H.F. _____ Section 1. Section 441.21, subsection 1, paragraph b, 1 subparagraph (1), Code 2023, is amended to read as follows: 2 (1) (a) The actual value of all property subject to 3 assessment and taxation shall be the fair and reasonable market 4 value of such property except as otherwise provided in this 5 section . “Market value” is defined as the fair and reasonable 6 exchange value-in-exchange of the fee simple interest of the 7 property in the year in which the property is listed and valued 8 between a willing buyer and a willing seller, neither being 9 under any compulsion to buy or sell and each being familiar 10 with all the facts relating to the particular property and does 11 not include an exchange that is value-in-use . Sale prices of 12 the property or comparable property in normal transactions 13 reflecting market value, and the probable availability 14 or unavailability of persons interested in purchasing the 15 property, shall be taken into consideration in arriving at its 16 market value. In arriving at market value, sale prices of 17 property in abnormal transactions not reflecting market value 18 shall not be taken into account , or . If, however, transactions 19 reflecting market value of the property or comparable property 20 are not available, transactions not reflecting market value 21 may be used, but shall be adjusted to eliminate the effect of 22 factors which distort market value, including but not limited 23 to build-to-suit, sale-leaseback transactions; leased fee 24 sales; sales to involving immediate family of the seller, or 25 related parties; foreclosure or other forced sales , ; contract 26 sales , ; discounted purchase transactions ; or purchase of 27 adjoining land or other land to be operated as a unit. 28 (b) “Fee simple” means absolute ownership unencumbered by 29 any other interest or estate, subject only to the limitations 30 imposed by the governmental powers of taxation, eminent domain, 31 police power, and escheat. 32 Sec. 2. Section 441.21, subsection 2, Code 2023, is amended 33 to read as follows: 34 2. In the event market value of the property being assessed 35 -1- LSB 1204YC (4) 90 md/jh 1/ 5

H.F. _____ cannot be readily established in the foregoing manner, then 1 the assessor may determine the value of the property using 2 the other uniform and recognized appraisal methods including 3 its productive and earning capacity, if any, industrial 4 conditions, its cost, physical and functional depreciation 5 and obsolescence and replacement cost, and all other factors 6 which would assist in determining the fair and reasonable 7 market value of the property but the actual value shall not 8 be determined by use of only one such factor. The following 9 shall not be taken into consideration: Special value or use 10 value , value-in-use, or present use of the property to its 11 present owner , and the intangibles, goodwill , or going concern 12 value of a business which uses the property as distinguished 13 from the value of the property as property. In addition, 14 for assessment years beginning on or after January 1, 2018 15 2024 , and unless otherwise required for property valued by the 16 department of revenue pursuant to chapters 428 , 433 , 437 , and 17 438 , the assessor shall not take into consideration and shall 18 not request from any person property insurance policies; loan, 19 mortgage, or other financing information; franchise agreements; 20 sales or receipts data , ; expense data , ; balance sheets , ; bank 21 account information , ; or other data related to the financial 22 condition of a business operating in whole or in part on the 23 property if the property is both classified as commercial or 24 industrial property and owned and used by the owner of the 25 business . However, in assessing property that is rented or 26 leased to low-income individuals and families as authorized by 27 section 42 of the Internal Revenue Code, as amended, and which 28 section limits the amount that the individual or family pays 29 for the rental or lease of units in the property, the assessor 30 shall, unless the owner elects to withdraw the property from 31 the assessment procedures for section 42 property, use the 32 productive and earning capacity from the actual rents received 33 as a method of appraisal and shall take into account the extent 34 to which that use and limitation reduces the market value of 35 -2- LSB 1204YC (4) 90 md/jh 2/ 5

