S.F. 501 Section 1. NEW SECTION . 422.11Y Commercial property tax 1 credit. 2 1. The taxes imposed under this division, less the credits 3 allowed under section 422.12, shall be reduced by a commercial 4 property tax credit. An owner of real property assessed as 5 commercial property, or new commercial property, as defined in 6 section 441.21, located in the state is eligible to receive 7 a tax credit equal to three percent of the total amount of 8 property taxes paid by the owner during the tax year on all 9 such commercial property or new commercial property owned by 10 the person within the state. 11 2. For purposes of this section, an individual may claim 12 a commercial property tax credit incurred by a partnership, 13 S corporation, limited liability company, estate, or trust 14 electing to have the income taxed directly to the individual. 15 The amount claimed by the individual shall be based upon the 16 pro rata share of the individual’s earnings of a partnership, S 17 corporation, limited liability company, estate, or trust. 18 3. Any credit in excess of the tax liability imposed by 19 section 422.5 less the amounts of nonrefundable credits allowed 20 under this division for the taxable year shall be refunded with 21 interest computed under section 422.25. In lieu of claiming 22 a refund, a taxpayer may elect to have the overpayment shown 23 on the taxpayer’s final, completed return credited to the tax 24 liability for the following taxable year. 25 Sec. 2. Section 422.33, Code 2011, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 29. The taxes imposed under this division 28 shall be reduced by a commercial property tax credit. A 29 corporation that owns real property assessed as commercial 30 property, or new commercial property, as defined in section 31 441.21, located in the state is eligible to receive a tax 32 credit equal to three percent of the total amount of property 33 taxes paid during the tax year on all such commercial property 34 or new commercial property owned by the corporation within 35 -1- LSB 1810XS (10) 84 md/sc 1/ 8

S.F. 501 the state. Any credit in excess of the tax liability for the 1 taxable year shall be refunded with interest computed under 2 section 422.25. In lieu of claiming a refund, a taxpayer 3 may elect to have the overpayment shown on the taxpayer’s 4 final, completed return credited to the tax liability for the 5 following taxable year. 6 Sec. 3. Section 422.60, Code 2011, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 13. The taxes imposed under this division 9 shall be reduced by a commercial property tax credit in the 10 same manner, for the same amount, and under the same conditions 11 as provided in section 422.11Y. 12 Sec. 4. NEW SECTION . 432.12M Commercial property tax 13 credit. 14 The taxes imposed under this chapter shall be reduced by a 15 commercial property tax credit in the same manner, for the same 16 amount, and under the same conditions as provided in section 17 422.11Y. 18 Sec. 5. Section 441.21, subsection 5, Code 2011, is amended 19 to read as follows: 20 5. a. For valuations established as of January 1, 1979, 21 commercial property and industrial property, excluding 22 properties referred to in section 427A.1, subsection 8 , shall 23 be assessed as a percentage of the actual value of each class 24 of property. The percentage shall be determined for each 25 class of property by the director of revenue for the state in 26 accordance with the provisions of this section . For valuations 27 established as of January 1, 1979, the percentage shall be 28 the quotient of the dividend and divisor as defined in this 29 section . The dividend for each class of property shall be the 30 total actual valuation for each class of property established 31 for 1978, plus six percent of the amount so determined. The 32 divisor for each class of property shall be the valuation 33 for each class of property established for 1978, as reported 34 by the assessors on the abstracts of assessment for 1978, 35 -2- LSB 1810XS (10) 84 md/sc 2/ 8

S.F. 501 plus the amount of value added to the total actual value by 1 the revaluation of existing properties in 1979 as equalized 2 by the director of revenue pursuant to section 441.49 . For 3 valuations established as of January 1, 1979, property valued 4 by the department of revenue pursuant to chapters 428 , 433 , 5 437 , and 438 shall be considered as one class of property and 6 shall be assessed as a percentage of its actual value. The 7 percentage shall be determined by the director of revenue in 8 accordance with the provisions of this section . For valuations 9 established as of January 1, 1979, the percentage shall be 10 the quotient of the dividend and divisor as defined in this 11 section . The dividend shall be the total actual valuation 12 established for 1978 by the department of revenue, plus ten 13 percent of the amount so determined. The divisor for property 14 valued by the department of revenue pursuant to chapters 428 , 15 433 , 437 , and 438 shall be the valuation established for 1978, 16 plus the amount of value added to the total actual value by 17 the revaluation of the property by the department of revenue 18 as of January 1, 1979. For valuations established as of 19 January 1, 1980, commercial property and industrial property, 20 excluding properties referred to in section 427A.1, subsection 21 8 , shall be assessed at a percentage of the actual value of 22 each class of property. The percentage shall be determined 23 for each class of property by the director of revenue for the 24 state in accordance with the provisions of this section . For 25 valuations established as of January 1, 1980, the percentage 26 shall be the quotient of the dividend and divisor as defined in 27 this section. The dividend for each class of property shall 28 be the dividend as determined for each class of property for 29 valuations established as of January 1, 1979, adjusted by the 30 product obtained by multiplying the percentage determined 31 for that year by the amount of any additions or deletions to 32 actual value, excluding those resulting from the revaluation 33 of existing properties, as reported by the assessors on the 34 abstracts of assessment for 1979, plus four percent of the 35 -3- LSB 1810XS (10) 84 md/sc 3/ 8

