H.F. 334 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 may designate 7 an area surrounding the lake, if it is an unincorporated 8 area of the county, a rural improvement zone upon receipt of 9 a petition pursuant to section 357H.2 , and upon the board’s 10 determination that the area is in need of improvements. 11 Sec. 2. Section 357H.1, subsection 2, Code 2015, is amended 12 by adding the following new paragraph: 13 NEW PARAGRAPH . c. “Lake” means a body of water that has 14 a surface area of at least eighty acres and is not a river or 15 stream. 16 Sec. 3. Section 357H.2, subsection 1, unnumbered paragraph 17 1, Code 2015, is amended to read as follows: 18 The board shall, on the petition of twenty-five percent 19 of the residents of a proposed rural improvement zone who 20 own a homestead within the proposed rural improvement zone 21 that is eligible for the credit under chapter 425 at the 22 time the petition is filed , and if the assessed valuation of 23 the property owned by the petitioners represents at least 24 twenty-five percent of the total assessed value of the proposed 25 zone, hold a public hearing concerning the establishment of 26 a proposed zone. The petition shall include a statement 27 containing the following information: 28 Sec. 4. Section 357H.2, subsection 1, paragraph a, Code 29 2015, is amended to read as follows: 30 a. The need for the proposed zone . , including all of the 31 following which shall be based upon a report prepared by a 32 licensed professional engineer: 33 (1) Surface area of the lake in acres. 34 (2) Number of acres of land comprising the lake’s watershed. 35 -1- LSB 1632YH (3) 86 md/sc 1/ 10

H.F. 334 (3) Soil classification of the land comprising the lake’s 1 watershed. 2 (4) Description of all current land uses within the lake’s 3 watershed. 4 (5) Estimate of historical annual silt accumulation for the 5 lake. 6 (6) Estimate of the amount of silt currently accumulated in 7 the lake. 8 (7) Estimates of annual silt accumulation in the lake for 9 the twenty-year period following establishment of the rural 10 improvement zone. 11 (8) Estimate of existing space available to the proposed 12 zone for storage of dredged and removed silt. 13 (9) Estimate of storage space that will be required to store 14 dredged and removed silt from the lake for the twenty-year 15 period following establishment of the rural improvement zone. 16 (10) Estimate of the cost to effectively address erosion 17 control for the twenty-year period following establishment of 18 the rural improvement zone. 19 Sec. 5. Section 357H.3, Code 2015, is amended to read as 20 follows: 21 357H.3 Time of public hearing. 22 1. The If the petition substantially meets the requirements 23 of section 357H.2, the public hearing required in section 24 357H.2 shall be held within thirty sixty days of the 25 presentation of the petition. Notice of hearing shall be 26 given by publication as provided in section 331.305 . Holding 27 a public hearing pursuant to this section is not dispositive 28 of the approval or denial of a petition by the board under this 29 chapter. 30 2. If the board determines that the petition does not 31 substantially meet the requirements of section 357H.2, the 32 board may, within thirty days of presentation of the petition, 33 request additional information from the petitioners. The 34 board’s request for additional information shall be limited 35 -2- LSB 1632YH (3) 86 md/sc 2/ 10

H.F. 334 to the information required under section 357H.2 that was not 1 contained in the petition. The board shall be limited to one 2 request for additional information under this section. Upon 3 presentation of the additional information, the public hearing 4 required in section 357H.2 shall be held within sixty days of 5 receiving the additional information. Notice of hearing shall 6 be given in the same manner as required under subsection 1. 7 Sec. 6. Section 357H.4, Code 2015, is amended to read as 8 follows: 9 357H.4 Hearing on petition —— action by board. 10 1. At the public hearing required in section 357H.3 , 11 the board may consider the boundaries of a proposed rural 12 improvement zone, whether the boundaries shall be as described 13 in the petition or otherwise, and for that purpose may amend 14 the petition and change the boundaries of the proposed zone as 15 stated in the petition. The board may adjust the boundaries 16 of a proposed zone as needed to exclude land that has no 17 reasonable likelihood of benefit from inclusion in a rural 18 improvement zone. However, the boundaries of a proposed zone 19 shall not be changed to incorporate property which is not 20 included in the original petition. 21 2. Within ten days after the hearing, the board shall 22 establish the rural improvement zone by resolution or disallow 23 the petition. However, the zone shall not include any area 24 which is part of an urban renewal area under chapter 403 . 25 Sec. 7. Section 357H.8, subsection 2, Code 2015, is amended 26 to read as follows: 27 2. Certificates may be issued with respect to a single 28 improvement project or multiple projects and may contain 29 terms or conditions as the board of trustees may provide by 30 resolution authorizing the issuance of the certificates. 31 However, certificates , including those to refund other 32 certificates under subsection 3, shall not be issued 33 after January 1, 2007, except to refund other certificates 34 as provided in subsection 3 if the maturity date of the 35 -3- LSB 1632YH (3) 86 md/sc 3/ 10

