Senate File 2003 - Introduced SENATE FILE 2003 BY ROZENBOOM A BILL FOR An Act relating to the operations and dissolution of rural 1 improvement zones and including effective date and 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5084XS (4) 85 md/sc

S.F. 2003 Section 1. Section 357H.1, subsection 1, Code 2014, 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 2014, 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 2014, is amended to read as 23 follows: 24 357H.7 Board of trustees —— power powers —— 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 5084XS (4) 85 md/sc 1/ 6

S.F. 2003 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 2014, 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 shall in good 28 faith limit the rural improvement zone’s reliance on 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 2014, is amended to read as 34 follows: 35 -2- LSB 5084XS (4) 85 md/sc 2/ 6

S.F. 2003 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. a. Each rural improvement zone established before the 7 effective date of this Act is dissolved on the date fifteen 8 years after the effective date of this Act. 9 b. Each rural improvement zone established on or after the 10 effective date of this Act is dissolved on the date ten years 11 after the effective date of this Act or on the date ten years 12 after the date that the resolution of the board establishing 13 the zone was adopted, whichever is later. 14 c. The date required under this subsection for dissolution 15 of a rural improvement zone may be extended by resolution of 16 the board adopted prior to dissolution of the zone to a date 17 not more than ten years after the date required for dissolution 18 under this subsection or a date not more than ten years after 19 the date to which the rural improvement zone was previously 20 extended by the board under this subsection. 21 3. Upon dissolution of the zone, all assets shall be deeded 22 to a nonprofit corporation whose members are property owners of 23 the improvement zone. If a zone is dissolved under subsection 24 2 and indebtedness of the zone remains unpaid on the date of 25 dissolution, such indebtedness shall be assumed by and become 26 an indebtedness of the nonprofit corporation to which the 27 zone’s assets are deeded. 28 4. Upon dissolution of the zone, the collection of the 29 property tax authorized under section 357H.8, subsection 4, and 30 the division of taxes authorized under section 357H.9 shall 31 cease immediately. 32 Sec. 6. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 33 immediate importance, takes effect upon enactment. 34 Sec. 7. APPLICABILITY. The following provision of this 35 -3- LSB 5084XS (4) 85 md/sc 3/ 6

S.F. 2003 Act applies to condemnation proceedings pending on or after 1 the effective date of this Act and to property acquisitions 2 commenced on or after the effective date of this Act: 3 1. The section of this Act amending section 357H.7. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 Current Code chapter 357H authorizes the board of 8 supervisors of a county with less than 20,000 residents 9 based upon the 2000 certified federal census to establish a 10 rural improvement zone in an area surrounding a private lake 11 development located in an unincorporated area of the county if 12 the board determines that the area is in need of improvements. 13 A rural improvement zone is governed by a board of trustees and 14 is authorized to enter into contracts and incur indebtedness 15 to provide funds for the costs of improvements, levy a standby 16 property tax upon taxable property within the zone, and divide 17 property tax revenue from the zone in the same manner as an 18 urban renewal area under Code chapter 403. 19 This bill provides that the board of supervisors may 20 designate an area to be a rural improvement zone if, in 21 addition to other considerations under current law, the board 22 determines that the use of incremental property taxes would 23 not have a substantial detrimental effect on other taxing 24 districts. The bill also provides that the decision of the 25 board to establish a rural improvement zone or to disallow the 26 petition shall be given deference by any reviewing court. 27 The bill prohibits a rural improvement zone from acquiring 28 real estate by condemnation and prohibits a governmental entity 29 with condemnation authority from exercising such authority on 30 behalf of a rural improvement zone or for a purpose related to 31 the activities of a rural improvement zone. 32 This provision of the bill applies to condemnation 33 proceedings pending on or after the effective date of the 34 bill and to property acquisitions commenced on or after the 35 -4- LSB 5084XS (4) 85 md/sc 4/ 6

S.F. 2003 effective date of the bill. 1 The bill requires each rural improvement zone board of 2 trustees to consider the use of other funding sources for 3 improvement projects prior to approving a resolution to provide 4 for the use of incremental property taxes. In addition, each 5 board of trustees shall in good faith limit the reliance on and 6 use of incremental property taxes. 7 Current Code section 357H.10 provides that a rural 8 improvement zone is dissolved upon the adoption of a resolution 9 of the board of trustees which specifies that all improvements 10 have been made in the zone and all indebtedness has been paid. 11 In addition, current law provides that upon dissolution all 12 assets of the rural improvement zone shall be deeded to a 13 nonprofit corporation whose members are property owners of the 14 improvement zone. 15 The bill provides that, in addition to the authority to 16 dissolve the rural improvement zone voluntarily, each rural 17 improvement zone established before the effective date of the 18 bill is dissolved on the date 15 years after the effective date 19 of the bill, and each rural improvement zone established on or 20 after the effective date of the bill is dissolved on the date 21 10 years after the date that the resolution of the board of 22 supervisors establishing the zone was adopted or on the date 23 10 years after the effective date of the bill, whichever is 24 later. However, the date required for dissolution of a rural 25 improvement zone may be extended by resolution of the board of 26 supervisors adopted prior to dissolution of the zone to a date 27 not more than 10 years after the date required for dissolution 28 under the bill or a date not more than 10 years after the date 29 to which the rural improvement zone was previously extended by 30 the board of supervisors under the bill. The bill provides 31 that if a rural improvement zone is dissolved by operation of 32 the bill and indebtedness of the zone remains unpaid on the 33 date of dissolution, such indebtedness shall be assumed by and 34 become an indebtedness of the nonprofit corporation to which 35 -5- LSB 5084XS (4) 85 md/sc 5/ 6

S.F. 2003 the zone’s assets are deeded. The bill also provides that the 1 collection of the property tax authorized under Code section 2 357H.8(4) and the division of taxes authorized under Code 3 section 357H.9 shall cease immediately upon dissolution of the 4 rural improvement zone. 5 The bill takes effect upon enactment. 6 -6- LSB 5084XS (4) 85 md/sc 6/ 6