House Study Bill 61 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act relating to the assessment and valuation of property 1 rented or leased to certain low-income individuals and 2 families and including effective date and retroactive 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1059YC (3) 90 md/jh

H.F. _____ Section 1. Section 441.21, subsection 2, Code 2023, is 1 amended to read as follows: 2 2. In the event market value of the property being assessed 3 cannot be readily established in the foregoing manner, then 4 the assessor may determine the value of the property using the 5 other uniform and recognized appraisal methods including its 6 productive and earning capacity, if any, industrial conditions, 7 its cost, physical and functional depreciation and obsolescence 8 and replacement cost, and all other factors which would assist 9 in determining the fair and reasonable market value of the 10 property but the actual value shall not be determined by use 11 of only one such factor. The following shall not be taken into 12 consideration: Special value or use value of the property to 13 its present owner, and the goodwill or value of a business 14 which uses the property as distinguished from the value of 15 the property as property. In addition, for assessment years 16 beginning on or after January 1, 2018, and unless otherwise 17 required for property valued by the department of revenue 18 pursuant to chapters 428 , 433 , 437 , and 438 , the assessor 19 shall not take into consideration and shall not request from 20 any person sales or receipts data, expense data, balance 21 sheets, bank account information, or other data related to 22 the financial condition of a business operating in whole or 23 in part on the property if the property is both classified as 24 commercial or industrial property and owned and used by the 25 owner of the business. However, in assessing property that 26 is rented or leased to low-income individuals and families 27 as authorized by section 42 of the Internal Revenue Code, 28 as amended, and which section limits the amount that the 29 individual or family pays for the rental or lease of units 30 in the property, the assessor shall, unless the owner elects 31 to withdraw the property from the assessment procedures for 32 section 42 property, use the productive and earning capacity 33 from the actual rents received as a method of appraisal , 34 including consideration of productive and earning capacity 35 -1- LSB 1059YC (3) 90 md/jh 1/ 4

H.F. _____ and rents received for years prior to the property being 1 subject to assessment procedures for section 42 property as 2 if the property was residential property, and shall take into 3 account the extent to which that use and limitation reduces 4 the market value of the property. The assessor shall not 5 consider any tax credit equity or other subsidized financing 6 as income provided to the property in determining the assessed 7 value. The property owner shall notify the assessor when 8 property is withdrawn from section 42 eligibility under the 9 Internal Revenue Code or if the owner elects to withdraw the 10 property from the assessment procedures for section 42 property 11 under this subsection . The property shall not be subject to 12 section 42 assessment procedures for the assessment year for 13 which section 42 eligibility is withdrawn or an election is 14 made. This notification must be provided to the assessor no 15 later than March 1 of the assessment year or the owner will 16 be subject to a penalty of five hundred dollars for that 17 assessment year. The penalty shall be collected at the same 18 time and in the same manner as regular property taxes. An 19 election to withdraw from the assessment procedures for section 20 42 property is irrevocable. Property that is withdrawn from 21 the assessment procedures for section 42 property shall be 22 classified and assessed as residential property unless the 23 property otherwise fails to meet the requirements of subsection 24 14 . Upon adoption of uniform rules by the department of 25 revenue or succeeding authority covering assessments and 26 valuations of such properties, the valuation on such properties 27 shall be determined in accordance with such rules and in 28 accordance with forms and guidelines contained in the real 29 property appraisal manual prepared by the department as updated 30 from time to time for assessment purposes to assure uniformity, 31 but such rules, forms, and guidelines shall not be inconsistent 32 with or change the foregoing means of determining the actual, 33 market, taxable and assessed values. 34 Sec. 2. Section 441.21, subsection 14, paragraph c, Code 35 -2- LSB 1059YC (3) 90 md/jh 2/ 4

H.F. _____ 2023, is amended to read as follows: 1 c. Property that is rented or leased to low-income 2 individuals and families as authorized by section 42 of the 3 Internal Revenue Code, and that has not been withdrawn from 4 section 42 assessment procedures under subsection 2 of this 5 section , or a hotel, motel, inn, or other building where rooms 6 or dwelling units are usually rented for less than one month 7 shall not be classified as residential property under this 8 subsection and are subject to assessment under subsection 2 . 9 Sec. 3. Section 441.21, subsection 14, Code 2023, is amended 10 by adding the following new paragraph: 11 NEW PARAGRAPH . 0d. Property that is a hotel, motel, inn, or 12 other building where rooms or dwelling units are usually rented 13 for less than one month shall not be classified as residential 14 property under this subsection. 15 Sec. 4. EFFECTIVE DATE. This Act, being deemed of immediate 16 importance, takes effect upon enactment. 17 Sec. 5. RETROACTIVE APPLICABILITY. This Act applies 18 retroactively to assessment years beginning on or after January 19 1, 2022. 20 EXPLANATION 21 The inclusion of this explanation does not constitute agreement with 22 the explanation’s substance by the members of the general assembly. 23 Under Code section 441.21(2), in assessing property that 24 is rented or leased to low-income individuals and families as 25 authorized by section 42 of the Internal Revenue Code, unless 26 the owner elects to withdraw the property from the assessment 27 procedures for section 42 property, the assessor shall use 28 the productive and earning capacity from the actual rents 29 received as a method of appraisal and shall take into account 30 the extent to which that use and limitation reduces the market 31 value of the property. This bill provides that consideration 32 of such productive and earning capacity and rents received 33 for years prior to the property being subject to assessment 34 procedures for section 42 property shall be as if the property 35 -3- LSB 1059YC (3) 90 md/jh 3/ 4

H.F. _____ was residential property. The bill also makes corresponding 1 changes to other provisions relating to property subject to 2 such assessment procedures. 3 The bill takes effect upon enactment and applies 4 retroactively to assessment years beginning on or after January 5 1, 2022. 6 -4- LSB 1059YC (3) 90 md/jh 4/ 4