House File 2063 - Introduced HOUSE FILE 2063 BY MOHR 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 taxes, modifying the conditions for 4 establishing certain urban renewal areas, imposing duration 5 limits on certain urban renewal areas, excluding certain 6 property taxes from a division of taxes, and including 7 effective date and applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 5112YH (5) 87 md/jh

H.F. 2063 Section 1. Section 260E.4, Code 2018, is amended to read as 1 follows: 2 260E.4 Incremental property taxes. 3 If an agreement provides that all or part of program costs 4 are to be paid for by incremental property taxes, the board 5 of directors shall provide by resolution that taxes levied 6 on the employer’s taxable business property, where new jobs 7 are created as a result of a project, each year by or for 8 the benefit of the state, city, county, school district, 9 or other taxing district after the effective date of the 10 resolution shall be divided as provided in section 403.19, 11 subsections 1 and 2 , in the same manner as if the employer’s 12 business property, where new jobs are created as a result of a 13 project, was taxable property in an urban renewal project and 14 the resolution was an ordinance within the meaning of those 15 subsections. The taxes received by the board of directors 16 shall be allocated to and when collected be paid into a special 17 fund of the community college and may be irrevocably pledged 18 by the community college to pay the principal of and interest 19 on the certificates issued by the community college to finance 20 or refinance, in whole or in part, the project. However, 21 with respect to any urban renewal project as to which an 22 ordinance is in effect under section 403.19 , the collection 23 of incremental property taxes authorized by this chapter are 24 suspended in favor of collection of incremental taxes under 25 section 403.19 . As used in this section , “taxes” includes, but 26 is not limited to, all levies on an ad valorem basis upon land 27 or real property of the employer’s business, where new jobs 28 are created as a result of a project. The urban renewal area 29 duration limitations under section 403.18A and the limitations 30 on the duration of ordinances under section 403.19, subsection 31 3A, shall not apply to resolutions adopted under this section. 32 Sec. 2. Section 331.403, subsection 3, paragraph d, Code 33 2018, is amended to read as follows: 34 d. The legislative services agency, in consultation with 35 -1- LSB 5112YH (5) 87 md/jh 1/ 14

H.F. 2063 the department of management, shall annually prepare a report 1 for submission to the governor and the general assembly that 2 summarizes and analyzes the information contained in the 3 reports submitted under this subsection , section 357H.9, 4 subsection 2 , and section 384.22, subsection 2 . The report 5 shall contain a list of each county, city, or rural improvement 6 zone that filed an annual report for the most recently ended 7 fiscal year and each such entity’s amount reported under 8 paragraph “b” , subparagraph (8), for counties and rural 9 improvement zones, or section 384.22, subsection 2, paragraph 10 “b” , subparagraph (8), for cities. The report prepared by the 11 legislative services agency shall be submitted not later than 12 February 15 following the most recently ended fiscal year for 13 which the reports were filed. 14 Sec. 3. Section 357H.9, subsection 1, Code 2018, is amended 15 by adding the following new paragraph: 16 NEW PARAGRAPH . 0f. The urban renewal area duration 17 limitations under section 403.18A and the limitations on the 18 duration of ordinances under section 403.19, subsection 3A, 19 shall not apply to rural improvement zones established under 20 this chapter and resolutions adopted under this section. 21 Sec. 4. Section 403.5, subsection 2, paragraph b, 22 subparagraph (1), Code 2018, is amended to read as follows: 23 (1) Prior to its approval of an urban renewal plan which 24 provides for a division of revenue pursuant to section 403.19 , 25 the municipality shall mail the proposed plan by regular mail 26 to the affected taxing entities. The municipality shall 27 include with the proposed plan notification of a consultation 28 to be held between the municipality and affected taxing 29 entities prior to the public hearing on the urban renewal plan. 30 If the proposed urban renewal plan or proposed urban renewal 31 project within the urban renewal area , which plan or project 32 is approved prior to the effective date of this Act, includes 33 the use of taxes resulting from a division of revenue under 34 section 403.19 for a public building, including but not limited 35 -2- LSB 5112YH (5) 87 md/jh 2/ 14

