S.F. _____ Section 1. Section 433.4, Code 2013, is amended to read as 1 follows: 2 433.4 Assessment. 3 1. The director of revenue shall on or before October 31 4 each year, proceed to find the actual value of the property 5 of these companies in this state used by the companies in the 6 transaction of telegraph and telephone business , taking into 7 consideration the information obtained from the statements 8 required, and any further information the director can obtain, 9 using the same as a means for determining the actual cash value 10 of the property of these companies within this state. The 11 director shall also take into consideration the valuation of 12 all property of these companies, including franchises and the 13 use of the property in connection with lines outside the state, 14 and making these deductions as may be necessary on account of 15 extra value of property outside the state as compared with 16 the value of property in the state, in order that the actual 17 cash value of the property of the company within this state 18 may be ascertained. The assessment shall include all property 19 of every kind and character whatsoever, real, personal, or 20 mixed, used by the companies in the transaction of telegraph 21 and telephone business; and the The property so included in 22 the assessment shall not be taxed in any other manner than as 23 provided in this chapter . 24 2. a. Except as provided in paragraph “c ”, for assessment 25 years beginning on or after January 1, 2014, a company’s 26 property, excluding the property identified in paragraph “b” 27 as exempt from taxation, shall be subject to assessment and 28 taxation under this chapter by the director of revenue in 29 the same manner as property assessed and taxed as commercial 30 property under chapters 427, 427A, 427B, 428, and 441. 31 b. All of the following is exempt from taxation and shall 32 not be assessed for taxation under this chapter: 33 (1) Central office equipment. 34 (2) Qualified telephone company property. However, 35 -1- LSB 2277XC (2) 85 md/sc 1/ 9

S.F. _____ qualified telephone company property shall be valued and 1 included in the company’s assessment for the assessment years, 2 and to the extent specified, in paragraph “c” . 3 c. For assessment years beginning on or after January 1, 4 2014, the director of revenue shall include as part of the 5 actual value determined under paragraph “a” for the applicable 6 assessment year, the following: 7 (1) For the assessment year beginning January 1, 2014, an 8 amount equal to the actual value of the company’s qualified 9 telephone company property that exceeds four million dollars. 10 (2) For the assessment year beginning January 1, 2015, an 11 amount equal to the actual value of the company’s qualified 12 telephone company property that exceeds eight million dollars. 13 (3) For the assessment year beginning January 1, 2016, an 14 amount equal to the actual value of the company’s qualified 15 telephone company property that exceeds twelve million dollars. 16 (4) For the assessment year beginning January 1, 2017, an 17 amount equal to the actual value of the company’s qualified 18 telephone company property that exceeds sixteen million 19 dollars. 20 (5) For the assessment year beginning January 1, 2018, and 21 each assessment year thereafter, an amount equal to the actual 22 value of the company’s qualified telephone company property 23 that exceeds twenty million dollars. 24 Sec. 2. Section 433.12, Code 2013, is amended by adding the 25 following new subsections: 26 NEW SUBSECTION . 1A. As used in this chapter, “central 27 office equipment” means motor vehicles, aircraft, tools and 28 other work equipment, furniture, office equipment, general 29 purpose computers, central office switching equipment, 30 nondigital switching equipment, digital electronic switching 31 equipment, operator systems, central office transmission 32 equipment, radio systems, circuit equipment, information 33 origination and termination equipment, station apparatus, 34 customer premises wiring, large private branch exchanges, 35 -2- LSB 2277XC (2) 85 md/sc 2/ 9

S.F. _____ public telephone terminal equipment, and other terminal 1 equipment, within the meaning of the telecommunications 2 companies account provisions of 47 C.F.R. pt. 32, in effect on 3 the effective date of this Act. 4 NEW SUBSECTION . 3. As used in this chapter, “qualified 5 telephone company property” means poles, aerial cable, 6 underground cable, buried cable, submarine and deep sea cable, 7 intrabuilding network cable, aerial wire, and conduit systems 8 within the meaning of the telecommunications companies account 9 provisions of 47 C.F.R. pt. 32, in effect on the effective date 10 of this Act. 11 Sec. 3. Section 441.21, subsection 5, Code 2013, is amended 12 to read as follows: 13 5. For valuations established as of January 1, 1979, 14 commercial property and industrial property, excluding 15 properties referred to in section 427A.1, subsection 8 , shall 16 be assessed as a percentage of the actual value of each class 17 of property. The percentage shall be determined for each 18 class of property by the director of revenue for the state in 19 accordance with the provisions of this section . For valuations 20 established as of January 1, 1979, the percentage shall be 21 the quotient of the dividend and divisor as defined in this 22 section . The dividend for each class of property shall be the 23 total actual valuation for each class of property established 24 for 1978, plus six percent of the amount so determined. The 25 divisor for each class of property shall be the valuation 26 for each class of property established for 1978, as reported 27 by the assessors on the abstracts of assessment for 1978, 28 plus the amount of value added to the total actual value by 29 the revaluation of existing properties in 1979 as equalized 30 by the director of revenue pursuant to section 441.49 . For 31 valuations established as of January 1, 1979, property valued 32 by the department of revenue pursuant to chapters 428 , 433 , 33 437 , and 438 shall be considered as one class of property and 34 shall be assessed as a percentage of its actual value. The 35 -3- LSB 2277XC (2) 85 md/sc 3/ 9

