Senate Study Bill 3118 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON ECONOMIC GROWTH/REBUILD IOWA BILL BY CHAIRPERSON SODDERS) A BILL FOR An Act relating to Iowa’s urban renewal law by modifying 1 provisions relating to the duration of urban renewal areas, 2 the approval, duration, and use of divisions of revenue, 3 the reporting of urban renewal debt certifications, and 4 including effective date provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5502XC (12) 84 md/sc

S.F. _____ Section 1. Section 8G.12, Code Supplement 2011, is amended 1 by adding the following new subsection: 2 NEW SUBSECTION . 3. The internet site made available by the 3 department of management under subsection 1 shall also include 4 the certifications received by the department under section 5 403.19, subsection 7, paragraph “d” . Such certifications 6 shall, to the extent possible, be organized and searchable. 7 Sec. 2. Section 403.17, subsection 1, Code 2011, is amended 8 to read as follows: 9 1. “Affected taxing entity” means a city, community college, 10 county, or school district which levied or certified for levy 11 a property tax on any portion of the taxable property located 12 within the urban renewal area in the fiscal year beginning 13 prior to the calendar year in which a proposed urban renewal 14 plan is submitted to the local governing body for approval. 15 Sec. 3. Section 403.17, subsection 10, Code 2011, is amended 16 to read as follows: 17 10. “Economic development area” means an area of a 18 municipality designated by the local governing body as 19 appropriate for commercial and industrial enterprises, public 20 improvements related to housing and residential development, 21 or construction of housing and residential development for low 22 and moderate income families, including single or multifamily 23 housing. If an urban renewal plan for an urban renewal area 24 adopted on or after January 1, 1995, but before the effective 25 date of this Act, is based upon a finding that the area is an 26 economic development area and that no part contains slum or 27 blighted conditions, then the division of revenue provided 28 in section 403.19 , if adopted prior to the effective date of 29 this Act, and stated in the plan shall be limited to twenty 30 years from the calendar year following the calendar year in 31 which the municipality first certifies to the county auditor 32 the amount of any loans, advances, indebtedness, or bonds which 33 qualify for payment from the division of revenue provided in 34 section 403.19 . Such designated An economic development area 35 -1- LSB 5502XC (12) 84 md/sc 1/ 18

S.F. _____ shall not include agricultural land, including land which is 1 part of a century farm, unless the owner of the agricultural 2 land or century farm agrees to include the agricultural land 3 or century farm in the urban renewal area. For the purposes of 4 this subsection , “century farm” means a farm in which at least 5 forty acres of such farm have been held in continuous ownership 6 by the same family for one hundred years or more. 7 Sec. 4. NEW SECTION . 403.18A Urban renewal area and 8 division of revenue limitations —— election filed with county 9 auditor. 10 1. Each municipality having an urban renewal area in 11 existence on the effective date of this Act that is subject in 12 whole or in part to a division of revenue under section 403.19 13 that is not limited in duration under either section 403.17, 14 subsection 10, or section 403.22, subsection 5, shall for each 15 such urban renewal area file a written election with the county 16 auditor not later than July 31, 2012, to impose one of the 17 following conditions on the urban renewal area: 18 a. (1) Except as provided in subparagraph (2), the urban 19 renewal area including all applicable urban renewal plans, 20 projects, and ordinances providing for a division of revenue 21 shall terminate and be of no further force and effect not 22 later than June 30, 2027. The municipality may for such urban 23 renewal area continue to incur or issue additional costs or 24 indebtedness, including loans, advances, and bonds, that 25 qualify for payment from the special fund created under section 26 403.19, subsection 2, on or after the effective date of this 27 Act. Any such additional costs or indebtedness payable from 28 the special fund shall, however, be limited to the amount 29 of taxes resulting from the imposition of the limitation in 30 section 403.19, subsection 1, paragraph “d” . 31 (2) A municipality may, with the approval of the governing 32 bodies of all affected taxing entities prior to the date 33 of termination under subparagraph (1), extend the date of 34 termination for the urban renewal area and all applicable urban 35 -2- LSB 5502XC (12) 84 md/sc 2/ 18

