HSB 695 (LSB 5408XD (10) 88)

SENATE/HOUSE FILE _____

BY  (PROPOSED DEPARTMENT OF REVENUE BILL)

A BILL FOR

An Act relating to property tax classifications, credits, assessment limitations, exemptions, and administration, making appropriations, and including effective date, applicability, and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
BUSINESS PROPERTY TAX CREDIT AND REPLACEMENT CLAIMS

    Section 1.  Section 2.48, subsection 3, paragraph f, subparagraph (5), Code 2020, is amended by striking the subparagraph.
    Sec. 2.  Section 331.512, subsection 5, Code 2020, is amended by striking the subsection.
    Sec. 3.  Section 331.559, subsection 15, Code 2020, is amended by striking the subsection.
    Sec. 4.  Section 357H.9, subsection 1, paragraph d, subparagraph (2), Code 2020, is amended to read as follows:
   (2)  The difference between the actual value of the property as determined by the assessor each year and the percentage of adjustment certified for that year by the director of revenue on or before November 1 assessed value of the property following application of the assessment limitations pursuant to section 441.21, subsection 9, multiplied by the actual value of the property as determined by the assessor, shall be subtracted from the actual value of the property as determined pursuant to section 403.19, subsection 1.
    Sec. 5.  Section 357H.9, subsection 1, paragraph f, subparagraph (1), Code 2020, is amended to read as follows:
   (1)  “Base year taxable value” means the actual value of the property as determined in section 403.19, subsection 1, multiplied by the percentage of adjustment certified for the assessment year specified in section 403.19, subsection 1, by the director of revenue on or before November 1 following application of the assessment limitations pursuant to section 441.21, subsection 9.
    Sec. 6.  Section 403.20, Code 2020, is amended to read as follows:
   403.20  Percentage of adjustment considered in value assessment.
   In determining the assessed value of property within an urban renewal area which is subject to a division of tax revenues pursuant to section 403.19, the difference between the actual value of the property as determined by the assessor each year and the percentage of adjustment certified for that year by the director of revenue on or before November 1 pursuant to section 441.21, subsection 9, multiplied by the actual value of the property as determined by the assessor following application of the assessment limitations under section 441.21, subsection 9, shall be subtracted from the actual value of the property as determined pursuant to section 403.19, subsection 1. If the assessed value of the property as determined pursuant to section 403.19, subsection 1, is reduced to zero, the additional valuation reduction shall be subtracted from the actual value of the property as determined by the assessor.
    Sec. 7.  Section 426C.2, Code 2020, is amended to read as follows:
   426C.2  Business property tax credit fund —— appropriation.
   1.  A business property tax credit fund is created in the state treasury under the authority of the department. For the fiscal year beginning July 1, 2014, there is appropriated from the general fund of the state to the department to be credited to the fund, the sum of fifty million dollars to be used for business property tax credits authorized in this chapter. For the fiscal year beginning July 1, 2015, there is appropriated from the general fund of the state to the department to be credited to the fund, the sum of one hundred million dollars to be used for business property tax credits authorized in this chapter. For the fiscal year beginning July 1, 2016, and each fiscal year thereafter beginning before July 1, 2021, there is appropriated from the general fund of the state to the department to be credited to the fund, the sum of one hundred twenty-five million dollars to be used for business property tax credits authorized in this chapter.
   2.  Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the fund shall be credited to the fund. Moneys in the fund are not subject to the provisions of section 8.33 and shall not be transferred, used, obligated, appropriated, or otherwise encumbered except as provided in this chapter.  However, moneys remaining in the fund at the end of the fiscal year beginning July 1, 2020, shall be transferred by the department for deposit in the general fund of the state.
    Sec. 8.  NEW SECTION.  426C.10  Future repeal.
   This chapter is repealed July 1, 2022.
