SF 149 (LSB 2098XS (2) 88)

SENATE FILE 149

BY  R. TAYLOR

A BILL FOR

An Act authorizing a city or county to provide a property tax exemption for value added by improvements to residential property that is a public nuisance.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 364.19, Code 2019, is amended to read as follows:
   364.19  Contracts to provide services to tax-exempt property.
   A city council or county board of supervisors may enter into a contract with a person whose property is totally or partially exempt from taxation under chapter 404, chapter 404B, section 427.1, or section 427B.1, or section 427B.10, for the city or county to provide specified services to that person including but not limited to police protection, fire protection, street maintenance, and waste collection. The contract shall terminate as of the date previously exempt property becomes subject to taxation.
    Sec. 2.  NEW SECTION.  427B.10  Residential nuisance property —— value added exemption from tax.
   1.  A city council or a county board of supervisors may provide by ordinance for an exemption from property taxation of the actual value added by improvements made to residential property if the property is a public nuisance prior to the improvements. A city council may provide for an exemption to such property located within the boundaries of the city and the county board of supervisors may provide for an exemption to such property located outside the boundaries of a city.
   2.  All property described in subsection 1 for which an exemption has been approved by ordinance is eligible to receive a one hundred percent exemption from taxation on the actual value added by the improvements. The exemption is for a period of ten years beginning not later than the first year in which all improvements described in the application are first assessed for taxation. A property tax exemption under this section shall not be granted if the property for which the exemption is claimed has received any other property tax exemption authorized by law for the actual value added to the property.
   3.  a.  The ordinance providing for the exemption may designate a length of time of less than ten years that the exemption shall be available and may designate an exemption percentage or schedule of percentages that is less than one hundred percent.
   b.  The city council or the board of supervisors may, as part of the resolution approving an exemption application, specify an exemption duration or exemption percentage that is different than that designated in the ordinance. However, the different duration or percentage specified in the resolution shall not exceed that which is provided for in the ordinance.
   4.  a.  An application shall be filed for each new exemption claimed. The first application for an exemption shall be filed by the owner of the property with the governing body of the city or county in which the property is located by February 1 of the assessment year for which the exemption is first claimed, but not later than February 1 of the assessment year in which all improvements included in the application are first assessed for taxation.
   b.  The application shall, at a minimum, contain the nature of the improvements, the cost of the improvements, a list of all other federal, state, or local government tax credits, exemptions, grants, forgivable loans, or other forms of financial assistance received by or applied for by the owner for completion of the improvements, and the estimated or actual date of completion of the improvements.
   c.  An owner may submit an application for an exemption under this section to the governing body of the city or county to receive prior approval for eligibility for a tax exemption. Such prior approval shall not entitle the owner to exemption from taxation until the improvements have been completed, a physical review of the property has been conducted by the assessor pursuant to subsection 5, and the assessor has determined that the actual value of the property has increased as a result of the improvements.
   d.  Approval of an exemption application shall be by resolution of the governing body of the city or county.
   e.  If an application for an exemption is not approved, the owner may submit an amended application for the governing body to approve or reject.
   5.  The local assessor shall review each first-year application by making a physical review of the property to determine if the improvements made increased the actual value of the approved property. If the assessor determines that the actual value of that property has increased, the assessor shall proceed to determine the actual value of the property and certify the valuation to the county auditor at the time of transmitting the assessment rolls. If an application for exemption is denied as a result of failure to increase the value of the property, the owner may, notwithstanding the filing deadlines in subsection 4, file a first application in a subsequent year when additional improvements are made. After the tax exemption is granted, the local assessor shall continue to grant the tax exemption, with periodic physical review by the assessor, for the time period specified in subsection 2, or specified in a different schedule if one has been adopted under subsection 3, paragraph “a”, or in the resolution of the governing body under which the exemption was granted pursuant to subsection 3, paragraph “b”.
   6.  When in the opinion of the city council or the county board of supervisors continuation of the exemption granted by this section ceases to be of benefit to the city or county, the city council or the county board of supervisors may repeal the ordinance, but all existing exemptions shall continue until their expiration.
   7.  For the purposes of this section, unless the context otherwise requires:
   a.  “Actual value added” means the actual value added as of the first year for which the exemption is received.
   b.  “Owner” includes a person who is purchasing property by installment contract or under a duly executed purchase contract.
   c.  “Public nuisance” means a building that is a menace to the public health, welfare, or safety, or that is structurally unsafe, unsanitary, or not provided with adequate safe egress, or that constitutes a fire hazard, or is otherwise dangerous to human life, or that in relation to the existing use constitutes a hazard to the public health, welfare, or safety by reason of inadequate maintenance, dilapidation, obsolescence, or abandonment.
    Sec. 3.  IMPLEMENTATION OF ACT.  Section 25B.7 shall not apply to the property tax exemption established in 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 authorizes a city council or a county board of supervisors to provide by ordinance for an exemption from property taxation of the actual value added to residential property by improvements to the property if the property is a public nuisance, as defined in the bill, prior to the improvements. 
   If approved by the governing body of the city or the board of supervisors of a county, the property is eligible to receive a 100 percent exemption from taxation on the actual value added by the improvements. The exemption is for a period of 10 years beginning not later than the first year in which all improvements described in the application are first assessed for taxation. The ordinance providing for the exemption from tax may designate a length of time of less than 10 years and may designate an exemption percentage or schedule of percentages that is less than 100 percent. The resolution approving the exemption application may also provide for a different period of exemption and exemption percentage than what is provided in the ordinance, but not exceeding the duration and percentages in the ordinance.
   The application for an exemption must be filed by the owner of the property with the governing body of the city or county in which the property is located by February 1 of the assessment year for which the exemption is first claimed, but not later than February 1 of the assessment year in which all improvements included in the application are first assessed for taxation. The bill authorizes an owner to submit an application for an exemption to receive prior approval for eligibility for a tax exemption. Such prior approval does not entitle the owner to exemption from taxation until the improvements have been completed, a physical review of the property has been conducted by the assessor, and the assessor has determined that the actual value of the property has increased as a result of the improvements.
   The bill requires the application to list all other federal, state, or local government tax credits, exemptions, grants, forgivable loans, or other forms of financial assistance received by or applied for by the owner for completion of the improvements.
   The bill requires the assessor to review each first-year application by making a physical review of the property, to determine if the improvements made increased the actual value of the approved property. If an application for exemption is denied as a result of failure to increase the value of the property, the owner may file a first application in a subsequent year when additional improvements are made. After the tax exemption is granted, the local assessor shall continue to grant the tax exemption, with periodic physical review by the assessor, for the time period authorized.
   Code section 25B.7 does not apply to the property tax exemption to the bill. Code section 25B.7 provides that for a property tax credit or exemption enacted on or after January 1, 1997, if a state appropriation made to fund the credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision is required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation.