S.F. _____ Section 1. Section 386.1, Code 2015, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 4A. “ Promotion area” means an area which 3 may be created and the lessors therein subject to the lodging 4 fee in accordance with section 386.3A. 5 NEW SUBSECTION . 4B. “Promotion board” means the board of 6 directors of a nonprofit corporation that conducts promotion 7 services and sponsors or supports community or tourism 8 attractions and activities in a promotion area or in the area 9 of a proposed promotion area and whose membership is comprised 10 of at least fifty percent lessors, as defined in section 11 386.5B, subsection 7, located in the promotion area. 12 NEW SUBSECTION . 4C. “Promotion services” means any of the 13 following: 14 a. Promoting public events that benefit businesses or 15 property in a promotion area. 16 b. Coordinating live music performances in a promotion area. 17 c. Coordinating promotion, marketing, and sales programs to 18 benefit property or businesses located in a promotion area. 19 d. Marketing and economic development services, including 20 retail retention and recruitment for the promotion area. 21 e. Providing security, sanitation, graffiti removal, street 22 and sidewalk cleaning, and other services for the promotion 23 area that are in addition to those already provided by the 24 city. 25 f. Any other services that benefit businesses and property 26 located in the promotion area. 27 Sec. 2. Section 386.2, Code 2015, is amended to read as 28 follows: 29 386.2 Authorization. 30 1. A city which that proposes to create a district, to 31 provide for its existence and operation, to provide for 32 improvements or self-liquidating improvements for the district, 33 to authorize and issue bonds for the purposes of the district, 34 and to levy the taxes authorized by this chapter must do so in 35 -1- LSB 2634XC (2) 86 md/sc 1/ 13

S.F. _____ accordance with the provisions of this chapter . 1 2. A city that proposes to create a promotion area, to 2 provide for its existence and operation, and to undertake or 3 provide for promotion services in the promotion area must do so 4 in accordance with the provisions of this chapter. Except for 5 the local lodging fee authorized in section 386.5B, a city is 6 not authorized to levy any other taxes or issue bonds otherwise 7 authorized in this chapter unless the city has also established 8 a district in accordance with the provisions of this chapter 9 that includes the property comprising the promotion area. 10 Sec. 3. NEW SECTION . 386.3A Establishment of a promotion 11 area. 12 1. A promotion area may be created by action of the council 13 following approval by the county board of supervisors, if 14 applicable, in accordance with the provisions of this section. 15 An area shall: 16 a. Be comprised of contiguous property wholly within 17 the boundaries of the city. However, a promotion area may 18 include property in the unincorporated areas of the county that 19 is contiguous to the property of the proposed area located 20 within the boundaries of a city, if approved by resolution of 21 the county board of supervisors. A promotion area shall be 22 comprised only of property that is zoned for commercial or 23 industrial uses or properties within a duly designated historic 24 district. 25 b. Be given a descriptive name containing the words 26 “promotion area”. 27 c. Be comprised of property related in some manner, 28 including but not limited to present or potential use, physical 29 location, condition, relationship to an area, or relationship 30 to present or potential commercial or other activity in an 31 area, so as to be benefited in any manner from the performance 32 of promotion services in the area. 33 2. The council shall initiate proceedings for establishing 34 a promotion area upon the filing with the city clerk of a 35 -2- LSB 2634XC (2) 86 md/sc 2/ 13

