House Study Bill 236 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act relating to Iowa’s urban renewal law by establishing 1 restrictions on the use of divided revenues, establishing 2 restrictions on the issuance of certain bonds and 3 indebtedness, and excluding school district property tax 4 levies from certain divisions of revenue, and including 5 effective date provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 2519YC (2) 85 md/sc

H.F. _____ Section 1. Section 403.5, subsection 2, paragraph b, 1 subparagraph (1), Code 2013, is amended to read as follows: 2 (1) Prior to its approval of an urban renewal plan which 3 provides for a division of revenue pursuant to section 403.19 , 4 the municipality shall mail the proposed plan by regular mail 5 to the affected taxing entities. The municipality shall 6 include with the proposed plan notification of a consultation 7 to be held between the municipality and affected taxing 8 entities prior to the public hearing on the urban renewal plan. 9 If For urban renewal plans and urban renewal projects approved 10 before the effective date of this Act, if the proposed urban 11 renewal plan or proposed urban renewal project within the urban 12 renewal area includes the use of taxes revenue resulting from a 13 division of revenue taxes under section 403.19 , subsection 2, 14 for a public building, including but not limited to a police 15 station, fire station, administration building, swimming 16 pool, hospital, library, recreational building, city hall, or 17 other public building that is exempt from taxation, including 18 the grounds of, and the erection, equipment, remodeling, or 19 reconstruction of, and additions or extensions to, such a 20 building, the municipality shall include with the proposed 21 plan notification an analysis of alternative development 22 options and funding for the urban renewal area or urban renewal 23 project and the reasons such options would be less feasible 24 than the proposed urban renewal plan or proposed urban renewal 25 project. A copy of the analysis required in this subparagraph 26 shall be included with the urban renewal report required under 27 section 331.403 or 384.22 , as applicable, and filed by December 28 1 following adoption of the urban renewal plan or project. 29 Urban renewal plans and urban renewal projects approved on or 30 after the effective date of this Act shall not include the use 31 of revenue resulting from a division of taxes under section 32 403.19, subsection 2, for a public building, including but 33 not limited to a police station, fire station, administration 34 building, swimming pool, hospital, library, recreational 35 -1- LSB 2519YC (2) 85 md/sc 1/ 8

H.F. _____ building, city hall, or other public building that is exempt 1 from taxation, including the grounds of, and the erection, 2 equipment, remodeling, or reconstruction of, and additions or 3 extensions to, such a building. 4 Sec. 2. Section 403.9, subsection 2, Code 2013, is amended 5 to read as follows: 6 2. a. Bonds issued under this section shall not constitute 7 an indebtedness within the meaning of any constitutional or 8 statutory debt limitation or restriction, and shall not be 9 subject to the provisions of any other law or charter relating 10 to the authorization, issuance or sale of bonds. Bonds issued 11 under the provisions of this chapter are declared to be issued 12 for an essential public and governmental purpose and, together 13 with interest thereon and income therefrom, shall be exempted 14 from all taxes. 15 b. A municipality shall not issue bonds or incur 16 indebtedness under this chapter or under another provision of 17 law that qualifies for payment as described in subsection 1, 18 except for refunding or refinancing of bonds or indebtedness 19 that does not result in an increase in the municipality’s total 20 outstanding indebtedness payable as described in subsection 21 1, if the municipality’s outstanding indebtedness payable 22 as described in subsection 1 exceeds an amount equal to the 23 population of the municipality’s area of operation, according 24 to the most recent federal decennial census, times eight 25 thousand dollars. 26 Sec. 3. Section 403.12, subsection 1, paragraph f, Code 27 2013, is amended to read as follows: 28 f. Cause Subject to the limitation in section 403.5, 29 subsection 2, paragraph “b” , subparagraph (1), cause public 30 buildings and public facilities, including parks, playgrounds, 31 and recreational, community, educational, water, sewer or 32 drainage facilities, or any other works which it is otherwise 33 empowered to undertake to be furnished; 34 Sec. 4. Section 403.19, subsections 2, 8, and 11, Code 2013, 35 -2- LSB 2519YC (2) 85 md/sc 2/ 8