H.F. 334 certificate is after the date the rural improvement zone is 1 authorized to operate under section 357H.10 . 2 Sec. 8. Section 357H.9, subsection 1, Code 2015, is amended 3 to read as follows: 4 1. The board of trustees shall provide by resolution that 5 taxes levied on the taxable property in a rural improvement 6 zone each year by or for the benefit of the state, city, 7 county, school district, or other taxing district after the 8 effective date of the resolution shall be divided as provided 9 in section 403.19, subsections 1 and 2 , in the same manner 10 as if the taxable property in the rural improvement zone was 11 taxable property in an urban renewal area and the resolution 12 was an ordinance within the meaning of those subsections. The 13 taxes received by the board of trustees shall be allocated to, 14 and when collected be paid into, a special fund and may be 15 irrevocably pledged by the trustees to pay the principal of and 16 interest on the certificates, contracts, or other obligations 17 approved by the board of trustees to finance or refinance, in 18 whole or in part, an improvement project. However, for fiscal 19 years beginning on or after July 1, 2015, when calculating 20 the amount of taxes subject to the division of taxes, if 21 the assessed value of the taxable property in the rural 22 improvement zone used to calculate the amount of taxes under 23 section 403.19, subsection 1, is less than fifty percent of the 24 assessed value of the taxable property in the rural improvement 25 zone used to calculate the total amount of property taxes in 26 the rural improvement zone for the fiscal year in which the 27 taxes are due and payable, the assessed value of the taxable 28 property in the rural improvement zone used to calculate the 29 amount of taxes under section 403.19, subsection 1, shall be 30 increased for that fiscal year until the amount is equal to 31 fifty percent of the assessed value of the taxable property in 32 the rural improvement zone used to calculate the total amount 33 of property taxes in the rural improvement zone for the fiscal 34 year in which the taxes are due and payable. In addition, upon 35 -4- LSB 1632YH (3) 86 md/sc 4/ 10

H.F. 334 the board’s approval of each extension of the rural improvement 1 zone’s dissolution date under section 357H.10, subsection 2, 2 paragraph “b” , the year of the assessment roll as of January 3 1 used to calculate the amount of taxes allocated to and 4 when collected paid into the funds for the respective taxing 5 districts under section 403.19, subsection 1, shall be adjusted 6 by increasing the year of the assessment roll by ten assessment 7 years. As used in this section , “taxes” includes but is not 8 limited to all levies on an ad valorem basis upon land or real 9 property located in the rural improvement zone. 10 Sec. 9. NEW SECTION . 357H.9A Annual financial report —— 11 audit. 12 1. Not later than December 1 of each year on forms and 13 pursuant to the instructions prescribed by the department 14 of management, the board of trustees shall file with the 15 county auditor an annual financial report showing the rural 16 improvement zone’s financial condition as of June 30 and the 17 results of operations for the year then ended. 18 2. A rural improvement zone is subject to annual audit by 19 the auditor of state. In lieu of an audit by the auditor of 20 state, the rural improvement zone may contract with or employ 21 a certified public accountant to conduct the audit pursuant 22 to the applicable terms and conditions prescribed by sections 23 11.6, 11.14, 11.19, and 11.41. The audit format shall be as 24 prescribed by the auditor of state. The rural improvement zone 25 shall pay all expenses incurred by the auditor of state in 26 conducting an audit under this section. 27 Sec. 10. Section 357H.10, Code 2015, is amended to read as 28 follows: 29 357H.10 Dissolution of zone. 30 1. The Prior to the date required for dissolution under 31 subsection 2, a rural improvement zone shall may be dissolved 32 upon the adoption of a resolution of the board of trustees 33 which specifies that all improvements have been made in the 34 zone , the need for the zone, as identified under section 35 -5- LSB 1632YH (3) 86 md/sc 5/ 10

