HF 57 (LSB 1348YH (4) 86)

HOUSE FILE 57

BY  BYRNES

A BILL FOR

An Act authorizing establishment of certain entities to undertake projects relating to the storage, transportation, transmission, and delivery of natural gas, to establish replacement tax districts, and to use certain replacement tax and property tax revenue to pay revenue bonds, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 28F.1, subsection 1, Code 2015, is amended to read as follows:
   1.  This chapter provides a means for the joint financing by public agencies of works or facilities useful and necessary for the collection, treatment, purification, and disposal in a sanitary manner of liquid and solid waste, sewage, and industrial waste, facilities and works used for the storage, transportation, transmission, and delivery of natural gas, facilities used for the conversion of solid waste to energy, and also electric power facilities constructed within the state of Iowa, except that hydroelectric power facilities may also be located in the waters and on the dams of or on land adjacent to either side of the Mississippi or Missouri river bordering the state of Iowa, water supply systems, swimming pools or golf courses. This chapter applies to the acquisition, construction, reconstruction, ownership, operation, repair, extension, or improvement of such works or facilities, by a separate administrative or legal entity created pursuant to chapter 28E or chapter 389. When the legal entity created under this chapter is comprised solely of cities, counties, and sanitary districts established under chapter 358, or any combination thereof or any combination of the foregoing with other public agencies, the entity shall be both a corporation and a political subdivision with the name under which it was organized. The legal entity may sue and be sued, contract, acquire and hold real and personal property necessary for corporate purposes, adopt a corporate seal and alter the seal at pleasure, and execute all the powers conferred in this chapter.
    Sec. 2.  Section 28F.2, Code 2015, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  “Natural gas distribution agency” means an entity created pursuant to chapter 28E for the purpose of acquiring, constructing, reconstructing, operating, repairing, extending, or improving natural gas facilities and works used for the storage, transportation, transmission, and delivery of natural gas.
    Sec. 3.  Section 28F.5, unnumbered paragraph 2, Code 2015, is amended to read as follows:

