H.F. 249 Section 1. Section 357H.1, subsection 1, Code 2015, 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 most recent certified federal 6 census, and with a private lake development shall designate an 7 area surrounding the lake, if it is an unincorporated area of 8 the 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. 11 Sec. 2. Section 357H.1, subsection 2, paragraph b, Code 12 2015, is amended to read as follows: 13 b. “Improvements” means dredging, installation of erosion 14 control and water quality measures, land acquisition, and 15 related improvements, including soil conservation practices, 16 within or outside of the boundaries of the zone. 17 Sec. 3. Section 357H.1, subsection 2, Code 2015, is amended 18 by adding the following new paragraph: 19 NEW PARAGRAPH . c. “Lake” means a body of water that has a 20 surface area of at least eighty acres. 21 Sec. 4. Section 357H.2, subsection 1, paragraph a, Code 22 2015, is amended to read as follows: 23 a. The need for the proposed zone . , which shall be based 24 upon a report of a licensed professional engineer prepared not 25 more than two years before the date the petition is filed, and 26 that includes all of the following: 27 (1) Surface area of the lake in acres. 28 (2) Number of acres of land comprising the lake’s watershed. 29 (3) Soil classification of the land comprising the lake’s 30 watershed. 31 (4) Description of all current land uses within the lake’s 32 watershed. 33 (5) Estimate of historical annual silt accumulation for the 34 lake during the twenty years immediately preceding the year in 35 -1- LSB 1257YH (7) 86 md/sc 1/ 12

H.F. 249 which the engineer’s report was completed. 1 (6) Estimate of the amount of silt currently accumulated in 2 the lake. 3 (7) Estimates of annual silt accumulation in the lake for 4 the twenty-year period following establishment of the rural 5 improvement zone. 6 (8) Estimate of remaining space available to the proposed 7 zone in existing detention basins for storage of dredged and 8 removed silt. 9 (9) Estimate of storage space that will be required to store 10 dredged and removed silt from the lake for the twenty-year 11 period following establishment of the rural improvement zone. 12 (10) Assessment of the current water quality of the lake. 13 (11) Assessment of the current need for preventative 14 practices to improve the water quality of the lake. 15 (12) Assessment of the impact preventative practices will 16 have on the water quality of the lake. 17 (13) Estimate of the cost to effectively address erosion 18 control and water quality for the twenty-year period following 19 establishment of the rural improvement zone. 20 Sec. 5. Section 357H.2, Code 2015, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 1A. A copy of the report prepared by the 23 licensed professional engineer and used to prepare the petition 24 shall be submitted with the petition under this section. 25 Sec. 6. Section 357H.3, Code 2015, is amended to read as 26 follows: 27 357H.3 Time of public hearing. 28 1. The If the petition substantially meets the requirements 29 of section 357H.2, the public hearing required in section 30 357H.2 shall be held within thirty sixty days of the 31 presentation of the petition. Notice of hearing shall be given 32 by publication as provided in section 331.305 . 33 2. If the board determines that the petition or the 34 engineer’s report does not substantially meet the requirements 35 -2- LSB 1257YH (7) 86 md/sc 2/ 12

H.F. 249 of section 357H.2, the board may, within thirty days of 1 presentation of the petition, request additional information 2 from the petitioners. The board’s request for additional 3 information shall be limited to the information required under 4 section 357H.2 that was not contained in the petition or the 5 accompanying engineer’s report. The board shall be limited to 6 one request for additional information under this section. The 7 public hearing required in section 357H.2 shall be held within 8 sixty days of receiving the additional information. Notice of 9 hearing shall be given in the same manner as required under 10 subsection 1. 11 Sec. 7. Section 357H.4, Code 2015, is amended to read as 12 follows: 13 357H.4 Hearing on petition —— action by board. 14 1. At the public hearing required in section 357H.3 , 15 the board may consider the boundaries of a proposed rural 16 improvement zone, whether the boundaries shall be as described 17 in the petition or otherwise, and for that purpose may amend 18 the petition and change the boundaries of the proposed zone as 19 stated in the petition. The board may adjust the boundaries 20 of a proposed zone as needed to exclude land that has no 21 reasonable likelihood of benefit from inclusion in a rural 22 improvement zone. However, the boundaries of a proposed zone 23 shall not be changed to incorporate property which is not 24 included in the original petition. 25 2. Within ten days after the hearing, the board shall 26 establish the rural improvement zone by resolution or disallow 27 the petition. However, the zone shall not include any area 28 which is part of an urban renewal area under chapter 403 . 29 Sec. 8. Section 357H.8, subsection 2, Code 2015, is amended 30 to read as follows: 31 2. Certificates may be issued with respect to a single 32 improvement project or multiple projects and may contain 33 terms or conditions as the board of trustees may provide by 34 resolution authorizing the issuance of the certificates. 35 -3- LSB 1257YH (7) 86 md/sc 3/ 12

