H.F. 540 Section 1. Section 427.1, Code 2019, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 25. Urban farm. Property certified as an 3 urban farm by a city in compliance with this subsection. 4 a. The city council must adopt an ordinance providing for 5 terms and conditions of the exemption. 6 b. The property must be owned by a nonprofit entity as 7 defined in section 501(c)(3) of the Internal Revenue Code 8 or must be leased by another person to such a nonprofit 9 entity. The lease must be for at least five consecutive 10 assessment years. The lease must be supported by no or nominal 11 consideration. A lease may be renewed or extended. 12 c. The property must be located within the corporate limits 13 of the city. 14 d. The nonprofit entity must use the property as an urban 15 farm to produce food suitable for human consumption. The food 16 may be further processed or packaged prior to distribution as 17 provided in this subsection. 18 e. The food must be used by, sold to, or otherwise 19 distributed to a food bank, emergency feeding organization, 20 or other nonprofit organization recognized by the department 21 of revenue. The food bank, emergency feeding organization, 22 or other nonprofit organization must prepare and serve or 23 distribute the food within the corporate limits of the city. 24 f. Prior to adopting a proposed ordinance providing for 25 the terms and conditions of the tax exemption, the city shall 26 mail a copy of the proposed ordinance to each affected taxing 27 entity, including a county or school district which levied 28 or certified for levy a property tax on any portion of the 29 property subject to the proposed ordinance in the fiscal year 30 beginning prior to the calendar year in which a proposed 31 ordinance is to be adopted. Unless an affected taxing entity 32 objects to the ordinance by resolution adopted within fourteen 33 days after delivery of the notice, the affected taxing entity 34 shall be deemed to have approved any approval of the ordinance 35 -1- LSB 1701YH (7) 88 da/jh 1/ 3

H.F. 540 by the city during that calendar year. If an affected taxing 1 entity objects to the proposed ordinance, future consideration 2 of the proposed ordinance shall be indefinitely tabled. 3 g. The city must certify that the property is an urban 4 farm. The city must send a copy of the certification to 5 the appropriate assessor not later than February 1 of the 6 assessment year for which the exemption is requested. The 7 city may subsequently withdraw certification of the property 8 if the lease is terminated or the property is not used as an 9 urban farm. The assessor shall be given written notice of the 10 decertification. 11 h. The exemption granted under this subsection shall 12 apply until the property is decertified or the lease expires, 13 whichever occurs earlier. 14 i. If the property was used as an urban farm for less than 15 five years and the property was decertified because the lease 16 was terminated by the owner for a cause other than a breach of 17 the lease by the nonprofit entity, the ordinance may provide 18 that all taxes that would have been levied for the period of 19 time the exemption was in effect under this subsection shall 20 be immediately entered against the property on the tax list 21 for the current year and shall constitute a lien against the 22 property in the same manner as a lien for property taxes. The 23 tax when collected shall be apportioned in the same manner 24 provided for the apportionment of property taxes for the 25 applicable tax year. 26 Sec. 2. IMPLEMENTATION OF ACT. Section 25B.7 shall not 27 apply to the property tax exemption enacted in this Act. 28 EXPLANATION 29 The inclusion of this explanation does not constitute agreement with 30 the explanation’s substance by the members of the general assembly. 31 This bill provides a property tax exemption for property 32 located within a city and certified as an urban farm by a 33 city council pursuant to an ordinance. The ordinance cannot 34 be adopted if another affected taxing entity objects. The 35 -2- LSB 1701YH (7) 88 da/jh 2/ 3

H.F. 540 property must be owned by or leased to a nonprofit entity 1 which must use the property to produce food use by, sale to, 2 or otherwise distributed to a nonprofit organization such as 3 a food bank or emergency feeding organization recognized by 4 the department of revenue. A lease must be for at least five 5 years and the exemption applies until the lease expires or 6 until the property is decertified. A lease may be renewed 7 or extended and, if the property is still eligible, the 8 exemption continues. The ordinance may provide that upon 9 decertification, the exemption is disallowed and the amount 10 of the property taxes that had been exempted shall be entered 11 against the property on the tax list for the current year. 12 The bill makes inapplicable Code section 25B.7. Code 13 section 25B.7 provides that for a property tax credit or 14 exemption enacted on or after January 1, 1997, if a state 15 appropriation made to fund the credit or exemption is not 16 sufficient to fully fund the credit or exemption, the political 17 subdivision shall be required to extend to the taxpayer only 18 that portion of the credit or exemption estimated by the 19 department of revenue to be funded by the state appropriation. 20 -3- LSB 1701YH (7) 88 da/jh 3/ 3