House Study Bill 737 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SHOMSHOR) A BILL FOR An Act increasing the maximum allowable local hotel and motel 1 tax rate and requiring public participation relating to the 2 use of certain local hotel and motel tax revenues. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6257HC (4) 83 md/sc

H.F. _____ Section 1. Section 423A.4, subsections 1 and 3, Code 2009, 1 are amended to read as follows: 2 1. A city or county may impose by ordinance of the city 3 council or by resolution of the board of supervisors a hotel 4 and motel tax, at a rate not to exceed seven nine percent, 5 which shall be imposed in increments of one or more full 6 percentage points upon the sales price from the renting of 7 lodging. A county may impose by resolution of the board of 8 supervisors a hotel and motel tax, at a rate not to exceed 9 eight percent, which shall be imposed in increments of one 10 or more full percentage points upon the sales price from the 11 renting of lodging. The tax when imposed by a city shall apply 12 only within the corporate boundaries of that city and when 13 imposed by a county shall apply only outside incorporated areas 14 within that county. 15 3. A Subject to the requirements of subsection 5, a local 16 hotel and motel tax shall be imposed on January 1 or July 1, 17 following the notification of the director of revenue. Once 18 imposed, the tax shall remain in effect at the rate imposed 19 for a minimum of one year. A local hotel and motel tax shall 20 terminate only on June 30 or December 31. At least forty-five 21 days prior to the tax being effective or prior to a revision in 22 the tax rate or prior to the repeal of the tax, a city or county 23 shall provide notice by mail of such action to the director of 24 revenue. The director shall have the authority to waive the 25 notice requirement. 26 Sec. 2. Section 423A.4, Code 2009, is amended by adding the 27 following new subsection: 28 NEW SUBSECTION . 5. a. For any imposition of a local hotel 29 and motel tax, or any increase in the rate of a local hotel and 30 motel tax, approved at election on or after the effective date 31 of this Act, the city council or county board of supervisors 32 where the tax or the tax rate increase was approved shall, 33 within ten days following approval at election, appoint a 34 citizen advisory committee consisting of not less than five 35 -1- LSB 6257HC (4) 83 md/sc 1/ 4

H.F. _____ individuals. Each individual appointed to the citizen advisory 1 committee shall be a resident of the city or the unincorporated 2 area of the county where the tax or the tax rate increase was 3 approved. A vacancy on the citizen advisory committee shall 4 be filled in the same manner as the original appointment. 5 Committee members shall not receive compensation by reason of 6 their membership on the committee. 7 b. The citizen advisory committee shall develop and 8 submit recommendations to the city council or county board 9 of supervisors, as applicable, relating to the use of the 10 increased revenues resulting from the imposition of the tax or 11 the increased tax rate. Recommendations for the use of such 12 increased revenues shall be consistent with the requirements 13 of section 423A.7, subsection 4. The recommendations of the 14 citizen advisory committee shall not relieve the city or county 15 from compliance with the requirements of section 423A.7, 16 subsection 4. 17 c. If a city or county fails to appoint a citizen advisory 18 committee as required under this subsection, the director of 19 revenue shall not impose the tax, or the increase in the tax 20 rate, notwithstanding subsection 3. The director of revenue 21 shall only impose the tax, or an increase in the tax rate, 22 approved on or after the effective date of this Act on January 23 1 or July 1, following the appointment of a citizen advisory 24 committee. 25 d. The citizen advisory committee shall be dissolved on 26 the date the tax or the increased tax rate is imposed by the 27 director of revenue. 28 EXPLANATION 29 Current Code section 423A.4 authorizes a city or county to 30 impose by ordinance of the city council or by resolution of 31 the county board of supervisors a local hotel and motel tax 32 at a rate not to exceed 7 percent. The imposition, repeal, 33 or change in the rate of a local hotel and motel tax is also 34 subject to approval at election. This bill increases the 35 -2- LSB 6257HC (4) 83 md/sc 2/ 4

H.F. _____ maximum allowable local hotel and motel tax rate for cities 1 from 7 percent to 9 percent. The bill increases the maximum 2 allowable local hotel and motel tax rate for counties from 7 3 percent to 8 percent. 4 The bill provides that for any imposition of a local hotel 5 and motel tax, or any increase in the rate of a local hotel and 6 motel tax, approved at election on or after the effective date 7 of the bill, the city council or county board of supervisors 8 where the tax or the tax rate increase was approved must, 9 within 10 days following approval at election, appoint a 10 citizen advisory committee consisting of not less than five 11 individuals. The bill requires each individual appointed to 12 a citizen advisory committee to be a resident of the city or 13 the unincorporated area of the county where the tax or the tax 14 rate increase was approved. Vacancies on a citizen advisory 15 committee must be filled in the same manner as the original 16 appointment. Committee members do not receive compensation for 17 serving on the committee. 18 The bill requires each citizen advisory committee to develop 19 and submit recommendations to the city council or county board 20 of supervisors, as applicable, relating to the use of the 21 increased revenues resulting from the imposition of the tax 22 or the increased tax rate. Such recommendations for the use 23 of the increased revenues must be consistent with statutory 24 requirements for the use of local hotel and motel tax revenues 25 under Code section 423A.7. Recommendations of the citizen 26 advisory committee do not relieve the city or county from 27 complying with the statutory use requirements under Code 28 section 423A.7. 29 Under the bill, if a city or county fails to appoint a 30 citizen advisory committee, the director of revenue shall not 31 impose the tax or the increase in the tax rate. The bill only 32 allows the director of revenue to impose the tax or an increase 33 in the tax rate following the appointment of a citizen advisory 34 committee. The bill provides that each citizen advisory 35 -3- LSB 6257HC (4) 83 md/sc 3/ 4

H.F. _____ committee is dissolved on the date the tax or the increased tax 1 rate is imposed by the director of revenue. 2 -4- LSB 6257HC (4) 83 md/sc 4/ 4