    Sec. 9.  Section 441.21, subsection 5, Code 2020, is amended to read as follows:
   5.  a.   For valuations established as of January 1, 1979, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be considered as one class of property and shall be assessed as a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1979, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1978 by the department of revenue, plus ten percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1978, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1979. For valuations established as of January 1, 1980, property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed at a percentage of its actual value. The percentage shall be determined by the director of revenue in accordance with the provisions of this section. For valuations established as of January 1, 1980, the percentage shall be the quotient of the dividend and divisor as defined in this section. The dividend shall be the total actual valuation established for 1979 by the department of revenue, plus eight percent of the amount so determined. The divisor for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be the valuation established for 1979, plus the amount of value added to the total actual value by the revaluation of the property by the department of revenue as of January 1, 1980. For valuations established as of January 1, 1981, and each year thereafter, the percentage of actual value at which property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 shall be assessed shall be calculated in accordance with the methods provided herein, except that any references to ten percent in this subsection shall be eight percent. For valuations established on or after January 1, 2013, property valued by the department of revenue pursuant to chapter 434 shall be assessed at a percentage portion of its actual value equal to the percentage of actual value determined in the same manner at which property assessed as commercial property is assessed under paragraph “b” for the same assessment year.
   b.  For valuations established on or after January 1, 2013, commercial property, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a percentage portion of its actual value, as determined in this paragraph “b”.
   (1)  For valuations established for the assessment year beginning January 1, 2013, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which commercial property shall be assessed shall be ninety-five percent. For valuations established for the assessment year beginning January 1, 2014, and each assessment year thereafter beginning before January 1, 2020, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which commercial property shall be assessed shall be ninety percent.
   (2)  For valuations established for the assessment year beginning January 1, 2020, and each assessment year thereafter, the portion of actual value at which each parcel of commercial property shall be assessed shall be the sum of the following:
   (a)  An amount equal to the product of the assessment limitation percentage applicable to residential property under subsection 4, for that assessment year multiplied by the actual value of the property that exceeds zero dollars but does not exceed one hundred fifty thousand dollars.
   (b)  An amount equal to ninety percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   c.  For valuations established on or after January 1, 2013, industrial property, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a percentage portion of its actual value, as determined in this paragraph “c”.
   (1)  For valuations established for the assessment year beginning January 1, 2013, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which industrial property shall be assessed shall be ninety-five percent. For valuations established for the assessment year beginning January 1, 2014, and each assessment year thereafter beginning before January 1, 2020, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which industrial property shall be assessed shall be ninety percent.
   (2)  For valuations established for the assessment year beginning January 1, 2020, and each assessment year thereafter, the portion of actual value at which each parcel of industrial property shall be assessed shall be the sum of the following:
   (a)  An amount equal to the product of the assessment limitation percentage applicable to residential property under subsection 4, for that assessment year multiplied by the actual value of the property that exceeds zero dollars but does not exceed one hundred fifty thousand dollars.
   (b)  An amount equal to ninety percent of the actual value of the property for that assessment year that exceeds one hundred fifty thousand dollars.
   d.  For valuations established for the assessment year beginning January 1, 2019, and each assessment year thereafter, the percentages or portions of actual value at which property is assessed, as determined under this subsection, shall not be applied to the value of wind energy conversion property valued under section 427B.26 the construction of which is approved by the Iowa utilities board on or after July 1, 2018.
    Sec. 10.  Section 441.21, subsections 9 and 10, Code 2020, are amended to read as follows:
   9.  Not later than November 1, 1979, and November 1 of each subsequent year, the director shall certify to the county auditor of each county the percentages of actual value at which residential property, agricultural property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 in each assessing jurisdiction in the county shall be assessed for taxation, including, for assessment years beginning on or after January 1, 2020, the percentages used to apply the assessment limitations under subsection 5, paragraphs “b” and “c”. The county auditor shall proceed to determine the assessed values of agricultural property, residential property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 by applying such percentages to the current actual value of such property, as reported to the county auditor by the assessor, and the assessed values so determined shall be the taxable values of such properties upon which the levy shall be made.
