House File 2466 - Introduced HOUSE FILE 2466 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 687) A BILL FOR An Act relating to the assessment of certain housing rented or 1 leased to low-income individuals and families and including 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6206HV (1) 85 md/sc

H.F. 2466 Section 1. Section 426C.4, subsection 1, paragraph b, 1 subparagraph (1), Code 2014, is amended to read as follows: 2 (1) Property that is rented or leased to low-income 3 individuals and families as authorized by section 42 of the 4 Internal Revenue Code, as amended , and that is subject to 5 assessment procedures relating to section 42 property under 6 section 441.21, subsection 2 , for the applicable assessment 7 year . 8 Sec. 2. Section 441.21, subsection 2, Code 2014, is amended 9 to read as follows: 10 2. In the event market value of the property being assessed 11 cannot be readily established in the foregoing manner, then 12 the assessor may determine the value of the property using 13 the other uniform and recognized appraisal methods including 14 its productive and earning capacity, if any, industrial 15 conditions, its cost, physical and functional depreciation 16 and obsolescence and replacement cost, and all other factors 17 which would assist in determining the fair and reasonable 18 market value of the property but the actual value shall not 19 be determined by use of only one such factor. The following 20 shall not be taken into consideration: Special value or use 21 value of the property to its present owner, and the goodwill or 22 value of a business which uses the property as distinguished 23 from the value of the property as property. However, in 24 assessing property that is rented or leased to low-income 25 individuals and families as authorized by section 42 of the 26 Internal Revenue Code, as amended, and which section limits 27 the amount that the individual or family pays for the rental 28 or lease of units in the property, the assessor shall , unless 29 the owner elects to withdraw the property from the assessment 30 procedures for section 42 property, use the productive and 31 earning capacity from the actual rents received as a method of 32 appraisal and shall take into account the extent to which that 33 use and limitation reduces the market value of the property. 34 The assessor shall not consider any tax credit equity or other 35 -1- LSB 6206HV (1) 85 md/sc 1/ 3

H.F. 2466 subsidized financing as income provided to the property in 1 determining the assessed value. The property owner shall 2 notify the assessor when property is withdrawn from section 42 3 eligibility under the Internal Revenue Code or if the owner 4 elects to withdraw the property from the assessment procedures 5 for section 42 property under this subsection . The property 6 shall not be subject to section 42 assessment procedures 7 for the assessment year for which section 42 eligibility is 8 withdrawn or an election is made . This notification must 9 be provided to the assessor no later than March 1 of the 10 assessment year or the owner will be subject to a penalty of 11 five hundred dollars for that assessment year. The penalty 12 shall be collected at the same time and in the same manner 13 as regular property taxes. An election to withdraw from the 14 assessment procedures for section 42 property is irrevocable 15 for as long as the property is owned by the owner who made the 16 election. Upon adoption of uniform rules by the department 17 of revenue or succeeding authority covering assessments and 18 valuations of such properties, the valuation on such properties 19 shall be determined in accordance with such rules and in 20 accordance with forms and guidelines contained in the real 21 property appraisal manual prepared by the department as updated 22 from time to time for assessment purposes to assure uniformity, 23 but such rules, forms, and guidelines shall not be inconsistent 24 with or change the foregoing means of determining the actual, 25 market, taxable and assessed values. 26 Sec. 3. APPLICABILITY. This Act applies to assessment years 27 beginning on or after January 1, 2015. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanation’s substance by the members of the general assembly. 31 Current Code section 441.21(2) provides that in assessing 32 property that is rented or leased to low-income individuals 33 and families as authorized by section 42 of the Internal 34 Revenue Code, the assessor shall use the productive and 35 -2- LSB 6206HV (1) 85 md/sc 2/ 3

H.F. 2466 earning capacity from the actual rents received as a method of 1 appraisal and shall take into account the extent to which that 2 use and limitation reduces the market value of the property. 3 Code section 441.21 also provides that the assessor shall not 4 consider any tax credit equity or other subsidized financing 5 as income provided to the property in determining the assessed 6 value. Under current law, such property is no longer subject 7 to the section 42 assessment procedures when the property is no 8 longer eligible under section 42 of the Internal Revenue Code 9 and notice is provided to the assessor. 10 This bill allows a section 42 property owner to elect to 11 withdraw the eligible property from the section 42 assessment 12 procedures by filing a notice with the assessor no later than 13 March 1 of the assessment year. An election to withdraw 14 from the assessment procedures for section 42 property is 15 irrevocable for as long as the property is owned by the owner 16 who made the election. 17 The bill applies to property tax assessment years beginning 18 on or after January 1, 2015. 19 -3- LSB 6206HV (1) 85 md/sc 3/ 3