HF 656 (LSB 2339HV (1) 87)

HOUSE FILE 656

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HSB 195)

A BILL FOR

An Act relating to Iowa’s urban renewal law by excluding the school foundation property tax from certain divisions of tax revenue and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 403.19, subsection 2, paragraph a, Code 2017, is amended to read as follows:
   a.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22. However, except as provided in paragraph “b”, taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2, and taxes for the instructional support program of a school district imposed pursuant to section 257.19, foundation property taxes of a school district imposed under section 257.3, taxes for the payment of bonds and interest of each taxing district, and taxes imposed under section 346.27, subsection 22, related to joint county-city buildings shall be collected against all taxable property within the taxing district without limitation by the provisions of this subsection.
    Sec. 2.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 3.  APPLICABILITY.  This Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2018, that are levied against any of the following:
   1.  Property located in an urban renewal area for which the ordinance providing for a division of revenue takes effect on or after the effective date of this Act.
   2.  Property annexed or otherwise included in an urban renewal area after the effective date of the ordinance providing for a division of revenue if the annexation or inclusion occurs on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill excludes the school district foundation property tax imposed under Code section 257.3 from the division of revenue under Code section 403.19 (tax increment financing). Under the bill, the foundation property tax is not divided and paid into the municipality’s special fund for the payment of urban renewal indebtedness but instead is required to be levied, collected, and paid to the school district in the same manner as all other property taxes. 
   Under Iowa’s urban renewal law, “municipality” includes cities and counties. In addition, by operation of law, the bill applies to divisions of revenue adopted by a community college under Code section 260E.4 and rural improvement zones under Code section 357H.9.
   The bill takes effect upon enactment. The bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2018, that are levied against any of the following: (1) property located in an urban renewal area for which the ordinance providing for a division of revenue takes effect on or after the effective date of the bill; or (2) property annexed or otherwise included in an urban renewal area after the effective date of the ordinance providing for a division of revenue if the annexation or inclusion occurs on or after the effective date of the bill.