S.F. _____ percentage shall be determined by the director of revenue in 1 accordance with the provisions of this section . For valuations 2 established as of January 1, 1979, the percentage shall be 3 the quotient of the dividend and divisor as defined in this 4 section . The dividend shall be the total actual valuation 5 established for 1978 by the department of revenue, plus ten 6 percent of the amount so determined. The divisor for property 7 valued by the department of revenue pursuant to chapters 428 , 8 433 , 437 , and 438 shall be the valuation established for 1978, 9 plus the amount of value added to the total actual value by 10 the revaluation of the property by the department of revenue 11 as of January 1, 1979. For valuations established as of 12 January 1, 1980, commercial property and industrial property, 13 excluding properties referred to in section 427A.1, subsection 14 8 , shall be assessed at a percentage of the actual value of 15 each class of property. The percentage shall be determined 16 for each class of property by the director of revenue for the 17 state in accordance with the provisions of this section . For 18 valuations established as of January 1, 1980, the percentage 19 shall be the quotient of the dividend and divisor as defined in 20 this section . The dividend for each class of property shall 21 be the dividend as determined for each class of property for 22 valuations established as of January 1, 1979, adjusted by the 23 product obtained by multiplying the percentage determined 24 for that year by the amount of any additions or deletions to 25 actual value, excluding those resulting from the revaluation 26 of existing properties, as reported by the assessors on the 27 abstracts of assessment for 1979, plus four percent of the 28 amount so determined. The divisor for each class of property 29 shall be the total actual value of all such property in 1979, 30 as equalized by the director of revenue pursuant to section 31 441.49 , plus the amount of value added to the total actual 32 value by the revaluation of existing properties in 1980. The 33 director shall utilize information reported on the abstracts of 34 assessment submitted pursuant to section 441.45 in determining 35 -4- LSB 2277XC (2) 85 md/sc 4/ 9

S.F. _____ such percentage. For valuations established as of January 1, 1 1980, property valued by the department of revenue pursuant 2 to chapters 428 , 433 , 437 , and 438 shall be assessed at a 3 percentage of its actual value. The percentage shall be 4 determined by the director of revenue in accordance with the 5 provisions of this section . For valuations established as of 6 January 1, 1980, the percentage shall be the quotient of the 7 dividend and divisor as defined in this section . The dividend 8 shall be the total actual valuation established for 1979 by 9 the department of revenue, plus eight percent of the amount so 10 determined. The divisor for property valued by the department 11 of revenue pursuant to chapters 428 , 433 , 437 , and 438 shall be 12 the valuation established for 1979, plus the amount of value 13 added to the total actual value by the revaluation of the 14 property by the department of revenue as of January 1, 1980. 15 For valuations established as of January 1, 1981, and each 16 year thereafter, the percentage of actual value as equalized 17 by the director of revenue as provided in section 441.49 at 18 which commercial property and industrial property, excluding 19 properties referred to in section 427A.1, subsection 8 , shall 20 be assessed shall be calculated in accordance with the methods 21 provided herein, except that any references to six percent 22 in this subsection shall be four percent. For valuations 23 established as of January 1, 1981, and each year thereafter, 24 the percentage of actual value at which property valued by the 25 department of revenue pursuant to chapters 428 , 433 , 437 , and 26 438 shall be assessed shall be calculated in accordance with 27 the methods provided herein, except that any references to 28 ten percent in this subsection shall be eight percent. For 29 assessment years beginning on or after January 1, 2014, the 30 percentage of actual value at which property valued by the 31 department of revenue pursuant to chapters 428, 433, 437, 32 and 438 shall be assessed shall be calculated using property 33 valuations for the applicable assessment years that include 34 the total value of property exempt from taxation under section 35 -5- LSB 2277XC (2) 85 md/sc 5/ 9

