H.F. 135 Section 1. Section 331.502, Code 2011, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 42A. Prepare and submit the report required 3 under section 403.19, subsection 9 . 4 Sec. 2. Section 403.19, subsection 2, Code 2011, is amended 5 to read as follows: 6 2. a. That portion of the taxes each year in excess of such 7 amount shall be allocated to and when collected be paid into a 8 special fund of the municipality to pay the principal of and 9 interest on loans, moneys advanced to, or indebtedness, whether 10 funded, refunded, assumed, or otherwise, including bonds issued 11 under the authority of section 403.9, subsection 1 , incurred 12 by the municipality to finance or refinance, in whole or in 13 part, an urban renewal project within the area, and to provide 14 assistance for low and moderate income family housing as 15 provided in section 403.22 , except that . However, except as 16 provided in paragraph “b” , taxes for the instructional support 17 program of a school district imposed pursuant to section 257.19 18 and taxes for the regular and voter-approved physical plant and 19 equipment levy of a school district imposed pursuant to section 20 298.2 and taxes for the payment of bonds and interest of each 21 taxing district must be collected against all taxable property 22 within the taxing district without limitation by the provisions 23 of this subsection . 24 b. (1) However, all All or a portion of the taxes for 25 the physical plant and equipment levy shall be paid by the 26 school district to the municipality if the auditor certifies 27 to the school district by July 1 the amount of such levy that 28 is necessary to pay the principal and interest on bonds issued 29 by the municipality to finance an urban renewal project, which 30 bonds were issued before July 1, 2001. Indebtedness incurred 31 to refund bonds issued prior to July 1, 2001, shall not be 32 included in the certification. Such school district shall pay 33 over the amount certified by November 1 and May 1 of the fiscal 34 year following certification to the school district. 35 -1- LSB 1098YH (9) 84 md/sc 1/ 5

H.F. 135 (2) (a) All or a portion of the taxes for the instructional 1 support program levy of a school district shall be paid by the 2 school district to the municipality if the auditor, pursuant 3 to subsection 8 , certifies to the school district by July 1 4 the amount of such levy that is necessary to pay the principal 5 and interest on bonds issued or other indebtedness incurred by 6 the municipality to finance an urban renewal project that was 7 approved at a public hearing on or before the effective date 8 of this Act, if the urban renewal project or the applicable 9 urban renewal plan has not been amended following such approval 10 and if the bonds issued or indebtedness incurred has not been 11 refinanced by the municipality. Such school district shall pay 12 over the amount certified by November 1 and May 1 of the fiscal 13 year following certification to the school district. 14 (b) In lieu of payment to a municipality under subparagraph 15 division (a) , a school district may by resolution of the board 16 of directors of the school district approve at a regular 17 meeting of the board of directors the payment of all or a 18 portion of the instructional support program property tax 19 revenue excluded under paragraph “a” , to the municipality for 20 the payment of principal and interest on bonds issued or other 21 indebtedness incurred by the municipality for an urban renewal 22 project approved before, on, or after the effective date of 23 this Act. 24 c. Unless and until the total assessed valuation of the 25 taxable property in an urban renewal area exceeds the total 26 assessed value of the taxable property in such area as shown by 27 the last equalized assessment roll referred to in subsection 1 , 28 all of the taxes levied and collected upon the taxable property 29 in the urban renewal area shall be paid into the funds for 30 the respective taxing districts as taxes by or for the taxing 31 districts in the same manner as all other property taxes. 32 When such loans, advances, indebtedness, and bonds, if any, 33 and interest thereon, have been paid, all moneys thereafter 34 received from taxes upon the taxable property in such urban 35 -2- LSB 1098YH (9) 84 md/sc 2/ 5