S.F. _____ renewal plans, projects, and ordinances to a date not later 1 than June 30, 2032. All other provisions of subparagraph 2 (1) shall apply to an urban renewal area authorized for an 3 extension under this subparagraph. 4 b. The urban renewal area including all applicable urban 5 renewal plans, projects, and ordinances providing for a 6 division of revenue shall continue in effect under this 7 chapter, until such time that the urban renewal area is 8 dissolved by the municipality. The municipality may continue 9 to operate under this chapter and divide revenue under section 10 403.19 for the purpose of paying costs and indebtedness, 11 including loans, advances, and bonds, that qualify for payment 12 from the special fund created under section 403.19, subsection 13 2, incurred or issued before the effective date of this Act. 14 The municipality shall not, however, incur or issue additional 15 costs or indebtedness payable from the division of revenue in 16 the urban renewal area. For the purposes of this paragraph “b” , 17 the refinancing of indebtedness incurred prior to the effective 18 date of this Act shall not constitute an additional cost or 19 indebtedness, unless such refinancing results in an increase in 20 debt service that qualifies for payment from the special fund. 21 2. Failure to file an election with the county auditor on 22 or before July 31, 2012, shall have the effect of imposing 23 subsection 1, paragraph “a” , subparagraphs (1) and (2), on the 24 urban renewal area. 25 3. An election under this section is irrevocable once filed, 26 and the provisions of this section shall supersede any powers 27 of a municipality under this chapter to the contrary. 28 Sec. 5. Section 403.19, Code Supplement 2011, is amended to 29 read as follows: 30 403.19 Division of revenue from taxation —— tax increment 31 financing. 32 A municipality may provide by ordinance that taxes levied 33 on taxable property in an urban renewal area each year by or 34 for the benefit of the state, city, county, school district, or 35 -3- LSB 5502XC (12) 84 md/sc 3/ 18

S.F. _____ other taxing district, shall be divided as follows: 1 1. a. Unless otherwise provided in this section and subject 2 to the limitation in paragraph “d” , that portion of the taxes 3 which would be produced by the rate at which the tax is levied 4 each year by or for each of the taxing districts upon the total 5 sum of the assessed value of the taxable property in the urban 6 renewal area, as shown on the assessment roll as of January 1 7 of the calendar year preceding the first calendar year in which 8 the municipality certifies to the county auditor the amount 9 of loans, advances, indebtedness, or bonds payable from the 10 division of property tax revenue, or on the assessment roll 11 last equalized prior to the date of initial adoption of the 12 urban renewal plan if the plan was adopted prior to July 1, 13 1972, shall be allocated to and when collected be paid into 14 the fund for the respective taxing district as taxes by or for 15 the taxing district into which all other property taxes are 16 paid. However, the municipality may choose to divide that 17 portion of the taxes which would be produced by levying the 18 municipality’s portion of the total tax rate levied by or for 19 the municipality upon the total sum of the assessed value of 20 the taxable property in the urban renewal area, as shown on the 21 assessment roll as of January 1 of the calendar year preceding 22 the effective date of the ordinance and if the municipality so 23 chooses, an affected taxing entity may allow a municipality to 24 divide that portion of the taxes which would be produced by 25 levying the affected taxing district’s portion of the total tax 26 rate levied by or for the affected taxing entity upon the total 27 sum of the assessed value of the taxable property in the urban 28 renewal area, as shown on the assessment roll as of January 29 1 of the calendar year preceding the effective date of the 30 ordinance. This choice to divide a portion of the taxes shall 31 not be construed to change the effective date of the division 32 of property tax revenue with respect to an urban renewal plan 33 in existence on July 1, 1994. 34 b. For the purpose of allocating taxes levied by or for any 35 -4- LSB 5502XC (12) 84 md/sc 4/ 18

