior to its approval of an urban renewal plan which provides for a division of revenue pursuant to section 403.19, the municipality shall mail the proposed plan by regular mail to the affected taxing entities. The municipality shall include with the proposed plan notification of a consultation to be held between the municipality and affected taxing entities prior to the public hearing on the urban renewal plan. If the proposed urban renewal plan or proposed urban renewal project within the urban renewal area, which plan or project is approved prior to the effective date of this Act, includes the use of taxes resulting from a division of revenue under section 403.19 for a public building, including but not limited to a police station, fire station, administration building, swimming pool, hospital, library, recreational building, city hall, or other public building that is exempt from taxation, including the grounds of, and the erection, equipment, remodeling, maintenance, repair, or reconstruction of, and additions or extensions to, such a building, the municipality shall include with the proposed plan notification an analysis of alternative development options and funding for the urban renewal area or urban renewal project and the reasons such options would be less feasible than the proposed urban renewal plan or proposed urban renewal project. A copy of the analysis required in this subparagraph shall be included with the urban renewal report required under section 331.403 or 384.22, as applicable, and filed by December 1 following adoption of the urban renewal plan or project.  Urban renewal plans and urban renewal projects approved on or after the effective date of this Act shall not include the use of taxes resulting from a division of revenue under section 403.19 for a public building, including but not limited to a police station, fire station, administration building, swimming pool, hospital, library, recreational building, city hall, or other public building that is exempt from taxation, including the grounds of, and the erection, equipment, remodeling, maintenance, repair, or reconstruction of, and additions or extensions to, such a building.
    Sec. 5.  Section 403.12, subsection 1, paragraph f, Code 2018, is amended to read as follows:
   f.  Cause Subject to the limitation in section 403.5, subsection 2, paragraph “b”, subparagraph (1), cause public buildings and public facilities, including parks, playgrounds, and recreational, community, educational, water, sewer or drainage facilities, or any other works which it is otherwise empowered to undertake to be furnished;
    Sec. 6.  Section 403.17, subsections 5 and 10, Code 2018, are amended to read as follows:
   5.  “Blighted area” means: 
   a.  For an urban renewal area established before the effective date of this Act, an area of a municipality within which the local governing body of the municipality determines that the presence of a substantial number of slum, deteriorated, or deteriorating structures; defective or inadequate street layout; faulty lot layout in relation to size, adequacy, accessibility, or usefulness; insanitary or unsafe conditions; deterioration of site or other improvements; diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land; defective or unusual conditions of title; or the existence of conditions which endanger life or property by fire and other causes; or any combination of these factors; substantially impairs or arrests the sound growth of a municipality, retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, or welfare in its present condition and use. A disaster area referred to in section 403.5, subsection 7, constitutes a “blighted area”. “Blighted area” does not include real property assessed as agricultural property for purposes of property taxation.
   b.  For an urban renewal area established on or after the effective date of this Act, an area of a municipality within which the local governing body of the municipality determines that the presence of a substantial number of slum, deteriorated, or deteriorating structures; insanitary or unsafe conditions; deterioration of site or other improvements; or the existence of conditions which endanger life or property by fire and other causes; or any combination of these factors; substantially impairs or arrests the sound growth of a municipality, retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, or welfare in its present condition and use. A disaster area referred to in section 403.5, subsection 7, constitutes a “blighted area”. “Blighted area” does not include real property assessed as agricultural property for purposes of property taxation.
   10.  “Economic development area” means an area of a municipality designated by the local governing body as appropriate for commercial and industrial enterprises, public improvements related to housing and residential development, or construction of housing and residential development for low and moderate income families, including single or multifamily housing. If an urban renewal plan for an urban renewal area is based upon a finding that the area is an economic development area and that no part contains slum or blighted conditions, then the division of revenue provided in section 403.19 and stated in the plan shall be limited to twenty years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds which qualify for payment from the division of revenue provided in section 403.19. Such designated area shall not include agricultural land, including land which is part of a century farm, unless the owner of the agricultural land or century farm agrees to include the agricultural land or century farm in the urban renewal area.  For an urban renewal area established as an economic development area on or after the effective date of this Act that includes agricultural land or land that is part of a century farm, the municipality shall not permit the use, development, or zoning of such agricultural land or century farm land for housing, residential, or multiresidential purposes, except for any such use in existence on the date the area was established. For the purposes of this subsection, “century farm” means a farm in which at least forty acres of such farm have been held in continuous ownership by the same family for one hundred years or more.
