House File 2435 - Introduced HOUSE FILE 2435 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 639) A BILL FOR An Act relating to Iowa’s urban renewal law by modifying 1 requirements for the annual report prepared by the 2 legislative services agency, establishing restrictions on 3 the use of divided revenues, modifying the conditions for 4 establishing certain urban renewal areas, imposing duration 5 limits on certain urban renewal areas, and including 6 effective date provisions. 7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 8 TLSB 6015HV (2) 86 md/sc

H.F. 2435 Section 1. Section 260E.4, Code 2016, is amended to read as 1 follows: 2 260E.4 Incremental property taxes. 3 If an agreement provides that all or part of program costs 4 are to be paid for by incremental property taxes, the board 5 of directors shall provide by resolution that taxes levied 6 on the employer’s taxable business property, where new jobs 7 are created as a result of a project, each year by or for 8 the benefit of the state, city, county, school district, 9 or other taxing district after the effective date of the 10 resolution shall be divided as provided in section 403.19, 11 subsections 1 and 2 , in the same manner as if the employer’s 12 business property, where new jobs are created as a result of a 13 project, was taxable property in an urban renewal project and 14 the resolution was an ordinance within the meaning of those 15 subsections. The taxes received by the board of directors 16 shall be allocated to and when collected be paid into a special 17 fund of the community college and may be irrevocably pledged 18 by the community college to pay the principal of and interest 19 on the certificates issued by the community college to finance 20 or refinance, in whole or in part, the project. However, 21 with respect to any urban renewal project as to which an 22 ordinance is in effect under section 403.19 , the collection 23 of incremental property taxes authorized by this chapter are 24 suspended in favor of collection of incremental taxes under 25 section 403.19 . As used in this section , “taxes” includes, but 26 is not limited to, all levies on an ad valorem basis upon land 27 or real property of the employer’s business, where new jobs 28 are created as a result of a project. The urban renewal area 29 duration limitations under section 403.18A and the limitations 30 on the duration of ordinances under section 403.19, subsection 31 3A, shall not apply to resolutions adopted under this section. 32 Sec. 2. Section 331.403, subsection 3, paragraph d, Code 33 2016, is amended to read as follows: 34 d. The legislative services agency, in consultation with 35 -1- LSB 6015HV (2) 86 md/sc 1/ 9

H.F. 2435 the department of management, shall annually prepare a report 1 for submission to the governor and the general assembly that 2 summarizes and analyzes the information contained in the 3 reports submitted under this subsection , section 357H.9, 4 subsection 2 , and section 384.22, subsection 2 . The report 5 shall contain a list of each county, city, or rural improvement 6 zone that filed an annual report for the most recently ended 7 fiscal year and each such entity’s amount reported under 8 paragraph “b” , subparagraph (8), for counties and rural 9 improvement zones, or section 384.22, subsection 2, paragraph 10 “b” , subparagraph (8), for cities. The report prepared by the 11 legislative services agency shall be submitted not later than 12 February 15 following the most recently ended fiscal year for 13 which the reports were filed. 14 Sec. 3. Section 357H.9, subsection 1, Code 2016, is amended 15 by adding the following new paragraph: 16 NEW PARAGRAPH . 0f. The urban renewal area duration 17 limitations under section 403.18A and the limitations on the 18 duration of ordinances under section 403.19, subsection 3A, 19 shall not apply to rural improvement zones established under 20 this chapter and resolutions adopted under this section. 21 Sec. 4. Section 403.5, subsection 2, paragraph b, 22 subparagraph (1), Code 2016, is amended to read as follows: 23 (1) Prior to its approval of an urban renewal plan which 24 provides for a division of revenue pursuant to section 403.19 , 25 the municipality shall mail the proposed plan by regular mail 26 to the affected taxing entities. The municipality shall 27 include with the proposed plan notification of a consultation 28 to be held between the municipality and affected taxing 29 entities prior to the public hearing on the urban renewal plan. 30 If the proposed urban renewal plan or proposed urban renewal 31 project within the urban renewal area , which plan or project 32 is approved prior to the effective date of this Act, includes 33 the use of taxes resulting from a division of revenue under 34 section 403.19 for a public building, including but not limited 35 -2- LSB 6015HV (2) 86 md/sc 2/ 9