S.F. _____ taxing district which did not include the territory in an urban 1 renewal area on the effective date of the ordinance or initial 2 adoption of the plan, but to which the territory has been 3 annexed or otherwise included after the effective date, the 4 assessment roll applicable to property in the annexed territory 5 as of January 1 of the calendar year preceding the effective 6 date of the ordinance, which amends the plan to include the 7 annexed area, shall , subject to the limitation in paragraph “d” , 8 be used in determining the assessed valuation of the taxable 9 property in the annexed area. 10 c. For the purposes of dividing taxes under section 260E.4 , 11 the applicable assessment roll for purposes of paragraph 12 “a” , subject to the limitation in paragraph “d” , shall be the 13 assessment roll as of January 1 of the calendar year preceding 14 the first written agreement providing that all or a portion of 15 program costs are to be paid for by incremental property taxes. 16 The community college shall file a copy of the agreement with 17 the appropriate assessor. The assessor may, within fourteen 18 days of such filing, physically inspect the applicable taxable 19 business property. If upon such inspection the assessor 20 determines that there has been a change in the value of the 21 property from the value as shown on the assessment roll as of 22 January 1 of the calendar year preceding the filing of the 23 agreement and such change in value is due to new construction, 24 additions or improvements to existing structures, or remodeling 25 of existing structures for which a building permit was 26 required, the assessor shall promptly determine the value of 27 the property as of the inspection in the manner provided in 28 chapter 441 and that value shall be included for purposes 29 of the jobs training project in the assessed value of the 30 employer’s taxable business property as shown on the assessment 31 roll as of January 1 of the calendar year preceding the filing 32 of the agreement. The assessor, within thirty days of such 33 filing, shall notify the community college and the employer 34 or business of that valuation which shall be included in the 35 -5- LSB 5502XC (12) 84 md/sc 5/ 18

S.F. _____ assessed valuation for purposes of this subsection and section 1 260E.4 . The value determined by the assessor shall reflect the 2 change in value due solely to new construction, additions or 3 improvements to existing structures, or remodeling of existing 4 structures for which a building permit was required. 5 d. Notwithstanding any provision of this chapter to the 6 contrary, when calculating a division of revenue, for the 7 payment of costs and indebtedness, including all loans, 8 advances, and bonds that qualify for payment from the special 9 fund, incurred or issued on or after the effective date of 10 this Act, the difference between the year of the assessment 11 roll as of January 1 used to calculate the amount of taxes 12 allocated to and when collected paid into the fund for the 13 respective taxing district under this subsection and the year 14 of the assessment roll used to calculate the total amount of 15 property taxes under this section for the fiscal year in which 16 the taxes are due and payable shall not exceed fifteen years. 17 If such difference exceeds fifteen years, the assessment roll 18 used to calculate the amount of taxes under this subsection, 19 shall be the assessment roll for the fifteenth assessment year 20 immediately preceding the year of the assessment roll used to 21 calculate the total amount of property taxes under this section 22 for the fiscal year in which the taxes are due and payable. 23 2. That portion of the taxes each year in excess of such 24 amount shall be allocated to and when collected be paid into a 25 special fund of the municipality to pay the principal of and 26 interest on loans, moneys advanced to, or indebtedness, whether 27 funded, refunded, assumed, or otherwise, including bonds issued 28 under the authority of section 403.9, subsection 1 , incurred 29 by the municipality to finance or refinance, in whole or in 30 part, an urban renewal project within the area, and to provide 31 assistance for low and moderate income family housing as 32 provided in section 403.22 , except that . However, taxes for 33 the regular and voter-approved physical plant and equipment 34 levy of a school district imposed pursuant to section 298.2 , 35 -6- LSB 5502XC (12) 84 md/sc 6/ 18

