House Study Bill 639 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON SANDS) 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 6015YC (2) 86 md/sc

H.F. _____ Section 1. Section 331.403, subsection 3, paragraph d, Code 1 2016, is amended to read as follows: 2 d. The legislative services agency, in consultation with 3 the department of management, shall annually prepare a report 4 for submission to the governor and the general assembly that 5 summarizes and analyzes the information contained in the 6 reports submitted under this subsection , section 357H.9, 7 subsection 2 , and section 384.22, subsection 2 . The report 8 shall contain a list of each county, city, or rural improvement 9 zone that filed an annual report for the most recently ended 10 fiscal year and each such entity’s amount reported under 11 paragraph “b” , subparagraph (8), for counties and rural 12 improvement zones, or section 384.22, subsection 2, paragraph 13 “b” , subparagraph (8), for cities. The report prepared by the 14 legislative services agency shall be submitted not later than 15 February 15 following the most recently ended fiscal year for 16 which the reports were filed. 17 Sec. 2. Section 403.5, subsection 2, paragraph b, 18 subparagraph (1), Code 2016, is amended to read as follows: 19 (1) Prior to its approval of an urban renewal plan which 20 provides for a division of revenue pursuant to section 403.19 , 21 the municipality shall mail the proposed plan by regular mail 22 to the affected taxing entities. The municipality shall 23 include with the proposed plan notification of a consultation 24 to be held between the municipality and affected taxing 25 entities prior to the public hearing on the urban renewal plan. 26 If the proposed urban renewal plan or proposed urban renewal 27 project within the urban renewal area , which plan or project 28 is approved prior to the effective date of this Act, includes 29 the use of taxes revenue resulting from a division of revenue 30 taxes under section 403.19 for a public building, including but 31 not limited to a police station, fire station, administration 32 building, swimming pool, hospital, library, recreational 33 building, city hall, or other public building that is exempt 34 from taxation, including the grounds of, and the erection, 35 -1- LSB 6015YC (2) 86 md/sc 1/ 8

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

H.F. _____ determines that the presence of a substantial number of 1 slum, deteriorated, or deteriorating structures; defective or 2 inadequate street layout; faulty lot layout in relation to 3 size, adequacy, accessibility, or usefulness; insanitary or 4 unsafe conditions; deterioration of site or other improvements; 5 diversity of ownership, tax or special assessment delinquency 6 exceeding the fair value of the land; defective or unusual 7 conditions of title; or the existence of conditions which 8 endanger life or property by fire and other causes; or any 9 combination of these factors; substantially impairs or arrests 10 the sound growth of a municipality, retards the provision of 11 housing accommodations, or constitutes an economic or social 12 liability and is a menace to the public health, safety, or 13 welfare in its present condition and use. A disaster area 14 referred to in section 403.5, subsection 7 , constitutes a 15 “blighted area” . “Blighted area” does not include real property 16 assessed as agricultural property for purposes of property 17 taxation. 18 b. For an urban renewal area established on or after 19 the effective date of this Act, an area of a municipality 20 within which the local governing body of the municipality 21 determines that the presence of a substantial number of slum, 22 deteriorated, or deteriorating structures; insanitary or unsafe 23 conditions; deterioration of site or other improvements; or 24 the existence of conditions which endanger life or property by 25 fire and other causes; or any combination of these factors; 26 substantially impairs or arrests the sound growth of a 27 municipality, retards the provision of housing accommodations, 28 or constitutes an economic or social liability and is a 29 menace to the public health, safety, or welfare in its present 30 condition and use. A disaster area referred to in section 31 403.5, subsection 7, constitutes a “blighted area” . “Blighted 32 area” does not include real property assessed as agricultural 33 property for purposes of property taxation. 34 Sec. 5. NEW SECTION . 403.18A Urban renewal area duration 35 -3- LSB 6015YC (2) 86 md/sc 3/ 8