H.F. 2063 to a police station, fire station, administration building, 1 swimming pool, hospital, library, recreational building, city 2 hall, or other public building that is exempt from taxation, 3 including the grounds of, and the erection, equipment, 4 remodeling, maintenance, repair, or reconstruction of, and 5 additions or extensions to, such a building, the municipality 6 shall include with the proposed plan notification an analysis 7 of alternative development options and funding for the urban 8 renewal area or urban renewal project and the reasons such 9 options would be less feasible than the proposed urban renewal 10 plan or proposed urban renewal project. A copy of the analysis 11 required in this subparagraph shall be included with the urban 12 renewal report required under section 331.403 or 384.22 , as 13 applicable, and filed by December 1 following adoption of the 14 urban renewal plan or project. Urban renewal plans and urban 15 renewal projects approved on or after the effective date of 16 this Act shall not include the use of taxes resulting from a 17 division of revenue under section 403.19 for a public building, 18 including but not limited to a police station, fire station, 19 administration building, swimming pool, hospital, library, 20 recreational building, city hall, or other public building 21 that is exempt from taxation, including the grounds of, and 22 the erection, equipment, remodeling, maintenance, repair, or 23 reconstruction of, and additions or extensions to, such a 24 building. 25 Sec. 5. Section 403.12, subsection 1, paragraph f, Code 26 2018, is amended to read as follows: 27 f. Cause Subject to the limitation in section 403.5, 28 subsection 2, paragraph “b” , subparagraph (1), cause public 29 buildings and public facilities, including parks, playgrounds, 30 and recreational, community, educational, water, sewer or 31 drainage facilities, or any other works which it is otherwise 32 empowered to undertake to be furnished; 33 Sec. 6. Section 403.17, subsections 5 and 10, Code 2018, are 34 amended to read as follows: 35 -3- LSB 5112YH (5) 87 md/jh 3/ 14

H.F. 2063 5. “Blighted area” means : 1 a. For an urban renewal area established before the 2 effective date of this Act, an area of a municipality 3 within which the local governing body of the municipality 4 determines that the presence of a substantial number of 5 slum, deteriorated, or deteriorating structures; defective or 6 inadequate street layout; faulty lot layout in relation to 7 size, adequacy, accessibility, or usefulness; insanitary or 8 unsafe conditions; deterioration of site or other improvements; 9 diversity of ownership, tax or special assessment delinquency 10 exceeding the fair value of the land; defective or unusual 11 conditions of title; or the existence of conditions which 12 endanger life or property by fire and other causes; or any 13 combination of these factors; substantially impairs or arrests 14 the sound growth of a municipality, retards the provision of 15 housing accommodations, or constitutes an economic or social 16 liability and is a menace to the public health, safety, or 17 welfare in its present condition and use. A disaster area 18 referred to in section 403.5, subsection 7 , constitutes a 19 “blighted area” . “Blighted area” does not include real property 20 assessed as agricultural property for purposes of property 21 taxation. 22 b. For an urban renewal area established on or after 23 the effective date of this Act, an area of a municipality 24 within which the local governing body of the municipality 25 determines that the presence of a substantial number of slum, 26 deteriorated, or deteriorating structures; insanitary or unsafe 27 conditions; deterioration of site or other improvements; or 28 the existence of conditions which endanger life or property by 29 fire and other causes; or any combination of these factors; 30 substantially impairs or arrests the sound growth of a 31 municipality, retards the provision of housing accommodations, 32 or constitutes an economic or social liability and is a 33 menace to the public health, safety, or welfare in its present 34 condition and use. A disaster area referred to in section 35 -4- LSB 5112YH (5) 87 md/jh 4/ 14

