HF 2577 (LSB 5441YH (4) 91)

HOUSE FILE 2577

BY  GOLDING

A BILL FOR

An Act relating to property taxes and local government funding by modifying the methodology for determining actual value of property, certain levy rates, bonding procedures, assessment protests, and assessment limitations of certain classes of property, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
ACTUAL VALUATION LIMITATION

    Section 1.  Section 441.21, subsection 1, paragraph a, Code 2026, is amended to read as follows:
   a.  (1)  All property subject to taxation shall be valued at its actual value which shall be entered opposite each item, and, except as otherwise provided in this section, shall be assessed at one hundred percent of its actual value, and the value so assessed shall be taken and considered as the assessed value and taxable value of the property upon which the levy shall be made.
   (2)  For assessment years beginning on or after January 1, 2027, but before January 1, 2030, and notwithstanding any provision of law to the contrary, the actual value of each individual residential, commercial, or industrial property, including after adjustments to actual values made as the result of equalization, shall not exceed one hundred percent of the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, ownership of the property changes, the property’s boundaries change, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and cost of the construction, additions, or improvements exceeds five percent of the property’s actual value.
   (3)  For assessment years beginning on or after January 1, 2030, and notwithstanding any provision of law to the contrary, the actual value of each individual residential, commercial, or industrial property, including after adjustments to actual values made as the result of equalization, shall not exceed the product of the annual inflation factor multiplied by the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, ownership of the property changes, the property’s boundaries change, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and cost of the construction, additions, or improvements exceeds five percent of the property’s actual value. For purposes of this subparagraph, “annual inflation factor” means an index, expressed as a percentage, determined by the department of management based upon the consumer price for all urban consumers for the midwest region for the twelve-month period ending six months prior to January 1 of the assessment year for which the factor is determined. In determining the annual inflation factor, the department of management shall use the annual percent change in the United States department of labor, bureau of labor statistics, consumer price index for all urban consumers for the midwest region, all items, or its successor index in the applicable twelve-month period and shall add all of that percent change to one hundred percent. The annual inflation factor shall be expressed as a percentage rounded to the nearest one-tenth of one percent. The annual inflation factor shall not be less than one hundred percent nor greater than one hundred three percent.
    Sec. 2.  Section 441.21, subsection 1, paragraph b, subparagraph (1), Code 2026, is amended to read as follows:
   (1)  The Subject to the limitation under paragraph “a”, the actual value of all property subject to assessment and taxation shall be the fair and reasonable market value of such property except as otherwise provided in this section. “Market value” is defined as the fair and reasonable exchange in the year in which the property is listed and valued between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and each being familiar with all the facts relating to the particular property. Sale prices of the property or comparable property in normal transactions reflecting market value, and the probable availability or unavailability of persons interested in purchasing the property, shall be taken into consideration in arriving at its market value. In arriving at market value, sale prices of property in abnormal transactions not reflecting market value shall not be taken into account, or shall be adjusted to eliminate the effect of factors which distort market value, including but not limited to sales to immediate family of the seller, foreclosure or other forced sales, contract sales, discounted purchase transactions or purchase of adjoining land or other land to be operated as a unit.
    Sec. 3.  Section 441.21, subsection 1, paragraph g, Code 2026, is amended to read as follows:
   g.  Notwithstanding any other provision of this section, the actual value of any property shall not exceed its fair and reasonable market value, subject to paragraph “a”, except agricultural property which shall be valued exclusively as provided in paragraph “e” and paragraph “a”, of this subsection.
    Sec. 4.  Section 441.21, subsection 2, Code 2026, is amended to read as follows:
   2.  In the event market value of the property being assessed cannot be readily established in the foregoing manner, then the assessor may, subject to the limitation under subsection 1, paragraph “a”, determine the value of the property using the other uniform and recognized appraisal methods including its productive and earning capacity, if any, industrial conditions, its cost, physical and functional depreciation and obsolescence and replacement cost, and all other factors which would assist in determining the fair and reasonable market value of the property but the actual value shall not be determined by use of only one such factor. The following shall not be taken into consideration:  Special value or use value of the property to its present owner, and the goodwill or value of a business which uses the property as distinguished from the value of the property as property. In addition, for assessment years beginning on or after January 1, 2018, and unless otherwise required for property valued by the department of revenue pursuant to chapters 428, 437, and 438, the assessor shall not take into consideration and shall not request from any person sales or receipts data, expense data, balance sheets, bank account information, or other data related to the financial condition of a business operating in whole or in part on the property if the property is both classified as commercial or industrial property and owned and used by the owner of the business. However, in assessing property that is rented or leased to low-income individuals and families as authorized by section 42 of the Internal Revenue Code, as amended, and which section limits the amount that the individual or family pays for the rental or lease of units in the property, the assessor shall, unless the owner elects to withdraw the property from the assessment procedures for section 42 property, use the productive and earning capacity from the actual rents received as a method of appraisal and shall take into account the extent to which that use and limitation reduces the market value of the property. The assessor shall not consider any tax credit equity or other subsidized financing as income provided to the property in determining the assessed value. The property owner shall notify the assessor when property is withdrawn from section 42 eligibility under the Internal Revenue Code or if the owner elects to withdraw the property from the assessment procedures for section 42 property under this subsection. The property shall not be subject to section 42 assessment procedures for the assessment year for which section 42 eligibility is withdrawn or an election is made. This notification must be provided to the assessor no later than March 1 of the assessment year or the owner will be subject to a penalty of five hundred dollars for that assessment year. The penalty shall be collected at the same time and in the same manner as regular property taxes. An election to withdraw from the assessment procedures for section 42 property is irrevocable. Property that is withdrawn from the assessment procedures for section 42 property shall be classified and assessed as residential property unless the property otherwise fails to meet the requirements of subsection 14. Upon adoption of uniform rules by the department of revenue or succeeding authority covering assessments and valuations of such properties, the valuation on such properties shall be determined in accordance with such rules and in accordance with forms and guidelines contained in the real property appraisal manual prepared by the department as updated from time to time for assessment purposes to assure uniformity, but such rules, forms, and guidelines shall not be inconsistent with or change the foregoing means of determining the actual, market, taxable, and assessed values.
DIVISION II
MODIFICATION OF ASSESSMENT LIMITATIONS