H.F. 249 However, certificates , including certificates to refund 1 outstanding certificates under subsection 3, shall not 2 be issued after January 1, 2007, except to refund other 3 certificates as provided in subsection 3 if the maturity 4 date of the certificates would be after the date the rural 5 improvement zone is, at the time of issuing the certificates, 6 to be dissolved by law under section 357H.10 . 7 Sec. 9. Section 357H.9, subsection 1, Code 2015, is amended 8 to read as follows: 9 1. a. The board of trustees shall provide by resolution 10 that taxes levied on the taxable property in a rural 11 improvement zone each year by or for the benefit of the state, 12 city, county, school district, or other taxing district after 13 the effective date of the resolution shall be divided as 14 provided in section 403.19, subsections 1 and 2 , in the same 15 manner as if the taxable property in the rural improvement 16 zone was taxable property in an urban renewal area and the 17 resolution was an ordinance within the meaning of those 18 subsections. The taxes received by the board of trustees shall 19 be allocated to, and when collected be paid into, a special 20 fund and may be irrevocably pledged by the trustees to pay the 21 principal of and interest on the certificates, contracts, or 22 other obligations approved by the board of trustees to finance 23 or refinance, in whole or in part, an improvement project. 24 However, for fiscal years beginning on or after July 1, 2016, 25 when calculating the amount of taxes subject to the division 26 of taxes, if the assessed value of the taxable property in 27 the rural improvement zone used to calculate the amount of 28 taxes under section 403.19, subsection 1, is less than fifty 29 percent of the assessed value of the taxable property in the 30 rural improvement zone used to calculate the total amount of 31 property taxes in the rural improvement zone for the fiscal 32 year in which the taxes are due and payable, the assessed value 33 of the taxable property in the rural improvement zone used to 34 calculate the amount of taxes under section 403.19, subsection 35 -4- LSB 1257YH (7) 86 md/sc 4/ 12

H.F. 249 1, shall be increased for that fiscal year until the amount is 1 equal to fifty percent of the assessed value of the taxable 2 property in the rural improvement zone used to calculate the 3 total amount of property taxes in the rural improvement zone 4 for the fiscal year in which the taxes are due and payable. 5 b. For fiscal years beginning on or after July 1, 2016, 6 when determining the assessed value of property within a rural 7 improvement zone which is subject to a division of tax revenues 8 pursuant to section 403.19, the requirement under section 9 403.20 that the valuation reductions first be subtracted from 10 the assessed value of the property as determined pursuant to 11 section 403.19, subsection 1, shall not apply, and percentage 12 adjustments certified for that year by the director of revenue 13 on or before November 1 pursuant to section 441.21, subsection 14 9, shall be applied uniformly, by class of property, to all 15 actual value in the rural improvement zone. 16 c. As used in this section , “taxes” includes but is not 17 limited to all levies on an ad valorem basis upon land or real 18 property located in the rural improvement zone. 19 Sec. 10. NEW SECTION . 357H.9A Annual financial report —— 20 audit. 21 1. Not later than December 1 of each year on forms and 22 pursuant to the instructions prescribed by the department 23 of management, the board of trustees shall file with the 24 county auditor an annual financial report showing the rural 25 improvement zone’s financial condition as of June 30 and the 26 results of operations for the year then ended. 27 2. A rural improvement zone is subject to annual audit by 28 the auditor of state. In lieu of an audit by the auditor of 29 state, the rural improvement zone may contract with or employ 30 a certified public accountant to conduct the audit pursuant 31 to the applicable terms and conditions prescribed by sections 32 11.6, 11.14, 11.19, and 11.41. The audit format shall be as 33 prescribed by the auditor of state. The rural improvement zone 34 shall pay all expenses incurred by the auditor of state in 35 -5- LSB 1257YH (7) 86 md/sc 5/ 12