H.F. 2063 403.5, subsection 7, constitutes a “blighted area” . “Blighted 1 area” does not include real property assessed as agricultural 2 property for purposes of property taxation. 3 10. “Economic development area” means an area of a 4 municipality designated by the local governing body as 5 appropriate for commercial and industrial enterprises, public 6 improvements related to housing and residential development, 7 or construction of housing and residential development for low 8 and moderate income families, including single or multifamily 9 housing. If an urban renewal plan for an urban renewal area is 10 based upon a finding that the area is an economic development 11 area and that no part contains slum or blighted conditions, 12 then the division of revenue provided in section 403.19 and 13 stated in the plan shall be limited to twenty years from 14 the calendar year following the calendar year in which the 15 municipality first certifies to the county auditor the amount 16 of any loans, advances, indebtedness, or bonds which qualify 17 for payment from the division of revenue provided in section 18 403.19 . Such designated area shall not include agricultural 19 land, including land which is part of a century farm, unless 20 the owner of the agricultural land or century farm agrees to 21 include the agricultural land or century farm in the urban 22 renewal area. For an urban renewal area established as an 23 economic development area on or after the effective date of 24 this Act that includes agricultural land or land that is 25 part of a century farm, the municipality shall not permit 26 the use, development, or zoning of such agricultural land or 27 century farm land for housing, residential, or multiresidential 28 purposes, except for any such use in existence on the date the 29 area was established. For the purposes of this subsection , 30 “century farm” means a farm in which at least forty acres of 31 such farm have been held in continuous ownership by the same 32 family for one hundred years or more. 33 Sec. 7. NEW SECTION . 403.18A Urban renewal area duration 34 —— limitations. 35 -5- LSB 5112YH (5) 87 md/jh 5/ 14

H.F. 2063 1. An urban renewal area in existence on the effective date 1 of this Act for which an ordinance providing for a division of 2 revenue under section 403.19 was adopted before the effective 3 date of this Act and that is not limited in duration under 4 section 403.17, subsection 10, or section 403.22, subsection 5, 5 shall be subject to the duration limitation in subsection 2. 6 2. a. For an urban renewal area described in subsection 1, 7 the urban renewal area, including all applicable urban renewal 8 plans, projects, and ordinances providing for a division of 9 revenue, shall continue in effect under this chapter, until 10 such time that the urban renewal area is dissolved by the 11 municipality or until the urban renewal area terminates under 12 the conditions of this section, whichever occurs first. The 13 municipality may continue to incur or issue additional costs 14 or indebtedness for such urban renewal area, including loans, 15 advances, and bonds that qualify for payment from the special 16 fund created in section 403.19, on or after the effective date 17 of this Act and until dissolution or termination of the urban 18 renewal area. 19 b. (1) For an urban renewal area described in subsection 20 1 that is based on a finding that the area is an economic 21 development area and that no part contains slum or blighted 22 conditions, the urban renewal area, including all applicable 23 urban renewal plans, projects, and ordinances providing for a 24 division of revenue, shall terminate and be of no further force 25 and effect on July 1, 2038. 26 (2) For an urban renewal area described in subsection 1 that 27 is based on a finding that all or a part of the area contains 28 slum or blighted conditions, the urban renewal area, including 29 all applicable urban renewal plans, projects, and ordinances 30 providing for a division of revenue, shall terminate and be of 31 no further force and effect on July 1, 2043. 32 3. The department of management shall adopt rules pursuant 33 to chapter 17A necessary to implement and administer this 34 section. 35 -6- LSB 5112YH (5) 87 md/jh 6/ 14