H.F. 334 357H.2, subsection 1, has been satisfied, and all indebtedness 1 has been paid. 2 2. a. Each rural improvement zone is dissolved on the day 3 four years after the effective date of this Act or twenty years 4 from the first day of the calendar year following the calendar 5 year in which the rural improvement zone first certifies to the 6 county auditor the amount of any loans, advances, indebtedness, 7 or bonds that qualify for payment from the division of taxes, 8 whichever date is later. 9 b. The date required under this subsection for dissolution 10 of a rural improvement zone may be extended by resolution of 11 the board adopted not less than eighteen months prior to the 12 date required for dissolution under paragraph “a” or a date 13 not less than eighteen months prior to the date to which the 14 rural improvement zone was previously extended by the board 15 under this subsection. Each extension approved by the board 16 under this subsection shall be for a period not to exceed 17 ten years. However, the date required for dissolution of a 18 rural improvement zone may only be extended two times under 19 the provisions of this paragraph. Prior to approval of an 20 extension by the board under this subsection, all of the 21 following requirements shall be met: 22 (1) Not less than thirty-six months prior to the date 23 required for dissolution, the board of trustees shall request 24 in writing that the board review the zone’s dissolution date. 25 Upon receipt of the board of trustees’ request, the board shall 26 within three months notify the board of trustees in writing 27 of the board’s intent or lack of intent to review the zone’s 28 dissolution date. 29 (2) Following receipt of the board’s notice of intent to 30 review and not less than twenty-four months prior to the date 31 required for dissolution, the board of trustees shall submit to 32 the board a report prepared by a licensed professional engineer 33 that includes the information required under section 357H.2, 34 subsection 1, paragraph “a” . 35 -6- LSB 1632YH (3) 86 md/sc 6/ 10

H.F. 334 (3) Not less than thirty and not more than seventy-five 1 days after receiving the report required under subparagraph 2 (2), the board shall hold a public hearing to determine the 3 continued need for the rural improvement zone. Notice of 4 hearing shall be given by publication as provided in section 5 331.305. Holding a public hearing pursuant to this section is 6 not dispositive of the approval or denial of a request for an 7 extension of a zone’s dissolution date. 8 3. Upon dissolution of the zone, all assets shall be deeded 9 to a nonprofit corporation whose members are property owners 10 of the improvement zone. 11 4. Upon dissolution of the zone, the collection of the 12 property tax authorized under section 357H.8, subsection 4, and 13 the division of taxes authorized under section 357H.9 shall 14 cease immediately. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 This bill relates to the establishment, operation, and 19 dissolution of rural improvement zones under Code chapter 357H. 20 Current law provides that the population threshold for 21 establishing a rural improvement zone is determined using 22 the 2000 certified federal census. The bill changes that 23 requirement so that the population is determined using the 24 most recent certified federal census. The bill also adds a 25 definition of “lake” for purposes of determining eligibility to 26 establish a rural improvement zone. The bill defines “lake” 27 to mean a body of water that has a surface area of at least 80 28 acres and is not a river or stream. 29 Current Code section 357H.1 provides that a board of 30 supervisors of a county meeting specified population 31 requirements shall designate an area surrounding the lake, if 32 it is an unincorporated area of the county, a rural improvement 33 zone upon receipt of a petition, and upon the board’s 34 determination that the area is in need of improvements. This 35 -7- LSB 1632YH (3) 86 md/sc 7/ 10