H.F. _____ are amended to read as follows: 1 2. a. (1) That portion of the taxes each year in excess of 2 such amount shall be allocated to and when collected be paid 3 into a special fund of the municipality to pay the principal 4 of and interest on loans, moneys advanced to, or indebtedness, 5 whether funded, refunded, assumed, or otherwise, including 6 bonds issued under the authority of section 403.9, subsection 7 1 , incurred by the municipality to finance or refinance, in 8 whole or in part, an urban renewal project within the area, 9 and to provide assistance for low and moderate income family 10 housing as provided in section 403.22 . 11 (2) However For ordinances adopted before the effective 12 date of this Act providing for a division of revenue , except 13 as provided in paragraph “b” , taxes for the regular and 14 voter-approved physical plant and equipment levy of a school 15 district imposed pursuant to section 298.2 and taxes for the 16 instructional support program of a school district imposed 17 pursuant to section 257.19 , taxes for the payment of bonds 18 and interest of each taxing district, and taxes imposed under 19 section 346.27, subsection 22 , related to joint county-city 20 buildings shall be collected against all taxable property 21 within the taxing district without limitation by the provisions 22 of this subsection . 23 (3) For ordinances adopted on or after the effective date of 24 this Act providing for a division of revenue, taxes resulting 25 from a levy imposed by a school district, taxes for the payment 26 of bonds and interest of each taxing district, and taxes 27 imposed under section 346.27, subsection 22, related to joint 28 county-city buildings shall be collected against all taxable 29 property within the taxing district without limitation by the 30 provisions of this subsection. 31 b. (1) All For ordinances adopted before the effective 32 date of this Act providing for a division of revenue, all or 33 a portion of the taxes for the physical plant and equipment 34 levy shall be paid by the school district to the municipality 35 -3- LSB 2519YC (2) 85 md/sc 3/ 8

H.F. _____ if the auditor certifies to the school district by July 1 the 1 amount of such levy that is necessary to pay the principal and 2 interest on bonds issued by the municipality to finance an 3 urban renewal project, which bonds were issued before July 1, 4 2001. Indebtedness incurred to refund bonds issued prior to 5 July 1, 2001, shall not be included in the certification. Such 6 school district shall pay over the amount certified by November 7 1 and May 1 of the fiscal year following certification to the 8 school district. 9 (2) (a) All For ordinances adopted before the effective 10 date of this Act providing for a division of revenue, all or 11 a portion of the taxes for the instructional support program 12 levy of a school district shall be paid by the school district 13 to the municipality if the auditor, pursuant to subsection 14 11 , certifies to the school district by July 1 the amount 15 of such levy that is necessary to pay the principal and 16 interest on bonds issued or other indebtedness incurred by 17 the municipality to finance an urban renewal project if such 18 bonds or indebtedness were issued or incurred on or before 19 April 24, 2012. Such school district shall pay over the amount 20 certified by November 1 and May 1 of the fiscal year following 21 certification to the school district. 22 (b) In lieu of payment to a municipality under subparagraph 23 division (a), a school district may by resolution of the board 24 of directors of the school district approve at a regular 25 meeting of the board of directors the payment of all or a 26 portion of the instructional support program property tax 27 revenue excluded under paragraph “a” , to the municipality for 28 the payment of principal and interest on such bonds issued or 29 such other indebtedness incurred by the municipality before, 30 on, or after April 24, 2012. 31 c. Unless and until the total assessed valuation of the 32 taxable property in an urban renewal area exceeds the total 33 assessed value of the taxable property in such area as shown by 34 the last equalized assessment roll referred to in subsection 1 , 35 -4- LSB 2519YC (2) 85 md/sc 4/ 8

H.F. _____ all of the taxes levied and collected upon the taxable property 1 in the urban renewal area shall be paid into the funds for 2 the respective taxing districts as taxes by or for the taxing 3 districts in the same manner as all other property taxes. 4 When such loans, advances, indebtedness, and bonds, if any, 5 and interest thereon, have been paid, all moneys thereafter 6 received from taxes upon the taxable property in such urban 7 renewal area shall be paid into the funds for the respective 8 taxing districts in the same manner as taxes on all other 9 property. 10 d. In those instances where a school district has entered 11 into an agreement pursuant to section 279.64 for sharing of 12 school district taxes levied and collected from valuation 13 described in this subsection and released to the school 14 district, the school district shall transfer the taxes as 15 provided in the agreement. 16 8. For any fiscal year an ordinance adopted before the 17 effective date of this Act providing for a division of revenue , 18 a municipality may , for any fiscal year, certify to the county 19 auditor for physical plant and equipment revenue necessary 20 for payment of principal and interest on bonds issued prior 21 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 and 29 interest on such bonds, as provided in subsection 2 , the 30 school district is not required to pay over the revenue to the 31 municipality. If a school district and a municipality are 32 unable to agree on the amount of physical plant and equipment 33 revenue certified by the municipality for the fiscal year 34 beginning July 1, 2001, either party may request that the state 35 -5- LSB 2519YC (2) 85 md/sc 5/ 8