H.F. 2063 Sec. 8. Section 403.19, subsection 2, paragraph a, Code 1 2018, is amended to read as follows: 2 a. That portion of the taxes each year in excess of such 3 amount shall be allocated to and when collected be paid into a 4 special fund of the municipality to pay the principal of and 5 interest on loans, moneys advanced to, or indebtedness, whether 6 funded, refunded, assumed, or otherwise, including bonds 7 issued under the authority of section 403.9, subsection 1 , 8 incurred by the municipality to finance or refinance, in whole 9 or in part, an urban renewal project within the area, and to 10 provide assistance for low and moderate income family housing 11 as provided in section 403.22 . However, except as provided 12 in paragraph “b” , taxes for the regular and voter-approved 13 physical plant and equipment levy of a school district imposed 14 pursuant to section 298.2 and taxes for the instructional 15 support program of a school district imposed pursuant to 16 section 257.19 , foundation property taxes of a school district 17 imposed under section 257.3, taxes for the payment of bonds 18 and interest of each taxing district, and taxes imposed under 19 section 346.27, subsection 22 , related to joint county-city 20 buildings shall be collected against all taxable property 21 within the taxing district without limitation by the provisions 22 of this subsection . Additionally, for ordinances dividing 23 taxes under this section adopted by a municipality that is 24 a city on or after the effective date of this Act, taxes 25 levied by or certified for levy by a county shall be collected 26 against all taxable property within the taxing district without 27 limitation by the provisions of this subsection if the county 28 board of supervisors adopts a resolution precluding such 29 a division of county property taxes before the city first 30 certifies an amount under subsection 6. 31 Sec. 9. Section 403.19, Code 2018, is amended by adding the 32 following new subsection: 33 NEW SUBSECTION . 3A. a. Except as otherwise provided in 34 paragraph “b” or section 403.22, an ordinance providing for a 35 -7- LSB 5112YH (5) 87 md/jh 7/ 14

H.F. 2063 division of revenue under this section that is adopted on or 1 after the effective date of this Act shall be limited to twenty 2 years from the calendar year following the calendar year in 3 which the municipality first certifies to the county auditor 4 the amount of any loans, advances, indebtedness, or bonds that 5 qualify for payment from the division of revenue provided 6 for in this section. The urban renewal area, including all 7 applicable urban renewal plans, projects, and ordinances, shall 8 terminate and be of no further force and effect following the 9 twenty-year period provided in this subsection. 10 b. An ordinance providing for a division of revenue under 11 this section that is adopted on or after the effective date 12 of this Act for an urban renewal area that contains slum or 13 blighted conditions shall be limited to twenty-five years from 14 the calendar year following the calendar year in which the 15 municipality first certifies to the county auditor the amount 16 of any loans, advances, indebtedness, or bonds that qualify for 17 payment from the division of revenue provided in this section. 18 The urban renewal area, including all applicable urban renewal 19 plans, projects, and ordinances, shall terminate and be of no 20 further force and effect following the twenty-five-year period 21 provided in this subsection. 22 Sec. 10. Section 403.19, subsection 9, Code 2018, is amended 23 to read as follows: 24 9. a. Moneys Unless prohibited under paragraph “b” , moneys 25 from any source deposited into the special fund created in 26 this section shall not be expended for or otherwise used in 27 connection with an urban renewal project approved on or after 28 July 1, 2012, that includes the relocation of a commercial 29 or industrial enterprise not presently located within the 30 municipality, unless one of the following occurs: 31 (1) The local governing body of the municipality where 32 the commercial or industrial enterprise is currently located 33 and the local governing body of the municipality where the 34 commercial or industrial enterprise is proposing to relocate 35 -8- LSB 5112YH (5) 87 md/jh 8/ 14

