HF 540 (LSB 1701YH (7) 88)

HOUSE FILE 540

BY  ISENHART and ABDUL-SAMAD

A BILL FOR

An Act providing a property tax exemption for land used to produce food within the limits of a city.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 427.1, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  25.  Urban farm.  Property certified as an urban farm by a city in compliance with this subsection.
   a.  The city council must adopt an ordinance providing for terms and conditions of the exemption.
   b.  The property must be owned by a nonprofit entity as defined in section 501(c)(3) of the Internal Revenue Code or must be leased by another person to such a nonprofit entity. The lease must be for at least five consecutive assessment years. The lease must be supported by no or nominal consideration. A lease may be renewed or extended.
   c.  The property must be located within the corporate limits of the city.
   d.  The nonprofit entity must use the property as an urban farm to produce food suitable for human consumption. The food may be further processed or packaged prior to distribution as provided in this subsection.
   e.  The food must be used by, sold to, or otherwise distributed to a food bank, emergency feeding organization, or other nonprofit organization recognized by the department of revenue. The food bank, emergency feeding organization, or other nonprofit organization must prepare and serve or distribute the food within the corporate limits of the city.
   f.  Prior to adopting a proposed ordinance providing for the terms and conditions of the tax exemption, the city shall mail a copy of the proposed ordinance to each affected taxing entity, including a county or school district which levied or certified for levy a property tax on any portion of the property subject to the proposed ordinance in the fiscal year beginning prior to the calendar year in which a proposed ordinance is to be adopted. Unless an affected taxing entity objects to the ordinance by resolution adopted within fourteen days after delivery of the notice, the affected taxing entity shall be deemed to have approved any approval of the ordinance by the city during that calendar year. If an affected taxing entity objects to the proposed ordinance, future consideration of the proposed ordinance shall be indefinitely tabled.
   g.  The city must certify that the property is an urban farm. The city must send a copy of the certification to the appropriate assessor not later than February 1 of the assessment year for which the exemption is requested. The city may subsequently withdraw certification of the property if the lease is terminated or the property is not used as an urban farm. The assessor shall be given written notice of the decertification.
   h.  The exemption granted under this subsection shall apply until the property is decertified or the lease expires, whichever occurs earlier.
   i.  If the property was used as an urban farm for less than five years and the property was decertified because the lease was terminated by the owner for a cause other than a breach of the lease by the nonprofit entity, the ordinance may provide that all taxes that would have been levied for the period of time the exemption was in effect under this subsection shall be immediately entered against the property on the tax list for the current year and shall constitute a lien against the property in the same manner as a lien for property taxes. The tax when collected shall be apportioned in the same manner provided for the apportionment of property taxes for the applicable tax year.
    Sec. 2.  IMPLEMENTATION OF ACT.  Section 25B.7 shall not apply to the property tax exemption enacted in 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 provides a property tax exemption for property located within a city and certified as an urban farm by a city council pursuant to an ordinance. The ordinance cannot be adopted if another affected taxing entity objects. The property must be owned by or leased to a nonprofit entity which must use the property to produce food use by, sale to, or otherwise distributed to a nonprofit organization such as a food bank or emergency feeding organization recognized by the department of revenue. A lease must be for at least five years and the exemption applies until the lease expires or until the property is decertified. A lease may be renewed or extended and, if the property is still eligible, the exemption continues. The ordinance may provide that upon decertification, the exemption is disallowed and the amount of the property taxes that had been exempted shall be entered against the property on the tax list for the current year.
   The bill makes inapplicable Code section 25B.7. Code section 25B.7 provides that for a property tax credit or exemption enacted on or after January 1, 1997, if a state appropriation made to fund the credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation.