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PAG LIN 1 1 DIVISION I 1 2 Section 1. Section 358C.1, subsection 2, paragraph d, Code 1 3 Supplement 1995, is amended to read as follows: 1 4 d. "District" means a real estate improvement district as 1 5 created in this chapter, in a county designated as a pilot1 6county under section 358C.2. 1 7 Sec. 2. Section 358C.2, Code Supplement 1995, is repealed. 1 8 DIVISION II 1 9 Sec. 3. Section 403.2, subsection 3, Code 1995, is amended 1 10 to read as follows: 1 11 3. It is further found and declared that there exists in 1 12 this state the continuing need for programs to alleviate and 1 13 prevent conditions of unemployment and a shortage of housing; 1 14 and that it is accordingly necessary to assist and retain 1 15 local industries and commercial enterprises to strengthen and 1 16 revitalize the economy of this state and its municipalities; 1 17 that accordingly it is necessary to provide means and methods 1 18 for the encouragement and assistance of industrial and 1 19 commercial enterprises in locating, purchasing, constructing, 1 20 reconstructing, modernizing, improving, maintaining, 1 21 repairing, furnishing, equipping, and expanding in this state 1 22 and its municipalities, for the provision of public 1 23 improvements related to housing and residential development, 1 24 and for theprovisionconstruction of housingand residential1 25developmentfor low and moderate income families; that 1 26 accordingly it is necessary to authorize local governing 1 27 bodies to designate areas of a municipality as economic 1 28 development areas for commercial and industrial enterprises, 1 29 public improvements related to housing and residential 1 30 development, or construction of housing andresidential1 31developmentfor low and moderate income families; and that it 1 32 is also necessary to encourage the location and expansion of 1 33 commercial enterprises to more conveniently provide needed 1 34 services and facilities of the commercial enterprises to 1 35 municipalities and the residents of the municipalities. 2 1 Therefore, the powers granted in this chapter constitute the 2 2 performance of essential public purposes for this state and 2 3 its municipalities. 2 4 Sec. 4. Section 403.5, subsection 2, unnumbered paragraph 2 5 1, Code 1995, is amended to read as follows: 2 6 The municipality may itself prepare or cause to be prepared 2 7 an urban renewal plan; or any person or agency, public or 2 8 private, may submit such a plan to a municipality. Prior to 2 9 its approval of an urban renewal plan, the local governing 2 10 body shall submit such plan to the planning commission of the 2 11 municipality, if any, for review and recommendations as to its 2 12 conformity with the general plan for the development of the 2 13 municipality as a whole. The planning commission shall submit 2 14 its written recommendations with respect to the proposed urban 2 15 renewal plan to the local governing body within thirty days 2 16 after receipt of the plan for review. Upon receipt of the 2 17 recommendations of the planning commission or, if no 2 18 recommendations are received within the thirty days, then, 2 19 without such recommendations, the local governing body may 2 20 proceed with the hearing on the proposed urban renewalproject2 21 plan prescribed by subsection 3. 2 22 Sec. 5. Section 403.5, subsection 3, Code 1995, is amended 2 23 to read as follows: 2 24 3. The local governing body shall hold a public hearing on 2 25 an urban renewalprojectplan after public notice thereof by 2 26 publication in a newspaper having a general circulation in the 2 27 area of operation of the municipality. The notice shall 2 28 describe the time, date, place and purpose of the hearing, 2 29 shall generally identify the urban renewal area covered by the 2 30 plan, and shall outline the general scope of the urban renewal 2 31projectactivities under consideration. A copy of the notice 2 32 shall be sent by ordinary mail to each affected taxing entity. 2 33 Sec. 6. Section 403.5, subsection 4, paragraph b, 2 34 subparagraph (1), Code 1995, is amended to read as follows: 2 35 (1) If it is to be developed for residential uses, the 3 1 local governing body shall determine that a shortage of 3 2 housing of sound standards and design with decency, safety and 3 3 sanitation exists in the municipality; that the acquisition of 3 4 the area for residential uses is an integral part of and 3 5 essential to the program of the municipality; and that one or 3 6 more of the following conditions exist: 3 7 (a) That the need for housing accommodations has been or 3 8 will be increased as a result of the clearance of slums in 3 9 other areas, including other portions of the urban renewal 3 10 area.; that the3 11 (b) That conditions of blight in theareamunicipality and 3 12 the shortage of decent, safe and sanitary housing cause or 3 13 contribute to an increase in and spread of disease and crime, 3 14andso as to constitute a menace to the public health, safety, 3 15 morals, or welfare; and that the acquisition of the area for3 16residential uses is an integral part of and essential to the3 17program of the municipality. 3 18 (c) That the provision of public improvements related to 3 19 housing and residential development will encourage housing and 3 20 residential development which is necessary to encourage the 3 21 retention or relocation of industrial and commercial 3 22 enterprises in this state and its municipalities. 3 23 (d) The acquisition of the area is necessary to provide 3 24 for the construction of housing for low and moderate income 3 25 families. 3 26 Sec. 7. Section 403.6, Code 1995, is amended by adding the 3 27 following new unnumbered paragraph: 3 28 NEW UNNUMBERED PARAGRAPH. The provisions of this chapter 3 29 shall be liberally interpreted to achieve the purposes of this 3 30 chapter. 3 31 Sec. 8. Section 403.9, subsection 3, Code 1995, is amended 3 32 by adding the following new unnumbered paragraph: 3 33 NEW UNNUMBERED PARAGRAPH. Before the local governing body 3 34 may institute proceedings for the issuance of bonds under this 3 35 section, a notice of the proposed action, including a state- 4 1 ment of the amount and purposes of the bonds and the time and 4 2 place of the meeting at which the local governing body 4 3 proposes to take action for the issuance of the bonds, must be 4 4 published as provided in section 362.3. At the meeting, the 4 5 local governing body shall receive oral or written objections 4 6 from any resident or property owner of the municipality. 4 7 After all objections have been received and considered, the 4 8 local governing body, at that meeting or any subsequent 4 9 meeting, may take additional action for the issuance of the 4 10 bonds or abandon the proposal to issue the bonds. Any 4 11 resident or property owner of the municipality may appeal the 4 12 decision of the local governing body to take additional action 4 13 to the district court of the county in which any part of the 4 14 municipality is located, within fifteen days after the 4 15 additional action is taken. The additional action of the 4 16 local governing body is final and conclusive unless the court 4 17 finds that the municipality exceeded its authority. 4 18 Sec. 9. Section 403.9, subsection 4, Code 1995, is amended 4 19 to read as follows: 4 20 4. Such bonds may be sold at not less than ninety-eight 4 21 percent of par at public or private sale, or may be exchanged 4 22 for other bondson the basisat not less than ninety-eight 4 23 percent of par. 4 24 Sec. 10. Section 403.10, Code 1995, is amended to read as 4 25 follows: 4 26 403.10 BONDS AS LEGAL INVESTMENT. 4 27 All banks, trust companies, building and loan associations, 4 28 savings and loan associations, investment companies and other 4 29 persons carrying on an investment business; all insurance 4 30 companies, insurance associations, and other persons carrying 4 31 on an insurance business; and all executors, administrators, 4 32 curators, trustees, and other fiduciaries, may legally invest 4 33 any sinking funds, moneys, or other funds belonging to them or 4 34 within their control in any bonds or other obligations issued 4 35 by a municipality pursuant to this chapter, or those issued by 5 1 any urban renewal agency vested with urban renewal project 5 2 powers under section 403.14: Provided, that such bonds and5 3other obligations shall be secured by an agreement between the5 4issuer and the federal government, in which the issuer agrees5 5to borrow from the federal government and the federal5 6government agrees to lend to the issuer, prior to the maturity5 7of such bonds or other obligations, moneys in an amount which,5 8together with any other moneys irrevocably committed to the5 9payment of interest on such bonds or other obligations, will5 10suffice to pay the principal of such bonds or other5 11obligations with interest to maturity thereon, which moneys5 12under the terms of said agreement are required to be used for5 13the purpose of paying the principal of and the interest on5 14such bonds or other obligations at their maturity. Such bonds 5 15 and other obligations shall be authorized security for all 5 16 public deposits. It is the purpose of this section to 5 17 authorize any persons, political subdivisions and officers, 5 18 public or private, to use any funds owned or controlled by 5 19 them for the purchase of any such bonds or other obligations. 5 20 Nothing contained in this section with regard to legal 5 21 investments shall be construed as relieving any person of any 5 22 duty of exercising reasonable care in selecting securities. 5 23 Sec. 11. Section 403.17, subsection 9, Code 1995, is 5 24 amended to read as follows: 5 25 9. "Economic development area" means an area of a 5 26 municipality designated by the local governing body as 5 27 appropriate for commercial and industrial enterprises, public 5 28 improvements related to housing and residential development, 5 29 or construction of housing and residential development for low 5 30 and moderate income families, including single or multifamily 5 31 housing. If an urban renewal plan for an urban renewal area 5 32 is based upon a finding that the area is an economic 5 33 development area and that no part contains slum or blighted 5 34 conditions, then the division of revenue provided in section 5 35 403.19 and stated in the plan shall be limited to twenty years 6 1 from the calendar year following the calendar year in which 6 2 the city first certifies to the county auditor the amount of 6 3 any loans, advances, indebtedness, or bonds which qualify for 6 4 payment from the division of revenue provided in section 6 5 403.19. Such area designated before July 1, 1994, shall not 6 6 include land which is part of a century farm. 6 7 Sec. 12. Section 