S.F. _____ and taxes for the payment of bonds and interest of each taxing 1 district must , and the foundation property tax imposed pursuant 2 to section 257.3 shall be collected against all taxable 3 property within the taxing district without limitation by the 4 provisions of this subsection . However, all or a portion of 5 the taxes for the physical plant and equipment levy and the 6 taxes for the foundation property tax shall be paid by the 7 school district to the municipality if the auditor certifies 8 to the school district by July 1 the amount of such levy that 9 is necessary to pay the principal and interest on bonds issued 10 by the municipality to finance an urban renewal project, which 11 bonds were issued before July 1, 2001. Indebtedness incurred 12 to refund bonds issued prior to July 1, 2001, shall not be 13 included in the certification. Such school district shall pay 14 over the amount certified by November 1 and May 1 of the fiscal 15 year following certification to the school district subsection 16 9 or 10 applies . Unless and until the total assessed valuation 17 of the taxable property in an urban renewal area exceeds the 18 total assessed value of the taxable property in such area as 19 shown by the last equalized assessment roll referred to in 20 subsection 1 , all of the taxes levied and collected upon the 21 taxable property in the urban renewal area shall be paid into 22 the funds for the respective taxing districts as taxes by 23 or for the taxing districts in the same manner as all other 24 property taxes. When such loans, advances, indebtedness, and 25 bonds, if any, and interest thereon, have been paid, all moneys 26 thereafter received from taxes upon the taxable property in 27 such urban renewal area shall be paid into the funds for the 28 respective taxing districts in the same manner as taxes on all 29 other property. In those instances where a school district 30 has entered into an agreement pursuant to section 279.64 for 31 sharing of school district taxes levied and collected from 32 valuation described in this subsection and released to the 33 school district, the school district shall transfer the taxes 34 as provided in the agreement. 35 -7- LSB 5502XC (12) 84 md/sc 7/ 18

S.F. _____ 3. The portion of taxes mentioned in subsection 2 and the 1 special fund into which they shall be paid, may be irrevocably 2 pledged by a municipality for the payment of the principal and 3 interest on loans, advances, bonds issued under the authority 4 of section 403.9, subsection 1 , or indebtedness incurred by a 5 municipality to finance or refinance, in whole or in part, the 6 urban renewal project within the area. 7 4. a. Except as provided in paragraph “b” and section 8 403.22, an ordinance providing for a division of revenue under 9 this section that is adopted on or after the effective date of 10 this Act shall be limited to fifteen years from the calendar 11 year following the calendar year in which the municipality 12 first certifies to the county auditor the amount of any loans, 13 advances, indebtedness, or bonds which qualify for payment from 14 the division of revenue. The urban renewal area, including all 15 applicable urban renewal plans, projects, and ordinances shall 16 terminate and be of no further force and effect following the 17 fifteen-year period provided in this subsection. 18 b. A municipality may, with the approval of the governing 19 bodies of all affected taxing entities prior to the date of 20 termination under paragraph “a” , extend the division of revenue 21 under section 403.19 and the applicable urban renewal plans, 22 projects, and ordinances for up to five years if such extension 23 is determined by the affected taxing entities to be necessary 24 to sufficiently fund an urban renewal project within the urban 25 renewal area. 26 4. 5. As used in this section the word “taxes” includes, 27 but is not limited to, all levies on an ad valorem basis upon 28 land or real property. 29 5. 6. An ordinance adopted under this section providing 30 for a division of revenue shall be filed in the office of 31 the county auditor of each county where the property that is 32 subject to the ordinance is located. 33 6. 7. a. (1) A municipality shall certify to the 34 county auditor on or before December 1 the amount of loans, 35 -8- LSB 5502XC (12) 84 md/sc 8/ 18

