S.F. 504 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 located in the state is eligible to receive 6 a tax credit equal to three percent of the total amount of 7 property taxes paid by the owner during the tax year on all 8 such commercial property owned by the person within the state. 9 2. For purposes of this section, an individual may claim 10 a commercial property tax credit incurred by a partnership, 11 S corporation, limited liability company, estate, or trust 12 electing to have the income taxed directly to the individual. 13 The amount claimed by the individual shall be based upon the 14 pro rata share of the individual’s earnings of a partnership, S 15 corporation, limited liability company, estate, or trust. 16 3. Any credit in excess of the tax liability imposed by 17 section 422.5 less the amounts of nonrefundable credits allowed 18 under this division for the taxable year shall be refunded with 19 interest computed under section 422.25. In lieu of claiming 20 a refund, a taxpayer may elect to have the overpayment shown 21 on the taxpayer’s final, completed return credited to the tax 22 liability for the following taxable year. 23 Sec. 2. Section 422.33, Code 2011, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 29. The taxes imposed under this division 26 shall be reduced by a commercial property tax credit. A 27 corporation that owns real property assessed as commercial 28 property located in the state is eligible to receive a tax 29 credit equal to three percent of the total amount of property 30 taxes paid during the tax year on all such commercial property 31 owned by the corporation within the state. Any credit in 32 excess of the tax liability for the taxable year shall be 33 refunded with interest computed under section 422.25. In 34 lieu of claiming a refund, a taxpayer may elect to have the 35 -1- LSB 1808XS (5) 84 md/sc 1/ 6

S.F. 504 overpayment shown on the taxpayer’s final, completed return 1 credited to the tax liability for the following taxable year. 2 Sec. 3. Section 422.60, Code 2011, is amended by adding the 3 following new subsection: 4 NEW SUBSECTION . 13. The taxes imposed under this division 5 shall be reduced by a commercial property tax credit in the 6 same manner, for the same amount, and under the same conditions 7 as provided in section 422.11Y. 8 Sec. 4. NEW SECTION . 432.12M Commercial property tax 9 credit. 10 The taxes imposed under this chapter shall be reduced by a 11 commercial property tax credit in the same manner, for the same 12 amount, and under the same conditions as provided in section 13 422.11Y. 14 Sec. 5. Section 441.21, subsection 5, Code 2011, is amended 15 to read as follows: 16 5. For valuations established as of January 1, 1979, 17 commercial property and industrial property, excluding 18 properties referred to in section 427A.1, subsection 8 , shall 19 be assessed as a percentage of the actual value of each class 20 of property. The percentage shall be determined for each 21 class of property by the director of revenue for the state in 22 accordance with the provisions of this section . For valuations 23 established as of January 1, 1979, the percentage shall be 24 the quotient of the dividend and divisor as defined in this 25 section . The dividend for each class of property shall be the 26 total actual valuation for each class of property established 27 for 1978, plus six percent of the amount so determined. The 28 divisor for each class of property shall be the valuation 29 for each class of property established for 1978, as reported 30 by the assessors on the abstracts of assessment for 1978, 31 plus the amount of value added to the total actual value by 32 the revaluation of existing properties in 1979 as equalized 33 by the director of revenue pursuant to section 441.49 . For 34 valuations established as of January 1, 1979, property valued 35 -2- LSB 1808XS (5) 84 md/sc 2/ 6

S.F. 504 by the department of revenue pursuant to chapters 428 , 433 , 1 437 , and 438 shall be considered as one class of property and 2 shall be assessed as a percentage of its actual value. The 3 percentage shall be determined by the director of revenue in 4 accordance with the provisions of this section . For valuations 5 established as of January 1, 1979, the percentage shall be 6 the quotient of the dividend and divisor as defined in this 7 section . The dividend shall be the total actual valuation 8 established for 1978 by the department of revenue, plus ten 9 percent of the amount so determined. The divisor for property 10 valued by the department of revenue pursuant to chapters 428 , 11 433 , 437 , and 438 shall be the valuation established for 1978, 12 plus the amount of value added to the total actual value by 13 the revaluation of the property by the department of revenue 14 as of January 1, 1979. For valuations established as of 15 January 1, 1980, commercial property and industrial property, 16 excluding properties referred to in section 427A.1, subsection 17 8 , shall be assessed at a percentage of the actual value of 18 each class of property. The percentage shall be determined 19 for each class of property by the director of revenue for the 20 state in accordance with the provisions of this section . For 21 valuations established as of January 1, 1980, the percentage 22 shall be the quotient of the dividend and divisor as defined in 23 this section . The dividend for each class of property shall 24 be the dividend as determined for each class of property for 25 valuations established as of January 1, 1979, adjusted by the 26 product obtained by multiplying the percentage determined 27 for that year by the amount of any additions or deletions to 28 actual value, excluding those resulting from the revaluation 29 of existing properties, as reported by the assessors on the 30 abstracts of assessment for 1979, plus four percent of the 31 amount so determined. The divisor for each class of property 32 shall be the total actual value of all such property in 1979, 33 as equalized by the director of revenue pursuant to section 34 441.49 , plus the amount of value added to the total actual 35 -3- LSB 1808XS (5) 84 md/sc 3/ 6