    Sec. 5.  Section 441.21, subsection 4, Code 2026, is amended to read as follows:
   4.  For valuations established as of January 1, 1979 2026, the percentage of actual value at which agricultural and residential property shall be assessed shall be the quotient of the dividend and divisor as defined in this section determined under this subsection.
   a.  (1)  The percentage of actual value at which agricultural property shall be assessed shall be the quotient of the dividend and divisor as defined in this paragraph.  The dividend for each class of property shall be the dividend as determined for each class of agricultural property for valuations established as of January 1, 1978 2025, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1978 2025, plus six three percent of the amount so determined.
   (2)  However, if the difference between the dividend so determined for either class of property and the dividend for that class of property for valuations established as of January 1, 1978, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1978, is less than six percent, the 1979 dividend for the other class of property shall be the dividend as determined for that class of property for valuations established as of January 1, 1978, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1978, plus a percentage of the amount so determined which is equal to the percentage by which the dividend as determined for the other class of property for valuations established as of January 1, 1978, adjusted by the product obtained by multiplying the percentage determined for that year by the amount of any additions or deletions to actual value, excluding those resulting from the revaluation of existing properties, as reported by the assessors on the abstracts of assessment for 1978, is increased in arriving at the 1979 dividend for the other class of property.
   (3)  For valuations established for assessment years beginning on or after January 1, 2022, the calculation of the dividend for residential property under this subsection shall exclude the value of all property described in subsection 14, paragraph “a”, subparagraphs (2), (3), (4), (5), and (6), and the property described in subsection 14, paragraph “a”, subparagraph (7), that contains three or more separate dwelling units.
   b.  (1)  The divisor for each class of property shall be the total actual value of all such agricultural property in the state in the preceding year, as reported by the assessors on the abstracts of assessment submitted for 1978 2025, plus the amount of value added to said total actual value by the revaluation of existing properties in 1979 2026 as equalized by the director of revenue pursuant to section 441.49. The director shall utilize information reported on abstracts of assessment submitted pursuant to section 441.45 in determining such percentage.  For valuations established as of January 1, 2027, and each assessment year thereafter, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which agricultural property shall be assessed shall be calculated in accordance with the methods provided in this paragraph.
   (2)  For valuations established for assessment years beginning on or after January 1, 2022, the calculation of the divisor for residential property under this subsection shall exclude the value of all property described in subsection 14, paragraph “a”, subparagraphs (2), (3), (4), (5), and (6), and the property described in subsection 14, paragraph “a”, subparagraph (7), that contains three or more separate dwelling units. 
   c.  (1)  For valuations established as of January 1, 1980, and each assessment year thereafter beginning before January 1, 2013, the percentage of actual value as equalized by the director of revenue as provided in section 441.49 at which agricultural and residential property shall be assessed shall be calculated in accordance with the methods provided in this subsection, including the limitation of increases in agricultural and residential assessed values to the percentage increase of the other class of property if the other class increases less than the allowable limit adjusted to include the applicable and current values as equalized by the director of revenue, except that any references to six percent in this subsection shall be four percent.
   (2)  For valuations established as of January 1, 2013, and each assessment year thereafter, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which agricultural and residential property shall be assessed shall be calculated in accordance with the methods provided in this subsection, including the limitation of increases in agricultural and residential assessed values to the percentage increase of the other class of property if the other class increases less than the allowable limit adjusted to include the applicable and current values as equalized by the department of revenue, except that any references to six percent in this subsection shall be three percent.
   b.  (1)  For valuations established for the assessment year beginning January 1, 2026, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which residential property shall be assessed shall be forty-four and five thousand three hundred and forty-five ten thousandths percent.
   (2)  For valuations established for the assessment year beginning January 1, 2027, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which residential property shall be assessed shall be forty-seven percent.
   (3)  For valuations established for the assessment year beginning January 1, 2028, and each assessment year thereafter, the percentage of actual value as equalized by the department of revenue as provided in section 441.49 at which residential property shall be assessed shall be fifty percent.
    Sec. 6.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2026, for assessment years beginning on or after that date.
DIVISION III
PROPERTY TAX LEVY RATES

