House File 681 - Introduced HOUSE FILE 681 BY HANSON , HAGER , GASKILL , KEARNS , WITTNEBEN , ABDUL-SAMAD , and H. MILLER A BILL FOR An Act relating to areas established as fruit-tree or forest 1 reservations for purposes of a property tax exemption and 2 including effective date and applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2229YH (11) 84 da/sc

H.F. 681 Section 1. Section 427C.1, Code 2011, is amended to read as 1 follows: 2 427C.1 Tax exemption. 3 Any person who establishes a forest or fruit-tree or forest 4 reservation located in an eligible county as provided in this 5 chapter shall be entitled to the tax exemption provided by law 6 in section 427C.12 . 7 Sec. 2. Section 427C.12, Code 2011, is amended to read as 8 follows: 9 427C.12 Application —— inspection —— continuation of 10 exemption —— recapture of tax exemption . 11 1. It shall be the duty of the The assessor to shall secure 12 the facts relative to fruit-tree and forest reservations by 13 taking the sworn statement, or affirmation, of the owner or 14 owners making application under this chapter ; and to shall make 15 a special report to the county auditor of all areas established 16 as fruit-tree and forest reservations made in the county under 17 the provisions of this chapter . 18 2. The board of supervisors shall designate the county 19 conservation board or the assessor who shall as the entity 20 responsible to inspect the area for which an application is 21 filed for a fruit-tree or forest reservation tax exemption 22 before the application is accepted. Use of aerial Aerial 23 photographs may be substituted for an on-site inspection when 24 appropriate. The application can shall only be accepted if 25 it the area meets the criteria established by the natural 26 resource commission to be established as a fruit-tree or forest 27 reservation. 28 3. Once the Except as otherwise provided in this section, 29 once an application submitted under subsection 2 has been 30 accepted approved , the area shall continue to be qualified to 31 receive the tax exemption during each year in which the area is 32 maintained as a fruit-tree or forest reservation without the 33 owner having to refile an application . 34 a. Upon evidence that the area is not maintained as a 35 -1- LSB 2229YH (11) 84 da/sc 1/ 4

H.F. 681 fruit-tree or forest reservation, the assessor shall require 1 that the owner refile the application for each succeeding year, 2 until the assessor or county conservation board, as applicable, 3 is satisfied that the area is maintained as a fruit-tree or 4 forest reservation. If the assessor has evidence that the area 5 is used to hunt by persons other than the owner or the owner’s 6 family, the owner shall have the burden of proof that the area 7 is not maintained for economic gain prohibited in this section. 8 b. If the property area is sold or transferred, the seller 9 shall notify the buyer that all, or part of, the property area 10 is in established as a fruit-tree or forest reservation and 11 subject to the recapture tax provisions of this section . The 12 tax exemption shall continue to be granted for the remainder of 13 the eight-year period for a fruit-tree reservation and for the 14 following years for a forest reservation or until the property 15 area no longer qualifies as a fruit-tree or forest reservation 16 as provided in this chapter, whichever is earlier . 17 4. a. The assessor shall not approve an application if more 18 than fifteen percent of the acres owned in the county by the 19 applicant is applied for as a fruit-tree or forest reservation. 20 b. Notwithstanding paragraph “a” , an area that received a 21 tax exemption as a fruit-tree or forest reservation prior to 22 February 1, 2012, shall continue to receive the tax exemption 23 as otherwise provided in this section until the earlier of the 24 following dates: 25 (1) The date that the tax exemption granted to a fruit-tree 26 reservation expires as provided in section 427C.7. 27 (2) The date that the area no longer qualifies as a 28 fruit-tree or forest reservation as provided in this chapter. 29 (3) Eight years after February 1, 2012. 30 5. The area approved as a fruit-tree or forest reservation 31 eligible to receive a tax credit may be inspected each year by 32 the county conservation board or the assessor to determine if 33 the area is maintained as a fruit-tree or forest reservation. 34 6. If the an area is not maintained or is used for economic 35 -2- LSB 2229YH (11) 84 da/sc 2/ 4

H.F. 681 gain other than as a fruit-tree reservation during any year of 1 the eight-year exemption period and any year of the following 2 five years or as a forest reservation during any year for which 3 the exemption is granted and any of the five years following 4 those exemption years, the assessor shall assess the property 5 for taxation at its fair market value if the property is 6 classified as residential, commercial, or industrial property, 7 and at its value based on productivity if the property is 8 classified as agricultural property, as of January 1 of that 9 year and in addition the area shall be subject to a recapture 10 tax. However, the area shall not be subject to the recapture 11 tax if the owner, including one possessing under a contract of 12 sale, and the owner’s direct antecedents or descendants have 13 owned the area for more than ten years. In addition, the area 14 shall not be subject to the recapture tax until the area is 15 transferred to a new owner. The area shall not qualify as 16 a fruit-tree or forest reservation for ten years after the 17 recapture tax has been assessed. The tax shall be computed by 18 multiplying the consolidated levy for each of those years, if 19 any, of the five preceding years for which the area received 20 the exemption for fruit-tree or forest reservation times the 21 assessed value of the area that would have been taxed but 22 for the tax exemption. This tax shall be entered against 23 the property on the tax list for the current year and shall 24 constitute a lien against the property in the same manner as 25 a lien for property taxes. The tax when collected shall be 26 apportioned in the manner provided for the apportionment of the 27 property taxes for the applicable tax year. 28 Sec. 3. EFFECTIVE DATE. This Act takes effect on January 29 1, 2013. 30 Sec. 4. APPLICABILITY. This Act applies to applications 31 for fruit-tree or forest reservation exemptions first filed 32 pursuant to section 427C.12 on or after January 1, 2013. 33 EXPLANATION 34 This bill makes changes relating to areas established as 35 -3- LSB 2229YH (11) 84 da/sc 3/ 4

H.F. 681 a fruit-tree or forest reservation and granted a 100 percent 1 exemption from property taxation. The bill provides that upon 2 evidence that an area is not maintained as a fruit-tree or 3 forest reservation, the assessor may require that the owner 4 refile the application for each succeeding year. The owner may 5 have the burden of proving to the assessor that the area is not 6 maintained for economic gain. 7 The bill prohibits the assessor from approving an 8 application for a reservation if more than 15 percent of the 9 acres owned in the county by the applicant would qualify as a 10 fruit-tree or forest reservation. The bill does not affect a 11 person who has placed more than 15 percent of the acres in a 12 reservation prior to February 1, 2012, until the tax exemption 13 expires, the area no longer qualifies as a fruit-tree or forest 14 reservation, or eight years after February 1, 2012. The bill 15 amends a provision which provides for the assessment of an area 16 which fails to retain its qualifying status as a fruit-tree 17 or forest reservation. The bill provides that the area is 18 subject to the recapture tax when ownership is transferred and 19 cannot requalify for 10 years after the recapture tax has been 20 assessed. 21 The bill takes effect January 1, 2013, and applies to 22 applications for exemption first filed on or after January 1, 23 2013. 24 -4- LSB 2229YH (11) 84 da/sc 4/ 4