S.F. _____ advances, indebtedness, or bonds which qualify for payment 1 from the special fund referred to in subsection 2 , for each 2 urban renewal area in the municipality, and the filing of the 3 certificate shall make it a duty of the auditor to provide for 4 the division of taxes in each subsequent year without further 5 certification, except as provided in paragraphs “b” and “c” , 6 until the amount of the loans, advances, indebtedness, or 7 bonds is paid to the special fund. If any loans, advances, 8 indebtedness, or bonds are issued which qualify for payment 9 from the special fund and which are in addition to amounts 10 already certified, the municipality shall certify the amount of 11 the additional obligations on or before December 1 of the year 12 such obligations were issued, and the filing of the certificate 13 shall make it a duty of the auditor to provide for the division 14 of taxes in each subsequent year without further certification, 15 except as provided in paragraphs “b” and “c” , until the amount 16 of the loans, advances, indebtedness, or bonds is paid to 17 the special fund. Any subsequent certifications under this 18 subsection shall not include amounts previously certified. 19 (2) A certification made under this paragraph “a” shall 20 include the date that the individual loans, advances, 21 indebtedness, or bonds were initially approved by the governing 22 body of the municipality. 23 b. If the amount certified in paragraph “a” is reduced by 24 payment from sources other than the division of taxes, by a 25 refunding or refinancing of the obligation which results in 26 lowered principal and interest on the amount of the obligation, 27 or for any other reason, the municipality on or before December 28 1 of the year the action was taken which resulted in the 29 reduction shall certify the amount of the reduction to the 30 county auditor. 31 c. In any year, the county auditor shall, upon receipt 32 of a certified request from a municipality filed on or 33 before December 1, increase the amount to be allocated under 34 subsection 1 in order to reduce the amount to be allocated 35 -9- LSB 5502XC (12) 84 md/sc 9/ 18

S.F. _____ in the following fiscal year to the special fund, to the 1 extent that the municipality does not request allocation to 2 the special fund of the full portion of taxes which could be 3 collected. Upon receipt of a certificate from a municipality, 4 the auditor shall mail a copy of the certificate to each 5 affected taxing district. 6 d. The county auditor shall, upon receipt of a certification 7 under this subsection, provide an electronic copy of the 8 certification to the department of management within thirty 9 days of receiving the certification. The department shall 10 make such certifications and information available on the 11 department’s searchable database internet site created under 12 section 8G.12. 13 7. 8. Tax collections within each taxing district may be 14 allocated to the entire taxing district including the taxes on 15 the valuations determined under subsection 1 and to the special 16 fund created under subsection 2 in the proportion of their 17 taxable valuations determined as provided in this section . 18 8. 9. a. For any fiscal year, a municipality may certify 19 to the county auditor for physical plant and equipment revenue 20 necessary for payment of principal and interest on bonds issued 21 prior to July 1, 2001, only if the municipality certified for 22 such revenue for the fiscal year beginning July 1, 2000. A 23 municipality shall not certify to the county auditor for a 24 school district more than the amount the municipality certified 25 for the fiscal year beginning July 1, 2000. If for any fiscal 26 year a municipality fails to certify to the county auditor 27 for a school district by July 1 the amount of physical plant 28 and equipment revenue necessary for payment of principal 29 and interest on such bonds, as provided in subsection 2 , 30 the school district is not required to pay over the revenue 31 to the municipality. The county auditor shall immediately 32 certify to the school district the amount of such levy that is 33 necessary to pay the principal and interest on bonds issued by 34 the municipality to finance an urban renewal project, which 35 -10- LSB 5502XC (12) 84 md/sc 10/ 18