H.F. 135 renewal area shall be paid into the funds for the respective 1 taxing districts in the same manner as taxes on all other 2 property. 3 d. In those instances where a school district has entered 4 into an agreement pursuant to section 279.64 for sharing of 5 school district taxes levied and collected from valuation 6 described in this subsection and released to the school 7 district, the school district shall transfer the taxes as 8 provided in the agreement. 9 Sec. 3. Section 403.19, Code 2011, is amended by adding the 10 following new subsections: 11 NEW SUBSECTION . 8. For any fiscal year, a municipality 12 may certify to the county auditor for instructional support 13 program property tax revenue necessary for payment of principal 14 and interest on bonds issued or other indebtedness incurred 15 for an urban renewal project that was approved at a public 16 hearing on or before the effective date of this Act, if the 17 urban renewal project or the applicable urban renewal plan 18 has not been amended following such approval and if the bonds 19 issued or indebtedness incurred has not been refinanced by the 20 municipality. If for any fiscal year a municipality fails 21 to certify to the county auditor by July 1 the amount of 22 instructional support program property tax revenue necessary 23 for payment of principal and interest on such bonds, as 24 provided in subsection 2 , the school district is not required 25 to pay over the revenue to the municipality. If a school 26 district and a municipality are unable to agree on the amount 27 of instructional support program property tax revenue certified 28 by the municipality, either party may request that the state 29 appeal board review and finally pass upon the amount that 30 may be certified. Such appeals must be presented in writing 31 to the state appeal board no later than July 31 following 32 certification. The burden shall be on the municipality to 33 prove that the instructional support program property tax 34 revenue is necessary to pay principal and interest on the 35 -3- LSB 1098YH (9) 84 md/sc 3/ 5

H.F. 135 applicable bonds. A final decision must be issued by the state 1 appeal board no later than the following October 1. 2 NEW SUBSECTION . 9. The county auditor shall prepare an 3 annual report of all urban renewal projects or urban renewal 4 plans within the county that utilized a division of revenue 5 under this section, including those projects and plans that 6 were terminated or that expired during the previous fiscal 7 year. Such report shall be submitted to the department of 8 management each year on or before October 1. 9 Sec. 4. EFFECTIVE UPON ENACTMENT AND APPLICABILITY. This 10 Act, being deemed of immediate importance, takes effect upon 11 enactment and applies to property taxes due and payable in 12 fiscal years beginning on or after July 1, 2011. 13 EXPLANATION 14 Current Code section 403.19 excludes regular and 15 voter-approved physical plant and equipment levy (PPEL) 16 property taxes of a school district from a division of revenue 17 (tax increment financing) for urban renewal projects and 18 certain low and moderate income housing assistance. Current 19 Code section 403.19, however, also provides that all or a 20 portion of such taxes shall be paid by the school district to 21 the municipality if the county auditor certifies to the school 22 district by July 1 the amount of such levy that is necessary 23 to pay the principal and interest on bonds issued by the 24 municipality to finance an urban renewal project, if the bonds 25 were issued before July 1, 2001. 26 This bill establishes similar provisions for the property 27 taxes for the instructional support program of a school 28 district imposed pursuant to Code section 257.19, including 29 a provision requiring the school district to pay all or a 30 portion of such taxes to the municipality if the county auditor 31 certifies to the school district by July 1 the amount of such 32 levy that is necessary to pay the principal and interest on 33 bonds issued by the municipality to finance an urban renewal 34 project, if the bonds were issued before the effective date of 35 -4- LSB 1098YH (9) 84 md/sc 4/ 5

H.F. 135 the bill. Additionally, the bill allows the school district 1 to approve by resolution the payment of all or a portion of the 2 instructional support program property tax revenue otherwise 3 excluded under the bill, to the municipality for the payment of 4 principal and interest on bonds issued or other indebtedness 5 incurred by the municipality for an urban renewal project 6 approved before, on, or after the effective date of the bill. 7 The bill includes certification and reporting requirements 8 for the municipality and the county auditor and authorizes 9 an appeal to the state appeal board in the event the school 10 district and the municipality are unable to agree on the amount 11 of instructional support program property tax revenue payable 12 from the school district to the municipality. 13 The bill takes effect upon enactment and applies to property 14 taxes due and payable in fiscal years beginning on or after 15 July 1, 2011. 16 -5- LSB 1098YH (9) 84 md/sc 5/ 5