H.F. 2435 to a police station, fire station, administration building, 1 swimming pool, hospital, library, recreational building, city 2 hall, or other public building that is exempt from taxation, 3 including the grounds of, and the erection, equipment, 4 remodeling, maintenance, repair, or reconstruction of, and 5 additions or extensions to, such a building, the municipality 6 shall include with the proposed plan notification an analysis 7 of alternative development options and funding for the urban 8 renewal area or urban renewal project and the reasons such 9 options would be less feasible than the proposed urban renewal 10 plan or proposed urban renewal project. A copy of the analysis 11 required in this subparagraph shall be included with the urban 12 renewal report required under section 331.403 or 384.22 , as 13 applicable, and filed by December 1 following adoption of the 14 urban renewal plan or project. Urban renewal plans and urban 15 renewal projects approved on or after the effective date of 16 this Act shall not include the use of taxes resulting from a 17 division of revenue under section 403.19 for a public building, 18 including but not limited to a police station, fire station, 19 administration building, swimming pool, hospital, library, 20 recreational building, city hall, or other public building 21 that is exempt from taxation, including the grounds of, and 22 the erection, equipment, remodeling, maintenance, repair, or 23 reconstruction of, and additions or extensions to, such a 24 building. 25 Sec. 5. Section 403.12, subsection 1, paragraph f, Code 26 2016, is amended to read as follows: 27 f. Cause Subject to the limitation in section 403.5, 28 subsection 2, paragraph “b” , subparagraph (1), cause public 29 buildings and public facilities, including parks, playgrounds, 30 and recreational, community, educational, water, sewer or 31 drainage facilities, or any other works which it is otherwise 32 empowered to undertake to be furnished; 33 Sec. 6. Section 403.17, subsection 5, Code 2016, is amended 34 to read as follows: 35 -3- LSB 6015HV (2) 86 md/sc 3/ 9

H.F. 2435 5. “Blighted area” means : 1 a. For an urban renewal area established before the 2 effective date of this Act, an area of a municipality 3 within which the local governing body of the municipality 4 determines that the presence of a substantial number of 5 slum, deteriorated, or deteriorating structures; defective or 6 inadequate street layout; faulty lot layout in relation to 7 size, adequacy, accessibility, or usefulness; insanitary or 8 unsafe conditions; deterioration of site or other improvements; 9 diversity of ownership, tax or special assessment delinquency 10 exceeding the fair value of the land; defective or unusual 11 conditions of title; or the existence of conditions which 12 endanger life or property by fire and other causes; or any 13 combination of these factors; substantially impairs or arrests 14 the sound growth of a municipality, retards the provision of 15 housing accommodations, or constitutes an economic or social 16 liability and is a menace to the public health, safety, or 17 welfare in its present condition and use. A disaster area 18 referred to in section 403.5, subsection 7 , constitutes a 19 “blighted area” . “Blighted area” does not include real property 20 assessed as agricultural property for purposes of property 21 taxation. 22 b. For an urban renewal area established on or after 23 the effective date of this Act, an area of a municipality 24 within which the local governing body of the municipality 25 determines that the presence of a substantial number of slum, 26 deteriorated, or deteriorating structures; insanitary or unsafe 27 conditions; deterioration of site or other improvements; or 28 the existence of conditions which endanger life or property by 29 fire and other causes; or any combination of these factors; 30 substantially impairs or arrests the sound growth of a 31 municipality, retards the provision of housing accommodations, 32 or constitutes an economic or social liability and is a 33 menace to the public health, safety, or welfare in its present 34 condition and use. A disaster area referred to in section 35 -4- LSB 6015HV (2) 86 md/sc 4/ 9