S.F. _____ bonds were issued prior to July 1, 2001. Indebtedness incurred 1 to refund bonds issued prior to July 1, 2001, shall not be 2 included in the certification. Such school district shall pay 3 over the amount certified by November 1 and May 1 of the fiscal 4 year following certification to the school district. 5 b. If a school district and a municipality are unable to 6 agree on the amount of physical plant and equipment revenue 7 certified by the municipality for the fiscal year beginning 8 July 1, 2001, either party may request that the state appeal 9 board review and finally pass upon the amount that may 10 be certified. Such appeals must be presented in writing 11 to the state appeal board no later than July 31 following 12 certification. The burden shall be on the municipality to 13 prove that the physical plant and equipment levy revenue is 14 necessary to pay principal and interest on bonds issued prior 15 to July 1, 2001. A final decision must be issued by the state 16 appeal board no later than the following October 1. 17 10. For fiscal years beginning on or after July 1, 2013, 18 the foundation property tax imposed pursuant to section 257.3 19 shall, for the purposes of subsection 2, be collected against 20 all taxable property within the taxing district without 21 limitation and paid to the school district, except for such 22 foundation property taxes necessary for the payment of costs 23 and indebtedness, including loans, advances, and bonds that 24 qualify for payment from the special fund, incurred or issued 25 by the municipality before the effective date of this Act. 26 For the purpose of this subsection, the refinancing of costs 27 or indebtedness incurred or issued prior to the effective 28 date of this Act shall constitute a cost or indebtedness 29 incurred or issued before the effective date of this Act, 30 unless such refinancing results in an increase in debt service 31 that qualifies for payment from the special fund. For any 32 fiscal year beginning on or after July 1, 2013, a municipality 33 may certify to the county auditor for foundation property 34 tax revenue necessary for payment of costs and indebtedness, 35 -11- LSB 5502XC (12) 84 md/sc 11/ 18

S.F. _____ including all loans, advances, and bonds that qualify for 1 payment from the special fund, incurred or issued by the 2 municipality before the effective date of this Act. The amount 3 of the foundation property taxes necessary to pay such costs 4 and indebtedness shall be paid by the school district to the 5 municipality if the auditor certifies to the school district 6 by July 1 the amount of such levy that is necessary to pay such 7 costs and indebtedness. Such school district shall pay over 8 the amount certified by November 1 and May 1 of the fiscal 9 year following certification to the school district. If for 10 any fiscal year a municipality fails to certify to the county 11 auditor by July 1 the amount of foundation property tax revenue 12 necessary for payment of such costs and indebtedness, the 13 school district is not required to pay over the revenue to 14 the municipality. If a school district and a municipality 15 are unable to agree on the amount of revenue certified by 16 the municipality, either party may request that the state 17 appeal board review and finally pass upon the amount that 18 may be certified. Such appeals must be presented in writing 19 to the state appeal board no later than July 31 following 20 certification. The burden shall be on the municipality to 21 prove that the foundation property tax revenue is necessary 22 to pay such costs and indebtedness. A final decision must be 23 issued by the state appeal board no later than the following 24 October 1. 25 11. Except as authorized in section 403.22, subsection 4, 26 deposits into the special fund that are taxes resulting from a 27 division of revenue under this section shall only be expended 28 from the fund for purposes related to the urban renewal area 29 from which the deposits were collected. Deposits into the 30 special fund under subsection 2 that are taxes for the payment 31 of costs and indebtedness incurred or issued on or after the 32 effective date of this Act, including all loans, advances, and 33 bonds that qualify for payment from the special fund, shall 34 not be used for any of the following unless approved by the 35 -12- LSB 5502XC (12) 84 md/sc 12/ 18

S.F. _____ governing bodies of all affected taxing entities: 1 a. Public buildings, including but not limited to 2 public works facilities, police stations, fire stations, 3 administration buildings, swimming pools, libraries, hospitals, 4 recreational facilities, city halls, including the site 5 or grounds of, and the erection, equipment, remodeling, 6 or reconstruction of, and additions or extensions to, such 7 buildings or facilities. 8 b. Movable property or equipment. 9 c. Buildings or facilities leased or intended in the future 10 to be leased by a public body for any of the uses specified in 11 paragraph “a” . 12 d. The payment of any indebtedness or cost related to 13 paragraphs “a” , “b” , or “c” . 14 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 15 immediate importance, takes effect upon enactment. 16 EXPLANATION 17 This bill relates to Code chapter 403, Iowa’s urban renewal 18 law. 19 The bill strikes community colleges from the definition of 20 “affected taxing entity” under Code section 403.17. Under 21 current Code section 403.17, “affected taxing entity” means 22 a city, community college, county, or school district which 23 levied or certified for levy a property tax on any portion of 24 the taxable property located within the urban renewal area 25 in the fiscal year beginning prior to the calendar year in 26 which a proposed urban renewal plan is submitted to the local 27 governing body for approval. Under current Code chapter 403, 28 affected taxing entities are provided notice and consulted by 29 the municipality prior to the approval of an urban renewal 30 plan which provides for a division of revenue pursuant to Code 31 section 403.19. 32 Under new Code section 403.18A, each municipality having 33 an urban renewal area in existence on the effective date of 34 the bill that is subject in whole or in part to a division 35 -13- LSB 5502XC (12) 84 md/sc 13/ 18

