S.F. 112 Section 1. Section 427C.1, Code 2021, is amended to read as 1 follows: 2 427C.1 Tax exemption —— amount of exemption . 3 1. Any person who establishes a forest or fruit-tree 4 reservation as provided in this chapter shall be entitled to 5 the tax exemption provided by law. 6 2. a. For assessment years beginning before January 1, 7 2022, the exemption for forest or fruit-tree reservations 8 authorized in this chapter shall be one hundred percent of the 9 actual value of the property comprising the reservation. 10 b. For assessment years beginning on or after January 1, 11 2022, the exemption for forest or fruit-tree reservations 12 authorized in this chapter shall be seventy-five percent of the 13 actual value of the property comprising the reservation. 14 Sec. 2. Section 427C.2, Code 2021, is amended to read as 15 follows: 16 427C.2 Reservations. 17 1. On For assessment years beginning before January 1, 2022, 18 on any tract of land in the state of Iowa, the owner or owners 19 may select a permanent forest reservation or reservations, each 20 not less than two acres in continuous area, or a fruit-tree 21 reservation or reservations, not less than one nor more than 22 ten acres in total area, or both, and upon compliance with 23 the provisions of this chapter , such owner or owners shall be 24 entitled to the benefits provided by law. 25 2. For assessment years beginning on or after January 26 1, 2022, on any tract of land in the state of Iowa, the 27 owner or owners may select a permanent forest reservation or 28 reservations, each not less than ten acres in continuous area, 29 or a fruit-tree reservation or reservations, not less than 30 one nor more than ten acres in total area, or both, and upon 31 compliance with the provisions of this chapter, such owner or 32 owners shall be entitled to the benefits provided by law. 33 Sec. 3. Section 427C.3, Code 2021, is amended to read as 34 follows: 35 -1- LSB 1985XS (3) 89 md/jh 1/ 9

S.F. 112 427C.3 Forest reservation —— duration of exemption . 1 1. A forest reservation shall contain not less than two 2 hundred growing forest trees on each acre. If Except as 3 provided in subsection 2, if the area selected is a forest 4 containing the required number of growing forest trees, it 5 shall be accepted as a forest reservation under this chapter 6 for a period of five years provided application is made or 7 on file on or before February 1 of the exemption year. If 8 any buildings are standing on an area selected as a forest 9 reservation under this section or a fruit-tree reservation 10 under section 427C.7 , one acre of that area shall be excluded 11 from the tax exemption. However, the exclusion of that acre 12 shall not affect the area’s meeting the acreage requirement of 13 section 427C.2 . 14 2. a. For forest reservation exemption applications filed 15 on or before February 1, 2021, unless the reservation fails 16 to meet the acreage requirement of section 427C.2, subsection 17 2, and is terminated under paragraph “b” , the period of the 18 exemption ends at the conclusion of the fifth assessment year 19 following the certification conducted by the department of 20 natural resources under section 427C.13, subsection 2. 21 b. For forest reservation exemption applications filed on 22 or before February 1, 2021, if the reservation fails to meet 23 the acreage requirement of section 427C.2, subsection 2, the 24 reservation’s exemption shall terminate beginning with the 25 assessment year beginning January 1, 2022. 26 3. For forest reservation exemption applications filed 27 after February 1, 2021, in addition to the other requirements 28 of this chapter, if the department of natural resources 29 determines that the forest reservation meets the criteria for 30 depredation licenses and permits, the owner shall enter into a 31 depredation agreement with the department of natural resources 32 under section 481C.2A for each of the remaining years of the 33 exemption period following determination by the department and 34 the depredation agreement shall be subject to section 481C.2A, 35 -2- LSB 1985XS (3) 89 md/jh 2/ 9

