H.F. 208 Section 1. Section 386.1, Code 2015, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 4A. “Neighborhood” means an area zoned, in 3 whole or at least in part, for residential use that may include 4 an area zoned for commercial or industrial use. 5 Sec. 2. Section 386.3, subsection 1, paragraph a, Code 2015, 6 is amended to read as follows: 7 a. Be comprised of contiguous property wholly located 8 within the boundaries of the city . A self-supported municipal 9 improvement district shall be comprised only of property in 10 districts which are and one of the following: 11 (1) An area zoned for commercial or industrial uses and 12 properties within a use. 13 (2) A duly designated historic district. 14 (3) A neighborhood. 15 Sec. 3. Section 386.3, subsection 4, Code 2015, is amended 16 to read as follows: 17 4. Upon the receipt of the commission’s final report the 18 council shall set a time and place for a meeting at which the 19 council proposes to take action for the establishment of the 20 district, and shall publish notice of the meeting as provided 21 in section 362.3 , and the clerk shall send a copy of the notice 22 by certified first class mail not less than fifteen days before 23 the meeting to each owner of property within the proposed 24 district at the owner’s address as shown by the records of 25 the county auditor. If a property is shown to be in the name 26 of more than one owner at the same mailing address, a single 27 notice may be mailed addressed to all owners at that address. 28 Failure to receive a mailed notice is not grounds for objection 29 to the council’s taking any action authorized in this chapter . 30 Sec. 4. Section 386.8, Code 2015, is amended to read as 31 follows: 32 386.8 Operation tax. 33 A city may establish a self-supported improvement district 34 operation fund, and may certify taxes not to exceed the 35 -1- LSB 2168YH (3) 86 md/rj 1/ 5

H.F. 208 rate limitation as established in the ordinance creating the 1 district, or any amendment thereto, each year to be levied 2 for the fund against all of the property in the district, 3 for the purpose of paying the administrative expenses of 4 the district, which may include but are not limited to 5 administrative personnel salaries, a separate administrative 6 office, planning costs including consultation fees, engineering 7 fees, architectural fees, and legal fees and all other expenses 8 reasonably associated with the administration of the district 9 and the fulfilling of the purposes of the district. The taxes 10 levied for this fund may also be used for the purpose of paying 11 maintenance expenses of improvements or self-liquidating 12 improvements for a specified length of time with one or more 13 options to renew if such is clearly stated in the petition 14 which requests the council to authorize construction of the 15 improvement or self-liquidating improvement, whether or not 16 such petition is combined with the petition requesting creation 17 of a district. Parcels Except for residential property within 18 a duly designated historic district, parcels of property which 19 are assessed as residential property for property tax purposes 20 and are located within a district created prior to July 1, 21 2015, are exempt from the tax levied under this section except 22 residential properties within a duly designated historic 23 district . However, the ordinance creating a district may be 24 amended pursuant to section 386.4 to specifically identify and 25 add such residential property to the existing district and make 26 such property subject to the tax. A tax levied under this 27 section is not subject to the levy limitation in section 384.1 . 28 Sec. 5. Section 386.9, Code 2015, is amended to read as 29 follows: 30 386.9 Capital improvement tax. 31 A city may establish a capital improvement fund for a 32 district and may certify taxes, not to exceed the rate 33 established by the ordinance creating the district, or any 34 subsequent amendment thereto, each year to be levied for 35 -2- LSB 2168YH (3) 86 md/rj 2/ 5

H.F. 208 the fund against all of the property in the district, for 1 the purpose of accumulating moneys for the financing or 2 payment of a part or all of the costs of any improvement or 3 self-liquidating improvement. However Except for residential 4 property within a duly designated historic district , parcels 5 of property which are assessed as residential property for 6 property tax purposes and are located within a district 7 created prior to July 1, 2015, are exempt from the tax levied 8 under this section except residential properties within a 9 duly designated historic district . However, the ordinance 10 creating a district may be amended pursuant to section 386.4 11 to specifically identify and add such residential property to 12 the existing district and make such property subject to the 13 tax. A tax levied under this section is not subject to the levy 14 limitations in section 384.1 or 384.7 . 15 Sec. 6. Section 386.10, Code 2015, is amended to read as 16 follows: 17 386.10 Debt service tax. 18 A city shall establish a self-supported municipal 19 improvement district debt service fund whenever any 20 self-supported municipal improvement district bonds are issued 21 and outstanding, other than revenue bonds, and shall certify 22 taxes to be levied against all of the property in the district 23 for the debt service fund in the amount necessary to pay 24 interest as it becomes due and the amount necessary to pay, 25 or to create a sinking fund to pay, the principal at maturity 26 of all self-supported municipal improvement district bonds as 27 authorized in section 386.11 , issued by the city. However 28 Except for residential property within a duly designated 29 historic district , parcels of property which are assessed as 30 residential property for property tax purposes at the time of 31 the issuance of the bonds and are located within a district 32 created prior to July 1, 2015, are exempt from the tax levied 33 under this section until the parcels are no longer assessed 34 as residential property or until the residential properties 35 -3- LSB 2168YH (3) 86 md/rj 3/ 5

H.F. 208 are designated as a part of an historic district . However, 1 the ordinance creating a district may be amended pursuant to 2 section 386.4 to specifically identify and add such residential 3 property to the existing district and make such property 4 subject to the tax. 5 Sec. 7. NEW SECTION . 386.15 Taxes not imposed against 6 certain residential property. 7 The property taxes authorized pursuant to sections 386.8, 8 386.9, and 386.10 shall not be imposed against residential 9 property in a neighborhood district if the owner of the 10 residential property occupies the property and, for the fiscal 11 year in which the property taxes are due, has a claim for the 12 low-income elderly and disabled property tax credit certified 13 for payment to the department of revenue under chapter 425, 14 division II. 15 Sec. 8. IMPLEMENTATION OF ACT. Section 25B.7 shall not 16 apply to the property tax exemption created under this Act. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 Code chapter 386 currently allows a city to create a self- 21 supported municipal improvement district comprised of areas 22 zoned for commercial or industrial use and property within a 23 duly designated historic district. This bill allows the city 24 to create a district comprised of an area zoned, in whole or at 25 least in part, for residential use, known as a neighborhood. 26 Any combination of residential, commercial, or industrial 27 properties may comprise such a district. 28 Currently, residential properties located within a district 29 comprised of commercial or industrial properties are exempt 30 from taxes levied under this Code chapter. This exemption will 31 continue for districts created prior to July 1, 2015. However, 32 the ordinance creating the district may be amended pursuant 33 to Code section 386.4 to specifically identify and add such 34 residential property to the existing district and make such 35 -4- LSB 2168YH (3) 86 md/rj 4/ 5

H.F. 208 property subject to the tax. 1 The bill exempts certain residential property within a 2 neighborhood district from the property tax authorized pursuant 3 to Code sections 386.8, 386.9, and 386.10 if the owner of the 4 residential property occupies the property and, for the fiscal 5 year in which property taxes are due, has a claim for the 6 low-income elderly and disabled property tax credit. 7 The requirement under Code section 25B.7 that the cost of a 8 property tax exemption be fully funded by the state does not 9 apply to the exemption under new Code section 386.15. 10 Code chapter 386 currently requires the city to send notices 11 of meetings, to establish or amend a district, for example, 12 to each affected property owner by certified mail. The bill 13 provides that the notice be sent by first class mail. 14 -5- LSB 2168YH (3) 86 md/rj 5/ 5