House Study Bill 227 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) A BILL FOR An Act relating to the taxation of pipeline company property 1 by modifying eligibility criteria for the business property 2 tax credit, modifying property assessment limitations, and 3 including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2562YC (5) 86 md/sc

H.F. _____ Section 1. Section 331.559, Code 2015, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 18A. Collect taxes levied against the 3 property of pipeline companies as provided in chapter 438. 4 Sec. 2. Section 426C.1, subsection 4, Code 2015, is amended 5 to read as follows: 6 4. “Parcel” means as defined in section 445.1 and, for 7 purposes of business property tax credits claimed for fiscal 8 years beginning on or after January 1, 2016, “parcel” also means 9 that portion of a parcel assigned to be commercial property, 10 industrial property, or railway property under chapter 434 , 11 or pipeline property under chapter 438, pursuant to section 12 441.21, subsection 13 , paragraph “c” . 13 Sec. 3. Section 426C.4, subsection 1, paragraph a, Code 14 2015, is amended to read as follows: 15 a. Except as provided in paragraph “b” , parcels classified 16 and taxed as commercial property, industrial property, or 17 railway property under chapter 434 , or pipeline property under 18 chapter 438 are eligible for a credit under this chapter . A 19 person may claim and receive one credit under this chapter for 20 each eligible parcel unless the parcel is part of a property 21 unit for which a credit is claimed. A person may claim and 22 receive one credit under this chapter for each property unit. 23 A credit approved for a property unit shall be allocated to 24 the several parcels within the property unit in the proportion 25 that each parcel’s total amount of property taxes due and 26 payable bears to the total amount of property taxes due and 27 payable on the property unit. Only property units comprised of 28 property assessed as commercial property, industrial property, 29 or railway property under chapter 434 , or pipeline property 30 under chapter 438 are eligible for a credit under this chapter . 31 The classification of property used to determine eligibility 32 for the credit under this chapter shall be the classification 33 of the property for the assessment year used to calculate the 34 taxes due and payable in the fiscal year for which the credit 35 -1- LSB 2562YC (5) 86 md/sc 1/ 6

H.F. _____ is claimed. 1 Sec. 4. Section 441.21, subsection 5, paragraph a, Code 2 2015, is amended to read as follows: 3 a. (1) For valuations established as of January 1, 1979, 4 property valued by the department of revenue pursuant to 5 chapters 428 , 433 , and 437 , and 438 shall be considered as 6 one class of property and shall be assessed as a percentage 7 of its actual value. The percentage shall be determined by 8 the director of revenue in accordance with the provisions of 9 this section . For valuations established as of January 1, 10 1979, the percentage shall be the quotient of the dividend and 11 divisor as defined in this section . The dividend shall be the 12 total actual valuation established for 1978 by the department 13 of revenue, plus ten percent of the amount so determined. 14 The divisor for property valued by the department of revenue 15 pursuant to chapters 428 , 433 , and 437 , and 438 shall be the 16 valuation established for 1978, plus the amount of value added 17 to the total actual value by the revaluation of the property 18 by the department of revenue as of January 1, 1979. For 19 valuations established as of January 1, 1980, property valued 20 by the department of revenue pursuant to chapters 428 , 433 , and 21 437 , and 438 shall be assessed at a percentage of its actual 22 value. The percentage shall be determined by the director of 23 revenue in accordance with the provisions of this section . For 24 valuations established as of January 1, 1980, the percentage 25 shall be the quotient of the dividend and divisor as defined in 26 this section . The dividend shall be the total actual valuation 27 established for 1979 by the department of revenue, plus eight 28 percent of the amount so determined. The divisor for property 29 valued by the department of revenue pursuant to chapters 428 , 30 433 , and 437 , and 438 shall be the valuation established for 31 1979, plus the amount of value added to the total actual 32 value by the revaluation of the property by the department of 33 revenue as of January 1, 1980. For valuations established as 34 of January 1, 1981, and each year thereafter, the percentage 35 -2- LSB 2562YC (5) 86 md/sc 2/ 6