    Sec. 7.  Section 331.422, unnumbered paragraph 1, Code 2026, is amended to read as follows:
   Subject to this section and sections 331.423 through 331.425 331.424 or as otherwise provided by state law, the board of each county shall certify property taxes annually at its April session to be levied for county purposes as follows:
    Sec. 8.  Section 331.434, unnumbered paragraph 1, Code 2026, is amended to read as follows:
   Annually, the board of each county, subject to section 331.403, subsection 4, sections 331.423 through 331.425 331.424, the applicable portions of chapter 24, and other applicable state law, shall prepare and adopt a budget, certify taxes, and provide appropriations as follows:
    Sec. 9.  Section 331.435, subsection 1, Code 2026, is amended to read as follows:
   1.  The board may amend the adopted county budget, subject to sections 331.423 through 331.425 331.424 and other applicable state law, to permit increases in any class of proposed expenditures contained in the budget summary published under section 331.434, subsection 3.
    Sec. 10.  Section 384.12, subsection 4, Code 2026, is amended by striking the subsection.
    Sec. 11.  NEW SECTION.  444.25  Maximum property tax levy dollars.
   1.  For purposes of this section, unless the context otherwise requires:
   a.  “Budget year” is the fiscal year beginning during the calendar year in which a budget is certified.
   b.  “Governmental entity” means any unit of government or other public body or public corporation, including any intergovernmental entity or special purpose district, that has the power to impose or certify a property tax levy. “Governmental entity” does not include a school district.
   c.  “Property tax levy” means each ad valorem property tax authorized by law to be imposed by a governmental entity, but excluding any levy the revenue from which is specified by law for debt service or required to be used exclusively for the repayment of bonds or other indebtedness. The levy under section 384.1, subsection 2, on tracts of land and improvements thereon used and assessed for agricultural or horticultural purposes, shall be considered a separate property tax levy under this section.
   2.  a.  For the budget year beginning July 1, 2027, and each budget year thereafter, and notwithstanding any provision of law to the contrary, the maximum levy rate that may be imposed for a property tax levy by a governmental entity shall not exceed the levy rate for such property tax levy imposed by the governmental subdivision for the budget year beginning July 1, 2026, unless a higher levy rate is approved at election under subsection 3.
   b.  If the budget year includes a voter-approved property tax levy that was not approved for imposition in the budget year beginning July 1, 2026, the maximum property tax levy rate for the governmental entity under paragraph “a” for the budget year shall be the levy rate approved at election or the levy rate necessary to levy the amount of property taxes approved at election, as applicable.
   3.  a.  The limitation on any property tax levy rate under subsection 2, paragraph “a”, may be increased provided the question has been submitted at the election under section 39.1 and received sixty percent of the votes cast on the proposition to authorize the levy rate increase for the proposed budget year.
   b.  If the governmental entity is located in an area that is the subject of a governor’s proclamation of a state of disaster emergency or the declaration of a major disaster by the president of the United States, the limitation on any property tax levy rate under subsection 2, paragraph “a”, may be temporarily increased for a budget year, unless approved at election for additional years under paragraph “a”.
   c.  If the governmental entity is a city with a population of five thousand or less according to the most recent federal decennial census, the city council may certify levy rates in excess of the rate limitation under subsection 2, paragraph “a”, without an election. However, if at any time within twenty days following certification of the city’s budget, a petition is filed with the clerk of the city in the manner provided by section 362.4, asking that the question of exceeding the levy rate limit be submitted to the registered voters of the city, the council shall direct the county commissioner of elections to call a special election upon the question of exceeding the levy rate limitation.
   4.  If a governmental entity certifies a budget that violates this section, the department of management shall reduce the applicable governmental entity’s property tax levies so that the governmental entity is in compliance with this section.
    Sec. 12.  REPEAL.  Sections 24.48 and 331.425, Code 2026, are repealed.
DIVISION IV
PROPERTY ASSESSMENT PROTESTS