403.19, subsection 2, Code 1995, is 6 8 amended to read as follows: 6 9 2. That portion of the taxes each year in excess of such 6 10 amount shall be allocated to and when collected be paid into a 6 11 special fund of the municipality to pay the principal of and 6 12 interest on loans, moneys advanced to, or indebtedness, 6 13 whether funded, refunded, assumed, or otherwise, including 6 14 bonds issued under the authority of section 403.9, subsection 6 15 1, incurred by the municipality to finance or refinance, in 6 16 whole or in part, an urban renewal project within the area, 6 17 and to provide assistance for low and moderate income family 6 18 housing as provided in section 403.22, except that taxes for 6 19 the payment of bonds and interest of each taxing district must 6 20 be collected against all taxable property within the taxing 6 21 district without limitation by the provisions of this 6 22 subsection. Unless and until the total assessed valuation of 6 23 the taxable property in an urban renewal area exceeds the 6 24 total assessed value of the taxable property in such area as 6 25 shown by the last equalized assessment roll referred to in 6 26 subsection 1, all of the taxes levied and collected upon the 6 27 taxable property in the urban renewal area shall be paid into 6 28 the funds for the respective taxing districts as taxes by or 6 29 for the taxing districts in the same manner as all other 6 30 property taxes. When such loans, advances, indebtedness, and 6 31 bonds, if any, and interest thereon, have been paid, all 6 32 moneys thereafter received from taxes upon the taxable 6 33 property in such urban renewal area shall be paid into the 6 34 funds for the respective taxing districts in the same manner 6 35 as taxes on all other property. 7 1 Sec. 13. NEW SECTION. 403.22 FINANCING PUBLIC 7 2 IMPROVEMENTS RELATED TO LOW INCOME HOUSING AND RESIDENTIAL 7 3 DEVELOPMENT. 7 4 1. With respect to any urban renewal area established upon 7 5 the determination that the area is an economic development 7 6 area, a division of revenue as provided in section 403.19 7 7 shall not be allowed for the purpose of providing or aiding in 7 8 the provision of public improvements related to housing and 7 9 residential development, unless the municipality assures that 7 10 the project will include assistance for low and moderate 7 11 income family housing. The amount to be provided for low and 7 12 moderate income family housing for such projects shall be 7 13 either equal to or greater than the percentage of the original 7 14 project cost that is equal to the percentage of low and 7 15 moderate income residents for the county in which the urban 7 16 renewal area is located as determined by the United States 7 17 department of housing and urban development using section 8 7 18 guidelines or such other amount as set out in a plan adopted 7 19 by the municipality and approved by the Iowa department of 7 20 economic development. 7 21 2. The assistance to low and moderate income housing may 7 22 be in, but is not limited to, any of the following forms: 7 23 a. Lots for low and moderate income housing within or 7 24 outside the urban renewal area. 7 25 b. Construction of low and moderate income housing within 7 26 or outside the urban renewal area. 7 27 c. Grants, credits, or other direct assistance to low and 7 28 moderate income families living within or outside the urban 7 29 renewal area, but within the area of operation of the 7 30 municipality. 7 31 d. Payments to a low and moderate income housing fund 7 32 established by the municipality to be expended for one or more 7 33 of the above purposes, including matching funds for any state 7 34 or federal moneys used for such purposes. 7 35 3. Sources for low and moderate income family housing 8 1 assistance may include the following: 8 2 a. Proceeds from loans, advances, bonds, or indebtedness 8 3 incurred. 8 4 b. Annual distributions from the division of revenues 8 5 pursuant to section 403.19 related to the urban renewal area. 8 6 c. Lump sum or periodic direct payments from developers or 8 7 other private parties under an agreement for development or 8 8 redevelopment between the municipality and a developer. 8 9 d. Any other sources which are legally available for this 8 10 purpose. 8 11 4. The assistance to low and moderate income family 8 12 housing may be expended outside the boundaries of the urban 8 13 renewal area. 8 14 5. The division of the revenue under section 403.19 for 8 15 each project under this section shall be limited to tax 8 16 collections for ten fiscal years beginning with the second 8 17 fiscal year after the year in which the municipality first 8 18 certifies to the county auditor the amount of any loans, 8 19 advances, indebtedness, or bonds which qualify for payment 8 20 from the division of the revenue in connection with the 8 21 project under this section. 8 22 EXPLANATION 8 23 This bill does the following: 8 24 1. Division I. Sections 1 and 2 repeal the pilot program 8 25 which limits the establishment of real estate improvement 8 26 districts to six counties, thus allowing the statewide 8 27 establishment of real estate improvement districts. 8 28 2. Division II (sections 3 through 12). Section 3 adds to 8 29 the declaration of policy regarding urban renewal that a need 8 30 exists for programs to alleviate and prevent a shortage of 8 31 housing and that programs which provide for public 8 32 improvements related to housing and residential development 8 33 and the construction of housing are essential public purposes 8 34 for the state and its municipalities. 