HSB 224 (LSB 2193YC (2) 90)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act relating to property taxation for commercial child care centers and facilities and including effective date, applicability, and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 441.21, subsection 5, paragraph b, subparagraph (2), unnumbered paragraph 1, Code 2023, is amended to read as follows:
   For Except for property subject to subparagraph (3), for valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the portion of actual value at which each property unit of commercial property shall be assessed shall be the sum of the following:
    Sec. 2.  Section 441.21, subsection 5, paragraph b, Code 2023, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (3)  (a)  For valuations established for the assessment year beginning January 1, 2023, and each assessment year thereafter, the portion of actual value at which each portion of a property unit of commercial property that is primarily used as a child care center or child care facility, as defined in section 237A.1, and for which an application has been allowed under this subparagraph, shall be assessed at 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.
   (b)  A person who wishes to qualify for the assessment limitation under this subparagraph shall file an application with the assessor not later than July 1 of the assessment year for which the person is first requesting the assessment limitation on forms provided by the department of revenue. The application shall describe the property and its location and include other information required by the department of revenue. The application shall be accompanied by a copy of the license to operate as a child care center or child care facility issued by the department of health and human services or other proof of eligibility set forth in rule by the department of revenue. Upon allowance of the application, the assessment limitation shall be applied to the portion of the property unit of commercial property that is primarily used as a child care center or child care facility for successive years without further filing as long as the portion of the property unit continues to be classified as commercial property and is used for the purposes specified in the application.
   (c)  Not later than July 6 of each year, the assessor shall remit the applications for the assessment limitation to the county auditor with the assessor’s recommendation for allowance or disallowance. If the assessor recommends disallowance, the assessor shall submit the reasons for the recommendation, in writing, to the county auditor.
   (d)  Not later than July 15 of each year, the county auditor shall forward the applications for the assessment limitation to the board of supervisors. The board shall determine the eligibility for each application on or before September 1 of each year. If the board disallows a claim, it shall send written notice, by mail, to the applicant at the applicant’s last-known address. The notice shall state the reasons for disallowing the application and shall state the applicant’s right to appeal the board’s action to the district court under subparagraph division (f).
   (e)  All applications that have been allowed by the board of supervisors shall be certified on or before October 1, in each year, by the board of supervisors to the county auditor.
   (f)  Within thirty days following the date of the notice of disallowance under subparagraph division (d), the applicant may appeal the disallowance to the district court of the county in which the property is situated.
   (g)  If the person ceases to use the property as a child care center or child care facility, the person shall provide written notice to the assessor by July 1 following the date on which the use has changed. If, at any time within thirty-six months following the date that an application is allowed, the board determines that the person received an assessment limitation under this subparagraph that the person is not entitled to, the treasurer shall collect from the person the amount of additional tax that would have been assessed on the property if the property received the assessment limitations under subparagraph (2), and the amount shall become a lien on the property that received the assessment limitation and shall be collected by the county treasurer in the same manner as other taxes. Prior to the board’s determination that a person received an assessment limitation that the person is not entitled to, the board shall notify the person by mail and conduct a hearing.
   (h)  The assessor shall retain a permanent file of current applications made under this subparagraph. The county recorder shall give notice to the assessor of each transfer of title filed in the recorder’s office. The notice from the county recorder shall describe the property transferred, the name of the person transferring title to the property, and the name of the person to whom title to the property has been transferred. The assessor shall file a notice of transfer of property for which an application is filed when notice is received from the office of the county recorder.
   (i)  The department shall adopt rules to implement and administer this subparagraph.
    Sec. 3.  Section 441.21, subsection 5, paragraph e, subparagraphs (1) and (3), Code 2023, are amended to read as follows:
   (1)  For each fiscal year beginning on or after July 1, 2023, there is appropriated from the general fund of the state to the department of revenue the sum of one hundred twenty-five million dollars to be used for payments under this paragraph calculated as a result of the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a);, and paragraph “c”, subparagraph (2), subparagraph division (a); and paragraph “b”, subparagraph (3), for the portion of actual value of each property unit subject to the assessment limitation under paragraph “b”, subparagraph (3), that is less than or equal to one hundred fifty thousand dollars. 
   (3)  On or before July 1 of each fiscal year, the assessor shall report to the county auditor that portion of the total actual value of all commercial property and industrial property in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a);, and paragraph “c”, subparagraph (2), subparagraph division (a),; and paragraph “b”, subparagraph (3), for the portion of actual value of each property unit subject to the assessment limitation under paragraph “b”, subparagraph (3), that is less than or equal to one hundred fifty thousand dollars, for the assessment year used to calculate the taxes due and payable in that fiscal year.
    Sec. 4.  Section 441.21, subsection 5, paragraph e, subparagraph (4), subparagraph division (a), Code 2023, is amended to read as follows:
   (a)  The product of the portion of the total actual value of all commercial property, industrial property, and property valued by the department under chapter 434 in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a);, and paragraph “c”, subparagraph (2), subparagraph division (a),; and paragraph “b”, subparagraph (3), for the portion of actual value of each property unit subject to the assessment limitation under paragraph “b”, subparagraph (3), that is less than or equal to one hundred fifty thousand dollars, for the applicable assessment year used to calculate taxes which are due and payable in the applicable fiscal year multiplied by the difference, stated as a percentage, between ninety percent and the assessment limitation percentage applicable to residential property under subsection 4 for the applicable assessment year. 
    Sec. 5.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  RETROACTIVE APPLICABILITY.  The following apply retroactively to assessment years beginning on or after January 1, 2023:
   1.  The section of this Act amending section 441.21, subsection 5, paragraph “b”, subparagraph (2), unnumbered paragraph 1.
   2.  The section of this Act enacting section 441.21, subsection 5, paragraph “b”, subparagraph (3).
    Sec. 7.  APPLICABILITY.  The following apply July 1, 2024, for payments under section 441.21, subsection 5, paragraph “e”, for fiscal years beginning on or after that date:
   1.  The section of this Act amending section 441.21, subsection 5, paragraph “e”, subparagraphs (1) and (3).
   2.  The section of this Act amending section 441.21, subsection 5, paragraph “e”, subparagraph (4), subparagraph division (a).
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 taxation for commercial child care centers and facilities. Code section 441.21(5) determines the amount of actual value of commercial property that is subject to property tax. The amount is the sum of the residential assessment limitation to the portion of the property’s value that does not exceed $150,000 plus 90 percent of the property’s value in excess of $150,000. The bill excludes property primarily used as a child care center or child care facility from that determination and instead specifies that for assessment years beginning on or after January 1, 2023, the amount of actual value of such properties that is subject to property tax and for which an application has been allowed is equal to the product of the assessment limitation percentage applicable to residential property multiplied by the actual value of the property. 
   The bill establishes an application and approval procedure for the assessment limitation and amends provisions relating to the calculation of payments to local governments as the result of the application of certain assessment limitations under Code section 441.21(5)(e).
   The bill takes effect upon enactment, applies retroactively to assessment years beginning on or after January 1, 2023, and applies to payments to local governments under Code section 441.21(5)(e) for fiscal years beginning on or after July 1, 2024.