H.F. 606 Section 1. Section 357H.1, subsection 1, Code 2013, is 1 amended to read as follows: 2 1. The board of supervisors of a county with less than 3 twenty thousand residents, not counting persons admitted or 4 committed to an institution enumerated in section 218.1 or 5 904.102 , based upon the 2000 certified federal census, and 6 with a private lake development shall may designate an area 7 surrounding the lake, if it is an unincorporated area of the 8 county, a rural improvement zone upon receipt of a petition 9 pursuant to section 357H.2 , and upon the board’s determination 10 that the area is in need of improvements and that the use of 11 incremental property taxes under section 357H.9 would not have 12 a substantial detrimental effect on other taxing districts . 13 Sec. 2. Section 357H.4, unnumbered paragraph 2, Code 2013, 14 is amended to read as follows: 15 Within ten days after the hearing, the board shall establish 16 the rural improvement zone by resolution or disallow the 17 petition. However, the zone shall not include any area which 18 is part of an urban renewal area under chapter 403 . The 19 decision of the board to establish a rural improvement zone 20 or to disallow the petition shall be given deference by any 21 reviewing court. 22 Sec. 3. Section 357H.7, Code 2013, is amended to read as 23 follows: 24 357H.7 Board of trustees —— power —— limitations . 25 The trustees of a rural improvement zone elected pursuant 26 to section 357H.6 shall constitute the board of trustees of 27 the zone and shall manage and control the affairs, property, 28 and facilities of the zone. The board of trustees shall elect 29 a president, a clerk, and a treasurer from its membership. 30 The trustees may authorize construction, reconstruction, 31 or repair of improvements following procedures set out in 32 section 331.341 . For these purposes, the trustees may purchase 33 material, employ personnel, acquire real estate and interests 34 in real estate except by condemnation , and perform all other 35 -1- LSB 2478HV (3) 85 md/sc 1/ 5

H.F. 606 acts necessary to properly maintain and operate the zone. 1 The trustees are allowed necessary expenses in the discharge 2 of their duties, but they shall not receive salaries. A 3 governmental entity with the authority to acquire property 4 by condemnation shall not exercise such authority on behalf 5 of a rural improvement zone or for a purpose related to the 6 activities of a rural improvement zone. 7 Sec. 4. Section 357H.9, subsection 1, Code 2013, is amended 8 to read as follows: 9 1. To minimize the use of divisions of revenue by rural 10 improvement zones, the board of trustees shall consider the 11 use of other funding sources for improvement projects prior to 12 approving a resolution to divide taxes under this section. The 13 board of trustees shall may provide by resolution that taxes 14 levied on the taxable property in a rural improvement zone each 15 year by or for the benefit of the state, city, county, school 16 district, or other taxing district after the effective date of 17 the resolution shall be divided as provided in section 403.19, 18 subsections 1 and 2 , in the same manner as if the taxable 19 property in the rural improvement zone was taxable property 20 in an urban renewal area and the resolution was an ordinance 21 within the meaning of those subsections. The taxes received by 22 the board of trustees shall be allocated to, and when collected 23 be paid into, a special fund and may be irrevocably pledged 24 by the trustees to pay the principal of and interest on the 25 certificates, contracts, or other obligations approved by the 26 board of trustees to finance or refinance, in whole or in part, 27 an improvement project. The board of trustees is encouraged 28 to limit the rural improvement zone’s reliance and use of 29 taxes received under this section. As used in this section , 30 “taxes” includes but is not limited to all levies on an ad 31 valorem basis upon land or real property located in the rural 32 improvement zone. 33 Sec. 5. Section 357H.10, Code 2013, is amended to read as 34 follows: 35 -2- LSB 2478HV (3) 85 md/sc 2/ 5