8 35 3. Sections 4 and 5 provide that public hearings are to be 9 1 held on a proposed urban renewal plan, rather than on each 9 2 urban renewal project undertaken in accordance with the plan. 9 3 4. Section 6 requires the municipality to make a finding 9 4 that acquisition of land for residential uses is essential to 9 5 the municipality's urban renewal plan. Section 6 also 9 6 requires the municipality to find that one of four conditions 9 7 exist including that the provision of public improvements 9 8 related to housing and residential development will encourage 9 9 residential development and the retention or relocation of 9 10 industrial or commercial enterprises or that the area to be 9 11 acquired under the plan is necessary to provide for the 9 12 construction of low and moderate income housing. 9 13 5. Section 7 provides that the provisions of chapter 403 9 14 are to be liberally construed by the courts. 9 15 6. Section 8 provides that, prior to the issuance of 9 16 bonds, the local governing body must issue a notice of 9 17 proposed action, identify the place of the meeting at which 9 18 action will be taken, and publish the same. It allows for 9 19 oral or written objections at the meeting from any resident or 9 20 property owner of the municipality. It provides the local 9 21 governing body may then take action or abandon the proposal to 9 22 issue any bonds. It provides for an appeal period. 9 23 7. Section 9 provides that bonds may be sold or exchanged 9 24 at 98 percent of par value or higher. 9 25 8. Section 10 removes the requirement that bonds and other 9 26 obligations under chapter 403 be secured by an agreement 9 27 between the issuer of the bonds and the federal government 9 28 obligating the issuer to borrow from the federal government if 9 29 necessary to pay off the bonds or obligations. 9 30 9. Section 11 adds public improvements related to housing 9 31 development to the definition of economic development area and 9 32 makes construction of low and moderate income housing an 9 33 alternative use (along with commercial and industrial 9 34 enterprise and public improvements for housing) for an 9 35 economic development area. The division of revenue under tax 10 1 increment financing based upon a finding that the area is an 10 2 economic development area is limited to 20 years. 10 3 10. Sections 12 and 13 add low and moderate income housing 10 4 assistance to the uses which revenue from tax increment 10 5 financing may be used and set out the manner in which 10 6 assistance for public improvements related to housing and 10 7 residential development, both low and moderate income and 10 8 otherwise, may be provided. 10 9 Tax increment financing for housing or residential 10 10 development is not allowed unless the municipality assures 10 11 that the project will include assistance for low and moderate 10 12 income family housing in an amount either based on the 10 13 percentage of low and moderate income persons in the county or 10 14 in some other amount as determined by the municipality and 10 15 agreed to by the department of economic development. 10 16 Assistance for low and moderate income housing may take many 10 17 forms, including lots for low and moderate income housing 10 18 within or outside the urban renewal area or payments to a low 10 19 and moderate income housing fund established by the 10 20 municipality. Funding sources may include revenue from tax 10 21 increment financing or any other legal source. Tax increment 10 22 financing for housing projects is limited in duration to 10 10 23 years. 10 24 BACKGROUND STATEMENT 10 25 SUBMITTED BY THE AGENCY 10 26 The housing development study committee has recognized the 10 27 importance of extending access to real estate improvement 10 28 districts to all regions of the state. The need for this 10 29 legislation is based on concern expressed by Iowa bonding 10 30 attorneys that limiting access to the residential infrastruc- 10 31 ture improvement incentives offered by real estate improvement 10 32 districts to only the six counties originally specified by the 10 33 Iowa finance authority will be deemed unconstitutional by 10 34 state courts. 10 35 The guidelines set forth in Iowa's current tax increment 11 1 financing (TIF) law are so narrowly drawn that they seriously 11 2 restrict the ability of communities to take advantage of tax 11 3 breaks intended to encourage new housing developments. An 11 4 enhanced TIF flexibility will broaden the scope of TIF in- 11 5 centives to include middle to upper income housing 11 6 developments while guaranteeing funding to benefit those in 11 7 need of low and moderate income housing. This funding will be 11 8 generated based upon the percentage of low and moderate income 11 9 persons within the county where the TIF is established. These 11 10 proceeds could be used as part of the TIF project or for other 11 11 low to moderate income housing needs, e.g., rehabilitation. 11 12 Such a proposal supports a mix of incomes within TIF projects, 11 13 making them more attractive to developers and avoiding 11 14 concentrations of low income households in only one area. 11 15 LSB 3415DP 76 11 16 mk/jw/5.2
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