H.F. 249 conducting an audit under this section. 1 Sec. 11. Section 357H.10, Code 2015, is amended to read as 2 follows: 3 357H.10 Dissolution of zone. 4 1. The Prior to the date required for dissolution under 5 subsection 2, a rural improvement zone shall may be dissolved 6 upon the adoption of a resolution of the board of trustees 7 which specifies that all improvements have been made in the 8 zone , the need for the zone, as identified under section 9 357H.2, subsection 1, has been satisfied, and all indebtedness 10 has been paid. 11 2. a. Unless dissolved by resolution of the board of 12 trustees under subsection 1, or an extension is approved under 13 paragraph “b” , each rural improvement zone is dissolved on June 14 30, 2019, or twenty years after the first day of the fiscal 15 year following the fiscal year in which the zone first receives 16 revenue from the division of taxes under section 357H.9, 17 whichever date is later. 18 b. The date required under this subsection for dissolution 19 of a rural improvement zone may be extended by resolution of 20 the board adopted prior to the date required for dissolution 21 under paragraph “a” or a date prior to the date to which 22 the rural improvement zone was previously extended by the 23 board under this paragraph “b” or by operation of law under 24 subparagraph (1). Each extension approved by the board under 25 this paragraph “b” shall be for a period of twenty years. Prior 26 to approval of an extension by the board under this paragraph 27 “b” , all of the following requirements shall be met: 28 (1) Not more than forty-eight months nor less than 29 thirty-six months prior to the date required for dissolution, 30 the board of trustees shall file a petition with the board 31 requesting an extension of the zone’s dissolution date that 32 complies with the petition requirements under section 357H.2. 33 The petition shall state the continued need for the rural 34 improvement zone and describe the improvements needed in the 35 -6- LSB 1257YH (7) 86 md/sc 6/ 12

H.F. 249 zone beyond the dissolution date otherwise required under 1 this section. The board shall, within ninety days after 2 receiving the petition, either adopt a resolution granting the 3 twenty-year extension without further proceedings or notify the 4 board of trustees in writing of the board’s intent to review 5 the zone’s dissolution date under subparagraphs (2) through 6 (4). The board may, as part of its notice to the board of 7 trustees, request a report prepared by a licensed professional 8 engineer containing all of the information required under 9 section 357H.2, subsection 1. If the board fails to either 10 approve the extension by resolution or notify the board of 11 trustees of the board’s intent to review the zone’s dissolution 12 date under subparagraphs (2) through (4) within the ninety-day 13 period, the request for a twenty-year extension shall be deemed 14 approved. 15 (2) Following receipt of the board’s notice of intent 16 to review and not less than twenty-four months prior to the 17 date required for dissolution, the board of trustees shall, 18 if requested by the board, submit to the board a report 19 prepared by a licensed professional engineer that includes 20 the information required under section 357H.2, subsection 1, 21 paragraph “a” . If the board determined that the petition or the 22 engineer’s report does not substantially meet the requirements 23 of section 357H.2 or that additional relevant information is 24 needed, the board may, within thirty days of the date the 25 petition was filed, request additional information from the 26 board of trustees. The board shall be limited to one request 27 for additional information. 28 (3) Not more than sixty days after receiving the engineer’s 29 report required or the additional information requested under 30 subparagraph (2), whichever is later, the board shall hold 31 a public hearing to determine the continued need for the 32 rural improvement zone. Notice of hearing shall be given by 33 publication as provided in section 331.305. 34 (4) Within ten days after the public hearing, the board 35 -7- LSB 1257YH (7) 86 md/sc 7/ 12

