HF 2224 (LSB 6007YH (3) 91)

HOUSE FILE 2224

BY  SIECK

A BILL FOR

An Act relating to property assessment standards and litigation.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 421.17, subsection 6, paragraph b, Code 2026, is amended to read as follows:
   b.  (1)  The director shall require all city and county assessors to prepare a quarterly report in the manner and form to be prescribed by the director showing for each warranty deed or contract of sale of real estate, divided between rural and urban, during the last completed quarter the amount of real property transfer tax, the sale price or consideration, and the equalized value at which that property was assessed that year. This report with further information required by the director shall be submitted to the department within sixty days after the end of each quarter.
   (2)  The department shall prepare annual summaries of the records of the ratio of assessments to actual sales prices for all counties, and for cities having city assessors, and the. The information for the preceding year shall be available for public inspection by May 1, and shall be available on the department’s internet website for a minimum of twenty years from the date of publication.
    Sec. 2.  Section 421.17, subsection 17, Code 2026, is amended to read as follows:
   17.  a.  To prepare and issue a state appraisal manual which each county and city assessor shall use in assessing and valuing all classes of property in the state.
   b.  The appraisal manual shall be continuously revised and the manual and revisions shall be issued to the county and city assessors in such form and manner as prescribed by the director.
   c.  Each county and city assessor shall use the most recently issued manual in assessing and valuing all classes of property in the state within two years of the publication date of the most recently issued manual. The department may grant an extension of up to two years to a county or city assessor upon request and demonstration of substantial hardship by an assessor.
   d.  When preparing the state appraisal manual, the director shall adopt standards for assessing property developed and published by the international association of assessing officers. Such standards must include all of the following:
   (1)  Use of a coefficient of dispersion analysis in determining whether properties are equitably assessed. Assessments shall maintain a coefficient of dispersion less than fifteen and ninety-nine hundredths percent unless there is good cause for a variance.
   (2)  Use of a price-related differential analysis in determining whether properties are equitably assessed. Assessments shall maintain a price-related differential between ninety-eight hundredths and one and three hundredths unless there is good cause for a variance.
    Sec. 3.  Section 441.21, subsection 1, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0i.  The coefficient of dispersion and price-related differentials of a class of property shall be calculated based on comparisons of the actual value of property in the same class within the state.
    Sec. 4.  Section 441.37, subsection 1, paragraph a, subparagraph (1), subparagraph division (a), Code 2026, is amended to read as follows:
   (a)  That said assessment is not equitable as compared with assessments of other like property in the taxing district. 
    Sec. 5.  Section 441.37, subsection 1, paragraph a, Code 2026, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (04)  For purposes of this section, “like property” means all property within a given class of property.
    Sec. 6.  Section 441.41, subsection 1, Code 2026, is amended to read as follows:
   1.  a.  In the case of cities having an assessor, the city legal department shall represent the assessor and board of review in all litigation dealing with assessments. In the case of counties, the county attorney shall represent the assessor and board of review in all litigation dealing with assessments. Any taxing district interested in the taxes received from such assessments may be represented by an attorney and shall be required to appear by attorney upon written request of the assessor to the presiding officer of any such taxing district. Subject
   b.  In cases where the opposing party is a legal business entity, including nonprofit entities, and subject to review and prior approval by either the city legal department in the case of a city or the county attorney in the case of a county, the conference board may employ special counsel to assist the city legal department or county attorney as the case may be.
    Sec. 7.  Section 441.42, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  A property owner may appeal the assessment of any property to the board of review or a court with jurisdiction over the assessed property provided that the assessed property is located in a taxing district to which the property owner appealing the assessment owns property of the same class. Appeals made pursuant to this subsection shall be made in accordance with section 441.37.
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 assessment standards and litigation.
   The international association of assessing officers (IAAO) is a nonprofit professional membership organization of government assessment officials and others interested in the administration of the property tax. The IAAO regularly publishes standards related to property assessments with the goal of advancing more equitable property appraisals, assessment administration, and property tax policies.
   Current law requires the director of the department of revenue (director) to prepare and issue a state appraisal manual which each county and city assessor must use to assess and value all classes of property. The bill requires the director to adopt real estate property assessment standards for the state appraisal manual in conformance with the standards developed and published by the IAAO. Such standards must include the use of the coefficient of dispersion (COD) and price-related differentials (PRD).
   COD is the measure of the spread of values about the median value of a class of properties. When the difference between the median value of a class of properties and the actual value to sales value ratio of a property increases, the COD will increase as well. CODs above a certain percentage are seen as inequitable. The bill requires assessors to maintain a COD of less than 15.99 percent unless there is good cause for a variance.
   PRD, or analysis of assessment bias, is used in order to determine whether higher-valued properties are overvalued or undervalued in relation to lower-valued properties. The bill requires assessors to maintain a PRD between .98 and 1.03 unless there is good cause for a variance.
   The bill requires the COD and PRD of a class of property to be calculated based on comparisons of the actual value of property in the same class.
   The bill defines, for the purposes of protesting an assessment, “like property” as all property within a given class of property.
   The bill limits the employment of special counsel to assist a city legal department or county attorney in litigation dealing with assessments to cases where the opposing party is a legal business entity, including a nonprofit entity. Under current law, a city legal department or county attorney may employ special counsel to assist the city legal department or county attorney in any litigation dealing with assessments.
   The bill allows a property owner to appeal the assessment of any other property provided that the property with the assessment to be appealed is located in a taxing district to which the property owner appealing the assessment owns property of the same class. The bill requires such appeals to be made in accordance with Code section 441.37 (protest of assessment —— grounds).