   Such an entity shall have the power to fix, establish and maintain such rates, tolls, fees, rentals, or other charges and collect the same from the public agencies participating in the agreement or from private agencies or persons for the payment of the services and facilities provided by said project or projects. Such rates, tolls, fees, rentals or other charges shall be so fixed, established and maintained and revised from time to time whenever necessary as will always provide revenues sufficient to pay the cost of maintaining, repairing and operating the project or projects, to pay the principal of and interest on the bonds then outstanding which are payable therefrom as the same become due and payable, to provide adequate and sufficient reserves therefor, to provide for replacements, depreciations and necessary extensions and enlargements and to provide a margin of safety for the making of such payments and providing such reserves. Notwithstanding the foregoing such an entity shall have the further right to pledge to the payment of the bonds issued pursuant to this chapter, in addition to the net revenues of the project or projects pledged therefor, such other moneys that it may have and which are lawfully available therefor, including but not limited to replacement tax revenue received by a natural gas distribution agency under section 28F.5A and designated by resolution of the governing body of the agency for such purposes.
    Sec. 4.  NEW SECTION.  28F.5A  Use of replacement taxes —— natural gas distribution agencies —— district.
   1.  A natural gas distribution agency that is undertaking a project to acquire, construct, reconstruct, operate, repair, extend, or improve natural gas facilities and works used for the storage, transportation, transmission, and delivery of natural gas may by resolution of the agency’s governing body authorize the use of certain replacement tax revenue collected under chapter 437A for the payment of bonds issued pursuant to this chapter.
   2.  a.  A resolution authorizing the use of replacement tax revenue by a natural gas distribution agency shall be adopted by the agency’s governing body prior to the issuance of bonds under this chapter. The resolution shall include all of the following:
   (1)  A description of the project.
   (2)  A designation of a replacement tax district.
   (3)  A description of the boundaries of the replacement tax district.
   (4)  A map of the location of the project and the boundaries of the district.
   (5)  The amount of bonds proposed to be issued under this chapter for the project.
   (6)  A list of each natural gas competitive service area under chapter 437A that serves property located in the replacement tax district.
   b.  A replacement tax district designated by a natural gas distribution agency shall comprise only property that will be directly served by the project following its completion.
   c.  Following adoption, a copy of the resolution and all items required under paragraph “a” shall be filed by the natural gas distribution agency’s governing body with the director of revenue, the director of the department of management, and with the county auditor of each county in which the replacement tax district is located.
   3.  a.  For each tax year after the base year, the natural gas distribution agency shall receive from the department of management an amount of replacement tax paid by the agency under chapter 437A in an amount not to exceed the amount determined in paragraph “b”.
   b.  (1)  The maximum amount of replacement tax that may be paid to a natural gas distribution agency under this section for a tax year is the total amount of replacement taxes paid by the natural gas distribution agency in the tax year minus the total amount of replacement taxes paid by the natural gas distribution agency in the base year.
   (2)  The total amount of replacement taxes paid by the natural gas distribution agency in the base year is the sum of the following:
   (a)  The amount of replacement tax paid in the base year by the natural gas distribution agency under section 437A.5 that is the result of natural gas delivered to a consumer located in the area that comprises the replacement tax district.
   (b)  The amount of property tax paid in the base year by the natural gas distribution agency as the result of the statewide property tax imposed under section 437A.18 on property located in the area that comprises the replacement tax district.
   (3)  The total amount of replacement taxes paid by the natural gas distribution agency in a tax year is the sum of the following:
   (a)  The amount of replacement tax paid in the tax year by the natural gas distribution agency under section 437A.5 that is the result of natural gas delivered to a consumer located in the area that comprises the replacement tax district.
   (b)  The amount of property tax paid in the tax year by the natural gas distribution agency as the result of the statewide property tax imposed under section 437A.18 on property located in the area that comprises the replacement tax district.
   (4)  For purposes of this section, “base year” means the tax year, as defined in section 437A.3, that precedes the year in which the resolution establishing the replacement tax district is filed with the director of the department of management under subsection 2, paragraph “c”.
   4.  a.  A natural gas distribution agency which has authorized the use of replacement tax revenue shall by December 1 certify to the department of management and the county auditor of each county in which the replacement tax district is located the amount of bonds issued under this chapter, including interest on the bonds, that qualify for payment from the replacement tax revenue received under this section. The filing of the certificate shall make it a duty of the department of management and the county auditor to provide for the allocation and payment of replacement tax revenue in each subsequent year without further certification, except as provided in paragraphs “b” and “c”, until the amount of the bonds, including the interest on the bonds, is paid. If any bonds are issued that qualify for payment from replacement tax revenue under this section and are in addition to amounts already certified, the agency shall certify the amount of the additional bonds, including the interest on the bonds, on or before December 1 of the year such bonds were issued. Any subsequent certifications under this subsection shall not include amounts previously certified.
   b.  If the amount certified in paragraph “a” is reduced by payment from sources other than replacement taxes received under this section, by a refunding or refinancing of the bonds which results in lowered principal and interest on the amount of the bonds, or for any other reason, the agency on or before December 1 of the year the action was taken which resulted in the reduction shall certify the amount of the reduction to the department of management and each appropriate county auditor.
   c.  In any year, the department of management shall, upon receipt of a certified request from an agency filed on or before December 1, decrease the amount of replacement tax revenue to be allocated under this section in order to reduce the amount to be allocated to the agency under this section in the next tax year to an amount that is less than the full portion of taxes which could be allocated. Upon receipt of a certificate from an agency, the department of management shall mail a copy of the certificate to each affected taxing district.
   5.  The maximum period of years that a natural gas distribution agency may receive replacement tax revenue under this section shall be forty consecutive tax years following the base year.
   6.  The resolution adopted by the natural gas distribution agency may be amended or repealed. Any amendment to the resolution or any amendment to any of the items required under subsection 2, paragraph “a”, shall be filed with the director of the department of management, the director of revenue, and the county auditor of each county in which the replacement tax district is located. If the resolution adopted under this section is amended to include additional property, the base year for such additional property shall be the tax year that precedes the year in which the amendment to the resolution is filed with the director of the department of management.
   7.  A natural gas distribution agency receiving replacement tax revenue under this section shall on or before March 1 of each year file a report with the department of management, the department of revenue, and the county auditor of each county in which the replacement tax district is located. The report shall include all of the following:
   a.  The amount of bonds, including interest on the bonds, issued under this chapter during the most recent tax year that qualify for payment using replacement tax revenues received by the agency under this section.
   b.  The amount of bonds, including interest on the bonds, that remain unpaid at the close of the most recent tax year, and that qualify for payment using replacement tax revenues received by the agency under this section.
   c.  The amount of replacement tax revenue received by the agency under this section and used in the most recent tax year for the payment of bonds issued under this chapter, including interest on the bonds.
   d.  The amount of replacement tax revenue received by the agency under this section in the most recent tax year and deposited by the agency for the future payment of bonds issued under this chapter, including interest on the bonds.
   e.  The amount of funds received by the agency and used in the most recent tax year for the payment of bonds issued under this chapter, including interest on the bonds, from sources other than replacement tax revenue received under this section.
   f.  The amount of funds received by the agency in the most recent tax year and deposited by the agency for the future payment of bonds issued under this chapter, including interest on the bonds, from sources other than replacement tax revenue received under this section.
   g.  All other additional information or documentation relating to an agency’s use of replacement tax revenue received under this section deemed relevant by the department of management in consultation with the department of revenue.
    Sec. 5.  Section 437A.8, subsection 1, Code 2015, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  g.  All information determined by the director to be necessary to implement the allocation and payment of replacement taxes to a natural gas distribution agency that has authorized the use of such revenue pursuant to section 28F.5A.
    Sec. 6.  Section 437A.15, subsection 3, paragraph a, subparagraph (1), Code 2015, is amended to read as follows:
   (1)  All replacement taxes owed by a taxpayer shall be allocated among the local taxing districts in which such taxpayer’s property is located in accordance with a general allocation formula determined by the department of management on the basis of general property tax equivalents. General property tax equivalents shall be determined by applying the levy rates reported by each local taxing district to the department of management on or before June 30 following a tax year to the taxable value of taxpayer property allocated to each such local taxing district as adjusted and reported to the department of management in such tax year by the director pursuant to section 437A.19, subsection 2. The general allocation formula for a tax year shall allocate to each local taxing district that portion of the replacement taxes owed by each taxpayer which bears the same ratio as such taxpayer’s general property tax equivalents for each local taxing district bears to such taxpayer’s total general property tax equivalents for all local taxing districts in Iowa.  For tax years beginning on or after January 1, 2016, the amount of replacement taxes allocated by the department of management under this section and paid to local taxing districts located in whole or in part within a replacement tax district created under section 28F.5A shall be adjusted to take into account the use of replacement taxes under section 28F.5A by a natural gas distribution agency.
    Sec. 7.  Section 437A.23, Code 2015, is amended to read as follows:
   437A.23  Deposit of tax proceeds.