    Sec. 7.  NEW SECTION.  403.18A  Urban renewal area duration —— limitations.
   1.  An urban renewal area in existence on the effective date of this Act for which an ordinance providing for a division of revenue under section 403.19 was adopted before the effective date of this Act and that is not limited in duration under section 403.17, subsection 10, or section 403.22, subsection 5, shall be subject to the duration limitation in subsection 2.
   2.  a.  For an urban renewal area described in subsection 1, the urban renewal area, including all applicable urban renewal plans, projects, and ordinances providing for a division of revenue, shall continue in effect under this chapter, until such time that the urban renewal area is dissolved by the municipality or until the urban renewal area terminates under the conditions of this section, whichever occurs first. The municipality may continue to incur or issue additional costs or indebtedness for such urban renewal area, including loans, advances, and bonds that qualify for payment from the special fund created in section 403.19, on or after the effective date of this Act and until dissolution or termination of the urban renewal area.
   b.  (1)  For an urban renewal area described in subsection 1 that is based on a finding that the area is an economic development area and that no part contains slum or blighted conditions, the urban renewal area, including all applicable urban renewal plans, projects, and ordinances providing for a division of revenue, shall terminate and be of no further force and effect on July 1, 2038.
   (2)  For an urban renewal area described in subsection 1 that is based on a finding that all or a part of the area contains slum or blighted conditions, the urban renewal area, including all applicable urban renewal plans, projects, and ordinances providing for a division of revenue, shall terminate and be of no further force and effect on July 1, 2043.
   3.  The department of management shall adopt rules pursuant to chapter 17A necessary to implement and administer this section.
    Sec. 8.  Section 403.19, subsection 2, paragraph a, Code 2018, is amended to read as follows:
   a.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22. However, except as provided in paragraph “b”, taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2 and taxes for the instructional support program of a school district imposed pursuant to section 257.19, foundation property taxes of a school district imposed under section 257.3, taxes for the payment of bonds and interest of each taxing district, and taxes imposed under section 346.27, subsection 22, related to joint county-city buildings shall be collected against all taxable property within the taxing district without limitation by the provisions of this subsection.  Additionally, for ordinances dividing taxes under this section adopted by a municipality that is a city on or after the effective date of this Act, taxes levied by or certified for levy by a county shall be collected against all taxable property within the taxing district without limitation by the provisions of this subsection if the county board of supervisors adopts a resolution precluding such a division of county property taxes before the city first certifies an amount under subsection 6.
    Sec. 9.  Section 403.19, Code 2018, is amended by adding the following new subsection:
   NEW SUBSECTION.  3A.  a.  Except as otherwise provided in paragraph “b” or section 403.22, an ordinance providing for a division of revenue under this section that is adopted on or after the effective date of this Act shall be limited to twenty years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds that qualify for payment from the division of revenue provided for in this section. The urban renewal area, including all applicable urban renewal plans, projects, and ordinances, shall terminate and be of no further force and effect following the twenty-year period provided in this subsection.
   b.  An ordinance providing for a division of revenue under this section that is adopted on or after the effective date of this Act for an urban renewal area that contains slum or blighted conditions shall be limited to twenty-five years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds that qualify for payment from the division of revenue provided in this section. The urban renewal area, including all applicable urban renewal plans, projects, and ordinances, shall terminate and be of no further force and effect following the twenty-five-year period provided in this subsection.
    Sec. 10.  Section 403.19, subsection 9, Code 2018, is amended to read as follows:
   9.  a.  Moneys Unless prohibited under paragraph “b”, moneys from any source deposited into the special fund created in this section shall not be expended for or otherwise used in connection with an urban renewal project approved on or after July 1, 2012, that includes the relocation of a commercial or industrial enterprise not presently located within the municipality, unless one of the following occurs:
   (1)  The local governing body of the municipality where the commercial or industrial enterprise is currently located and the local governing body of the municipality where the commercial or industrial enterprise is proposing to relocate have either entered into a written agreement concerning the relocation of the commercial or industrial enterprise or have entered into a written agreement concerning the general use of economic incentives to attract commercial or industrial development within those municipalities.
   (2)  The local governing body of the municipality where the commercial or industrial enterprise is proposing to relocate finds that the use of deposits into the special fund for an urban renewal project that includes such a relocation is in the public interest. A local governing body’s finding that an urban renewal project that includes a commercial or industrial enterprise relocation is in the public interest shall include written verification from the commercial or industrial enterprise that the enterprise is actively considering moving all or a part of its operations to a location outside the state and a specific finding that such an out-of-state move would result in a significant reduction in either the enterprise’s total employment in the state or in the total amount of wages earned by employees of the enterprise in the state.
   b.  Moneys from any source deposited into the special fund created in this section shall not be expended for or otherwise used in connection with an urban renewal project approved on or after the effective date of this Act that includes the relocation of a commercial or industrial enterprise for which the location of the enterprise’s existing operations is two miles or less from the enterprise’s proposed new operations location.
   b.  c.  For the purposes of this subsection, “relocation” means the closure or substantial reduction of an enterprise’s existing operations in one area of the state and the initiation of substantially the same operation in the same county or a contiguous county in the state. This subsection does not prohibit an enterprise from expanding its operations in another area of the state provided that existing operations of a similar nature are not closed or substantially reduced.
    Sec. 11.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 12.  APPLICABILITY.  The portion of the section of this Act amending section 403.19, subsection 2, paragraph “a”, relating to the division of foundation property taxes of a school district applies to property taxes due and payable in fiscal years beginning on or after July 1, 2019, that are levied against any of the following:
   1.  Property located in an urban renewal area for which the ordinance providing for a division of revenue takes effect on or after the effective date of this Act.
   2.  Property annexed or otherwise included in an urban renewal area after the effective date of the ordinance providing for a division of revenue if the annexation or inclusion occurs on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to Iowa’s urban renewal law.
   The bill requires the annual report prepared by the legislative services agency, in consultation with the department of management, under Code section 331.403, to contain a list of each county, city, or rural improvement zone that filed an annual report for the most recently ended fiscal year and each such entity’s reported amount of loans, advances, indebtedness, or bonds that remain unpaid at the close of the fiscal year, and which qualify for payment from the special fund created in Code section 403.19, including interest negotiated on such loans, advances, indebtedness, or bonds.
   The bill provides that urban renewal plans and urban renewal projects approved on or after the effective date of the bill shall not include the use of taxes resulting from a division of revenue for a public building that is exempt from taxation, including the grounds of, and the erection, equipment, remodeling, maintenance, repair, or reconstruction of, and additions or extensions to, such a building. The bill also modifies provisions governing the use of such revenues for public buildings for plans and projects approved before the effective date of the bill to include the maintenance and repair of such public buildings.
   Code chapter 403 governs the criteria upon which an urban renewal area may be established, which may include a determination that an area is a “blighted area”. The bill establishes a definition of “blighted area” for those urban renewal areas established on or after the effective date of the bill. For such areas, “blighted area” means an area of a municipality within which the local governing body of the municipality determines that the presence of a substantial number of slum, deteriorated, or deteriorating structures; insanitary or unsafe conditions; deterioration of site or other improvements; or the existence of conditions which endanger life or property by fire and other causes; or any combination of these factors; substantially impairs or arrests the sound growth of a municipality, retards the provision of housing accommodations, or constitutes an economic or social liability and is a menace to the public health, safety, or welfare in its present condition and use. In addition, a disaster area under Code section 403.5, subsection 7, constitutes a “blighted area”. However, “blighted area” does not include real property assessed as agricultural property for purposes of property taxation.
   Current Code section 403.17(10) prohibits, as part of the definition of “economic development area”, an urban renewal area that is an economic development area from including agricultural land, including land which is part of a century farm, unless the owner of the agricultural land or century farm agrees to include the agricultural land or century farm in the urban renewal area. The bill provides that for an urban renewal area established as an economic development area on or after the effective date of the bill that includes agricultural land or land that is part of a century farm, the municipality shall not permit the use, development, or zoning of such agricultural land or century farm land for housing, residential, or multiresidential purposes, except for any such use in existence on the date the area was established. 
   New Code section 403.18A provides that an urban renewal area in existence on the effective date of the bill for which an ordinance providing for a division of revenue was adopted before the effective date of the bill and that is not limited in duration under Code section 403.17, subsection 10 (20 years), or Code section 403.22, subsection 5 (10 years), shall be subject to the duration limitations established in the bill. For such an urban renewal area that is based on a finding that the area is an economic development area and that no part contains slum or blighted conditions, the urban renewal area, including all applicable urban renewal plans, projects, and ordinances providing for a division of revenue, shall terminate and be of no further force and effect on July 1, 2038. If, however, such an urban renewal area is based on a finding that all or a part of the area contains slum or blighted conditions, the urban renewal area, including all applicable urban renewal plans, projects, and ordinances providing for a division of revenue, shall terminate and be of no further force and effect on July 1, 2043.
   The bill provides that, except for a division of revenue authorized for certain housing and residential development under Code section 403.22, an ordinance providing for a division of revenue that is adopted on or after the effective date of the bill shall be limited to 20 years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds that qualify for payment from the division of revenue, at which time the urban renewal area, including all applicable urban renewal plans, projects, and ordinances, shall terminate and be of no further force and effect. If, however, the urban renewal area for which such an ordinance is adopted contains slum or blighted conditions, the division of revenue shall be limited to 25 years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds that qualify for payment from the division of revenue.
   The bill specifies that the urban renewal duration limits under new Code section 403.18A and the limitations on the duration of ordinances providing for a division of revenue under Code section 403.19, new subsection 3A, shall not apply to divisions of taxes established by community colleges under Code chapter 260E or rural improvement zones under Code chapter 357H.
   The bill excludes the school district foundation property tax imposed under Code section 257.3 from the division of revenue under Code section 403.19 (tax increment financing). Under the bill, the foundation property tax is not divided and paid into the municipality’s special fund for the payment of urban renewal indebtedness but instead is required to be levied, collected, and paid to the school district in the same manner as all other property taxes. 
   Under Iowa’s urban renewal law, “municipality” includes cities and counties. In addition, by operation of law, the bill applies to divisions of revenue adopted by a community college under Code section 260E.4 and rural improvement zones under Code section 357H.9.
   The bill also provides that for ordinances dividing taxes under Code section 403.19 adopted by a municipality that is a city on or after the effective date of the bill, taxes levied by or certified for levy by a county are required to be collected and shall not be divided if the county board of supervisors adopts a resolution precluding such a division of county property taxes before the city first certifies an amount for payment using divided taxes under Code section 403.19(6).
   Current Code section 403.19(9) imposes restrictions on the use of urban renewal special fund moneys for an urban renewal project approved on or after July 1, 2012, that includes the relocation of a commercial or industrial enterprise not presently located within the municipality. The bill prohibits such funds from being expended for or otherwise used in connection with an urban renewal project approved on or after the effective date of the bill that includes the relocation of a commercial or industrial enterprise for which the location of the enterprise’s existing operations is two miles or less from the enterprise’s proposed new operations location.
   The bill takes effect upon enactment.
   The portion of the section of the bill amending Code section 403.19 relating to the division of foundation property taxes of a school district applies to property taxes due and payable in fiscal years beginning on or after July 1, 2019, that are levied against any of the following: (1) property located in an urban renewal area for which the ordinance providing for a division of revenue takes effect on or after the effective date of the bill; or (2) property annexed or otherwise included in an urban renewal area after the effective date of the ordinance providing for a division of revenue if the annexation or inclusion occurs on or after the effective date of the bill.