H.F. 2063 have either entered into a written agreement concerning the 1 relocation of the commercial or industrial enterprise or have 2 entered into a written agreement concerning the general use 3 of economic incentives to attract commercial or industrial 4 development within those municipalities. 5 (2) The local governing body of the municipality where the 6 commercial or industrial enterprise is proposing to relocate 7 finds that the use of deposits into the special fund for an 8 urban renewal project that includes such a relocation is in 9 the public interest. A local governing body’s finding that an 10 urban renewal project that includes a commercial or industrial 11 enterprise relocation is in the public interest shall include 12 written verification from the commercial or industrial 13 enterprise that the enterprise is actively considering moving 14 all or a part of its operations to a location outside the state 15 and a specific finding that such an out-of-state move would 16 result in a significant reduction in either the enterprise’s 17 total employment in the state or in the total amount of wages 18 earned by employees of the enterprise in the state. 19 b. Moneys from any source deposited into the special fund 20 created in this section shall not be expended for or otherwise 21 used in connection with an urban renewal project approved on 22 or after the effective date of this Act that includes the 23 relocation of a commercial or industrial enterprise for which 24 the location of the enterprise’s existing operations is two 25 miles or less from the enterprise’s proposed new operations 26 location. 27 b. c. For the purposes of this subsection , “relocation” 28 means the closure or substantial reduction of an enterprise’s 29 existing operations in one area of the state and the initiation 30 of substantially the same operation in the same county or a 31 contiguous county in the state. This subsection does not 32 prohibit an enterprise from expanding its operations in another 33 area of the state provided that existing operations of a 34 similar nature are not closed or substantially reduced. 35 -9- LSB 5112YH (5) 87 md/jh 9/ 14

H.F. 2063 Sec. 11. EFFECTIVE UPON ENACTMENT. This Act, being deemed 1 of immediate importance, takes effect upon enactment. 2 Sec. 12. APPLICABILITY. The portion of the section of 3 this Act amending section 403.19, subsection 2, paragraph 4 “a”, relating to the division of foundation property taxes of 5 a school district applies to property taxes due and payable 6 in fiscal years beginning on or after July 1, 2019, that are 7 levied against any of the following: 8 1. Property located in an urban renewal area for which the 9 ordinance providing for a division of revenue takes effect on 10 or after the effective date of this Act. 11 2. Property annexed or otherwise included in an urban 12 renewal area after the effective date of the ordinance 13 providing for a division of revenue if the annexation or 14 inclusion occurs on or after the effective date of this Act. 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 Iowa’s urban renewal law. 19 The bill requires the annual report prepared by the 20 legislative services agency, in consultation with the 21 department of management, under Code section 331.403, to 22 contain a list of each county, city, or rural improvement zone 23 that filed an annual report for the most recently ended fiscal 24 year and each such entity’s reported amount of loans, advances, 25 indebtedness, or bonds that remain unpaid at the close of the 26 fiscal year, and which qualify for payment from the special 27 fund created in Code section 403.19, including interest 28 negotiated on such loans, advances, indebtedness, or bonds. 29 The bill provides that urban renewal plans and urban 30 renewal projects approved on or after the effective date of 31 the bill shall not include the use of taxes resulting from 32 a division of revenue for a public building that is exempt 33 from taxation, including the grounds of, and the erection, 34 equipment, remodeling, maintenance, repair, or reconstruction 35 -10- LSB 5112YH (5) 87 md/jh 10/ 14

H.F. 2063 of, and additions or extensions to, such a building. The bill 1 also modifies provisions governing the use of such revenues 2 for public buildings for plans and projects approved before 3 the effective date of the bill to include the maintenance and 4 repair of such public buildings. 5 Code chapter 403 governs the criteria upon which an 6 urban renewal area may be established, which may include a 7 determination that an area is a “blighted area”. The bill 8 establishes a definition of “blighted area” for those urban 9 renewal areas established on or after the effective date of 10 the bill. For such areas, “blighted area” means an area of 11 a municipality within which the local governing body of the 12 municipality determines that the presence of a substantial 13 number of slum, deteriorated, or deteriorating structures; 14 insanitary or unsafe conditions; deterioration of site or other 15 improvements; or the existence of conditions which endanger 16 life or property by fire and other causes; or any combination 17 of these factors; substantially impairs or arrests the sound 18 growth of a municipality, retards the provision of housing 19 accommodations, or constitutes an economic or social liability 20 and is a menace to the public health, safety, or welfare in 21 its present condition and use. In addition, a disaster area 22 under Code section 403.5, subsection 7, constitutes a “blighted 23 area”. However, “blighted area” does not include real property 24 assessed as agricultural property for purposes of property 25 taxation. 26 Current Code section 403.17(10) prohibits, as part of the 27 definition of “economic development area”, an urban renewal 28 area that is an economic development area from including 29 agricultural land, including land which is part of a century 30 farm, unless the owner of the agricultural land or century 31 farm agrees to include the agricultural land or century farm 32 in the urban renewal area. The bill provides that for an 33 urban renewal area established as an economic development 34 area on or after the effective date of the bill that includes 35 -11- LSB 5112YH (5) 87 md/jh 11/ 14

