HOUSE FILE 135

BY  ISENHART and WILLEMS

A BILL FOR

An Act relating to the division of instructional support program property tax revenue for urban renewal purposes and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 331.502, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  42A.  Prepare and submit the report required under section 403.19, subsection 9.
   Sec. 2.  Section 403.19, subsection 2, Code 2011, is amended to read as follows:
   2.
  a.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22, except that. However, except as provided in paragraph “b”, taxes for the instructional support program of a school district imposed pursuant to section 257.19 and taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2 and taxes for the payment of bonds and interest of each taxing district must be collected against all taxable property within the taxing district without limitation by the provisions of this subsection.
    b.
  (1)  However, all All or a portion of the taxes for the physical plant and equipment levy shall be paid by the school district to the municipality if the auditor certifies to the school district by July 1 the amount of such levy that is necessary to pay the principal and interest on bonds issued by the municipality to finance an urban renewal project, which bonds were issued before July 1, 2001. Indebtedness incurred to refund bonds issued prior to July 1, 2001, shall not be included in the certification. Such school district shall pay over the amount certified by November 1 and May 1 of the fiscal year following certification to the school district.
   (2)
  (a)  All or a portion of the taxes for the instructional support program levy of a school district shall be paid by the school district to the municipality if the auditor, pursuant to subsection 8, certifies to the school district by July 1 the amount of such levy that is necessary to pay the principal and interest on bonds issued or other indebtedness incurred by the municipality to finance an urban renewal project that was approved at a public hearing on or before the effective date of this Act, if the urban renewal project or the applicable urban renewal plan has not been amended following such approval and if the bonds issued or indebtedness incurred has not been refinanced by the municipality. Such school district shall pay over the amount certified by November 1 and May 1 of the fiscal year following certification to the school district.
   (b)  In lieu of payment to a municipality under subparagraph division (a), a school district may by resolution of the board of directors of the school district approve at a regular meeting of the board of directors the payment of all or a portion of the instructional support program property tax revenue excluded under paragraph “a”, to the municipality for the payment of principal and interest on bonds issued or other indebtedness incurred by the municipality for an urban renewal project approved before, on, or after the effective date of this Act.
   c.  Unless and until the total assessed valuation of the taxable property in an urban renewal area exceeds the total assessed value of the taxable property in such area as shown by the last equalized assessment roll referred to in subsection 1, all of the taxes levied and collected upon the taxable property in the urban renewal area shall be paid into the funds for the respective taxing districts as taxes by or for the taxing districts in the same manner as all other property taxes. When such loans, advances, indebtedness, and bonds, if any, and interest thereon, have been paid, all moneys thereafter received from taxes upon the taxable property in such urban renewal area shall be paid into the funds for the respective taxing districts in the same manner as taxes on all other property.
   d.  In those instances where a school district has entered into an agreement pursuant to section 279.64 for sharing of school district taxes levied and collected from valuation described in this subsection and released to the school district, the school district shall transfer the taxes as provided in the agreement.
   Sec. 3.  Section 403.19, Code 2011, is amended by adding the following new subsections:
   NEW SUBSECTION.  8.  For any fiscal year, a municipality may certify to the county auditor for instructional support program property tax revenue necessary for payment of principal and interest on bonds issued or other indebtedness incurred for an urban renewal project that was approved at a public hearing on or before the effective date of this Act, if the urban renewal project or the applicable urban renewal plan has not been amended following such approval and if the bonds issued or indebtedness incurred has not been refinanced by the municipality. If for any fiscal year a municipality fails to certify to the county auditor by July 1 the amount of instructional support program property tax revenue necessary for payment of principal and interest on such bonds, as provided in subsection 2, the school district is not required to pay over the revenue to the municipality. If a school district and a municipality are unable to agree on the amount of instructional support program property tax revenue certified by the municipality, either party may request that the state appeal board review and finally pass upon the amount that may be certified. Such appeals must be presented in writing to the state appeal board no later than July 31 following certification. The burden shall be on the municipality to prove that the instructional support program property tax revenue is necessary to pay principal and interest on the applicable bonds. A final decision must be issued by the state appeal board no later than the following October 1.
   NEW SUBSECTION.  9.  The county auditor shall prepare an annual report of all urban renewal projects or urban renewal plans within the county that utilized a division of revenue under this section, including those projects and plans that were terminated or that expired during the previous fiscal year. Such report shall be submitted to the department of management each year on or before October 1.
   Sec. 4.  EFFECTIVE UPON ENACTMENT AND APPLICABILITY.  This Act, being deemed of immediate importance, takes effect upon enactment and applies to property taxes due and payable in fiscal years beginning on or after July 1, 2011.
EXPLANATION
   Current Code section 403.19 excludes regular and voter-approved physical plant and equipment levy (PPEL) property taxes of a school district from a division of revenue (tax increment financing) for urban renewal projects and certain low and moderate income housing assistance. Current Code section 403.19, however, also provides that all or a portion of such taxes shall be paid by the school district to the municipality if the county auditor certifies to the school district by July 1 the amount of such levy that is necessary to pay the principal and interest on bonds issued by the municipality to finance an urban renewal project, if the bonds were issued before July 1, 2001.
   This bill establishes similar provisions for the property taxes for the instructional support program of a school district imposed pursuant to Code section 257.19, including a provision requiring the school district to pay all or a portion of such taxes to the municipality if the county auditor certifies to the school district by July 1 the amount of such levy that is necessary to pay the principal and interest on bonds issued by the municipality to finance an urban renewal project, if the bonds were issued before the effective date of the bill. Additionally, the bill allows the school district to approve by resolution the payment of all or a portion of the instructional support program property tax revenue otherwise excluded under the bill, to the municipality for the payment of principal and interest on bonds issued or other indebtedness incurred by the municipality for an urban renewal project approved before, on, or after the effective date of the bill.
   The bill includes certification and reporting requirements for the municipality and the county auditor and authorizes an appeal to the state appeal board in the event the school district and the municipality are unable to agree on the amount of instructional support program property tax revenue payable from the school district to the municipality.
   The bill takes effect upon enactment and applies to property taxes due and payable in fiscal years beginning on or after July 1, 2011.