House Study Bill 675 - 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, modifying the methodology for calculating the 4 amount of divided revenues, and including effective date 5 provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 6172YC (3) 85 md/sc

H.F. _____ Section 1. Section 403.5, subsection 2, paragraph b, 1 subparagraph (1), Code 2014, 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 6172YC (3) 85 md/sc 1/ 7

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 2014, 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 from the special fund created 18 in section 403.19, except for refunding or refinancing of 19 bonds or indebtedness that does not result in an increase in 20 the municipality’s total outstanding indebtedness payable from 21 the special fund created in section 403.19, if the sum of 22 the municipality’s outstanding indebtedness payable from the 23 special fund created in section 403.19 plus any outstanding 24 indebtedness of the municipality that is subject to the debt 25 limitation of Article XI, section 3, of the Constitution of the 26 State of Iowa and that does not qualify for payment from the 27 special fund created in section 403.19 exceeds an amount equal 28 to five percent of the value of the taxable property within the 29 municipality. 30 Sec. 3. Section 403.12, subsection 1, paragraph f, Code 31 2014, is amended to read as follows: 32 f. Cause Subject to the limitation in section 403.5, 33 subsection 2, paragraph “b” , subparagraph (1), cause public 34 buildings and public facilities, including parks, playgrounds, 35 -2- LSB 6172YC (3) 85 md/sc 2/ 7

H.F. _____ and recreational, community, educational, water, sewer or 1 drainage facilities, or any other works which it is otherwise 2 empowered to undertake to be furnished; 3 Sec. 4. NEW SECTION . 403.18A Urban renewal area and 4 division of revenue limitations. 5 1. Each municipality having an urban renewal area in 6 existence on the effective date of this Act that is subject 7 to a division of revenue under section 403.19 that is not 8 limited in duration under either section 403.17, subsection 9 10, or section 403.22, subsection 5, shall be subject to the 10 limitation in subsection 2. 11 2. a. For each such urban renewal area described in 12 subsection 1, the urban renewal area, including all applicable 13 urban renewal plans, projects, and ordinances providing 14 for a division of revenue, shall continue in effect under 15 this chapter, until such time that the urban renewal area 16 is dissolved by the municipality or until the urban renewal 17 area terminates under the conditions of paragraph “b” . The 18 municipality may continue to incur or issue additional costs 19 or indebtedness for such urban renewal area, including loans, 20 advances, and bonds, that qualify for payment from the special 21 fund created in section 403.19 on or after the effective date 22 of this Act and until dissolution or termination of the urban 23 renewal area. 24 b. Notwithstanding any provision of this chapter to the 25 contrary, for fiscal years beginning on or after July 1, 2015, 26 when calculating a division of revenue for an urban renewal 27 area described in subsection 1, and for which the difference 28 between the year of the assessment roll as of January 1 used to 29 calculate the amount of taxes allocated to and when collected 30 paid into the funds for the respective taxing districts under 31 section 403.19, subsection 1, and the year of the assessment 32 roll used to calculate the total amount of property taxes under 33 section 403.19 for the fiscal year in which the taxes are 34 due and payable, first exceeds twenty years, the year of the 35 -3- LSB 6172YC (3) 85 md/sc 3/ 7

H.F. _____ assessment roll as of January 1 that is otherwise required to 1 be used under section 403.19, subsection 1, shall be adjusted 2 by increasing the year of the assessment roll by two assessment 3 years. The year of the assessment roll used shall be further 4 increased in each subsequent fiscal year by two assessment 5 years until the assessment roll as of January 1 used to 6 calculate the amount of taxes allocated to and when collected 7 paid into the funds for the respective taxing districts under 8 section 403.19, subsection 1, is later in time than the year 9 of the assessment roll used to calculate the total amount of 10 property taxes under section 403.19 for the fiscal year in 11 which the taxes are due and payable, at which time the urban 12 renewal area, including all applicable urban renewal plans, 13 projects, and ordinances providing for a division of revenue, 14 shall terminate and be of no further force and effect. 15 3. The department of management shall adopt rules necessary 16 to implement and administer this section. 17 Sec. 5. Section 403.19, Code 2014, is amended by adding the 18 following new subsection: 19 NEW SUBSECTION . 3A. Except as provided in section 403.22, 20 an ordinance providing for a division of revenue under this 21 section that is adopted on or after the effective date of 22 this Act shall be limited to twenty years from the calendar 23 year following the calendar year in which the municipality 24 first certifies to the county auditor the amount of any loans, 25 advances, indebtedness, or bonds that qualify for payment from 26 the division of revenue provided in section 403.19. The urban 27 renewal area, including all applicable urban renewal plans, 28 projects, and ordinances, shall terminate and be of no further 29 force and effect following the twenty-year period provided in 30 this subsection. 31 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 32 immediate importance, takes effect upon enactment. 33 EXPLANATION 34 The inclusion of this explanation does not constitute agreement with 35 -4- LSB 6172YC (3) 85 md/sc 4/ 7