S.F. 501 amount so determined. The divisor for each class of property 1 shall be the total actual value of all such property in 1979, 2 as equalized by the director of revenue pursuant to section 3 441.49 , plus the amount of value added to the total actual 4 value by the revaluation of existing properties in 1980. The 5 director shall utilize information reported on the abstracts of 6 assessment submitted pursuant to section 441.45 in determining 7 such percentage. For valuations established as of January 1, 8 1980, property valued by the department of revenue pursuant 9 to chapters 428 , 433 , 437 , and 438 shall be assessed at a 10 percentage of its actual value. The percentage shall be 11 determined by the director of revenue in accordance with the 12 provisions of this section . For valuations established as of 13 January 1, 1980, the percentage shall be the quotient of the 14 dividend and divisor as defined in this section . The dividend 15 shall be the total actual valuation established for 1979 by 16 the department of revenue, plus eight percent of the amount so 17 determined. The divisor for property valued by the department 18 of revenue pursuant to chapters 428 , 433 , 437 , and 438 shall be 19 the valuation established for 1979, plus the amount of value 20 added to the total actual value by the revaluation of the 21 property by the department of revenue as of January 1, 1980. 22 For valuations established as of January 1, 1981, and each year 23 thereafter, the percentage of actual value as equalized by the 24 director of revenue as provided in section 441.49 at which 25 commercial property that is not new commercial property, as 26 defined in paragraph “b” , and industrial property, excluding 27 properties referred to in section 427A.1, subsection 8 , shall 28 be assessed shall be calculated in accordance with the methods 29 provided herein, except that any references to six percent 30 in this subsection shall be four percent. For valuations 31 established as of January 1, 1981, and each year thereafter, 32 the percentage of actual value at which property valued by 33 the department of revenue pursuant to chapters 428 , 433 , 437 , 34 and 438 shall be assessed shall be calculated in accordance 35 -4- LSB 1810XS (10) 84 md/sc 4/ 8

S.F. 501 with the methods provided herein, except that any references 1 to ten percent in this subsection shall be eight percent. 2 Beginning with valuations established as of January 1, 1979, 3 and each year thereafter, property valued by the department of 4 revenue pursuant to chapter 434 shall also be assessed at a 5 percentage of its actual value which percentage shall be equal 6 to the percentage determined by the director of revenue for 7 commercial property, industrial property, or property valued by 8 the department of revenue pursuant to chapters 428 , 433 , 437 , 9 and 438 , whichever is lowest. 10 b. (1) For valuations established on or after January 1, 11 2012, but before January 1, 2016, new commercial property, 12 excluding properties referred to in section 427A.1, subsection 13 8 , shall be assessed as a percentage of the actual value as 14 determined in this paragraph “b” . 15 (2) For valuations established for assessment years 16 beginning on or after January 1, 2012, but before January 17 1, 2016, the percentage of actual value as equalized by the 18 director of revenue as provided in section 441.49 at which new 19 commercial property shall be assessed shall be sixty percent. 20 (3) For purposes of this section, “new commercial property” 21 means a parcel of real estate containing no buildings or 22 structures on July 1, 2011, upon which the construction of 23 buildings or structures is commenced after July 1, 2011, and 24 that, but for this paragraph, would be assessed under paragraph 25 “a” . “New commercial property” shall be considered a separate 26 classification of property. 27 Sec. 6. Section 441.21, subsection 8, paragraph b, Code 28 2011, is amended to read as follows: 29 b. Notwithstanding paragraph “a” , any construction or 30 installation of a solar energy system on property classified 31 as agricultural, residential, commercial, new commercial, or 32 industrial property shall not increase the actual, assessed and 33 taxable values of the property for five full assessment years. 34 Sec. 7. Section 441.21, subsections 9 and 10, Code 2011, are 35 -5- LSB 1810XS (10) 84 md/sc 5/ 8