S.F. _____ of revenue under Code section 403.19 that is not limited 1 in duration under either Code section 403.17(10) (20-year 2 limitation), or Code section 403.22(5) (10-year limitation), 3 shall for each such urban renewal area file a written election 4 with the county auditor not later than July 31, 2012, to impose 5 one of the following conditions on the urban renewal area: 6 (1) The urban renewal area including all applicable urban 7 renewal plans, projects, and ordinances providing for a 8 division of revenue shall terminate and be of no further force 9 and effect not later than June 30, 2027. The municipality 10 may for such urban renewal area continue to incur or issue 11 additional costs or indebtedness that qualify for payment 12 from the special fund on or after the effective date of the 13 bill. Any such additional costs or indebtedness payable from 14 the special fund shall, however, be limited to the amount of 15 taxes resulting from the imposition of the 15-year increment 16 limitation on divisions of revenue established in the bill. A 17 municipality under this option may, with the approval of the 18 governing bodies of all affected taxing entities prior to June 19 30, 2027, extend the date of termination for the urban renewal 20 area and all applicable urban renewal plans, projects, and 21 ordinances to a date not later than June 30, 2032. However, 22 all other limitations of this option apply to an urban renewal 23 area authorized for such an extension. 24 (2) The urban renewal area including all applicable urban 25 renewal plans, projects, and ordinances providing for a 26 division of revenue shall continue in effect, until such time 27 that the urban renewal area is dissolved by the municipality. 28 The municipality may continue to operate under Code chapter 403 29 and divide revenue under Code section 403.19 for the purpose of 30 paying costs and indebtedness that qualify for payment from the 31 special fund, incurred or issued before the effective date of 32 the bill. The municipality shall not, however, incur or issue 33 additional costs or indebtedness payable from the division 34 of revenue in the urban renewal area. The refinancing of 35 -14- LSB 5502XC (12) 84 md/sc 14/ 18

S.F. _____ indebtedness incurred prior to the effective date of the bill 1 does not constitute an additional cost or indebtedness, unless 2 such refinancing results in an increase in debt service payable 3 from the special fund. 4 The bill provides that failure to file an election with 5 the county auditor on or before July 31, 2012, shall have 6 the effect of imposing the June 30, 2027, termination option 7 on the urban renewal area, including the optional extension 8 if approved by the affected taxing entities. An election is 9 irrevocable once filed and the provisions of new Code section 10 403.18A supersede any powers of a municipality under Code 11 chapter 403 to the contrary. 12 The bill provides that, notwithstanding other provisions of 13 Code chapter 403 to the contrary, when calculating a division 14 of revenue (tax increment financing) for the payment of costs 15 and indebtedness incurred or issued on or after the effective 16 date of the bill, the difference between the base year and 17 the assessment year for which such property taxes are due 18 and payable shall not exceed 15 years. If such difference 19 exceeds 15 years, the base year shall be adjusted so that the 20 difference is 15 years. The amount of taxes calculated using 21 the adjusted base year is allocated to and when collected paid 22 into the fund for the respective taxing districts as taxes by 23 or for the taxing district, as is required under current law. 24 The bill provides that except for certain divisions of 25 revenue for public improvements related to housing and 26 residential development, ordinances providing for a division of 27 revenue that are adopted on or after the effective date of the 28 bill are limited to 15 years from the calendar year following 29 the calendar year in which the municipality first certifies 30 to the county auditor the amount of any loans, advances, 31 indebtedness, or bonds which qualify for payment from the 32 division of revenue. The bill further provides that the urban 33 renewal area, including all applicable urban renewal plans, 34 projects, and ordinances shall terminate and shall have no 35 -15- LSB 5502XC (12) 84 md/sc 15/ 18