H.F. 334 bill strikes “shall” from that provision and inserts “may”. 1 The bill provides that as part of the approval process 2 for a rural improvement zone, the petition must include 3 a statement of the need for the proposed zone including 4 specified information based upon a report prepared by a 5 licensed professional engineer. The information required to be 6 included relates to the size of the lake, soil classification, 7 silt accumulation data and estimates, and cost estimates. 8 In addition, the petition must be signed by 25 percent of 9 the residents of a proposed rural improvement zone who own 10 a homestead within the proposed zone that is eligible for 11 the homestead credit under Code chapter 425 at the time the 12 petition is filed. Current law requires that the petitioners 13 be residents of the proposed rural improvement zone. 14 The bill changes the period of time required for holding 15 a public hearing on the petition from within 30 days of 16 presentation of the petition to within 60 days. In addition, 17 the bill provides that if the board of supervisors determines 18 that the petition does not substantially meet the statutory 19 requirements, the board may, within 30 days of presentation 20 of the petition, request additional information from the 21 petitioners. The board’s request for additional information is 22 limited to the statutorily required information that was not 23 contained in the petition. The bill limits the board to one 24 request for additional information. Upon presentation of the 25 additional information, the public hearing must be held within 26 60 days of receiving the additional information. 27 The bill specifies that holding a public hearing relating 28 to the establishment of a rural improvement zone is not 29 dispositive of the approval or denial of a petition by the 30 board. 31 The bill strikes the provision which prohibited the issuance 32 of certificates for the payment of a rural improvement zone’s 33 improvements and activities after January 1, 2007, and provides 34 that such certificates, including those to refund other 35 -8- LSB 1632YH (3) 86 md/sc 8/ 10

H.F. 334 certificates, may not be issued if the maturity date of the 1 certificate is after the date the rural improvement zone is 2 authorized to operate, as provided by the bill. 3 Current Code section 357H.9 authorizes rural improvement 4 zones to authorize the use of taxes from a division of taxes 5 (tax increment financing). The bill provides that for fiscal 6 years beginning on or after July 1, 2015, when calculating 7 the amount of taxes subject to the division of taxes, if the 8 assessed value of the taxable property in the rural improvement 9 zone used to calculate the amount of taxes to be paid to the 10 other taxing districts (base value) is less than 50 percent 11 of the assessed value of the taxable property in the rural 12 improvement zone used to calculate the total amount of property 13 taxes in the rural improvement zone for the fiscal year in 14 which the taxes are due and payable, the assessed value of 15 the taxable property in the rural improvement zone used to 16 calculate the amount of taxes to be paid to the other taxing 17 districts (base value) shall be increased for that fiscal 18 year to an amount equal to 50 percent of the assessed value 19 of the taxable property in the rural improvement zone used 20 to calculate the total amount of property taxes in the rural 21 improvement zone for the fiscal year in which the taxes are 22 due and payable. In addition, upon the board of supervisors’ 23 approval of each extension of the rural improvement zone’s 24 dissolution date, as provided in the bill, the year of the 25 assessment roll used to calculate the amount of taxes to be 26 paid to the other taxing districts is adjusted by increasing 27 the year of the assessment roll by 10 assessment years. 28 The bill provides that not later than December 1 of each 29 year the board of trustees of a zone shall file with the 30 county auditor an annual financial report showing the rural 31 improvement zone’s financial condition as of June 30 and the 32 results of operations for the year then ended. The bill also 33 provides that all rural improvement zones are subject to annual 34 audit either by the auditor of state or by a certified public 35 -9- LSB 1632YH (3) 86 md/sc 9/ 10

H.F. 334 accountant contracted with or employed by the rural improvement 1 zone to conduct the audit. 2 The bill provides that each rural improvement zone is 3 dissolved on the date four years after the effective date of 4 the bill or 20 years from the first day of the calendar year 5 following the calendar year in which the rural improvement 6 zone first certifies to the county auditor for payment from 7 the division of taxes, whichever is later. The bill further 8 provides that the date required for dissolution may be extended 9 by resolution of the board of supervisors adopted not less 10 than 18 months prior to the date required for dissolution or 11 a date not less than 18 months prior to the date to which 12 the rural improvement zone was previously extended by the 13 board of supervisors under the provisions of the bill. Each 14 extension shall be for a period not to exceed 10 years. The 15 date required for dissolution of a rural improvement zone 16 may only be extended two times under the provisions of the 17 bill. Prior to an extension, the board of trustees must 18 request in writing a review of the zone’s dissolution date 19 by the board of supervisors, the board of supervisors must 20 notify the board of trustees in writing of the board’s intent 21 to review or not to review the zone’s dissolution date, and, 22 if the board intends to review, the board of trustees must 23 submit a report prepared by a licensed professional engineer 24 that includes the information required in the petition seeking 25 establishment of the zone, and the board of supervisors must 26 hold a public hearing to determine the continued need for the 27 rural improvement zone. The bill specifies that holding a 28 public hearing relating to the extension of a rural improvement 29 zone’s dissolution date is not dispositive of the approval or 30 denial of such an extension. 31 -10- LSB 1632YH (3) 86 md/sc 10/ 10