S.F. 501 amended to read as follows: 1 9. Not later than November 1, 1979, and November 1 of 2 each subsequent year, the director shall certify to the 3 county auditor of each county the percentages of actual 4 value at which residential property, agricultural property, 5 commercial property, new commercial property, industrial 6 property, and property valued by the department of revenue 7 pursuant to chapters 428 , 433 , 434 , 437 , and 438 in each 8 assessing jurisdiction in the county shall be assessed for 9 taxation. The county auditor shall proceed to determine the 10 assessed values of agricultural property, residential property, 11 commercial property, new commercial property, industrial 12 property, and property valued by the department of revenue 13 pursuant to chapters 428 , 433 , 434 , 437 , and 438 by applying 14 such percentages to the current actual value of such property, 15 as reported to the county auditor by the assessor, and the 16 assessed values so determined shall be the taxable values of 17 such properties upon which the levy shall be made. 18 10. The percentage of actual value computed by the 19 director for agricultural property, residential property, 20 commercial property, new commercial property, industrial 21 property , and property valued by the department of revenue 22 pursuant to chapters 428 , 433 , 434 , 437 , and 438 and used to 23 determine assessed values of those classes of property does not 24 constitute a rule as defined in section 17A.2, subsection 11 . 25 Sec. 8. Section 533.329, subsection 2, Code 2011, is amended 26 by adding the following new paragraph: 27 NEW PARAGRAPH . l. The moneys and credits tax imposed under 28 this section shall be reduced by a commercial property tax 29 credit in the same manner, for the same amount, and under the 30 same conditions as provided in section 422.11Y. 31 Sec. 9. APPLICABILITY. 32 1. The sections of this Act amending section 441.21 apply 33 to property tax assessment years beginning on or after January 34 1, 2012. 35 -6- LSB 1810XS (10) 84 md/sc 6/ 8

S.F. 501 2. The sections of this Act enacting section 422.11Y, 1 section 422.33, subsection 29, section 422.60, subsection 13, 2 section 432.12M, and section 533.329, subsection 2, paragraph 3 “l”, apply to tax years beginning on or after January 1, 2012. 4 EXPLANATION 5 This bill establishes a new commercial property 6 classification. “New commercial property” is defined in 7 the bill as a parcel of real estate containing no buildings 8 or structures on July 1, 2011, upon which the construction 9 of buildings or structures is commenced after July 1, 2011, 10 and that, but for the classification, would be assessed as 11 commercial property. For assessment years beginning on or 12 after January 1, 2012, the percentage of actual value at which 13 new commercial property is assessed is 60 percent. 14 The bill also makes corresponding changes to other 15 provisions of Code section 441.21. 16 The bill establishes an individual income tax credit for 17 persons who own and pay property taxes on commercial property 18 or new commercial property, as defined in the bill, located 19 in the state. Each person is eligible to receive an income 20 tax credit equal to 3 percent of the total amount of property 21 taxes paid by the person during the tax year on all commercial 22 property owned by the person within the state. The tax credit 23 is refundable. 24 The bill establishes a corporate income tax credit for 25 corporations that own and pay property taxes on commercial 26 property or new commercial property, as defined in the bill, 27 located in the state. Each corporation that owns and pays 28 property taxes on commercial property or new commercial 29 property located in the state is eligible to receive a tax 30 credit equal to 3 percent of the total amount of property taxes 31 paid during the tax year on all commercial property or new 32 commercial property owned by the corporation within the state. 33 Any credit in excess of the tax liability is refundable. 34 The bill also provides a commercial property tax credit 35 -7- LSB 1810XS (10) 84 md/sc 7/ 8

S.F. 501 against the franchise tax, the insurance premiums tax, and the 1 moneys and credits tax imposed under Code chapters 422, 432, 2 and 533, respectively. Such credits are for the same amount 3 and are administered in the same manner as the individual 4 income tax credit created in the bill. 5 The bill applies to property tax assessment years beginning 6 on or after January 1, 2012. The sections of the bill enacting 7 new Code sections 422.11Y and 432.12M, Code section 422.33, new 8 subsection 29, Code section 422.60, new subsection 13, and Code 9 section 533.329, subsection 2, new paragraph “l”, apply to tax 10 years beginning on or after January 1, 2012. 11 -8- LSB 1810XS (10) 84 md/sc 8/ 8