S.F. _____ petition containing: 1 a. The signatures of a majority of all owners of property 2 that is used in the business of renting lodging to users within 3 the proposed promotion area. These signatures must together 4 represent ownership of property with an assessed value in 5 excess of fifty percent of the assessed value of all of the 6 property in the proposed promotion area. 7 b. A description of the boundaries of the proposed promotion 8 area or a description of the property within the proposed 9 promotion area. 10 c. The name of the proposed promotion area. 11 d. A statement of the rate of the local lodging fee proposed 12 for imposition within the promotion area, not to exceed one 13 dollar per night of lodging rental. 14 e. The purpose of the establishment of the promotion area, 15 which may be stated generally or in terms of the relationship 16 of the property within the promotion area or the interests of 17 the owners of property within the promotion area. 18 f. A statement that local lodging fees shall be used for 19 promotion services in the promotion area. 20 3. a. The council shall notify the city planning commission 21 upon the receipt of a petition. It shall be the duty of the 22 city planning commission to make recommendations to the council 23 in regard to the proposed promotion area. The city planning 24 commission shall, with due diligence, prepare an evaluative 25 report for the council on the merit and feasibility of the 26 promotion services for the proposed promotion area. The 27 council shall not hold its public hearings or take further 28 action on the establishment of the promotion area until it 29 has received the report of the city planning commission. In 30 addition to its report, the commission may, from time to time, 31 recommend to the council amendments and changes relating to the 32 promotion area. 33 b. If no city planning commission exists, the council shall 34 notify the metropolitan or regional planning commission upon 35 -3- LSB 2634XC (2) 86 md/sc 3/ 13

S.F. _____ receipt of a petition, and such commission shall have the 1 same duties set forth in this subsection as a city planning 2 commission. If no metropolitan or regional planning commission 3 exists, the council shall notify the zoning commission upon 4 receipt of a petition, and such commission shall have the 5 same duties set forth in this subsection as a city planning 6 commission. If no planning or zoning commission exists, the 7 council shall, upon receipt of a petition, conduct a public 8 hearing on the establishment of a promotion area. 9 4. Upon receipt of the commission’s final report or after 10 the public hearing has been conducted, as applicable, the 11 council shall set a time and place for a meeting at which 12 the council proposes to take action on the petition filed 13 pursuant to subsection 2 for establishment of the promotion 14 area and shall publish notice of the meeting as provided in 15 section 362.3, and the clerk shall send a copy of the notice by 16 certified mail not less than fifteen days before the meeting 17 to each owner of property within the proposed promotion area 18 at the owner’s address as shown by the records of the county 19 auditor. If a property is shown to be in the name of more than 20 one owner at the same mailing address, a single notice may be 21 mailed addressed to all owners at that address. Failure to 22 receive a mailed notice is not grounds for objection to the 23 council’s taking any action authorized in this section, section 24 386.4A, section 386.5A, or section 386.5B. 25 5. In addition to the time and place of the meeting for 26 hearing on the petition, the notice must state: 27 a. That a petition has been filed with the council asking 28 that a promotion area be established. 29 b. The name of the promotion area. 30 c. The purpose of the promotion area. 31 d. The property proposed to be included in the promotion 32 area. 33 e. The rate of the local lodging fee proposed for imposition 34 in the promotion area. 35 -4- LSB 2634XC (2) 86 md/sc 4/ 13

S.F. _____ f. The name of the promotion board with which the city 1 intends to contract to conduct promotion services within the 2 promotion area using local lodging fee revenue. 3 6. At the time and place set in the notice, the council 4 shall hear all owners of property in the proposed promotion 5 area or residents of the city, or county, if applicable, 6 desiring to express their views. The council must wait at 7 least thirty days after the public hearing has been held before 8 it may adopt an ordinance establishing a promotion area which 9 must be comprised of all the property which the council finds 10 has the relationship described in subsection 1, paragraph 11 “c” . Property included in the promotion area proposed in the 12 petition need not be included in the established promotion 13 area. However, the council may not include property in the 14 promotion area that was not included in the petition proposing 15 the area until the council has held another public hearing 16 after it has published and mailed notice in the same manner 17 as required in subsection 4 and containing the information 18 required in subsection 5, or has caused a notice of the 19 inclusion of the property to be personally served upon each 20 owner of the additional property, or has received a written 21 waiver of notice from each owner of the additional property. 22 7. Adoption of the ordinance establishing a promotion 23 area requires the affirmative vote of three-fourths of all 24 of the members of the council, or in cities having but three 25 members of the council, the affirmative vote of two members. 26 However, if a remonstrance has been filed with the clerk signed 27 by a majority of all owners of property within the proposed 28 promotion area representing ownership of property with an 29 assessed value in excess of fifty percent of the assessed 30 value of all of the property in the proposed promotion area, 31 the adoption of the ordinance requires a unanimous vote of the 32 council. 33 8. The clerk shall cause a copy of the ordinance to be filed 34 in the office of the county recorder of each county in which 35 -5- LSB 2634XC (2) 86 md/sc 5/ 13