H.F. 2435 403.5, subsection 7, constitutes a “blighted area” . “Blighted 1 area” does not include real property assessed as agricultural 2 property for purposes of property taxation. 3 Sec. 7. NEW SECTION . 403.18A Urban renewal area duration 4 —— limitations. 5 1. An urban renewal area in existence on the effective date 6 of this Act for which an ordinance providing for a division of 7 revenue under section 403.19 was adopted before the effective 8 date of this Act and that is not limited in duration under 9 section 403.17, subsection 10, or section 403.22, subsection 5, 10 shall be subject to the duration limitation in subsection 2. 11 2. a. For an urban renewal area described in subsection 1, 12 the urban renewal area, including all applicable urban renewal 13 plans, projects, and ordinances providing for a division of 14 revenue, shall continue in effect under this chapter, until 15 such time that the urban renewal area is dissolved by the 16 municipality or until the urban renewal area terminates under 17 the conditions of this section, whichever occurs first. 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. (1) For an urban renewal area described in subsection 25 1 that is based on a finding that the area is an economic 26 development area and that no part contains slum or blighted 27 conditions, the urban renewal area, including all applicable 28 urban renewal plans, projects, and ordinances providing for a 29 division of revenue, shall terminate and be of no further force 30 and effect on July 1, 2036. 31 (2) For an urban renewal area described in subsection 1 that 32 is based on a finding that all or a part of the area contains 33 slum or blighted conditions, the urban renewal area, including 34 all applicable urban renewal plans, projects, and ordinances 35 -5- LSB 6015HV (2) 86 md/sc 5/ 9

H.F. 2435 providing for a division of revenue, shall terminate and be of 1 no further force and effect on July 1, 2041. 2 3. The department of management shall adopt rules pursuant 3 to chapter 17A necessary to implement and administer this 4 section. 5 Sec. 8. Section 403.19, Code 2016, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 3A. a. Except as otherwise provided in 8 paragraph “b” or section 403.22, an ordinance providing for a 9 division of revenue under this section that is adopted on or 10 after the effective date of this Act shall be limited to twenty 11 years from the calendar year following the calendar year in 12 which the municipality first certifies to the county auditor 13 the amount of any loans, advances, indebtedness, or bonds that 14 qualify for payment from the division of revenue provided 15 for in this section. The urban renewal area, including all 16 applicable urban renewal plans, projects, and ordinances, shall 17 terminate and be of no further force and effect following the 18 twenty-year period provided in this subsection. 19 b. An ordinance providing for a division of revenue under 20 this section that is adopted on or after the effective date 21 of this Act for an urban renewal area that contains slum or 22 blighted conditions shall be limited to twenty-five years from 23 the calendar year following the calendar year in which the 24 municipality first certifies to the county auditor the amount 25 of any loans, advances, indebtedness, or bonds that qualify for 26 payment from the division of revenue provided in this section. 27 The urban renewal area, including all applicable urban renewal 28 plans, projects, and ordinances, shall terminate and be of no 29 further force and effect following the twenty-five-year period 30 provided in this subsection. 31 Sec. 9. 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 -6- LSB 6015HV (2) 86 md/sc 6/ 9