   10.  The percentage percentages of actual value computed by the department of revenue for agricultural property, residential property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438, including, for assessment years beginning on or after January 1, 2020, the percentages used to apply the assessment limitations under subsection 5, paragraphs “b” and “c”, and used to determine assessed values of those classes of property does do not constitute a rule as defined in section 17A.2, subsection 11.
    Sec. 11.  Section 441.21A, subsection 1, paragraph a, Code 2020, is amended to read as follows:
   a.  For each fiscal year beginning on or after July 1, 2014, there is appropriated from the general fund of the state to the department of revenue an amount necessary for the payment of all commercial and industrial property tax replacement claims under this section for the fiscal year. However, for a fiscal year beginning on or after July 1, 2017, but before July 1, 2021, the total amount of moneys appropriated from the general fund of the state to the department of revenue for the payment of commercial and industrial property tax replacement claims in that fiscal year shall not exceed the total amount of money necessary to pay all commercial and industrial property tax replacement claims for the fiscal year beginning July 1, 2016.  Additionally, for each fiscal year beginning on or after July 1, 2021, the total amount of moneys appropriated from the general fund of the state to the department of revenue for the payment of commercial and industrial property tax replacement claims in that fiscal year shall not exceed the sum of the total amount of money necessary to pay all commercial and industrial property tax replacement claims for the fiscal year beginning July 1, 2016, plus one hundred twenty-five million dollars.
    Sec. 12.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to assessment years beginning on or after January 1, 2020.
DIVISION II
MULTIRESIDENTIAL PROPERTY

    Sec. 13.  Section 404.2, subsection 2, paragraph f, Code 2020, is amended to read as follows:
   f.  A statement specifying whether the revitalization is applicable to none, some, or all of the property assessed as residential, multiresidential, agricultural, commercial, or industrial property within the designated area or a combination thereof and whether the revitalization is for rehabilitation and additions to existing buildings or new construction or both. If revitalization is made applicable only to some property within an assessment classification, the definition of that subset of eligible property must be by uniform criteria which further some planning objective identified in the plan. The city shall state how long it is estimated that the area shall remain a designated revitalization area which time shall be longer than one year from the date of designation and shall state any plan by the city to issue revenue bonds for revitalization projects within the area. For a county, a revitalization area shall include only property which will be used as industrial property, commercial property, multiresidential property, or residential property. However, a county shall not provide a tax exemption under this chapter to commercial property, multiresidential property, or residential property which is located within the limits of a city.
    Sec. 14.  Section 404.3, subsection 4, paragraph a, Code 2020, is amended by striking the paragraph and inserting in lieu thereof the following:
   a.  All qualified real estate assessed as residential property is eligible to receive a one hundred percent exemption from taxation on the actual value added by the improvements.