   All Following any required allocation and payment of statewide property tax revenues to natural gas distribution agencies pursuant to section 28F.5A, revenues received from imposition of the statewide property tax shall be deposited in the general fund of the state. Fifty percent of the revenues shall be available, as appropriated by the general assembly, to the department of management for salaries, support, services, and equipment to administer the replacement tax. The balance of the revenues shall be available, as appropriated by the general assembly, to the department of revenue for salaries, support, services, and equipment to administer and enforce the replacement tax and the statewide property tax.
    Sec. 8.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   Code chapter 28F provides a means for the joint financing by public agencies of works or facilities for the collection, treatment, purification, and disposal in a sanitary manner of liquid and solid waste, sewage, and industrial waste, facilities used for the conversion of solid waste to energy, and also electric power facilities constructed within the state of Iowa. Code chapter 28F applies to the acquisition, construction, reconstruction, ownership, operation, repair, extension, or improvement of such works or facilities by a separate administrative or legal entity created pursuant to Code chapter 28E or Code chapter 389.
   This bill adds facilities and works for the storage, transportation, transmission, and delivery of natural gas to the types of works and facilities that may be jointly financed by public agencies under Code chapter 28F.
   Current Code chapter 28F authorizes joint agencies to issue revenue bonds to finance such works or facilities that are payable from the net revenues of the project and other revenues that the entity may have and which are lawfully available for the payment of revenue bonds. New Code section 28F.5A authorizes a natural gas distribution agency that is undertaking a project to acquire, construct, reconstruct, operate, repair, extend, or improve natural gas facilities and works used for the storage, transportation, transmission, and delivery of natural gas to authorize, by resolution, the use of certain replacement tax revenue collected under Code chapter 437A for the payment of bonds issued under Code chapter 28F.
   Under the bill, for each tax year after a designated base year, the natural gas distribution agency that has adopted the required resolution shall receive an amount of replacement tax paid by the agency under Code chapter 437A in an amount not to exceed the maximum amount allowed in the bill. The maximum amount of replacement tax that may be paid to a natural gas distribution agency for a tax year is the total amount of statewide property taxes under Code section 437A.18 and replacement taxes paid by the natural gas distribution agency in the tax year minus the total amount of statewide property taxes under Code section 437A.18 and replacement taxes paid by the natural gas distribution agency in the base year.
   The bill requires the natural gas distribution agency to certify to the department of management and the county auditor of each county in which the replacement tax district is located the amount of bonds issued under this Code chapter, including interest on the bonds, that qualify for payment from the replacement tax revenue received under this Code section. The bill also requires a natural gas distribution agency receiving replacement tax revenue to, on or before March 1 of each year, file a report containing information specified in the bill with the department of management, the department of revenue, and the county auditor of each county in which the replacement tax district is located. 
   The maximum period of years that a natural gas distribution agency may receive replacement tax revenue is 40 consecutive tax years following the base year. The bill allows the resolution adopted by the natural gas distribution agency to be amended or repealed.
   The bill makes corresponding changes to Code chapter 437A to provide for the allocation and payment of replacement tax revenues to natural gas distribution agencies.
   The bill takes effect upon enactment.