S.F. _____ further force and effect following the 15-year period. Under 1 the bill, a municipality may, however, with the approval of 2 the governing bodies of all other affected taxing entities, as 3 amended in the bill, prior to the date of termination, extend 4 the division of revenue and any applicable urban renewal plan, 5 project, and ordinance for up to five years if such extension 6 is determined by the other affected taxing entities to be 7 necessary to sufficiently fund an urban renewal project within 8 the urban renewal area. 9 The bill does not modify the 20-year limitation applicable 10 to divisions of revenue for urban renewal areas based on a 11 finding that the area is an economic development area if the 12 urban renewal plan was adopted on or after January 1, 1995, 13 but before the effective date of the bill, and the ordinance 14 providing for the division of revenue was adopted prior to the 15 effective date of the bill. 16 Current Code section 403.19 requires a municipality to 17 certify to the county auditor on or before December 1 the 18 amount of loans, advances, indebtedness, or bonds which 19 qualify for payment from the municipality’s special fund, 20 for each urban renewal area in the municipality. The bill 21 requires the county auditor, upon receipt of the certification 22 from a municipality, to provide an electronic copy of the 23 certification to the department of management within 30 days of 24 receiving the certification. The bill requires the department 25 of management to make such certifications and information 26 available on the department’s searchable internet site created 27 under Code section 8G.12. 28 The bill excludes, for fiscal years beginning on or after 29 July 1, 2013, the school district foundation property tax 30 from the division of revenue under Code section 403.19 except 31 for such foundation property taxes necessary for the payment 32 of costs and indebtedness that qualify for payment from the 33 special fund, incurred or issued by the municipality before the 34 effective date of the bill. Under the bill, the refinancing of 35 -16- LSB 5502XC (12) 84 md/sc 16/ 18

S.F. _____ costs or indebtedness incurred or issued prior to the effective 1 date of the bill constitutes a cost or indebtedness incurred 2 or issued before the effective date of the bill, unless 3 such refinancing results in an increase in debt service that 4 qualifies for payment from the special fund. The bill requires 5 municipalities to certify to the county auditor for foundation 6 property tax revenue necessary for payment of costs and 7 indebtedness that qualify for payment from the special fund, 8 incurred or issued by the municipality before the effective 9 date of the bill. Such certification requirements are similar 10 to those under current Code section 403.19 for taxes collected 11 from the school district physical plant and equipment levy. 12 The bill provides that, except for specified expenses 13 related to low and moderate income housing, deposits into 14 the special fund that are taxes resulting from a division of 15 revenue shall only be expended from the fund for purposes 16 related to the urban renewal area from which the deposits were 17 collected. 18 The bill also specifies that taxes deposited into the 19 special fund under Code section 403.19 resulting from a 20 division of revenue for the payment of costs and indebtedness 21 incurred or issued on or after the effective date of the 22 bill that qualify for payment from the special fund shall 23 not, unless approved by the governing bodies of all affected 24 taxing entities, be used for movable property or equipment, 25 public buildings, including but not limited to public works 26 facilities, fire stations, police stations, administration 27 buildings, swimming pools, libraries, hospitals, recreational 28 facilities, city halls, including the site or grounds of, and 29 the erection, equipment, remodeling, or reconstruction of, 30 and additions or extensions to, the buildings or facilities, 31 or for the payment of indebtedness or expenses related to 32 such purposes. This limitation also applies to buildings or 33 facilities leased or intended to be leased by a public body for 34 any of these purposes. 35 -17- LSB 5502XC (12) 84 md/sc 17/ 18