House Study Bill 681 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON APPROPRIATIONS BILL BY CHAIRPERSON GRASSLEY) A BILL FOR An Act relating to Iowa’s urban renewal law by excluding 1 certain school district property and county property 2 taxes from certain divisions of tax revenue and including 3 effective date and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6224YC (1) 87 md/jh

H.F. _____ Section 1. Section 331.403, subsection 3, paragraph b, Code 1 2018, is amended by adding the following new subparagraph: 2 NEW SUBPARAGRAPH . (22) The amount and source of any 3 voluntary transfer of property taxes under section 403.19, 4 subsection 3A or 3B. 5 Sec. 2. Section 384.22, subsection 2, paragraph b, Code 6 2018, is amended by adding the following new subparagraph: 7 NEW SUBPARAGRAPH . (22) The amount and source of any 8 voluntary transfer of property taxes under section 403.19, 9 subsection 3A or 3B. 10 Sec. 3. Section 403.19, subsection 2, paragraph a, Code 11 2018, is amended to read as follows: 12 a. That portion of the taxes each year in excess of such 13 amount shall be allocated to and when collected be paid into a 14 special fund of the municipality to pay the principal of and 15 interest on loans, moneys advanced to, or indebtedness, whether 16 funded, refunded, assumed, or otherwise, including bonds 17 issued under the authority of section 403.9, subsection 1 , 18 incurred by the municipality to finance or refinance, in whole 19 or in part, an urban renewal project within the area, and to 20 provide assistance for low and moderate income family housing 21 as provided in section 403.22 . However, except as provided 22 in paragraph “b” , taxes for the regular and voter-approved 23 physical plant and equipment levy of a school district imposed 24 pursuant to section 298.2 , and taxes for the instructional 25 support program of a school district imposed pursuant to 26 section 257.19 , foundation property taxes of a school district 27 imposed under section 257.3, taxes for county basic levies 28 under section 331.423, taxes for the payment of bonds and 29 interest of each taxing district, and taxes imposed under 30 section 346.27, subsection 22 , related to joint county-city 31 buildings shall be collected against all taxable property 32 within the taxing district without limitation by the provisions 33 of this subsection . 34 Sec. 4. Section 403.19, Code 2018, is amended by adding the 35 -1- LSB 6224YC (1) 87 md/jh 1/ 4

H.F. _____ following new subsections: 1 NEW SUBSECTION . 3A. a. To further the purposes of an 2 urban renewal area, a school district for which foundation 3 property taxes imposed under section 257.3 are excluded from 4 the division of taxes under subsection 2, paragraph “a” , may 5 voluntarily transfer to the municipality all or a portion of 6 the foundation property taxes that would otherwise have been 7 deposited into the municipality’s special fund but for the 8 exclusion. Such a transfer shall be at the sole discretion of 9 the school district’s board of directors. 10 b. Amounts voluntarily transferred by a school district 11 under this subsection shall not be considered a reduction in 12 the amount of foundation property tax received by the school 13 district under section 257.3 and shall not result in an 14 increase in the amount of school foundation aid received by the 15 school district under section 257.1. 16 NEW SUBSECTION . 3B. To further the purposes of an urban 17 renewal area, a county for which basic levy property taxes 18 under section 331.423 are excluded from the division of taxes 19 under subsection 2, paragraph “a” , may voluntarily transfer to 20 the municipality all or a portion of the basic levy property 21 taxes that would otherwise have been deposited into the 22 municipality’s special fund but for the exclusion. Such a 23 transfer shall be at the sole discretion of the county board 24 of supervisors. 25 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 26 immediate importance, takes effect upon enactment. 27 Sec. 6. APPLICABILITY. This Act applies to property taxes 28 due and payable in fiscal years beginning on or after July 1, 29 2019, that are levied against any of the following: 30 1. Property located in an urban renewal area for which the 31 ordinance providing for a division of revenue takes effect on 32 or after the effective date of this Act. 33 2. Property annexed or otherwise included in an urban 34 renewal area after the effective date of the ordinance 35 -2- LSB 6224YC (1) 87 md/jh 2/ 4

H.F. _____ providing for a division of revenue if the annexation or 1 inclusion occurs on or after the effective date of this Act. 2 EXPLANATION 3 The inclusion of this explanation does not constitute agreement with 4 the explanation’s substance by the members of the general assembly. 5 This bill excludes the school district foundation property 6 tax imposed under Code section 257.3 and taxes for county basic 7 levies imposed under Code section 331.423 from the division of 8 revenue under Code section 403.19 (tax increment financing). 9 Under the bill, such taxes are not divided and paid into the 10 municipality’s special fund for the payment of urban renewal 11 indebtedness but instead are required to be levied, collected, 12 and paid to the school district or county in the same manner as 13 all other property taxes. 14 The bill also authorizes a school district board of 15 directors to voluntarily transfer to the municipality all or a 16 portion of the foundation property taxes that would otherwise 17 have been deposited into the municipality’s urban renewal 18 special fund but for the exclusion in the bill. However, 19 amounts voluntarily transferred by a school district are not to 20 be considered a reduction in the amount of foundation property 21 tax received by the school district and do not result in an 22 increase in the amount of school foundation aid received by the 23 school district. 24 Similarly, the bill authorizes a county board of supervisors 25 to voluntarily transfer to the municipality all or a portion of 26 the basic levy property taxes that would otherwise have been 27 deposited into the municipality’s special fund but for the 28 exclusion. 29 The bill requires a municipality to include the amounts of 30 voluntary transfers of property taxes as authorized in the bill 31 in the municipality’s annual report required under Code section 32 331.403 or Code section 384.22. 33 Under Iowa’s urban renewal law, “municipality” includes 34 cities and counties. In addition, by operation of law, the 35 -3- LSB 6224YC (1) 87 md/jh 3/ 4

H.F. _____ bill applies to divisions of revenue adopted by a community 1 college under Code section 260E.4 and rural improvement zones 2 under Code section 357H.9. 3 The bill takes effect upon enactment. The bill applies 4 to property taxes due and payable in fiscal years beginning 5 on or after July 1, 2019, that are levied against any of the 6 following: (1) property located in an urban renewal area 7 for which the ordinance providing for a division of revenue 8 takes effect on or after the effective date of the bill; or 9 (2) property annexed or otherwise included in an urban renewal 10 area after the effective date of the ordinance providing for a 11 division of revenue if the annexation or inclusion occurs on or 12 after the effective date of the bill. 13 -4- LSB 6224YC (1) 87 md/jh 4/ 4