H.F. _____ of actual value at which property valued by the department of 1 revenue pursuant to chapters 428 , 433 , and 437 , and 438 shall 2 be assessed shall be calculated in accordance with the methods 3 provided herein, except that any references to ten percent in 4 this subsection shall be eight percent. 5 (2) For valuations established on or after January 1, 6 2013, property valued by the department of revenue pursuant to 7 chapter 434 shall be considered a separate class of property 8 and shall be assessed at a percentage of its actual value equal 9 to the percentage of actual value at which property assessed 10 as commercial property is assessed under paragraph “b” for the 11 same assessment year. 12 (3) For valuations established on or after January 1, 13 2016, property valued by the department of revenue pursuant to 14 chapter 438 shall be considered a separate class of property 15 and shall be assessed at a percentage of its actual value equal 16 to the percentage of actual value at which property assessed 17 as commercial property is assessed under paragraph “b” for the 18 same assessment year. 19 Sec. 5. Section 441.21, subsections 9 and 10, Code 2015, are 20 amended to read as follows: 21 9. Not later than November 1, 1979, and November 1 of each 22 subsequent year, the director shall certify to the county 23 auditor of each county the percentages of actual value at 24 which residential property, agricultural property, commercial 25 property, industrial property, multiresidential property, 26 property valued by the department of revenue pursuant to 27 chapter 434 , property valued by the department of revenue 28 pursuant to chapter 438, and property valued by the department 29 of revenue pursuant to chapters 428 , 433 , and 437 , and 438 in 30 each assessing jurisdiction in the county shall be assessed for 31 taxation. The county auditor shall proceed to determine the 32 assessed values of agricultural property, residential property, 33 commercial property, industrial property, multiresidential 34 property, property valued by the department of revenue pursuant 35 -3- LSB 2562YC (5) 86 md/sc 3/ 6

H.F. _____ to chapter 434 , property valued by the department of revenue 1 pursuant to chapter 438, and property valued by the department 2 of revenue pursuant to chapters 428 , 433 , and 437 , and 438 by 3 applying such percentages to the current actual value of such 4 property, as reported to the county auditor by the assessor, 5 and the assessed values so determined shall be the taxable 6 values of such properties upon which the levy shall be made. 7 10. The percentage of actual value computed by the director 8 for agricultural property, residential property, commercial 9 property, industrial property, multiresidential property, 10 property valued by the department of revenue pursuant to 11 chapter 434 , property valued by the department of revenue 12 pursuant to chapter 438, and property valued by the department 13 of revenue pursuant to chapters 428 , 433 , and 437 , and 438 and 14 used to determine assessed values of those classes of property 15 does not constitute a rule as defined in section 17A.2, 16 subsection 11 . 17 Sec. 6. SAVINGS PROVISION. This Act, pursuant to section 18 4.13, does not affect the operation of, or prohibit the 19 application of, prior provisions of section 441.21, or rules 20 adopted under chapter 17A to administer prior provisions 21 of section 441.21, for assessment years beginning before 22 January 1, 2016, and for duties, powers, protests, appeals, 23 proceedings, actions, or remedies attributable to an assessment 24 year beginning before January 1, 2016. 25 Sec. 7. APPLICABILITY. The following provisions of this 26 Act apply to claims for the business property tax credit under 27 chapter 426C against property taxes due and payable in fiscal 28 years beginning on or after July 1, 2016: 29 1. The section of this Act amending section 426C.1, 30 subsection 4. 31 2. The section of this Act amending section 426C.4, 32 subsection 1, paragraph “a”. 33 Sec. 8. APPLICABILITY. The following provision or 34 provisions of this Act apply to assessment years beginning on 35 -4- LSB 2562YC (5) 86 md/sc 4/ 6

H.F. _____ or after January 1, 2016: 1 1. The section of this Act amending section 441.21, 2 subsection 5, paragraph “a”. 3 2. The section of this Act amending section 441.21, 4 subsections 9 and 10. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 Under current Code section 426C.4, parcels or property 9 units classified and taxed as commercial property, industrial 10 property, or railway property are eligible for the business 11 property tax credit. This bill adds pipeline property valued 12 by the department of revenue under Code chapter 438 to the 13 list of property classifications that may claim the business 14 property tax credit. Under the bill, pipeline property is 15 eligible for the business property tax credit against property 16 taxes due and payable in fiscal years beginning on or after 17 July 1, 2016. 18 Under current Code section 441.21(5), property valued by the 19 department of revenue pursuant to Code chapters 428 (certain 20 utility property), 433 (telephone company property), 437 21 (electric transmission lines), and 438 (pipeline companies) 22 are considered to be a single class of property for purposes 23 of calculating the statewide assessment limitation (rollback). 24 The bill provides that for valuations established on or after 25 January 1, 2016, pipeline company property valued by the 26 department of revenue pursuant to Code chapter 438 is assessed 27 as a separate class of property and at a percentage of its 28 actual value equal to the percentage of actual value at which 29 property assessed as commercial property is assessed for the 30 same assessment year. Under current law, for valuations 31 established on or after January 1, 2014, commercial property is 32 assessed at 90 percent of its actual value. 33 The bill, pursuant to Code section 4.13, does not affect the 34 operation of, or prohibit the application of, prior provisions 35 -5- LSB 2562YC (5) 86 md/sc 5/ 6

H.F. _____ of Code section 441.21, or rules adopted to administer 1 prior provisions of Code section 441.21, for assessment 2 years beginning before January 1, 2016, and for duties, 3 powers, protests, appeals, proceedings, actions, or remedies 4 attributable to an assessment year beginning before January 1, 5 2016. 6 -6- LSB 2562YC (5) 86 md/sc 6/ 6