S.F. _____ any property within the promotion area is located. 1 9. The city shall, as part of the ordinance establishing the 2 promotion area, designate a promotion board that the city will 3 contract with to administer revenues collected by the city from 4 imposition of the local lodging fee and undertake promotion 5 services in the promotion area using local lodging fee revenue. 6 10. The adoption of an ordinance establishing a promotion 7 area is a legislative determination that the property within 8 the promotion area has the relationship required under 9 subsection 1, paragraph “c” , and includes all of the property 10 within the promotion area which has that relationship in the 11 promotion area. 12 11. Any resident or property owner of the city, or of the 13 unincorporated area of the county, if applicable, may appeal 14 the action and the decisions of the council, including the 15 creation of the promotion area and the imposition of the local 16 lodging fee, to the district court of the county in which any 17 part of the promotion area is located, within thirty days after 18 the date upon which the ordinance creating the promotion area 19 becomes effective, but the action and decision of the council 20 are final and conclusive unless the court finds that the 21 council exceeded its authority. An action may not be brought 22 questioning the regularity of the proceedings pertaining to 23 the establishment of a promotion area or the validity of the 24 promotion, or the propriety of the inclusion or exclusion of 25 any property within or from the promotion area, or the ability 26 to impose a local lodging fee in accordance with the ordinance 27 establishing the promotion area, after thirty days from the 28 date on which the ordinance creating the promotion area becomes 29 effective. 30 Sec. 4. NEW SECTION . 386.4A Amendments to promotion areas. 31 1. The ordinance creating a promotion area may be amended 32 and property may be added to a promotion area and the local 33 lodging fee rate referred to in the ordinance may be changed at 34 any time in the same manner and by the same procedure as for the 35 -6- LSB 2634XC (2) 86 md/sc 6/ 13

S.F. _____ establishment of a promotion area. 1 2. Action by the council amending the ordinance creating 2 the promotion area, including adding property to or severing 3 property from the promotion area, changing the designated 4 promotion board, or changing the rate of the local lodging 5 fee, shall be by ordinance adopted by an affirmative vote of 6 three-fourths of all of the members of the council, or in 7 cities having but three members of the council, the affirmative 8 vote of two members. However, if a remonstrance has been filed 9 with the clerk signed by a majority of all owners of property 10 within the promotion area and all property proposed to be 11 included representing ownership of property with an assessed 12 value in excess of fifty percent of the assessed value of all 13 the property in the promotion area and all property proposed 14 to be included, the amending ordinance must be adopted by 15 unanimous vote of the council. 16 3. The clerk shall cause a copy of the amending ordinance 17 to be filed in the office of the county recorder of each county 18 in which any property within the promotion area, as amended, 19 is located. 20 4. Any resident or property owner of the city may appeal 21 the action or decisions of the council amending the ordinance 22 creating the promotion area to the district court of the county 23 in which any part of the promotion area, as amended, is located 24 within fifteen days after the date upon which the amending 25 ordinance becomes effective, but the action and decision of 26 the council are final and conclusive unless the court finds 27 that the council exceeded its authority. An action may not 28 be brought questioning the regularity of the proceedings 29 pertaining to the amended ordinance or the validity of the 30 promotion area as amended, or the propriety of the inclusion 31 or exclusion of any property within or from the amended 32 promotion area, or the ability to impose the local lodging fee 33 in accordance with the ordinance establishing the promotion 34 area, as amended, after thirty days from the date upon which 35 -7- LSB 2634XC (2) 86 md/sc 7/ 13

S.F. _____ the amending ordinance becomes effective. 1 5. All other provisions in section 386.3A shall apply to 2 an amended promotion area and to any ordinance amending the 3 ordinance creating the promotion area with the same effect as 4 they apply to the original promotion area and the ordinance 5 creating the original promotion area. 6 Sec. 5. NEW SECTION . 386.5A Dissolution. 7 A promotion area may be dissolved and terminated by 8 action of the council repealing the ordinance creating the 9 promotion area, and any subsequent ordinances amending the 10 ordinance creating the promotion area, by an affirmative vote 11 of three-fourths of all members of the council, or in cities 12 having but three members of the council, the affirmative vote 13 of two members. However, if a remonstrance has been filed with 14 the clerk signed by a majority of all owners of property within 15 the promotion area representing ownership of property with 16 an assessed value in excess of fifty percent of the assessed 17 value of all the property in the promotion area, the repeal of 18 the ordinance creating the promotion area, and any subsequent 19 ordinances amending the ordinance creating the promotion area, 20 requires a unanimous vote of the council. 21 Sec. 6. NEW SECTION . 386.5B Local lodging fee. 22 1. Following establishment of a promotion area in 23 accordance with this chapter, a city may impose, as part of 24 the ordinance establishing the promotion area, a local lodging 25 fee, not to exceed one dollar, to be imposed on each night of 26 lodging rental at a lessor located in the promotion area. 27 2. The local lodging fee shall be collected by the lessor 28 of lodging from the user of that lodging. The lessor shall add 29 the fee to the sales price of the lodging, and the fee shall 30 be stated as a distinct item separate and apart from the sales 31 price of the lodging and taxes imposed, if any, under section 32 423A.3 or 423A.4. 33 3. Local lodging fees collected by a lessor shall be due and 34 payable to the city according to a schedule specified in the 35 -8- LSB 2634XC (2) 86 md/sc 8/ 13

S.F. _____ ordinance creating the promotion area. A lessor is liable for 1 the payment of fees to the city in the same manner as liability 2 is imposed on retailers for the payment of taxes under sections 3 421.26 and 421.28. 4 4. Fees received by a city under this section shall be 5 deposited in a promotion area account within the city’s general 6 fund. A separate account shall be created for each promotion 7 area established by the city. All fees collected under this 8 section are deemed to be held in trust for the city. The city 9 shall, not less than quarterly, transfer all such fees from 10 the promotion area account within the city’s general fund to 11 the promotion board with which the city has contracted with to 12 administer revenues collected by the city from imposition of 13 the local lodging fee. 14 5. Moneys transferred to a promotion board shall be used for 15 promotion services within the applicable promotion area. 16 6. The ordinance imposing a local lodging fee under this 17 section shall designate a city officer to receive payments 18 from lessors and to prescribe any forms necessary for the 19 collection, reporting, and payment of such fees. 20 7. For the purposes of this section, unless the context 21 otherwise requires, “lessor” , “lodging” , “rent” , and “user” mean 22 the same as defined in section 423A.2. 23 Sec. 7. Section 423A.3, Code 2015, is amended to read as 24 follows: 25 423A.3 State-imposed hotel and motel tax. 26 A tax of five percent is imposed upon the sales price for 27 the renting of any lodging if the renting occurs in this state. 28 The tax shall be collected by any lessor of lodging from the 29 user of that lodging. The lessor shall add the tax to the 30 sales price of the lodging, and the state-imposed tax, when 31 collected, shall be stated as a distinct item, separate and 32 apart from the sales price of the lodging , and the local tax 33 imposed, if any, under section 423A.4 , and the local lodging 34 fee imposed, if any, under section 386.5B . 35 -9- LSB 2634XC (2) 86 md/sc 9/ 13

S.F. _____ Sec. 8. Section 423A.5, Code 2015, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 3. All of the following are exempt from any 3 fee imposed under section 386.5B: 4 a. The renting of lodging which is rented by the same person 5 for a period of more than thirty-one consecutive days. 6 b. The renting of sleeping rooms in dormitories and in the 7 memorial unions at all universities and colleges located in the 8 state of Iowa. 9 c. The lodging furnished to the guests of a religious 10 institution if the property is exempt under section 427.1, 11 subsection 8, and the purpose of renting is to provide a 12 place for a religious retreat or function and not a place for 13 transient guests generally. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill authorizes the establishment of promotion areas by 18 cities and authorizes the imposition of a local lodging fee in 19 those promotion areas. 20 Under the bill, a promotion area may be created by action 21 of the city council under Code chapter 386 (self-supported 22 municipal improvement districts). A promotion area must be 23 comprised of contiguous property wholly within the boundaries 24 of the city but may include property in the unincorporated 25 area of the county that is contiguous to the property of the 26 proposed area if the county board of supervisors approves its 27 inclusion by resolution. The bill requires that the promotion 28 area be comprised of property related in some manner, including 29 but not limited to present or potential use, physical location, 30 condition, relationship to an area, or relationship to present 31 or potential commercial or other activity in an area, so as to 32 be benefited in any manner from the performance of promotion 33 services in the area. 34 The bill requires the council to initiate proceedings for 35 -10- LSB 2634XC (2) 86 md/sc 10/ 13