H.F. 249 shall either find a continued need for the rural improvement 1 zone and adopt a resolution approving the twenty-year extension 2 or find that the continued operation of the rural improvement 3 zone is not necessary and deny the request for an extension. 4 If the board fails to either approve or deny the extension 5 within the ten-day period, the request for a twenty-year 6 extension is deemed approved. 7 3. Upon dissolution of the zone, all assets shall be deeded 8 or otherwise transferred to a nonprofit corporation whose 9 members are property owners of the improvement zone. 10 4. Upon dissolution of the zone, the collection of the 11 property tax authorized under section 357H.8, subsection 4, and 12 the division of taxes authorized under section 357H.9 shall 13 cease immediately. 14 Sec. 12. NEW SECTION . 357H.11 Agreements. 15 Any agreement or other instrument in connection with an 16 agreement between a board of trustees and a board in existence 17 on July 1, 2015, relating to the division of taxes under 18 section 357H.9, the dissolution date of a rural improvement 19 zone, or the criteria used for determining the continued 20 existence of a rural improvement zone that is inconsistent with 21 this chapter shall be null and void. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 This bill relates to the establishment, operation, and 26 dissolution of rural improvement zones under Code chapter 357H. 27 Current law provides that the population threshold for 28 establishing a rural improvement zone is determined using 29 the 2000 certified federal census. The bill changes that 30 requirement so that the population is determined using the 31 most recent certified federal census. The bill also adds a 32 definition of “lake” for purposes of determining eligibility to 33 establish a rural improvement zone. The bill defines “lake” 34 to mean a body of water that has a surface area of at least 80 35 -8- LSB 1257YH (7) 86 md/sc 8/ 12

H.F. 249 acres. 1 The bill adds water quality measures to the definition of 2 “improvements”. Under Code chapter 357H, the board of trustees 3 may authorize construction, reconstruction, or repair of 4 improvements for the rural improvement zone. 5 The bill provides that as part of the approval process for a 6 rural improvement zone, the petition must include a statement 7 of the need for the proposed zone based upon a report prepared 8 by a licensed professional engineer. The report utilized 9 in preparing the petition must have been prepared not more 10 than two years before the date the petition is filed. The 11 information required to be included in the engineer’s report 12 relates to the size of the lake, soil classification, silt 13 accumulation data and estimates, water quality assessments, 14 and cost estimates. The bill requires a copy of the report 15 prepared by the licensed professional engineer and used to 16 prepare the petition to be submitted with the petition. 17 The bill changes the period of time required for holding 18 a public hearing on the petition from within 30 days 19 of presentation of the petition to within 60 days. In 20 addition, the bill provides that if the board of supervisors 21 determines that the petition or the engineer’s report does 22 not substantially meet the statutory requirements, the 23 board may, within 30 days of presentation of the petition, 24 request additional information from the petitioners. The 25 board’s request for additional information is limited to the 26 statutorily required information that was not contained in the 27 petition or in the accompanying engineer’s report. The bill 28 limits the board to one request for additional information. 29 Upon presentation of the additional information, the public 30 hearing must be held within 60 days of receiving the additional 31 information. 32 The bill strikes the provision which prohibited the issuance 33 of certificates for the payment of a rural improvement zone’s 34 improvements and activities after January 1, 2007, and provides 35 -9- LSB 1257YH (7) 86 md/sc 9/ 12