H.F. 2063 agricultural land or land that is part of a century farm, the 1 municipality shall not permit the use, development, or zoning 2 of such agricultural land or century farm land for housing, 3 residential, or multiresidential purposes, except for any such 4 use in existence on the date the area was established. 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 10 years), or Code section 403.22, subsection 5 (10 years), shall 11 be 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, 2038. 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, 2043. 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 -12- LSB 5112YH (5) 87 md/jh 12/ 14

H.F. 2063 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 specifies that the urban renewal duration limits 8 under new Code section 403.18A and the limitations on the 9 duration of ordinances providing for a division of revenue 10 under Code section 403.19, new subsection 3A, shall not apply 11 to divisions of taxes established by community colleges under 12 Code chapter 260E or rural improvement zones under Code chapter 13 357H. 14 The bill excludes the school district foundation property 15 tax imposed under Code section 257.3 from the division of 16 revenue under Code section 403.19 (tax increment financing). 17 Under the bill, the foundation property tax is not divided 18 and paid into the municipality’s special fund for the payment 19 of urban renewal indebtedness but instead is required to be 20 levied, collected, and paid to the school district in the same 21 manner as all other property taxes. 22 Under Iowa’s urban renewal law, “municipality” includes 23 cities and counties. In addition, by operation of law, the 24 bill applies to divisions of revenue adopted by a community 25 college under Code section 260E.4 and rural improvement zones 26 under Code section 357H.9. 27 The bill also provides that for ordinances dividing taxes 28 under Code section 403.19 adopted by a municipality that is 29 a city on or after the effective date of the bill, taxes 30 levied by or certified for levy by a county are required to 31 be collected and shall not be divided if the county board of 32 supervisors adopts a resolution precluding such a division of 33 county property taxes before the city first certifies an amount 34 for payment using divided taxes under Code section 403.19(6). 35 -13- LSB 5112YH (5) 87 md/jh 13/ 14

H.F. 2063 Current Code section 403.19(9) imposes restrictions on the 1 use of urban renewal special fund moneys for an urban renewal 2 project approved on or after July 1, 2012, that includes 3 the relocation of a commercial or industrial enterprise not 4 presently located within the municipality. The bill prohibits 5 such funds from being expended for or otherwise used in 6 connection with an urban renewal project approved on or after 7 the effective date of the bill that includes the relocation of 8 a commercial or industrial enterprise for which the location of 9 the enterprise’s existing operations is two miles or less from 10 the enterprise’s proposed new operations location. 11 The bill takes effect upon enactment. 12 The portion of the section of the bill amending Code section 13 403.19 relating to the division of foundation property taxes 14 of a school district applies to property taxes due and payable 15 in fiscal years beginning on or after July 1, 2019, that are 16 levied against any of the following: (1) property located in 17 an urban renewal area for which the ordinance providing for a 18 division of revenue takes effect on or after the effective date 19 of the bill; or (2) property annexed or otherwise included in 20 an urban renewal area after the effective date of the ordinance 21 providing for a division of revenue if the annexation or 22 inclusion occurs on or after the effective date of the bill. 23 -14- LSB 5112YH (5) 87 md/jh 14/ 14