S.F. 112 subsection 1, paragraph “e” . 1 Sec. 4. Section 427C.6, Code 2021, is amended to read as 2 follows: 3 427C.6 Groves. 4 The trees of a forest reservation shall be in groves not 5 less than four rods wide except when the trees are growing or 6 are planted in or along a gully or ditch to control erosion in 7 which case any width will qualify provided the area meets the 8 size acreage requirement of two acres . 9 Sec. 5. Section 427C.7, Code 2021, is amended to read as 10 follows: 11 427C.7 Fruit-tree reservation —— duration of exemption. 12 A fruit-tree reservation shall contain on each acre, 13 at least forty apple trees, or seventy other fruit trees, 14 growing under proper care and annually pruned and sprayed. 15 A reservation may be claimed as a fruit-tree reservation, 16 under this chapter , for a period of eight years after planting 17 provided application is made or on file on or before February 18 1 of the exemption year. If any buildings are standing on an 19 area selected as a fruit-tree reservation under this section, 20 one acre of that area shall be excluded from the tax exemption. 21 However, the exclusion of that acre shall not affect the area’s 22 meeting the acreage requirement of section 427C.2. 23 Sec. 6. Section 427C.12, Code 2021, is amended to read as 24 follows: 25 427C.12 Application —— inspection —— continuation of 26 exemption —— recapture of tax. 27 1. It shall be the duty of the assessor to secure the facts 28 relative to fruit-tree and forest reservations by taking the 29 sworn statement, or affirmation, of the owner or owners making 30 application under this chapter ; and to make special report to 31 the county auditor of all reservations made in the county under 32 the provisions of this chapter . 33 2. a. The board of supervisors shall designate the county 34 conservation board or the assessor who shall inspect the area 35 -3- LSB 1985XS (3) 89 md/jh 3/ 9

S.F. 112 for which an application is filed for a fruit-tree or forest 1 reservation tax exemption before the application is accepted. 2 b. The department of natural resources shall inspect the 3 area for which an application is filed for a forest reservation 4 tax exemption before the application is accepted. 5 c. Use of aerial photographs may be substituted for on-site 6 inspection when appropriate. 7 3. The application can only be accepted if it meets the 8 criteria established by the natural resource commission to be a 9 fruit-tree or forest reservation. 10 4. Once the application has been accepted, the area shall 11 continue to receive the tax exemption during each year of the 12 exemption period under section 427C.3 or 427C.7 in which the 13 area is maintained as a fruit-tree or forest or fruit-tree 14 reservation without the owner having to refile. If the 15 property is sold or transferred, the seller shall notify the 16 buyer that all, or part of, the property is in fruit-tree or 17 forest reservation and subject to the recapture tax provisions 18 of this section . The tax exemption shall continue to be 19 granted for the remainder of the eight-year exemption period 20 for fruit-tree reservation and for the following years for 21 forest reservation under section 427C.3 or 427C.7, or until 22 the property no longer qualifies as a fruit-tree or forest or 23 fruit-tree reservation. 24 5. a. The An area that is a fruit-tree reservation may 25 be inspected each year by the county conservation board or 26 the assessor to determine if the area is maintained as a 27 fruit-tree or forest reservation. An area that is a forest 28 reservation may be inspected each year by the department of 29 natural resources to determine if the area is maintained as 30 forest reservation. If the area is not maintained or is used 31 for economic gain other than as a fruit-tree reservation during 32 any year of the eight-year exemption period and any year of 33 the following five years under section 427C.7 or as a forest 34 reservation during any year for which of the exemption is 35 -4- LSB 1985XS (3) 89 md/jh 4/ 9