H.F. 249 that such certificates, including certificates to refund 1 outstanding certificates, may not be issued if the maturity 2 date of the certificates would be after the date the rural 3 improvement zone is to be dissolved, as provided by the bill. 4 Current Code section 357H.9 authorizes rural improvement 5 zones to authorize the use of taxes from a division of taxes 6 (tax increment financing). The bill provides that for fiscal 7 years beginning on or after July 1, 2016, when calculating 8 the amount of taxes subject to the division of taxes, if the 9 assessed value of the taxable property in the rural improvement 10 zone used to calculate the amount of taxes to be paid to the 11 other taxing districts is less than 50 percent of the assessed 12 value of the taxable property in the rural improvement zone 13 used to calculate the total amount of property taxes in the 14 rural improvement zone for the fiscal year in which the taxes 15 are due and payable, the assessed value of the taxable property 16 in the rural improvement zone used to calculate the amount of 17 taxes to be paid to the other taxing districts (base value) 18 shall be increased for that fiscal year to an amount equal to 19 50 percent of the assessed value of the taxable property in the 20 rural improvement zone used to calculate the total amount of 21 property taxes in the rural improvement zone for the fiscal 22 year in which the taxes are due and payable. 23 The bill provides that for fiscal years beginning on or after 24 July 1, 2016, when determining the assessed value of property 25 within a rural improvement zone that is subject to a division 26 of tax revenues, the requirement under Code section 403.20 27 that the valuation reductions (rollback) first be subtracted 28 from the assessed value of the property as determined pursuant 29 to Code section 403.19(1) (base value), does not apply and 30 provides that the rollbacks for that year shall instead be 31 applied uniformly, by class of property, to all actual value 32 in the rural improvement zone. 33 The bill provides that not later than December 1 of each 34 year the board of trustees of a zone shall file with the 35 -10- LSB 1257YH (7) 86 md/sc 10/ 12

H.F. 249 county auditor an annual financial report showing the rural 1 improvement zone’s financial condition as of June 30 and the 2 results of operations for the year then ended. The bill also 3 provides that all rural improvement zones are subject to annual 4 audit either by the auditor of state or by a certified public 5 accountant contracted with or employed by the rural improvement 6 zone to conduct the audit. 7 The bill provides that, unless dissolved by resolution of 8 the board of trustees, each rural improvement zone is dissolved 9 on June 30, 2019, or 20 years from the first day of the fiscal 10 year following the fiscal year in which the zone first receives 11 revenue from the division of taxes, whichever is later. The 12 bill further provides that the date required for dissolution 13 may be extended by resolution of the board of supervisors 14 adopted prior to the date required for dissolution or prior to 15 the date to which the rural improvement zone was previously 16 extended by the board of supervisors under the provisions of 17 the bill. Each extension shall be for a period of 20 years. 18 The bill updates language relating to the disposition of 19 property upon dissolution of the zone and specifies that any 20 collection of, or division of, property taxes under Code 21 chapter 357H ceases immediately upon dissolution of the zone. 22 Under the bill, the rural improvement zone’s board of 23 trustees must file a petition with the board of supervisors 24 requesting an extension of the dissolution date. The petition 25 must state the continued need for the rural improvement zone 26 and describe the improvements needed in the zone beyond the 27 dissolution date otherwise required by the bill. Within 90 28 days after receiving the petition, the board of supervisors 29 must either adopt a resolution granting the 20-year extension 30 without further proceedings, or notify the board of trustees in 31 writing of the board’s intent to review the zone’s dissolution 32 date. The board may, as part of its notice to the board of 33 trustees, request a report prepared by a licensed professional 34 engineer. If the board fails to either approve the extension 35 -11- LSB 1257YH (7) 86 md/sc 11/ 12

H.F. 249 by resolution or notify the board of trustees of the board’s 1 intent to review the zone’s dissolution date within the 90-day 2 period, the request for a 20-year extension is deemed approved. 3 The board of supervisors requests additional information from 4 the board of trustees. As part of the board of supervisors’ 5 further review of the petition, a public hearing must be held 6 within the period of time specified in the bill. Within 7 10 days after the public hearing, the board of supervisors 8 is required to either find a continued need for the rural 9 improvement zone and adopt a resolution approving the 20-year 10 extension or find that the continued operation of the rural 11 improvement zone is not necessary and deny the request for an 12 extension. If the board fails to either approve or deny the 13 extension within the 10-day period, the request for a 20-year 14 extension is deemed approved. 15 The bill provides that any agreement or other instrument in 16 connection with an agreement between a board of trustees and a 17 board in existence on July 1, 2015, relating to the division 18 of taxes, the dissolution date of a rural improvement zone, or 19 the criteria used for determining the continued existence of 20 a rural improvement zone that is inconsistent with this Code 21 chapter shall be null and void. 22 -12- LSB 1257YH (7) 86 md/sc 12/ 12