SF 2267 (LSB 5981XS (3) 87)

SENATE FILE 2267

BY  CHAPMAN

A BILL FOR

An Act relating to the operation and use of urban renewal areas and urban revitalization areas and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
URBAN RENEWAL AREAS

    Section 1.  Section 331.403, subsection 3, paragraph b, Code 2018, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (22)  The amount and source of any voluntary transfer of property taxes under section 403.19, subsection 3A.
    Sec. 2.  Section 384.22, subsection 2, paragraph b, Code 2018, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (22)  The amount and source of any voluntary transfer of property taxes under section 403.19, subsection 3A.
    Sec. 3.  Section 403.5, subsection 4, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  For urban renewal areas established on or after the effective date of this division of this Act, the area comprising the urban renewal area does not include real property assessed as residential property, multiresidential property, or agricultural property to the extent prohibited under section 403.17, subsection 5, 10, or 22.
    Sec. 4.  Section 403.17, subsections 5, 10, and 22, Code 2018, are amended to read as follows:
   5.  “Blighted area” means:
   a.  For urban renewal areas established prior to the effective date of this division 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 urban renewal areas established on or after the effective date of this division 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, 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 residential property, multiresidential property, or agricultural property for purposes of property taxation.
   10.  “Economic development area” means:
   a.  For urban renewal areas established prior to the effective date of this division of this Act, 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 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.
   b.  For urban renewal areas established on or after the effective date of this division of this Act, an area of a municipality designated by the local governing body as appropriate for commercial and industrial enterprises and public improvements related to commercial and industrial development. 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 property assessed as residential property or multiresidential property. Such designated area shall also 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 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.
   22.  “Slum area” shall mean means:
   a.  For urban renewal areas established prior to the effective date of this division of this Act, an area in which there is a predominance of buildings or improvements, whether residential or nonresidential, which:  by reason of dilapidation, deterioration, age or obsolescence; by reason of inadequate provision for ventilation, light, air, sanitation, or open spaces; by reason of high density of population and overcrowding; by reason of the existence of conditions which endanger life or property by fire and other causes; or which by any combination of such factors, is conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, or crime, and which is detrimental to the public health, safety, morals, or welfare. “Slum area” does not include real property assessed as agricultural property for purposes of property taxation.
   b.  For urban renewal areas established on or after the effective date of this division of this Act, an area in which there is a predominance of nonresidential buildings or improvements, which: by reason of dilapidation, deterioration, age or obsolescence; by reason of inadequate provision for ventilation, light, air, sanitation, or open spaces; by reason of high density of population and overcrowding; by reason of the existence of conditions which endanger life or property by fire and other causes; or which by any combination of such factors, is conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, or crime, and which is detrimental to the public health, safety, morals, or welfare. “Slum area” does not include real property assessed as residential property, multiresidential property, or agricultural property for purposes of property taxation.
    Sec. 5.  Section 403.19, subsection 2, paragraph a, Code 2018, is amended to read as follows:
   a.  That Unless subject to the provisions of subsection 2A, 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, 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.
    Sec. 6.  Section 403.19, Code 2018, is amended by adding the following new subsections:
   NEW SUBSECTION.  2A.  For 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 division of this Act or for 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 division of this Act, 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, all taxes certified or imposed by a taxing entity or taxing district other than the municipality shall be collected against all taxable property within the taxing district without limitation and allocated to and when collected be paid into the fund for the respective taxing district as taxes by or for the taxing district into which all other property taxes are paid.
   NEW SUBSECTION.  3A.  a.  To further the purposes of an urban renewal area, an affected taxing entity for which property taxes imposed by the affected taxing entity are excluded from the division of taxes under subsection 2A, may voluntarily transfer to the municipality all or a portion of the property taxes that would otherwise have been deposited into the municipality’s special fund but for the exclusion. Such a transfer shall be at the sole discretion of the governing body of the affected taxing entity.
   b.  Amounts voluntarily transferred by a school district under this subsection shall not be considered a reduction in the amount of foundation property tax received by the school district under section 257.3 and shall not result in an increase in the amount of school foundation aid received by the school district under section 257.1.
    Sec. 7.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 8.  APPLICABILITY.  This division of this Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2018, 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 division 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 division of this Act.
DIVISION II
URBAN REVITALIZATION AREAS

    Sec. 9.  Section 404.2, subsection 2, Code 2018, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0j.  (1)  A list of each property tax levy imposed by the designating city or designating county from which qualified real estate will be exempt. In order for qualified real estate to be exempt from a property tax levy imposed by a taxing jurisdiction other than the designating city or designating county, the governing body of each such taxing jurisdiction shall adopt a resolution under section 404.2A identifying each property tax levy for which the exemption within the revitalization area is authorized. 
   (2)  This paragraph applies to ordinances designating revitalization areas adopted on or after the effective date of this division of this Act and to first-year exemption applications filed on or after the effective date of this division of this Act for revitalization areas in existence on the effective date of this division of this Act.
    Sec. 10.  NEW SECTION.  404.2A  Other taxing jurisdictions —— resolution authorizing exemption.

   1.  a.  Except as authorized in paragraph “b”, a property tax exemption allowed under this chapter shall only extend to those property tax levies imposed by the designating city or designating county and identified by the city or county in the plan adopted under section 404.2. 
   b.  In order for qualified real estate to be exempt from a property tax levy imposed by a taxing jurisdiction other than the designating city or designating county, the governing body of each such taxing jurisdiction shall first adopt a resolution identifying each property tax levy for which the exemption is authorized. 
   2.  a.  At any time following adoption of the ordinance designating the revitalization area, the list of property tax levies imposed by the designating city or designating county from which qualified real estate will be exempt may be modified by amending the plan adopted under section 404.2. However, an amendment to remove a property tax levy from the list shall only apply to first-year exemption applications filed on or after the effective date of the amendment removing the levy from the list.
   b.  At any time following adoption of the ordinance designating the revitalization area, the governing body of any taxing jurisdiction, other than the designating city or designating county, that has authorized an exemption from one or more levies under subsection 1, paragraph “b”, may extend the exemption to additional levies imposed or certified for levy by the taxing jurisdiction or may withdraw authorization for levies previously approved. However, the withdrawal of authorization for a property tax levy shall only apply to first-year exemption applications filed on or after the effective date of the amendment approving the withdrawal.
   3.  For purposes of this chapter, “taxing jurisdiction” means a political subdivision of the state with the authority to levy property taxes. “Taxing jurisdiction” includes but is not limited to a city, a county, a school district, a township, or a special purpose district.
   4.  Except as otherwise provided in this section, this section applies to revitalization areas established on or after the effective date of this division of this Act and to first-year exemption applications filed on or after the effective date of this division of this Act for revitalization areas in existence on the effective date of this division of this Act.
    Sec. 11.  NEW SECTION.  404.3C  Exemptions for property used for residential purposes —— prohibition.
   For revitalization areas established under this chapter on or after the effective date of this division of this Act and for first-year exemption applications for property located in a revitalization area in existence on the effective date of this division of this Act filed on or after the effective date of this division of this Act, an exemption otherwise authorized under this chapter shall not be authorized for or approved by a city or county, as applicable, for property that is residential property or multiresidential property. 
    Sec. 12.  EFFECTIVE UPON ENACTMENT.   This division of this Act, being deemed of immediate importance, takes effect upon enactment.
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 the operation and use of urban renewal areas and urban revitalization areas.
   Division I of the bill excludes the property taxes certified or imposed by a taxing entity or body other than the municipality that established the urban renewal area from the division of revenue under Code section 403.19 (tax increment financing). Under the bill, such excluded taxes are not divided and paid into the municipality’s special fund for the payment of urban renewal indebtedness but instead are required to be levied, collected, and paid to the taxing entity or body in the same manner as all other property taxes. 
   Division I of the bill also authorizes an affected taxing entity to voluntarily transfer to the municipality all or a portion of the property taxes that would otherwise have been deposited into the municipality’s urban renewal special fund but for the exclusion in the bill. However, amounts voluntarily transferred by a school district are not to be considered a reduction in the amount of foundation property tax received by the school district and do not result in an increase in the amount of school foundation aid received by the school district.
   Division I of the bill requires a municipality to include the amounts of voluntary transfers of property taxes as authorized in the bill in the municipality’s annual report required under Code section 331.403 or Code section 384.22.
   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.
   Division I of the bill modifies the definitions of “slum area”, “economic development area”, and “blighted area” for purposes of urban renewal areas established on or after the effective date of Division I of the bill to specify that such areas do not include property assessed as residential property or multiresidential property. The bill also modifies the criteria under which an urban renewal plan for an urban renewal area established on or after the effective date of Division I of the bill may be approved to forbid that the area comprising the urban renewal area include real property assessed as residential property or multiresidential property, or include certain agricultural property pursuant to current law.
   Division I of the bill takes effect upon enactment and 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 Division I 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 Division I of the bill.
   Code chapter 404 authorizes the governing body of a city to designate an area of the city or the governing body of a county to designate an area of the county outside the boundaries of a city as a revitalization area if the property within that area meets certain statutory conditions for development or redevelopment. Qualified real estate located within the boundaries of an urban revitalization area may be eligible for specified property tax exemptions for actual value added by improvements. Current law authorizes the property tax exemption to extend to all property tax levies imposed on qualified real estate regardless of taxing jurisdiction. 
   For revitalization areas established on or after the effective date of Division II of the bill and for first-year exemption applications filed on or after the effective date of Division II of the bill for revitalization areas in existence on the effective date of Division II of the bill, the property tax exemption afforded to qualified real estate only extends to those property tax levies imposed by the designating city or designating county and identified by the city or county in the adopted plan. In order for qualified real estate to be exempt from a property tax levy imposed by a taxing jurisdiction other than the designating city or designating county, the governing body of each such taxing jurisdiction must first adopt a resolution identifying each property tax levy for which the exemption is authorized. 
   Division II of the bill also authorizes the designating city or designating county to, following designation of the revitalization area by ordinance, amend the list of property tax levies imposed by the designating city or designating county from which qualified real estate is exempt. Additionally, the bill provides that at any time following designation of the revitalization area by ordinance, the governing body of any other taxing jurisdiction that has authorized an exemption from one or more levies may extend the exemption to additional levies or may withdraw authorization for levies previously approved by resolution. However, the removal of a levy from the designating city or county’s list or withdrawal of authorization for a property tax levy only applies to first-year exemption applications filed on or after the effective date of the resolution amending the list or approving the withdrawal, as applicable.
   Division II of the bill also establishes limitations on exemptions for residential and multiresidential property within revitalization areas. For revitalization areas established on or after the effective date of Division II of the bill and for first-year exemption applications for property located in a revitalization area in existence on the effective date of Division II of the bill filed on or after the effective date of Division II of the bill, an exemption otherwise authorized under Code chapter 404 shall not be authorized for or approved by a city or county, as applicable, for property that is residential property or multiresidential property.
   Division II of the bill takes effect upon enactment.