H.F. _____ the explanation’s substance by the members of the general assembly. 1 This bill relates to Iowa’s urban renewal law. 2 The bill provides that urban renewal plans and urban renewal 3 projects approved on or after the effective date of the bill 4 shall not include the use of revenue resulting from a division 5 of taxes for a public building, including but not limited to a 6 police station, fire station, administration building, swimming 7 pool, hospital, library, recreational building, city hall, or 8 other public building that is exempt from taxation, including 9 the grounds of, and the erection, equipment, remodeling, or 10 reconstruction of, and additions or extensions to, such a 11 building. 12 The bill strikes provisions of Code section 403.9 relating 13 to whether the bonds issued under that Code section constitute 14 indebtedness for purposes of constitutional and statutory debt 15 limitations. The bill also provides that a municipality shall 16 not issue bonds or incur indebtedness under Code chapter 403 17 or under another provision of law that qualifies for payment 18 from the municipality’s special fund created under Code section 19 403.19, with some exceptions, if the sum of the municipality’s 20 outstanding urban renewal indebtedness plus any outstanding 21 indebtedness of the municipality that is subject to the debt 22 limitation in Article XI, section 3, of the Iowa Constitution 23 and not payable from the municipality’s special fund exceeds an 24 amount equal to 5 percent of the value of the taxable property 25 within the municipality. 26 New Code section 403.18A provides that each municipality 27 having an urban renewal area in existence on the effective 28 date of the bill that is subject to a division of revenue that 29 is not limited in duration under either Code section 403.17, 30 subsection 10 (20 years) or Code section 403.22, subsection 31 5 (10 years) shall be subject to the limitation provided for 32 in the bill. Under the bill, when calculating a division 33 of revenue for such an urban renewal area, and for which 34 the difference between the year of the assessment roll as of 35 -5- LSB 6172YC (3) 85 md/sc 5/ 7

H.F. _____ January 1 used to calculate the amount of taxes allocated to 1 and when collected paid into the funds for the respective 2 taxing districts under Code section 403.19, subsection 1, 3 and the year of the assessment roll used to calculate the 4 total amount of property taxes under Code section 403.19 5 for the fiscal year in which the taxes are due and payable, 6 first exceeds 20 years, the year of the assessment roll as of 7 January 1 that is otherwise required under Code section 403.19, 8 subsection 1, shall be adjusted by increasing the year of the 9 assessment roll by two assessment years. Under the bill, the 10 year of the assessment roll used shall be further increased in 11 each subsequent fiscal year by two assessment years until the 12 assessment roll as of January 1 used to calculate the amount 13 of taxes allocated to and when collected paid into the funds 14 for the respective taxing districts under Code section 403.19, 15 subsection 1, is later in time than the year of the assessment 16 roll used to calculate the total amount of property taxes under 17 Code section 403.19 for the fiscal year in which the taxes are 18 due and payable, at which time the urban renewal area including 19 all applicable urban renewal plans, projects, and ordinances 20 providing for a division of revenue shall terminate and be of 21 no further force and effect. 22 The bill provides that except for certain divisions of 23 revenue authorized for certain housing and residential 24 development under Code section 403.22, an ordinance providing 25 for a division of revenue under Code section 403.19 that is 26 adopted on or after the effective date of the bill shall be 27 limited to 20 years from the calendar year following the 28 calendar year in which the municipality first certifies to the 29 county auditor the amount of any loans, advances, indebtedness, 30 or bonds which qualify for payment from the division of revenue 31 provided in Code section 403.19. Under the bill, the urban 32 renewal area, including all applicable urban renewal plans, 33 projects, and ordinances shall terminate and be of no further 34 force and effect following the 20-year period provided in the 35 -6- LSB 6172YC (3) 85 md/sc 6/ 7