    Sec. 15.  Section 441.21, subsection 2, Code 2020, is amended to read as follows:
   2.  In the event market value of the property being assessed cannot be readily established in the foregoing manner, then the assessor may determine the value of the property using the other uniform and recognized appraisal methods including its productive and earning capacity, if any, industrial conditions, its cost, physical and functional depreciation and obsolescence and replacement cost, and all other factors which would assist in determining the fair and reasonable market value of the property but the actual value shall not be determined by use of only one such factor. The following shall not be taken into consideration:  Special value or use value of the property to its present owner, and the goodwill or value of a business which uses the property as distinguished from the value of the property as property. In addition, for assessment years beginning on or after January 1, 2018, and unless otherwise required for property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438, the assessor shall not take into consideration and shall not request from any person sales or receipts data, expense data, balance sheets, bank account information, or other data related to the financial condition of a business operating in whole or in part on the property if the property is both classified as commercial or industrial property and owned and used by the owner of the business. However, in assessing property that is rented or leased to low-income individuals and families as authorized by section 42 of the Internal Revenue Code, as amended, and which section limits the amount that the individual or family pays for the rental or lease of units in the property, the assessor shall, unless the owner elects to withdraw the property from the assessment procedures for section 42 property, use the productive and earning capacity from the actual rents received as a method of appraisal and shall take into account the extent to which that use and limitation reduces the market value of the property. The assessor shall not consider any tax credit equity or other subsidized financing as income provided to the property in determining the assessed value. The property owner shall notify the assessor when property is withdrawn from section 42 eligibility under the Internal Revenue Code or if the owner elects to withdraw the property from the assessment procedures for section 42 property under this subsection. The property shall not be subject to section 42 assessment procedures for the assessment year for which section 42 eligibility is withdrawn or an election is made. This notification must be provided to the assessor no later than March 1 of the assessment year or the owner will be subject to a penalty of five hundred dollars for that assessment year. The penalty shall be collected at the same time and in the same manner as regular property taxes. An election to withdraw from the assessment procedures for section 42 property is irrevocable. Property that is withdrawn from the assessment procedures for section 42 property shall be classified and assessed as multiresidential residential property unless the property otherwise fails to meet the requirements of subsection 13 14. Upon adoption of uniform rules by the department of revenue or succeeding authority covering assessments and valuations of such properties, the valuation on such properties shall be determined in accordance with such rules and in accordance with forms and guidelines contained in the real property appraisal manual prepared by the department as updated from time to time for assessment purposes to assure uniformity, but such rules, forms, and guidelines shall not be inconsistent with or change the foregoing means of determining the actual, market, taxable and assessed values.
    Sec. 16.  Section 441.21, subsection 8, paragraph b, Code 2020, is amended to read as follows:
   b.  Notwithstanding paragraph “a”, any construction or installation of a solar energy system on property classified as agricultural, residential, commercial, multiresidential, or industrial property shall not increase the actual, assessed, and taxable values of the property for five full assessment years.
    Sec. 17.  Section 441.21, subsections 9 and 10, Code 2020, are amended to read as follows:
   9.  Not later than November 1, 1979, and November 1 of each subsequent year, the director shall certify to the county auditor of each county the percentages of actual value at which residential property, agricultural property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 in each assessing jurisdiction in the county shall be assessed for taxation. The county auditor shall proceed to determine the assessed values of agricultural property, residential property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 by applying such percentages to the current actual value of such property, as reported to the county auditor by the assessor, and the assessed values so determined shall be the taxable values of such properties upon which the levy shall be made.
   10.  The percentage of actual value computed by the department of revenue for agricultural property, residential property, commercial property, industrial property, multiresidential property, property valued by the department of revenue pursuant to chapter 434, and property valued by the department of revenue pursuant to chapters 428, 433, 437, and 438 and used to determine assessed values of those classes of property does not constitute a rule as defined in section 17A.2, subsection 11.
    Sec. 18.  Section 441.21, subsection 13, paragraphs a, b, and c, Code 2020, are amended to read as follows:
   a.  (1)   For the assessment year beginning January 1, 2015, mobile home parks, manufactured home communities, land-leased communities, assisted living facilities, property primarily used or intended for human habitation containing three or more separate dwelling units, and that portion of a building that is used or intended for human habitation and a proportionate share of the land upon which the building is situated, regardless of the number of dwelling units located in the building, if the use for human habitation is not the primary use of the building and such building is not otherwise classified as residential property, shall be valued as a separate class of property known as multiresidential property and, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a percentage of its actual value, as determined in this subsection.
   (2)  Beginning with valuations established on or after January 1, 2016, but before January 1, 2021, all of the following shall be valued as a separate class of property known as multiresidential property and, excluding properties referred to in section 427A.1, subsection 9, shall be assessed at a percentage of its actual value, as determined in this subsection:
   (a)  (1)  Mobile home parks.
   (b)  (2)  Manufactured home communities.
   (c)  (3)  Land-leased communities.
   (d)  (4)  Assisted living facilities.