S.F. 112 granted and any of the five years following those exemption 1 years period under section 427C.3 , the assessor shall assess 2 the property for taxation at its fair market value as of 3 January 1 of that year and in addition the area shall be 4 subject to a recapture tax. However, the area shall not be 5 subject to the recapture tax if the owner, including one 6 possessing under a contract of sale, and the owner’s direct 7 antecedents or descendants have owned the area for more than 8 ten years. 9 b. The recapture tax shall be computed by multiplying the 10 consolidated levy for each of those years, if any, of the five 11 preceding years for which the area received the exemption for 12 fruit-tree or forest reservation times the assessed value of 13 the area that would have been taxed but for the tax exemption. 14 This tax shall be entered against the property on the tax list 15 for the current year and shall constitute a lien against the 16 property in the same manner as a lien for property taxes. The 17 tax when collected shall be apportioned in the manner provided 18 for the apportionment of the property taxes for the applicable 19 tax year. 20 Sec. 7. Section 427C.13, Code 2021, is amended to read as 21 follows: 22 427C.13 Report to department of natural resources. 23 1. The county assessor shall keep a record of all forest 24 and fruit-tree reservations in the county and submit a report 25 of the reservations to the department of natural resources not 26 later than June 15 of each year. 27 2. a. Based on the reports submitted under subsection 1, 28 the department of natural resources shall conduct an inspection 29 of each forest reservation receiving an exemption that meets 30 the acreage requirement of section 427C.2, subsection 2, and 31 that was approved for an assessment year beginning before 32 January 1, 2022. 33 b. If the forest reservation meets the requirements for 34 the exemption, the department shall certify the reservation’s 35 -5- LSB 1985XS (3) 89 md/jh 5/ 9

S.F. 112 compliance to the county auditor of the county where the 1 forest reservation is located to be used in determining the 2 period of the exemption under section 427C.3, subsection 2. 3 If the forest reservation fails to meet the requirements for 4 the exemption, the department shall deny certification and 5 shall notify the owner and the county auditor of the county 6 where the forest reservation is located of the denial and the 7 exemption shall cease beginning with the immediately succeeding 8 assessment year. 9 c. The certification or denial of certification by the 10 director of the department of natural resources for each of 11 the forest reservations identified in paragraph “a” shall be 12 completed by July 1, 2026. 13 3. If, following approval of the exemption for a forest 14 reservation, the department of natural resources determines 15 that the area comprising the forest reservation meets the 16 criteria for depredation under chapter 481C, the owner 17 shall enter into an agreement as required by section 427C.3, 18 subsection 3. 19 Sec. 8. Section 441.22, Code 2021, is amended to read as 20 follows: 21 441.22 Forest and fruit-tree reservations. 22 Forest and fruit-tree reservations fulfilling the conditions 23 of sections 427C.1 to 427C.13 chapter 427C shall be exempt from 24 taxation to the extent authorized in that chapter . In all 25 other cases where trees are planted upon any tract of land, 26 without regard to area, for forest, fruit, shade, or ornamental 27 purposes, or for windbreaks, the assessor shall not increase 28 the valuation of the property because of such improvements. 29 Sec. 9. Section 481C.2A, subsection 1, Code 2021, is amended 30 by adding the following new paragraph: 31 NEW PARAGRAPH . e. For a depredation agreement entered into 32 for land that is a forest reservation under section 427C.3, the 33 number of licenses issued each year under this subsection to 34 persons other than the landowner or a family member shall not 35 -6- LSB 1985XS (3) 89 md/jh 6/ 9

S.F. 112 be less than twenty-five percent of the total licenses issued 1 under this subsection for that year. 2 Sec. 10. SAVINGS PROVISION. Except as provided in this 3 Act, this Act, pursuant to section 4.13, does not affect the 4 operation of, or prohibit the application of, prior provisions 5 of chapter 427C or section 441.22, or rules adopted under 6 chapter 17A to administer prior provisions of chapter 427C 7 or section 441.22, for assessment years beginning before 8 January 1, 2022, and for duties, powers, protests, appeals, 9 proceedings, actions, or remedies attributable to an assessment 10 year beginning before January 1, 2022. 11 Sec. 11. EFFECTIVE DATE. This Act, being deemed of 12 immediate importance, takes effect upon enactment. 13 Sec. 12. APPLICABILITY. This Act applies to assessment 14 years beginning on or after January 1, 2022. 15 Sec. 13. RETROACTIVE APPLICABILITY. The following apply 16 retroactively to February 1, 2021, for forest reservation 17 property tax exemption applications filed on or after that 18 date: 19 1. The section of this Act amending section 427C.3. 20 2. The provision of this Act enacting section 427C.12, 21 subsection 2, paragraph “b”. 22 EXPLANATION 23 The inclusion of this explanation does not constitute agreement with 24 the explanation’s substance by the members of the general assembly. 25 Current Code chapter 427C authorizes a property tax 26 exemption for certain forest reservations and fruit-tree 27 reservations. To qualify for the exemption as a forest 28 reservation, the property must be at least two acres in 29 continuous area and meet certain tree density requirements. 30 The bill provides that for assessment years beginning on or 31 after January 1, 2022, the exemption for forest reservations 32 and fruit-tree reservations is 75 percent of the actual 33 value of the property comprising the forest or fruit-tree 34 reservation. 35 -7- LSB 1985XS (3) 89 md/jh 7/ 9

S.F. 112 Current law requires each forest reservation to be not 1 less than two acres in continuous area. For assessment 2 years beginning on or after January 1, 2022, each forest 3 reservation must be not less than 10 acres in continuous area 4 and the period of the exemption is for a period of five years. 5 However, the bill establishes provisions to governing forest 6 reservation exemption applications filed on or before February 7 1, 2021. For forest reservation exemption applications filed 8 on or before February 1, 2021, unless the reservation fails 9 to meet the 10-acre requirement, the period of the exemption 10 ends at the conclusion of the fifth assessment year following 11 the certification conducted by the department of natural 12 resources as provided in the bill. For forest reservation 13 exemption applications filed on or before February 1, 2021, 14 if the reservation fails to meet the 10-acre requirement, 15 the reservation’s exemption terminates beginning with the 16 assessment year beginning January 1, 2022. 17 The bill provides that for forest reservation exemption 18 applications filed after February 1, 2022, if, following 19 approval of the exemption, the department of natural resources 20 determines that the forest reservation meets the criteria for 21 depredation under Code chapter 481C, the owner must enter 22 into a depredation agreement with the department of natural 23 resources for each of the remaining years of the exemption 24 period. For each such depredation agreement, the number of 25 licenses issued each year to persons other than the landowner 26 or a family member shall not be less than 25 percent of the 27 total licenses issued for that year. 28 The bill also requires the department of natural resources 29 to inspect the area for which an application is filed for a 30 forest reservation tax exemption before the application is 31 accepted. Additionally, an area that is a forest reservation 32 may be inspected each year by the department of natural 33 resources to determine if the area is maintained as forest 34 reservation. The bill also directs the department of natural 35 -8- LSB 1985XS (3) 89 md/jh 8/ 9

S.F. 112 resources to conduct an inspection of each forest reservation 1 receiving an exemption that meets the 10-acre requirement that 2 was approved for an assessment year beginning before January 3 1, 2022. If the forest reservation meets the requirements for 4 the exemption, the department shall certify the reservation’s 5 compliance to the county auditor of the county where the 6 forest reservation is located to be used in determining the 7 period of the exemption. If the forest reservation fails to 8 meet the requirements for the exemption, the department shall 9 deny certification and shall notify the owner and the county 10 auditor of the county where the forest reservation is located 11 of the denial and the exemption shall cease beginning with the 12 immediately succeeding assessment year. The certification or 13 denial of certification by the director of the department of 14 natural resources for each of the forest reservations shall be 15 completed by July 1, 2026. 16 Except as provided in the bill does not affect the operation 17 of, or prohibit the application of, prior provisions of 18 Code chapter 427C or Code section 441.22, or rules adopted 19 to administer prior provisions of Code chapter 427C or 20 Code section 441.22, for assessment years beginning before 21 January 1, 2022, and for duties, powers, protests, appeals, 22 proceedings, actions, or remedies attributable to an assessment 23 year beginning before January 1, 2022. 24 -9- LSB 1985XS (3) 89 md/jh 9/ 9