H.F. 2435 the explanation’s substance by the members of the general assembly. 1 This bill relates to Iowa’s urban renewal law. 2 The bill requires the annual report prepared by the 3 legislative services agency, in consultation with the 4 department of management, under Code section 331.403, to 5 contain a list of each county, city, or rural improvement zone 6 that filed an annual report for the most recently ended fiscal 7 year and each such entity’s reported amount of loans, advances, 8 indebtedness, or bonds that remain unpaid at the close of the 9 fiscal year, and which qualify for payment from the special 10 fund created in Code section 403.19, including interest 11 negotiated on such loans, advances, indebtedness, or bonds. 12 The bill provides that urban renewal plans and urban 13 renewal projects approved on or after the effective date of 14 the bill shall not include the use of taxes resulting from 15 a division of revenue for a public building that is exempt 16 from taxation, including the grounds of, and the erection, 17 equipment, remodeling, maintenance, repair, or reconstruction 18 of, and additions or extensions to, such a building. The bill 19 also modifies provisions governing the use of such revenues 20 for public buildings for plans and projects approved before 21 the effective date of the bill to include the maintenance and 22 repair of such public buildings. 23 Code chapter 403 governs the criteria upon which an 24 urban renewal area may be established, which may include a 25 determination that an area is a “blighted area”. The bill 26 establishes a definition of “blighted area” for those urban 27 renewal areas established on or after the effective date of 28 the bill. For such areas, “blighted area” means an area of 29 a municipality within which the local governing body of the 30 municipality determines that the presence of a substantial 31 number of slum, deteriorated, or deteriorating structures; 32 insanitary or unsafe conditions; deterioration of site or other 33 improvements; or the existence of conditions which endanger 34 life or property by fire and other causes; or any combination 35 -7- LSB 6015HV (2) 86 md/sc 7/ 9

H.F. 2435 of these factors; substantially impairs or arrests the sound 1 growth of a municipality, retards the provision of housing 2 accommodations, or constitutes an economic or social liability 3 and is a menace to the public health, safety, or welfare in 4 its present condition and use. In addition, a disaster area 5 under Code section 403.5, subsection 7, constitutes a “blighted 6 area”. However, “blighted area” does not include real property 7 assessed as agricultural property for purposes of property 8 taxation. 9 New Code section 403.18A provides that an urban renewal 10 area in existence on the effective date of the bill for which 11 an ordinance providing for a division of revenue was adopted 12 before the effective date of the bill and that is not limited 13 in duration under Code section 403.17, subsection 10 (20 years) 14 or Code section 403.22, subsection 5 (10 years) shall be 15 subject to the duration limitations established in the bill. 16 For such an urban renewal area that is based on a finding that 17 the area is an economic development area and that no part 18 contains slum or blighted conditions, the urban renewal area, 19 including all applicable urban renewal plans, projects, and 20 ordinances providing for a division of revenue, shall terminate 21 and be of no further force and effect on July 1, 2036. If, 22 however, such an urban renewal area is based on a finding that 23 all or a part of the area contains slum or blighted conditions, 24 the urban renewal area, including all applicable urban renewal 25 plans, projects, and ordinances providing for a division of 26 revenue, shall terminate and be of no further force and effect 27 on July 1, 2041. 28 The bill provides that, except for a division of revenue 29 authorized for certain housing and residential development 30 under Code section 403.22, an ordinance providing for a 31 division of revenue that is adopted on or after the effective 32 date of the bill shall be limited to 20 years from the calendar 33 year following the calendar year in which the municipality 34 first certifies to the county auditor the amount of any loans, 35 -8- LSB 6015HV (2) 86 md/sc 8/ 9

H.F. 2435 advances, indebtedness, or bonds that qualify for payment from 1 the division of revenue, at which time the urban renewal area, 2 including all applicable urban renewal plans, projects, and 3 ordinances, shall terminate and be of no further force and 4 effect. If, however, the urban renewal area for which such 5 an ordinance is adopted contains slum or blighted conditions, 6 the division of revenue shall be limited to 25 years from 7 the calendar year following the calendar year in which the 8 municipality first certifies to the county auditor the amount 9 of any loans, advances, indebtedness, or bonds that qualify for 10 payment from the division of revenue. 11 The bill specifies that the urban renewal duration limits 12 under new Code section 403.18A and the limitations on the 13 duration of ordinances providing for a division of revenue 14 under Code section 403.19, new subsection 3A, shall not apply 15 to divisions of taxes established by community colleges under 16 Code chapter 260E or rural improvement zones under Code chapter 17 357H. 18 The bill takes effect upon enactment. 19 -9- LSB 6015HV (2) 86 md/sc 9/ 9