   (e)  (5)  A parcel primarily used or intended for human habitation containing three or more separate dwelling units. If a portion of such a parcel is used or intended for a purpose that, if the primary use, would be classified as commercial property or industrial property, each such portion, including a proportionate share of the land included in the parcel, if applicable, shall be assigned the appropriate classification pursuant to paragraph “c”.
   (f)  (6)  For a parcel that is primarily used or intended for use as commercial property or industrial property, that portion of the parcel that is used or intended for human habitation, regardless of the number of dwelling units contained on the parcel, including a proportionate share of the land included in the parcel, if applicable. The portion of such a parcel used or intended for use as commercial property or industrial property, including a proportionate share of the land included in the parcel, if applicable, shall be assigned the appropriate classification pursuant to paragraph “c”.
   b.  For valuations established for the assessment year beginning January 1, 2015, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of eighty-six and twenty-five hundredths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2016, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of eighty-two and five-tenths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2017, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of seventy-eight and seventy-five hundredths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2018, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of seventy-five percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2019, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of seventy-one and twenty-five hundredths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2020, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of sixty-seven and five-tenths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2021, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be the greater of sixty-three and seventy-five hundredths percent or the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed for the same assessment year under subsection 4. For valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which multiresidential property shall be assessed shall be equal to the percentage of actual value determined by the department of revenue at which property assessed as residential property is assessed under subsection 4 for the same assessment year.
   c.  (1)  For the assessment year beginning January 1, 2015, for parcels that, in part, satisfy the requirements for classification as multiresidential property, the assessor shall assign to that portion of the parcel the classification of multiresidential property and to such other portions of the parcel the property classification for which such other portions qualify.
   (2)  Beginning with valuations established on or after January 1, 2016, but before January 1, 2021, for parcels for which a portion of the parcel satisfies the requirements for classification as multiresidential property pursuant to paragraph “a”, subparagraph (2), subparagraph division (e) or (f) (5) or (6), the assessor shall assign to that portion of the parcel the classification of multiresidential property and to such other portions of the parcel the property classification for which such other portions qualify.
    Sec. 19.  Section 441.21, Code 2020, is amended by adding the following new subsection:
   NEW SUBSECTION.  14.  a.  Beginning with valuations established on or after January 1, 2021, all of the following shall be classified and valued as residential property:
   (1)  Property primarily used or intended for human habitation containing two or fewer dwelling units.
   (2)  Mobile home parks.
   (3)  Manufactured home communities.
   (4)  Land-leased communities.
   (5)  Assisted living facilities.
   (6)  A parcel primarily used or intended for human habitation containing three or more separate dwelling units. If a portion of such a parcel is used or intended for a purpose that, if the primary use, would be classified as commercial property or industrial property, each such portion, including a proportionate share of the land included in the parcel, if applicable, shall be assigned the appropriate classification pursuant to paragraph “b”.
   (7)  For a parcel that is primarily used or intended for use as commercial property or industrial property, that portion of the parcel that is used or intended for human habitation, regardless of the number of dwelling units contained on the parcel, including a proportionate share of the land included in the parcel, if applicable. The portion of such a parcel used or intended for use as commercial property or industrial property, including a proportionate share of the land included in the parcel, if applicable, shall be assigned the appropriate classification pursuant to paragraph “b”.
   b.  Beginning with valuations established on or after January 1, 2021, for parcels for which a portion of the parcel satisfies the requirements for classification as residential property pursuant to paragraph “a”, subparagraph (6) or (7), the assessor shall assign to that portion of the parcel the classification of residential property and to such other portions of the parcel the property classification for which such other portions qualify.
   c.  Property that is rented or leased to low-income individuals and families as authorized by section 42 of the Internal Revenue Code, and that has not been withdrawn from section 42 assessment procedures under subsection 2 of this section, or a hotel, motel, inn, or other building where rooms or dwelling units are usually rented for less than one month shall not be classified as residential property under this subsection.
   d.  As used in this subsection:
   (1)  “Assisted living facility” means property for providing assisted living as defined in section 231C.2. “Assisted living facility” also includes a health care facility, as defined in section 135C.1, an elder group home, as defined in section 231B.1, a child foster care facility under chapter 237, or property used for a hospice program as defined in section 135J.1.