H.F. _____ appeal board review and finally pass upon the amount that 1 may be certified. Such appeals must be presented in writing 2 to the state appeal board no later than July 31 following 3 certification. The burden shall be on the municipality to 4 prove that the physical plant and equipment levy revenue is 5 necessary to pay principal and interest on bonds issued prior 6 to July 1, 2001. A final decision must be issued by the state 7 appeal board no later than the following October 1. 8 11. For any fiscal year an ordinance adopted before the 9 effective date of this Act providing for a division of revenue , 10 a municipality may , for any fiscal year, certify to the county 11 auditor for instructional support program property tax revenue 12 necessary for payment of principal and interest on bonds 13 issued or other indebtedness incurred for an urban renewal 14 project on or before April 24, 2012. If for any fiscal year 15 a municipality fails to certify to the county auditor by July 16 1 the amount of instructional support program property tax 17 revenue necessary for payment of principal and interest on 18 such bonds, as provided in subsection 2 , the school district 19 is not required to pay over the revenue to the municipality. 20 If a school district and a municipality are unable to agree 21 on the amount of instructional support program property 22 tax revenue certified by the municipality, either party may 23 request that the state appeal board review and finally pass 24 upon the amount that may be certified. Such appeals must be 25 presented in writing to the state appeal board no later than 26 July 31 following certification. The burden shall be on the 27 municipality to prove that the instructional support program 28 property tax revenue is necessary to pay principal and interest 29 on the applicable bonds. A final decision must be issued by 30 the state appeal board no later than the following October 1. 31 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 32 immediate importance, takes effect upon enactment. 33 EXPLANATION 34 This bill relates to Iowa’s urban renewal law. 35 -6- LSB 2519YC (2) 85 md/sc 6/ 8

H.F. _____ The bill provides that urban renewal plans and urban renewal 1 projects approved on or after the effective date of the bill, 2 shall not include the use of revenue resulting from a division 3 of taxes for a public building, including but not limited to a 4 police station, fire station, administration building, swimming 5 pool, hospital, library, recreational building, city hall, or 6 other public building that is exempt from taxation, including 7 the grounds of, and the erection, equipment, remodeling, or 8 reconstruction of, and additions or extensions to, such a 9 building. 10 The bill strikes provisions of Code section 403.9 relating 11 to whether the bonds issued under that Code section constitute 12 indebtedness for purposes of constitutional and statutory 13 debt limitations. The bill also provides that a municipality 14 shall not issue bonds or incur indebtedness under Code chapter 15 403 or under another provision of law that qualifies for 16 payment from a division of revenue, except for refunding or 17 refinancing of bonds or indebtedness that does not result in an 18 increase in the municipality’s total outstanding urban renewal 19 indebtedness, if the municipality’s outstanding urban renewal 20 indebtedness exceeds an amount equal to the population of the 21 municipality’s area of operation, according to the most recent 22 federal decennial census, times $8,000. 23 Current Code section 403.19, with specified exemptions, 24 provides that taxes for the regular and voter-approved physical 25 plant and equipment levy of a school district, taxes for the 26 instructional support program of a school district, taxes for 27 the payment of bonds and interest of each taxing district, 28 and taxes imposed under Code section 346.27, subsection 22, 29 related to joint county-city buildings, shall be excluded from 30 the division of revenue and are to be paid to the appropriate 31 taxing entities. The bill provides that for divisions of 32 revenue established on or after the effective date of the bill, 33 taxes resulting from a levy imposed by a school district, taxes 34 for the payment of bonds and interest of each taxing district, 35 -7- LSB 2519YC (2) 85 md/sc 7/ 8