SSB 3110 (LSB 6311XC (4) 88)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON NATURAL RESOURCES AND ENVIRONMENT BILL BY CHAIRPERSON ROZENBOOM)

A BILL FOR

An Act relating to the property tax exemption for forest reservations and fruit-tree reservations and including effective date, applicability, and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 427C.1, Code 2020, is amended to read as follows:
   427C.1  Tax exemption —— amount of exemption.
   1.  Any person who establishes a forest or fruit-tree reservation as provided in this chapter shall be entitled to the tax exemption provided by law.
   2.  a.  For assessment years beginning before January 1, 2021, the exemption for forest or fruit-tree reservations authorized in this chapter shall be one hundred percent of the actual value of the property comprising the reservation.
   b.  For assessment years beginning on or after January 1, 2021, the exemption for forest or fruit-tree reservations authorized in this chapter shall be seventy-five percent of the actual value of the property comprising the reservation.
    Sec. 2.  Section 427C.2, Code 2020, is amended to read as follows:
   427C.2  Reservations.
   1.  On For assessment years beginning before January 1, 2021, on any tract of land in the state of Iowa, the owner or owners may select a permanent forest reservation or reservations, each not less than two acres in continuous area, or a fruit-tree reservation or reservations, not less than one nor more than ten acres in total area, or both, and upon compliance with the provisions of this chapter, such owner or owners shall be entitled to the benefits provided by law.
   2.  For assessment years beginning on or after January 1, 2021, on any tract of land in the state of Iowa, the owner or owners may select a permanent forest reservation or reservations, each not less than ten acres in continuous area, or a fruit-tree reservation or reservations, not less than one nor more than ten acres in total area, or both, and upon compliance with the provisions of this chapter, such owner or owners shall be entitled to the benefits provided by law.
    Sec. 3.  Section 427C.3, Code 2020, is amended to read as follows:
   427C.3  Forest reservation —— duration of exemption.
   1.  A forest reservation shall contain not less than two hundred growing forest trees on each acre. If Except as provided in subsection 2, if the area selected is a forest containing the required number of growing forest trees, it shall be accepted as a forest reservation under this chapter for a period of five years provided application is made or on file on or before February 1 of the exemption year. If any buildings are standing on an area selected as a forest reservation under this section or a fruit-tree reservation under section 427C.7, one acre of that area shall be excluded from the tax exemption. However, the exclusion of that acre shall not affect the area’s meeting the acreage requirement of section 427C.2.
   2.  a.  For forest reservation exemption applications filed on or before February 1, 2020, unless the reservation fails to meet the acreage requirement of section 427C.2, subsection 2, and is terminated under paragraph “b”, the period of the exemption ends at the conclusion of the fifth assessment year following the certification conducted by the department of natural resources under 427C.13, subsection 2.
   b.  For forest reservation exemption applications filed on or before February 1, 2020, if the reservation fails to meet the acreage requirement of section 427C.2, subsection 2, the reservation’s exemption shall terminate beginning with the assessment year beginning January 1, 2021.
   3.  For forest reservation exemption applications filed after February 1, 2020, in addition to the other requirements of this chapter, if the department of natural resources determines that the forest reservation meets the criteria for depredation licenses and permits, the owner shall enter into a depredation agreement with the department of natural resources under section 481C.2A for each of the remaining years of the exemption period following determination by the department and the depredation agreement shall be subject to section 481C.2A, subsection 1, paragraph “e”.
    Sec. 4.  Section 427C.6, Code 2020, is amended to read as follows:
   427C.6  Groves.
   The trees of a forest reservation shall be in groves not less than four rods wide except when the trees are growing or are planted in or along a gully or ditch to control erosion in which case any width will qualify provided the area meets the size acreage requirement of two acres.
    Sec. 5.  Section 427C.7, Code 2020, is amended to read as follows:
   427C.7  Fruit-tree reservation —— duration of exemption.
   A fruit-tree reservation shall contain on each acre, at least forty apple trees, or seventy other fruit trees, growing under proper care and annually pruned and sprayed. A reservation may be claimed as a fruit-tree reservation, under this chapter, for a period of eight years after planting provided application is made or on file on or before February 1 of the exemption year.  If any buildings are standing on an area selected as a fruit-tree reservation under this section, one acre of that area shall be excluded from the tax exemption. However, the exclusion of that acre shall not affect the area’s meeting the acreage requirement of section 427C.2.