   (2)  “Dwelling unit” means an apartment, group of rooms, or single room which is occupied as separate living quarters or, if vacant, is intended for occupancy as separate living quarters, in which a tenant can live and sleep separately from any other persons in the building.
   (3)  “Land-leased community” means the same as defined in sections 335.30A and 414.28A.
   (4)  “Manufactured home community” means the same as a land-leased community.
   (5)  “Mobile home park” means the same as defined in section 435.1.
    Sec. 20.  Section 558.46, subsection 5, Code 2020, is amended by striking the subsection.
    Sec. 21.  SAVINGS PROVISION.  This division of this Act, pursuant to section 4.13, does not affect the operation of, or prohibit the application of, prior provisions of the Code sections amended by this division of this Act, or rules adopted under chapter 17A to administer such prior provisions, for assessment years beginning before January 1, 2021, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2021.
    Sec. 22.  EFFECTIVE DATE.  This division of this Act takes effect January 1, 2021.
    Sec. 23.  APPLICABILITY.  This division of this Act applies to assessment years beginning on or after January 1, 2021.
DIVISION III
DISASTER REVITALIZATION TAX EXEMPTIONS

    Sec. 24.  Section 404B.2, subsection 2, paragraph b, Code 2020, is amended to read as follows:
   b.  The assessed valuation of the real property in the proposed area as of January 1, 2007 2019, listing the land and building values separately.
    Sec. 25.  Section 404B.4, subsection 1, Code 2020, is amended to read as follows:
   1.  All real property within a disaster revitalization area is eligible to receive a one hundred percent exemption from taxation on the increase in assessed value of the property, as compared to the property’s assessed value on January 1, 2007 2019, if the increase in assessed value is attributable to revitalization of the property occurring between May 25, 2008 March 1, 2019, and December 31, 2013 2024. The exemption is for a period not to exceed five years, starting with an assessment year beginning on or after January 1, 2010 2020.
    Sec. 26.  Section 404B.7, Code 2020, is amended to read as follows:
   404B.7  Expiration or repeal of ordinance.
   An ordinance enacted under this chapter shall expire or be repealed no later than December 31, 2016 2028.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to property tax credits, assessment limitations, exemptions, and administration.
   Code chapter 426C provides a business property tax credit for commercial, industrial, and railway property for property taxes due and payable in fiscal years beginning on or after July 1, 2014. The business property tax credit is funded from an annual standing appropriation of $125 million.
   Division I of this bill eliminates the annual appropriation for the business property tax credit under Code section 426C.2 for fiscal years beginning on or after July 1, 2021, and provides that moneys remaining in the business property tax credit fund at the end of the fiscal year beginning July 1, 2020, shall be transferred by the department of revenue for deposit in the general fund of the state. The bill also establishes a future repeal date for Code chapter 426C of July 1, 2022.
   Current Code section 441.21 imposes an assessment limitation (rollback) on commercial property, industrial property, and property valued by the department of revenue under Code chapter 434 (railway company property) of 90 percent for assessment years beginning on or after January 1, 2014. The bill modifies the amount and methodology for calculating the assessment limitation for parcels within those classifications of property. Instead of a uniform percentage of value, for valuations established for the assessment year beginning January 1, 2020, and each assessment year thereafter, the portion of actual value at which each parcel of commercial property shall be assessed shall be the sum of the following: (1) an amount equal to the product of the assessment limitation percentage applicable to residential property multiplied by the actual value of the property that exceeds $0 but does not exceed $150,000; and (2) an amount equal to 90 percent of the actual value of the property for that assessment year that exceeds $150,000. The bill establishes a similar provision for industrial property and provides that the assessed value of railway company property shall be determined in the same manner as commercial property. The changes to the methodology and amount of assessment limitations for commercial property and industrial property also applies to the calculation of commercial and industrial property tax replacement payments under Code section 441.21A, as amended in the bill.
   Code section 441.21A calculates and funds the commercial and industrial property tax replacement payments to political subdivisions in the state. Under current law, the amount of the replacement claim for each taxing district is equal to the difference between the assessed valuation of all commercial and industrial property located in the taxing district that is subject to assessment and taxation and the total actual value of all such property located in the taxing district multiplied by the tax rate specified for the taxing district, and then divided by $1,000.
   The annual appropriation for the commercial and industrial property tax replacement payments is the amount necessary to fund all replacement claims, but not to exceed the total amount of money necessary to pay all commercial and industrial property tax replacement payments for the fiscal year beginning July 1, 2016. The bill provides that for each fiscal year beginning on or after July 1, 2021, the total annual appropriation is the amount necessary to pay all commercial and industrial property tax replacement claims in that fiscal year, but not to exceed the sum of the total amount of money necessary to pay all commercial and industrial property tax replacement claims for the fiscal year beginning July 1, 2016, plus $125 million.
   Division I of the bill applies retroactively to assessment years beginning on or after January 1, 2020.
   Code section 441.21 provides that for assessment years beginning on or after January 1, 2015, property can be classified as multiresidential property. Multiresidential property largely includes property that prior to the assessment year beginning January 1, 2015, was classified as commercial property and includes mobile home parks, manufactured home communities, land-leased communities, assisted living facilities, and property primarily used or intended for human habitation containing three or more separate dwelling units. The percentage of actual value at which multiresidential property is subject to tax has been reduced each assessment year beginning with the 2015 assessment year. The percentage of actual value is reduced by law until the percentage is equal to or below the percentage that is applicable to residential property, at which time the two classifications are subject to the same percentage.
   Division II of the bill eliminates the classification of multiresidential property for assessment years beginning on or after January 1, 2021. The bill also provides that the types of property previously classified as multiresidential will, for assessment years beginning on or after January 1, 2021, be classified as residential property.
   Division II makes corresponding changes to various other provisions of law to reflect the elimination of the multiresidential property classification.
   Division II of the bill takes effect January 1, 2021, and applies to assessment years beginning on or after that date.
   Division II of the bill does not affect the operation of, or prohibit the application of, prior provisions of the Code sections amended by division II of the bill, or rules adopted to administer such prior provisions, for assessment years beginning before January 1, 2021, and for duties, powers, protests, appeals, proceedings, actions, or remedies attributable to an assessment year beginning before January 1, 2021.
   Code chapter 404B authorizes cities and counties to designate a disaster revitalization area if the area is within a county or portion of a county declared a disaster area. All real property within a disaster revitalization area is eligible to receive a 100 percent exemption from taxation on the increase in assessed value of the property, as compared to the property's assessed value on January 1, 2007, if the increase is attributable to revitalization of the property occurring between May 25, 2008, and December 31, 2013. The exemption is available for a period not to exceed five years, starting with the assessment year beginning on January 1, 2010. Under Code chapter 404B, a city or county may adopt a different tax exemption percentage, so long as the exemption percentage applies to every disaster revitalization area within that jurisdiction. Ordinances establishing a disaster revitalization area and tax exemption expire or must repealed no later than December 31, 2016.
   Division III of the bill amends the periods of time for establishing disaster revitalization areas and qualifying for a property tax exemption. Under the bill, a disaster revitalization area may be established to provide property tax exemptions on the increase in assessed value of the property, as compared to the property's assessed value on January 1, 2019, if the increase is attributable to revitalization of the property occurring between March 1, 2019, and December 31, 2024. Ordinances establishing a disaster revitalization area and tax exemption expire or must repealed no later than December 31, 2028.