S.F. _____ 433.4, subsection 2, paragraph “b” , notwithstanding section 1 433.4, subsection 2, paragraph “c” . Beginning with valuations 2 established as of January 1, 1979, and each year thereafter, 3 property valued by the department of revenue pursuant to 4 chapter 434 shall also be assessed at a percentage of its 5 actual value which percentage shall be equal to the percentage 6 determined by the director of revenue for commercial property, 7 industrial property, or property valued by the department of 8 revenue pursuant to chapters 428 , 433 , 437 , and 438 , whichever 9 is lowest. 10 Sec. 4. Section 476.1D, subsection 10, Code 2013, is amended 11 by striking the subsection. 12 Sec. 5. PROPERTY TAXATION OF TELECOMMUNICATIONS COMPANIES 13 —— REPORT. The department of revenue, in consultation 14 with the department of management, representatives of the 15 telecommunications industry, and other interested stakeholders, 16 shall study the current system of assessing telecommunications 17 property and levying property tax against telecommunications 18 companies and make recommendations for changes. The 19 department of revenue shall prepare and file a report detailing 20 recommendations for changes to the current system of assessing 21 telecommunications property and levying property tax against 22 telecommunications companies. The report shall be filed by the 23 department of revenue with the chairpersons and ranking members 24 of the ways and means committees of the senate and the house 25 of representatives and with the legislative services agency by 26 January 13, 2014. 27 Sec. 6. SAVINGS PROVISION. This Act, pursuant to section 28 4.13, does not affect the operation of, or prohibit the 29 application of, prior provisions of chapter 433, or rules 30 adopted under chapter 17A to administer prior provisions of 31 chapter 433, for assessment years beginning before January 1, 32 2014, and for duties, powers, protests, appeals, proceedings, 33 actions, or remedies attributable to an assessment year 34 beginning before January 1, 2014. 35 -6- LSB 2277XC (2) 85 md/sc 6/ 9

S.F. _____ Sec. 7. IMPLEMENTATION. Section 25B.7 shall not apply to 1 this Act. 2 Sec. 8. EFFECTIVE DATE. 3 1. Except as provided in subsection 2, this Act takes effect 4 July 1, 2013. 5 2. The section of this Act amending section 476.1D takes 6 effect July 1, 2017. 7 Sec. 9. APPLICABILITY. 8 1. Except as provided in subsection 2, this Act applies to 9 assessment years beginning on or after January 1, 2014. 10 2. The section of this Act amending section 476.1D applies 11 to assessment years beginning on or after January 1, 2018. 12 EXPLANATION 13 This bill relates to the manner in which the property of 14 telecommunications companies is assessed and taxed. 15 The assessment provisions of current Code section 16 433.4 provide that in ascertaining the actual value of 17 telecommunications company property the director of revenue 18 shall include all property of every kind and character 19 whatsoever, real, personal, or mixed, used by the company in 20 the transaction of telegraph and telephone business. 21 The bill strikes the provisions that included all kinds and 22 character of property in the determination of actual value 23 of a company’s property. Instead, the bill provides that 24 for assessment years beginning on or after January 1, 2014, 25 a company’s property, excluding central office equipment and 26 qualified telephone company property, both as defined in the 27 bill, shall be subject to assessment and taxation under Code 28 chapter 433 by the director of revenue in the same manner as 29 property assessed and taxed as commercial property. The bill 30 provides, however, that for assessment years beginning on or 31 after January 1, 2014, the director of revenue shall include as 32 part of the actual value so determined for that assessment year 33 a specified amount of actual value of the company’s qualified 34 telephone company property. 35 -7- LSB 2277XC (2) 85 md/sc 7/ 9

S.F. _____ The bill also modifies the provision relating to the 1 calculation of the assessment limitation for property valued by 2 the department of revenue pursuant to Code chapters 428, 433, 3 437, and 438 by specifying that for assessment years beginning 4 on or after January 1, 2014, such assessment limitation shall 5 be calculated using property valuations for the applicable 6 assessment years that include the total value of specified 7 telecommunications company property exempted from taxation 8 under new Code section 433.4(2)(b). 9 The bill strikes a provision in Code section 476.1D that 10 allowed certain specified long-distance telephone company 11 property to be assessed for taxation as commercial property by 12 the local assessor. 13 The bill establishes a study to be facilitated by the 14 department of revenue, in consultation with applicable 15 stakeholders, regarding property tax on telecommunications 16 companies. The department of revenue will study the current 17 system of assessing property and levying property tax 18 for telecommunications companies. A report detailing any 19 recommended changes will be filed with the chairperson and 20 ranking members of the ways and means committees of the senate 21 and the house of representatives and with the legislative 22 services agency by January 13, 2014. 23 The bill provides that the provisions in Code section 25B.7, 24 relating to the obligation of the state to reimburse local 25 jurisdictions for property tax credits and exemptions, do not 26 apply to the exemption in the bill. 27 Except for the section of the bill amending Code section 28 476.1D, the bill takes effect July 1, 2013, and applies to 29 assessment years beginning on or after January 1, 2014. The 30 section of the bill amending Code section 476.1D takes effect 31 July 1, 2017, and applies to assessment years beginning on or 32 after January 1, 2018. 33 The bill, pursuant to Code section 4.13, does not affect the 34 application of Code chapter 433 to assessment years beginning 35 -8- LSB 2277XC (2) 85 md/sc 8/ 9