H.F. _____ —— limitations. 1 1. An urban renewal area in existence on the effective date 2 of this Act for which an ordinance providing for a division of 3 revenue under section 403.19 was adopted before the effective 4 date of this Act and that is not limited in duration under 5 section 403.17, subsection 10, or section 403.22, subsection 5, 6 shall be subject to the duration limitation in subsection 2. 7 2. a. For an urban renewal area described in subsection 1, 8 the urban renewal area, including all applicable urban renewal 9 plans, projects, and ordinances providing for a division of 10 revenue, shall continue in effect under this chapter, until 11 such time that the urban renewal area is dissolved by the 12 municipality or until the urban renewal area terminates under 13 the conditions of this section, whichever occurs first. The 14 municipality may continue to incur or issue additional costs 15 or indebtedness for such urban renewal area, including loans, 16 advances, and bonds that qualify for payment from the special 17 fund created in section 403.19, on or after the effective date 18 of this Act and until dissolution or termination of the urban 19 renewal area. 20 b. (1) For an urban renewal area described in subsection 21 1 that is based on a finding that the area is an economic 22 development area and that no part contains slum or blighted 23 conditions, the urban renewal area, including all applicable 24 urban renewal plans, projects, and ordinances providing for a 25 division of revenue, shall terminate and be of no further force 26 and effect on July 1, 2036. 27 (2) For an urban renewal area described in subsection 1 that 28 is based on a finding that all or a part of the area contains 29 slum or blighted conditions, the urban renewal area, including 30 all applicable urban renewal plans, projects, and ordinances 31 providing for a division of revenue, shall terminate and be of 32 no further force and effect on July 1, 2041. 33 3. The department of management shall adopt rules pursuant 34 to chapter 17A necessary to implement and administer this 35 -4- LSB 6015YC (2) 86 md/sc 4/ 8

H.F. _____ section. 1 Sec. 6. Section 403.19, Code 2016, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 3A. a. Except as otherwise provided in 4 paragraph “b” or section 403.22, an ordinance providing for a 5 division of revenue under this section that is adopted on or 6 after the effective date of this Act shall be limited to twenty 7 years from the calendar year following the calendar year in 8 which the municipality first certifies to the county auditor 9 the amount of any loans, advances, indebtedness, or bonds that 10 qualify for payment from the division of revenue provided 11 for in this section. The urban renewal area, including all 12 applicable urban renewal plans, projects, and ordinances, shall 13 terminate and be of no further force and effect following the 14 twenty-year period provided in this subsection. 15 b. An ordinance providing for a division of revenue under 16 this section that is adopted on or after the effective date 17 of this Act for an urban renewal area that contains slum or 18 blighted conditions shall be limited to twenty-five years from 19 the calendar year following the calendar year in which the 20 municipality first certifies to the county auditor the amount 21 of any loans, advances, indebtedness, or bonds that qualify for 22 payment from the division of revenue provided in this section. 23 The urban renewal area, including all applicable urban renewal 24 plans, projects, and ordinances, shall terminate and be of no 25 further force and effect following the twenty-five-year period 26 provided in this subsection. 27 Sec. 7. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 28 immediate importance, takes effect upon enactment. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill relates to Iowa’s urban renewal law. 33 The bill requires the annual report prepared by the 34 legislative services agency, in consultation with the 35 -5- LSB 6015YC (2) 86 md/sc 5/ 8

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

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

H.F. _____ effect. If, however, the urban renewal area for which such 1 an ordinance is adopted contains slum or blighted conditions, 2 the division of revenue shall be limited to 25 years from 3 the calendar year following the calendar year in which the 4 municipality first certifies to the county auditor the amount 5 of any loans, advances, indebtedness, or bonds that qualify for 6 payment from the division of revenue. 7 The bill takes effect upon enactment. 8 -8- LSB 6015YC (2) 86 md/sc 8/ 8