    Sec. 6.  Section 427C.12, Code 2020, is amended to read as follows:
   427C.12  Application —— inspection —— continuation of exemption —— recapture of tax.
   1.  It shall be the duty of the assessor to secure the facts relative to fruit-tree and forest reservations by taking the sworn statement, or affirmation, of the owner or owners making application under this chapter; and to make special report to the county auditor of all reservations made in the county under the provisions of this chapter.
   2.  a.  The board of supervisors shall designate the county conservation board or the assessor who shall inspect the area for which an application is filed for a fruit-tree or forest reservation tax exemption before the application is accepted.
   b.  The department of natural resources shall inspect the area for which an application is filed for a forest reservation tax exemption before the application is accepted.
   c.  Use of aerial photographs may be substituted for on-site inspection when appropriate.
   3.  The application can only be accepted if it meets the criteria established by the natural resource commission to be a fruit-tree or forest reservation.
   4.  Once the application has been accepted, the area shall continue to receive the tax exemption during each year of the exemption period under section 427C.3 or 427C.7 in which the area is maintained as a fruit-tree or forest or fruit-tree reservation without the owner having to refile. If the property is sold or transferred, the seller shall notify the buyer that all, or part of, the property is in fruit-tree or forest reservation and subject to the recapture tax provisions of this section. The tax exemption shall continue to be granted for the remainder of the eight-year exemption period for fruit-tree reservation and for the following years for forest reservation under section 427C.3 or 427C.7, or until the property no longer qualifies as a fruit-tree or forest or fruit-tree reservation.
   5.  a.  The An area that is a fruit-tree reservation may be inspected each year by the county conservation board or the assessor to determine if the area is maintained as a fruit-tree or forest reservation.  An area that is a forest reservation may be inspected each year by the department of natural resources to determine if the area is maintained as forest reservation. If the area is not maintained or is used for economic gain other than as a fruit-tree reservation during any year of the eight-year exemption period and any year of the following five years under section 427C.7 or as a forest reservation during any year for which of the exemption is granted and any of the five years following those exemption years period under section 427.3, the assessor shall assess the property for taxation at its fair market value as of January 1 of that year and in addition the area shall be subject to a recapture tax. However, the area shall not be subject to the recapture tax if the owner, including one possessing under a contract of sale, and the owner’s direct antecedents or descendants have owned the area for more than ten years.
   b.  The recapture tax shall be computed by multiplying the consolidated levy for each of those years, if any, of the five preceding years for which the area received the exemption for fruit-tree or forest reservation times the assessed value of the area that would have been taxed but for the tax exemption. This tax shall be 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 manner provided for the apportionment of the property taxes for the applicable tax year.
    Sec. 7.  Section 427C.13, Code 2020, is amended to read as follows:
   427C.13  Report to department of natural resources.
   1.  The county assessor shall keep a record of all forest and fruit-tree reservations in the county and submit a report of the reservations to the department of natural resources not later than June 15 of each year.
   2.  a.  Based on the reports submitted under subsection 1, the department of natural resources shall conduct an inspection of each forest reservation receiving an exemption that meets the acreage requirement of section 427C.2, subsection 2, and that was approved for an assessment year beginning before January 1, 2021.
   b.  If the forest reservation meets the requirements for the exemption, the department shall certify the reservation’s compliance to the county auditor of the county where the forest reservation is located to be used in determining the period of the exemption under section 427C.3, subsection 2. If the forest reservation fails to meet the requirements for the exemption, the department shall deny certification and shall notify the owner and the county auditor of the county where the forest reservation is located of the denial and the exemption shall cease beginning with the immediately succeeding assessment year.
   c.  The certification or denial of certification by the director of the department of natural resources for each of the forest reservations identified in paragraph “a” shall be completed by July 1, 2025.
   3.  If, following approval of the exemption for a forest reservation, the department of natural resources determines that the area comprising the forest reservation meets the criteria for depredation under chapter 481C, the owner shall enter into an agreement as required by section 427C.3, subsection 3.
    Sec. 8.  Section 441.22, Code 2020, is amended to read as follows:
   441.22  Forest and fruit-tree reservations.
   Forest and fruit-tree reservations fulfilling the conditions of sections 427C.1 to 427C.13 chapter 427C shall be exempt from taxation to the extent authorized in that chapter. In all other cases where trees are planted upon any tract of land, without regard to area, for forest, fruit, shade, or ornamental purposes, or for windbreaks, the assessor shall not increase the valuation of the property because of such improvements.
    Sec. 9.  Section 481C.2A, subsection 1, Code 2020, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  e.  For a depredation agreement entered into for land that is a forest reservation under section 427C.3, the number of licenses issued each year under this subsection to persons other than the landowner or a family member shall not be less than twenty-five percent of the total licenses issued under this subsection for that year.
    Sec. 10.  SAVINGS PROVISION.  Except as provided in this Act, this Act, pursuant to section 4.13, does not affect the operation of, or prohibit the application of, prior provisions of chapter 427C or section 441.22, or rules adopted under chapter 17A to administer prior provisions of chapter 427C or section 441.22, for assessment years beginning before January 1, 2021, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2021.
    Sec. 11.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 12.  APPLICABILITY.  This Act applies to assessment years beginning on or after January 1, 2021.
    Sec. 13.  RETROACTIVE APPLICABILITY.  The following apply retroactively to February 1, 2020, for forest reservation property tax exemption applications filed on or after that date:
   1.  The section of this Act amending section 427C.3.
   2.  The provision of this Act enacting section 427C.12, subsection 2, paragraph “b”.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   Current Code chapter 427C authorizes a property tax exemption for certain forest reservations and fruit-tree reservations. To qualify for the exemption as a forest reservation, the property must be at least two acres in continuous area and meet certain tree density requirements.
   The bill provides that for assessment years beginning on or after January 1, 2021, the exemption for forest reservations and fruit-tree reservations is 75 percent of the actual value of the property comprising the forest or fruit-tree reservation.
   Current law requires each forest reservation to be not less than two acres in continuous area. For assessment years beginning on or after January 1, 2021, each forest reservation must be not less than 10 acres in continuous area and the period of the exemption is for a period of five years. However, the bill establishes provisions to governing forest reservation exemption applications filed on or before February 1, 2020. For forest reservation exemption applications filed on or before February 1, 2020, unless the reservation fails to meet the 10-acre requirement, the period of the exemption ends at the conclusion of the fifth assessment year following the certification conducted by the department of natural resources as provided in the bill. For forest reservation exemption applications filed on or before February 1, 2020, if the reservation fails to meet the 10-acre requirement, the reservation’s exemption terminates beginning with the assessment year beginning January 1, 2021.
   The bill provides that for forest reservation exemption applications filed after February 1, 2020, if, following approval of the exemption, the department of natural resources determines that the forest reservation meets the criteria for depredation under Code chapter 481C, the owner must enter into a depredation agreement with the department of natural resources for each of the remaining years of the exemption period. For each such depredation agreement, the number of licenses issued each year to persons other than the landowner or a family member shall not be less than 25 percent of the total licenses issued for that year.
   The bill also requires the department of natural resources to inspect the area for which an application is filed for a forest reservation tax exemption before the application is accepted. Additionally, an area that is a forest reservation may be inspected each year by the department of natural resources to determine if the area is maintained as forest reservation. The bill also directs the department of natural resources to conduct an inspection of each forest reservation receiving an exemption that meets the 10-acre requirement that was approved for an assessment year beginning before January 1, 2021. If the forest reservation meets the requirements for the exemption, the department shall certify the reservation’s compliance to the county auditor of the county where the forest reservation is located to be used in determining the period of the exemption. If the forest reservation fails to meet the requirements for the exemption, the department shall deny certification and shall notify the owner and the county auditor of the county where the forest reservation is located of the denial and the exemption shall cease beginning with the immediately succeeding assessment year. The certification or denial of certification by the director of the department of natural resources for each of the forest reservations shall be completed by July 1, 2025.
   Except as provided in the bill does not affect the operation of, or prohibit the application of, prior provisions of Code chapter 427C or Code section 441.22, or rules adopted to administer prior provisions of Code chapter 427C or Code section 441.22, for assessment years beginning before January 1, 2021, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2021.