H.F. _____ the property. The assessor shall not consider any tax credit 1 equity or other subsidized financing as income provided to 2 the property in determining the assessed value. The property 3 owner shall notify the assessor when property is withdrawn 4 from section 42 eligibility under the Internal Revenue Code 5 or if the owner elects to withdraw the property from the 6 assessment procedures for section 42 property under this 7 subsection . The property shall not be subject to section 42 8 assessment procedures for the assessment year for which section 9 42 eligibility is withdrawn or an election is made. This 10 notification must be provided to the assessor no later than 11 March 1 of the assessment year or the owner will be subject to a 12 penalty of five hundred dollars for that assessment year. The 13 penalty shall be collected at the same time and in the same 14 manner as regular property taxes. An election to withdraw 15 from the assessment procedures for section 42 property is 16 irrevocable. Property that is withdrawn from the assessment 17 procedures for section 42 property shall be classified and 18 assessed as residential property unless the property otherwise 19 fails to meet the requirements of subsection 14 . Upon 20 adoption of uniform rules by the department of revenue or 21 succeeding authority covering assessments and valuations of 22 such properties, the valuation on such properties shall be 23 determined in accordance with such rules and in accordance with 24 forms and guidelines contained in the real property appraisal 25 manual prepared by the department as updated from time to time 26 for assessment purposes to assure uniformity, but such rules, 27 forms, and guidelines shall not be inconsistent with or change 28 the foregoing means of determining the actual, market, taxable 29 and assessed values. 30 Sec. 3. APPLICABILITY. This Act applies to assessment years 31 beginning on or after January 1, 2024. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -3- LSB 1204YC (4) 90 md/jh 3/ 5

H.F. _____ Code section 441.21 generally governs the assessment of 1 property for property tax purposes and provides that the actual 2 value of all property subject to assessment and taxation shall 3 be the fair and reasonable market value of such property except 4 as provided in that Code section. “Market value” is defined 5 as the fair and reasonable exchange in the year in which the 6 property is listed and valued between a willing buyer and a 7 willing seller, neither being under any compulsion to buy 8 or sell and each being familiar with all the facts relating 9 to the particular property. Sale prices of the property or 10 comparable property in normal transactions reflecting market 11 value, and the probable availability or unavailability of 12 persons interested in purchasing the property, shall be taken 13 into consideration in arriving at its market value. However, 14 sale prices of property in abnormal transactions not reflecting 15 market value shall not be taken into account. 16 This bill modifies the definition of “market value” to be 17 the fair and reasonable value-in-exchange of the fee simple 18 interest of property in the year in which the property is 19 listed and valued between a willing buyer and a willing seller, 20 neither being under any compulsion to buy or sell and each 21 being familiar with all the facts relating to the particular 22 property, but excluding an exchange that is value-in-use. The 23 bill includes a definition of fee simple. 24 The bill also modifies the conditions under which 25 transactions that do not reflect market value may be used 26 by the assessor. Under the bill, in arriving at market 27 value, sale prices of property in transactions not reflecting 28 market value shall not be taken into account. If, however, 29 transactions reflecting market value of the property or 30 comparable property are not available, transactions not 31 reflecting market value may be used, but shall be adjusted to 32 eliminate the effect of factors which distort market value. 33 The bill adds build-to-suit, sale-leaseback transactions, and 34 leased fee sales to the list of such transactions and modifies 35 -4- LSB 1204YC (4) 90 md/jh 4/ 5

H.F. _____ the provision governing the use of sales to immediate family 1 of the seller. 2 The bill also modifies Code section 441.21(2), which 3 specifies that in the event market value of the property being 4 assessed cannot be readily established using transaction data, 5 then the assessor may determine the value of the property using 6 the other uniform and recognized appraisal methods including 7 its productive and earning capacity, if any, industrial 8 conditions, its cost, physical and functional depreciation and 9 obsolescence and replacement cost, and all other factors which 10 would assist in determining the fair and reasonable market 11 value of the property, so long as the actual value is not to be 12 determined by use of only one such factor. The bill adds to the 13 prohibited considerations the value-in-use or present use of 14 the property, intangibles, or going concern value of a business 15 which uses the property. The bill also adds property insurance 16 policies; loan, mortgage, or other financing information; and 17 franchise agreements to the list of prohibited considerations 18 and things that may not be requested by the assessor and 19 modifies conditions for other items prohibited under current 20 law. 21 -5- LSB 1204YC (4) 90 md/jh 5/ 5