HF 142 (LSB 1465YH (3) 91)

HOUSE FILE 142

BY  WILLS

A BILL FOR

An Act creating conservation area designations subject to modified property tax levy rates and eliminating the forest and fruit-tree reservation property tax exemption program.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
CONSERVATION AREAS

    Section 1.  NEW SECTION.  427D.1  Conservation area designation —— taxation.
   1.  For assessment years beginning on or after January 1, 2026, any person who receives a conservation area designation as provided in this chapter shall be taxed at the following levy rates:
   a.  For a commercial conservation area, twelve dollars per commercial conservation acre.
   b.  For any other conservation area, eight dollars per acre.
   2.  The revenue generated from the levy pursuant to this section shall be apportioned by the county treasurer among the several taxing districts in which the area is located in proportion to each taxing district’s portion of the consolidated levy rate that would otherwise be applicable to the area but for the designation under this chapter.
    Sec. 2.  NEW SECTION.  427D.2  Conservation area.
   On any tract of land in the state of Iowa, the owner or owners may apply for a conservation area designation. The conservation area shall encompass not less than five acres in continuous area. Upon compliance with the provisions of this chapter, such owner or owners shall be entitled to the benefits of this chapter.
    Sec. 3.  NEW SECTION.  427D.3  Commercial conservation area.
   1.  In addition to the other requirements of a conservation area under this chapter, a commercial conservation area must be used primarily for one or more of the following:
   a.  Fruit production.
   b.  Pasture land, if the pasture land is managed with a certified management plan from the United States department of agriculture or the United States natural resource conservation service, and has a minimum stubble height of four inches to improve habitat.
   c.  Hunting or fishing pursuant to a lease agreement.
    Sec. 4.  NEW SECTION.  427D.4  Conservation area —— forests.
   A conservation area that does not satisfy the requirements for a commercial conservation area, but is comprised of forested land, which is compliant with a forest improvement plan, shall be designated as a conservation area.
    Sec. 5.  NEW SECTION.  427D.5  Penalty.
   If the owner or owners violate any provision of this chapter, the land shall lose the conservation area designation and any tax shall be subject to recapture as provided in section 427D.6.
    Sec. 6.  NEW SECTION.  427D.6  Application —— inspection —— continuation of exemption —— recapture of tax.
   1.  It shall be the duty of the assessor to secure the facts relative to a proposed conservation area by taking the sworn statement, or affirmation, of the owner or owners making application under this chapter; and to make a report to the county auditor of all conservation areas made in the county under the provisions of this chapter.
   2.  The board of supervisors shall designate the county conservation board or the assessor who shall inspect the area for which an application is filed for conservation area designations before the application is approved. Use of aerial photographs may be substituted for on-site inspection when appropriate. The application can only be approved if it meets the criteria established by the natural resource commission to be a conservation area. Once the application has been approved, the area shall continue to be taxed as a conservation area under this chapter during each year in which the area is maintained as a conservation area without the owner having to refile. If the property is sold or transferred, the seller shall notify the buyer that all, or part of, the property is a conservation area and subject to the recapture tax provisions of this section. The area may be inspected each year by the county conservation board or the assessor to determine if the area is maintained as a conservation area. If the area is not maintained or is used for economic gain other than for the purposes permitted under this chapter, the assessor shall classify and assess the property in the same manner as all other property subject to taxation as of January 1 of that year and, in addition, the area shall be subject to a recapture tax. However, the area shall not be subject to the recapture tax if the owner, including one possessing under a contract of sale, and the owner’s direct antecedents or descendants have owned the area for more than ten years. The tax shall be computed by multiplying the consolidated levy for each of the applicable years by the assessed value of the area that would have been taxed but for reduced taxation. This tax shall be entered against the property on the tax list for the current year and shall constitute a lien against the property in the same manner as a lien for property taxes. The tax when collected shall be apportioned in the manner provided for the apportionment of the property taxes for the applicable tax year.
    Sec. 7.  NEW SECTION.  427D.7  Report to department of natural resources.
   The county assessor shall keep a record of all conservation areas in the county and submit a report of the reservations to the department of natural resources beginning not later than June 15, 2027, and each June 15 thereafter.
    Sec. 8.  NEW SECTION.  441.22A  Conservation area designation.
   Conservation areas fulfilling the conditions of chapter 427D shall be subject to tax as provided in section 427D.1. In all other cases where trees are planted upon any tract of land, without regard to area, for forest, fruit, shade, or ornamental purposes, or for windbreaks, the assessor shall not increase the valuation of the property because of such improvements.
DIVISION II
FOREST AND FRUIT-TREE RESERVATIONS —— REPEAL

    Sec. 9.  NEW SECTION.  427C.14  Applicability and future repeal.
   1.  This chapter applies to assessment years beginning prior to January 1, 2026.
   2.  This chapter is repealed January 1, 2031.
    Sec. 10.  Section 441.22, Code 2025, is amended to read as follows:
   441.22  Forest and fruit-tree reservations —— future repeal.
   Forest and fruit-tree reservations fulfilling the conditions of chapter 427C shall be exempt from taxation for assessment years beginning prior to January 1, 2026. In all other cases where trees are planted upon any tract of land, without regard to area, for forest, fruit, shade, or ornamental purposes, or for windbreaks, the assessor shall not increase the valuation of the property because of such improvements.  This section is repealed January 1, 2031.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates conservation area designations and eliminates the forest and fruit-tree property tax exemption program.
   DIVISION I —— CONSERVATION AREAS. The bill establishes a conservation area designation, to be taxed at the following levy rates: for a commercial conservation area, $12 per acre; and for any other conservation area, $8 per acre.
   The bill specifies the revenue generated from the levies shall be apportioned by the county treasurer among the several taxing districts in which the area is located in proportion to each taxing district’s portion of the consolidated levy rate that would otherwise be applicable to the area but for the designation under the bill.
   The bill specifies any owner may select any tract of land as a conservation area. The conservation area must consist of five continuous acres.
   A commercial conservation area must consist of fruit production, pasture land, or an area encompassing a hunting or fishing lease. The bill requires the pasture land to be managed with a certified management plan and have a minimum stubble height of four inches to improve habitat.
   The bill requires a conservation area containing forested land to have an implemented forest improvement plan.
   The bill establishes an application process for the establishment of a conservation area.
   An owner who does not maintain the conservation area is subject to a recapture tax as described in the bill.
   DIVISION II —— FOREST AND FRUIT-TREE RESERVATIONS —— REPEAL.  The bill eliminates the forest and fruit-tree reservation tax exemption under Code chapter 427C for assessment years beginning on or after January 1, 2026.