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 reservations for purposes of a property tax exemption and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 427C.1, Code 2011, is amended to read as follows:
   427C.1  Tax exemption.
   Any person who establishes a forest or fruit-tree or forest reservation located in an eligible county as provided in this chapter shall be entitled to the tax exemption provided by law in section 427C.12.
   Sec. 2.  Section 427C.12, Code 2011, is amended to read as follows:
   427C.12  Application —— inspection ——continuation of exemption —— recapture of tax exemption.
   1.  It shall be the duty of the The assessor to shall secure the facts relative to fruit-tree and forest reservations by taking the sworn statement, or affirmation, of the owner or owners making application under this chapter; and to shall make a special report to the county auditor of all areas established as fruit-tree and forest reservations made in the county under the provisions of this chapter.
   2.  The board of supervisors shall designate the county conservation board or the assessor who shall as the entity responsible to inspect the area for which an application is filed for a fruit-tree or forest reservation tax exemption before the application is accepted. Use of aerial Aerial photographs may be substituted for an on-site inspection when appropriate. The application can shall only be accepted if it the area meetsthe criteria established by the natural resource commission to be established as a fruit-tree or forest reservation.
   3.  Once the Except as otherwise provided in this section, once an application submitted under subsection 2 has been accepted approved, the area shall continue to be qualified to receive the tax exemption during each year in which the area is maintained as a fruit-tree or forest reservation without the owner having to refile an application.
   a.  Upon evidence that the area is not maintained as a fruit-tree or forest reservation, the assessor shall require that the owner refile the application for each succeeding year, until the assessor or county conservation board, as applicable, is satisfied that the area is maintained as a fruit-tree or forest reservation. If the assessor has evidence that the area is used to hunt by persons other than the owner or the owner’s family, the owner shall have the burden of proof that the area is not maintained for economic gain prohibited in this section.
   b.  If the property area is sold or transferred, the seller shall notify the buyer that all, or part of, the property area is in established as a fruit-tree or forest reservation and subject to the recapture tax provisions of this section. The tax exemption shall continue to be granted for the remainder of the eight-year period for a fruit-tree reservation and for the following years for a forest reservation or until the property area no longer qualifies as a fruit-tree or forest reservation as provided in this chapter, whichever is earlier.
   4.
  a.  The assessor shall not approve an application if more than fifteen percent of the acres owned in the county by the applicant is applied for as a fruit-tree or forest reservation.
   b.  Notwithstanding paragraph “a”, an area that received a tax exemption as a fruit-tree or forest reservation prior to February 1, 2012, shall continue to receive the tax exemption as otherwise provided in this section until the earlier of the following dates:
   (1)  The date that the tax exemption granted to a fruit-tree reservation expires as provided in section 427C.7.
   (2)  The date that the area no longer qualifies as a fruit-tree or forest reservation as provided in this chapter.
   (3)  Eight years after February 1, 2012.
   5.  The area approved as a fruit-tree or forest reservation eligible to receive a tax credit may be inspected each year by the county conservation board or the assessor to determine if the area is maintained as a fruit-tree or forest reservation.

   6.  If the an area is not maintained or is used for economic gain other than as a fruit-tree reservation during any year of the eight-year exemption period and any year of the following five years or as a forest reservation during any year for which the exemption is granted and any of the five years following those exemption years, the assessor shall assess the property for taxation at its fair market value if the property is classified as residential, commercial, or industrial property, and at its value based on productivity if the property is classified as agricultural property, as of January 1 of that year and in addition the area shall be subject to a recapture tax. However, the area shall not be subject to the recapture tax if the owner, including one possessing under a contract of sale, and the owner’s direct antecedents or descendants have owned the area for more than ten years. In addition, the area shall not be subject to the recapture tax until the area is transferred to a new owner. The area shall not qualify as a fruit-tree or forest reservation for ten years after the recapture tax has been assessed. The tax shall be computed by multiplying the consolidated levy for each of those years, if any, of the five preceding years for which the area received the exemption for fruit-tree or forest reservation times the assessed value of the area that would have been taxed but for the tax exemption. This tax shall be entered against the property on the tax list for the current year and shall constitute a lien against the property in the same manner as a lien for property taxes. The tax when collected shall be apportioned in the manner provided for the apportionment of the property taxes for the applicable tax year.
   Sec. 3.  EFFECTIVE DATE.  This Act takes effect on January 1, 2013.
   Sec. 4.  APPLICABILITY.  This Act applies to applications for fruit-tree or forest reservation exemptions first filed pursuant to section 427C.12 on or after January 1, 2013.
EXPLANATION
   This bill makes changes relating to areas established as a fruit-tree or forest reservation and granted a 100 percent exemption from property taxation. The bill provides that upon evidence that an area is not maintained as a fruit-tree or forest reservation, the assessor may require that the owner refile the application for each succeeding year. The owner may have the burden of proving to the assessor that the area is not maintained for economic gain.
   The bill prohibits the assessor from approving an application for a reservation if more than 15 percent of the acres owned in the county by the applicant would qualify as a fruit-tree or forest reservation. The bill does not affect a person who has placed more than 15 percent of the acres in a reservation prior to February 1, 2012, until the tax exemption expires, the area no longer qualifies as a fruit-tree or forest reservation, or eight years after February 1, 2012. The bill amends a provision which provides for the assessment of an area which fails to retain its qualifying status as a fruit-tree or forest reservation. The bill provides that the area is subject to the recapture tax when ownership is transferred and cannot requalify for 10 years after the recapture tax has been assessed.
   The bill takes effect January 1, 2013, and applies to applications for exemption first filed on or after January 1, 2013.