H.F. 606 357H.10 Dissolution of zone. 1 1. The Prior to the date required for dissolution under 2 subsection 2, the rural improvement zone shall may be dissolved 3 upon the adoption of a resolution of the board of trustees 4 which specifies that all improvements have been made in the 5 zone and all indebtedness has been paid. 6 2. Each rural improvement zone is dissolved on the date 7 seven years after the effective date of this Act or seven years 8 after the date that the resolution of the board establishing 9 the zone was adopted, whichever is later. The date required 10 under this subsection for dissolution of a rural improvement 11 zone may be extended by resolution of the board adopted prior 12 to dissolution of the zone to a date not more than seven years 13 after the date required for dissolution under this subsection 14 or a date not more than seven years after the date to which the 15 rural improvement zone was previously extended by the board 16 under this subsection. 17 3. Upon dissolution of the zone, all assets shall be deeded 18 to a nonprofit corporation whose members are property owners of 19 the improvement zone. If a zone is dissolved under subsection 20 2 and indebtedness of the zone remains unpaid on the date of 21 dissolution, such indebtedness shall be assumed by and become 22 an indebtedness of the nonprofit corporation to which the 23 zone’s assets are deeded. 24 4. Upon dissolution of the zone, the collection of the 25 property tax authorized under section 357H.8, subsection 4, and 26 the division of taxes authorized under section 357H.9 shall 27 cease immediately. 28 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 29 immediate importance, takes effect upon enactment. 30 EXPLANATION 31 Current Code chapter 357H authorizes the board of 32 supervisors of a county with less than 20,000 residents 33 based upon the 2000 certified federal census to establish a 34 rural improvement zone in an area surrounding a private lake 35 -3- LSB 2478HV (3) 85 md/sc 3/ 5

H.F. 606 development located in an unincorporated area of the county if 1 the board determines that the area is in need of improvements. 2 A rural improvement zone is governed by a board of trustees and 3 is authorized to enter into contracts and incur indebtedness 4 to provide funds for the costs of improvements, levy a standby 5 property tax upon taxable property within the zone, and divide 6 property tax revenue from the zone in the same manner as an 7 urban renewal area under Code chapter 403. 8 This bill provides that the board of supervisors may 9 designate an area to be a rural improvement zone if, in 10 addition to other considerations under current law, the board 11 determines that the use of incremental property taxes would 12 not have a substantial detrimental effect on other taxing 13 districts. The bill also provides that the decision of the 14 board to establish a rural improvement zone or to disallow the 15 petition shall be given deference by any reviewing court. 16 The bill prohibits a rural improvement zone from acquiring 17 real estate by condemnation and prohibits a governmental entity 18 with condemnation authority from exercising such authority on 19 behalf of a rural improvement zone or for a purpose related to 20 the activities of a rural improvement zone. 21 The bill requires each rural improvement zone board of 22 trustees to consider the use of other funding sources for 23 improvement projects prior to approving a resolution to provide 24 for the use of incremental property taxes. In addition, each 25 board of trustees is encouraged to limit the reliance on and 26 use of incremental property taxes. 27 Current Code section 357H.10 provides that a rural 28 improvement zone is dissolved upon the adoption of a resolution 29 of the board of trustees which specifies that all improvements 30 have been made in the zone and all indebtedness has been paid. 31 In addition, current law provides that upon dissolution all 32 assets of the rural improvement zone shall be deeded to a 33 nonprofit corporation whose members are property owners of the 34 improvement zone. 35 -4- LSB 2478HV (3) 85 md/sc 4/ 5

H.F. 606 The bill provides that, in addition to the authority to 1 dissolve the rural improvement zone voluntarily, each rural 2 improvement zone is dissolved on the date seven years after 3 the date that the resolution of the board of supervisors 4 establishing the zone was adopted or seven years after the 5 effective date of the bill, whichever is later. However, the 6 date required for dissolution of a rural improvement zone may 7 be extended by resolution of the board of supervisors adopted 8 prior to dissolution of the zone to a date not more than seven 9 years after the date required for dissolution under the bill 10 or a date not more than seven years after the date to which 11 the rural improvement zone was previously extended by the 12 board of supervisors under the bill. The bill provides that 13 if a rural improvement zone is dissolved by operation of the 14 bill and indebtedness of the zone remains unpaid on the date 15 of dissolution, such indebtedness shall be assumed by and 16 become an indebtedness of the nonprofit corporation to which 17 the zone’s assets are deeded. The bill also provides that the 18 collection of the property tax authorized under Code section 19 357H.8(4) and the division of taxes authorized under Code 20 section 357H.9 shall cease immediately upon dissolution of the 21 rural improvement zone. 22 The bill takes effect upon enactment. 23 -5- LSB 2478HV (3) 85 md/sc 5/ 5