S.F. 504 value by the revaluation of existing properties in 1980. The 1 director shall utilize information reported on the abstracts of 2 assessment submitted pursuant to section 441.45 in determining 3 such percentage. For valuations established as of January 1, 4 1980, property valued by the department of revenue pursuant 5 to chapters 428 , 433 , 437 , and 438 shall be assessed at a 6 percentage of its actual value. The percentage shall be 7 determined by the director of revenue in accordance with the 8 provisions of this section . For valuations established as of 9 January 1, 1980, the percentage shall be the quotient of the 10 dividend and divisor as defined in this section . The dividend 11 shall be the total actual valuation established for 1979 by 12 the department of revenue, plus eight percent of the amount so 13 determined. The divisor for property valued by the department 14 of revenue pursuant to chapters 428 , 433 , 437 , and 438 shall 15 be the valuation established for 1979, plus the amount of 16 value added to the total actual value by the revaluation of 17 the property by the department of revenue as of January 1, 18 1980. For valuations established as of January 1, 1981, 19 and each year thereafter, the percentage of actual value as 20 equalized by the director of revenue as provided in section 21 441.49 at which commercial property and industrial property, 22 excluding properties referred to in section 427A.1, subsection 23 8 , shall be assessed shall be calculated in accordance with 24 the methods provided herein in this subsection , except that 25 any references to six percent in this subsection shall be four 26 percent. For valuations established for the assessment year 27 beginning January 1, 2012, and each assessment year thereafter, 28 the percentage of actual value as equalized by the director 29 of revenue as provided in section 441.49 at which commercial 30 property, excluding properties referred to in section 427A.1, 31 subsection 8 , shall be assessed shall be calculated in 32 accordance with the methods provided in this subsection, except 33 that in no assessment year shall the percentage of actual value 34 exceed ninety-seven percent. For valuations established as 35 -4- LSB 1808XS (5) 84 md/sc 4/ 6

S.F. 504 of January 1, 1981, and each year thereafter, the percentage 1 of actual value at which property valued by the department of 2 revenue pursuant to chapters 428 , 433 , 437 , and 438 shall be 3 assessed shall be calculated in accordance with the methods 4 provided herein, except that any references to ten percent 5 in this subsection shall be eight percent. Beginning with 6 valuations established as of January 1, 1979, and each year 7 thereafter, property valued by the department of revenue 8 pursuant to chapter 434 shall also be assessed at a percentage 9 of its actual value which percentage shall be equal to the 10 percentage determined by the director of revenue for commercial 11 property, industrial property, or property valued by the 12 department of revenue pursuant to chapters 428 , 433 , 437 , and 13 438 , whichever is lowest. 14 Sec. 6. Section 533.329, subsection 2, Code 2011, is amended 15 by adding the following new paragraph: 16 NEW PARAGRAPH . l. The moneys and credits tax imposed under 17 this section shall be reduced by a commercial property tax 18 credit in the same manner, for the same amount, and under the 19 same conditions as provided in section 422.11Y. 20 Sec. 7. APPLICABILITY. The sections of this Act enacting 21 section 422.11Y, section 422.33, subsection 29, section 422.60, 22 subsection 13, section 432.12M, and section 533.329, subsection 23 2, paragraph “l”, apply to tax years beginning on or after 24 January 1, 2012. 25 EXPLANATION 26 This bill establishes an individual income tax credit for 27 persons who own and pay property taxes on commercial property 28 located in the state. Each person is eligible to receive an 29 income tax credit equal to 3 percent of the total amount of 30 property taxes paid by the person during the tax year on all 31 commercial property owned by the person within the state. The 32 tax credit is refundable. 33 The bill establishes a corporate income tax credit for 34 corporations that own and pay property taxes on commercial 35 -5- LSB 1808XS (5) 84 md/sc 5/ 6

S.F. 504 property located in the state. Each corporation that owns 1 and pays property taxes on commercial property located in 2 the state is eligible to receive a tax credit equal to three 3 percent of the total amount of property taxes paid during the 4 tax year on all commercial property owned by the corporation 5 within the state. Any credit in excess of the tax liability is 6 refundable. 7 The bill also provides a commercial property credit against 8 the franchise tax under Code section 422.60, a credit against 9 the insurance premiums tax under Code chapter 432, and a credit 10 against the money and credits tax under Code section 533.329. 11 Such credits are for the same amount and are administered in 12 the same manner as the individual income tax credit created in 13 the bill. 14 The bill provides that for valuations established for 15 the assessment years beginning on or after January 1, 2012, 16 the percentage of actual value at which commercial property, 17 excluding properties referred to in Code section 427A.1(8), 18 shall be assessed shall be calculated in accordance with 19 the methods for previous assessments years, except that the 20 percentage of actual value at which commercial property is 21 assessed shall not exceed 97 percent. 22 The sections of the bill enacting new Code sections 422.11Y 23 and 432.12M, Code section 422.33, new subsection 29, Code 24 section 422.60, new subsection 13, and Code section 533.329, 25 subsection 2, new paragraph “l”, apply to tax years beginning 26 on or after January 1, 2012. 27 -6- LSB 1808XS (5) 84 md/sc 6/ 6