S.F. _____ establishing a promotion area upon the filing of a petition 1 containing signatures of all owners of property that is used in 2 the business of renting lodging within the proposed area and 3 other information specified in the bill. 4 The bill requires the council to notify the city planning 5 commission upon the receipt of a petition, and the planning 6 commission is required to make recommendations to the council 7 in regard to the proposed promotion area. The city planning 8 commission is also required to prepare an evaluative report 9 for the council on the merit and feasibility of the promotion 10 services for the proposed promotion area. The bill provides 11 alternative procedures in the event the city does not have a 12 planning commission. 13 Upon the receipt of the commission’s final report, the 14 council shall set a time and place for a meeting at which the 15 council proposes to take action for the establishment of the 16 promotion area and receive comments from residents. 17 The bill establishes council voting requirements for the 18 approval of an ordinance establishing a promotion area, appeal 19 provisions relating to the establishment of a promotion area, 20 provisions governing amendments to the ordinance creating the 21 promotion area, and provisions governing the dissolution of the 22 promotion area. Such requirements and provisions are similar 23 to those in current Code chapter 386 for establishment of a 24 self-supported municipal improvement district. 25 The bill provides that except for the local lodging fee 26 authorized in the bill, a city is not authorized to levy 27 any taxes or issue any bonds otherwise authorized in Code 28 chapter 386 within a promotion area unless the city has also 29 established a district in accordance with the provisions of 30 Code chapter 386 that includes the property comprising the 31 promotion area. 32 Following establishment of a promotion area, as part of the 33 ordinance establishing the promotion area, a city may impose 34 a local lodging fee, not to exceed $1, to be imposed on each 35 -11- LSB 2634XC (2) 86 md/sc 11/ 13

S.F. _____ night of lodging rental at a lessor located in the promotion 1 area. The local lodging fee shall be collected by the lessor 2 of lodging from the user of that lodging. The lessor shall 3 add the fee to the sales price of the lodging, and the fee 4 shall be stated as a distinct item separate and apart from the 5 sales price of the lodging and taxes imposed. Local lodging 6 fees collected by a lessor shall be due and payable to the city 7 according to a schedule specified in the ordinance. A lessor 8 is liable for the payment of fees to the city in the same manner 9 as liability is imposed on retailers for the payment of certain 10 state taxes. 11 The bill requires the city to contract with a promotion 12 board, as defined in the bill, to administer the local lodging 13 fees collected by a city and to undertake promotion services 14 within the promotion area using such revenues. 15 The bill requires that local lodging fees received by a 16 city be deposited in a promotion area account within the 17 city’s general fund. Such revenues must then be transferred 18 to the promotion board not less than quarterly. The moneys 19 transferred to the promotion board shall be used for promotion 20 services within the applicable promotion area. The bill 21 defines “promotion services” to mean any of the following: 22 publicizing public events that benefit businesses or property 23 in a promotion area; coordinating live music performances 24 in a promotion area; coordinating promotion, marketing, and 25 sales programs to benefit property or businesses located in a 26 promotion area; marketing and economic development services, 27 including retail retention and recruitment for the promotion 28 area; providing security, sanitation, graffiti removal, street 29 and sidewalk cleaning, and other services for the promotion 30 area that are in addition to those already provided by the 31 city; and any other services that benefit businesses and 32 property located in the promotion area. 33 The bill provides that an ordinance imposing a local lodging 34 fee is required to designate a city officer to receive payments 35 -12- LSB 2634XC (2) 86 md/sc 12/ 13