    Sec. 13.  Section 441.33, subsection 1, Code 2026, is amended to read as follows:
   1.  The board of review shall be in session from a date determined by the board that is on or after May 1 but not later than May 7 through the period of time necessary to act on all protests filed under section 441.37 but not later than May 31 June 15 each year and for an additional period as required under section 441.37 and shall hold as many meetings as are necessary to discharge its duties. On or before May 31 in those years in which a session has not been extended as required under section 441.37, the board shall return all books, records, and papers to the assessor except undisposed of protests and records pertaining to those protests. If it has not completed its work by May 31, in those years in which the session has not been extended under section 441.37, the director of revenue may authorize the board of review to continue in session for a period necessary to complete its work, but the director of revenue shall not approve a continuance extending beyond July 15. On or before May 31 or on the final day of any extended session required under section 441.37 or authorized by the director of revenue, the board of review shall adjourn until the date determined by the board that is on or after May 1 but not later than May 7 of the following year. It shall adopt its own rules of procedure, elect its own chairperson from its membership, and keep minutes of its meetings. The board shall appoint a clerk who may be a member of the board or any other qualified person, except the assessor or any member of the assessor’s staff. It may be reconvened by the director of revenue. All undisposed protests in its hands on July 15 shall be automatically overruled and returned to the assessor together with its other records.
    Sec. 14.  Section 441.37, subsection 1, paragraph a, subparagraph (1), unnumbered paragraph 1, Code 2026, is amended to read as follows:
   Any property owner or aggrieved taxpayer who is dissatisfied with the owner’s or taxpayer’s assessment may file a protest against such assessment with the board of review on or after April 2, to and including April May 30, of the year of the assessment. In any county which has been declared to be a disaster area by proper federal authorities or that is the subject of a state of disaster emergency proclamation by the governor after March 1 and prior to May 20 of said year of assessment, the board of review shall be authorized to remain in session until July 15 and the time for filing a protest shall be extended to and include the period from May June 1 to June 5 20 of such year. The protest shall be in writing on forms prescribed by the director of revenue and, except as provided in subsection 3, signed by the one protesting or by the protester’s duly authorized agent. The taxpayer may have an oral hearing on the protest if the request for the oral hearing is made in writing at the time of filing the protest. The protest must be confined to one or more of the following grounds:
    Sec. 15.  Section 441.45, subsection 2, Code 2026, is amended to read as follows:
   2.  If a board of review continues in session beyond June 1 15, under sections 441.33 and 441.37, the abstract of the real property shall be made out and transmitted to the department of revenue within fifteen days after the date of final adjournment by the board.
DIVISION V
BONDING

    Sec. 16.  Section 39.2, subsection 4, paragraph d, Code 2026, is amended to read as follows:
   d.  For any political subdivision of this state, if the special election is in whole or in part for the question of issuing bonds or other indebtedness, the first Tuesday after the first Monday in November in an even-numbered year.
    Sec. 17.  Section 75.1, subsection 1, Code 2026, is amended to read as follows:
   1.  When a proposition to authorize an issuance of bonds by a county, township, school corporation, merged area, city, or by any political subdivision or local board or commission, is submitted to the electors, such proposition shall not be deemed carried or adopted, anything in the statutes to the contrary notwithstanding, unless the vote in favor of such authorization is equal to at least sixty percent of the total vote cast for and against said proposition at said election. All elections on such proposition shall be held on the date specified in section 39.2, subsection 4, paragraph “d”.
    Sec. 18.  Section 296.2, Code 2026, is amended to read as follows:
   296.2  Petition for election.
   Before indebtedness can be contracted in excess of one and one-quarter percent of the assessed value of the taxable property, a petition signed by eligible electors equal in number to twenty-five percent of those voting at the last election of school officials shall be filed with the president of the board of directors, asking that an election be called, stating the amount of bonds proposed to be issued, and the purpose or purposes for which the indebtedness is to be created, and that the purpose or purposes cannot be accomplished within the limit of one and one-quarter percent of the valuation. The petition may request the calling of an election on one or more propositions separately and a each proposition may include one or more purposes.
    Sec. 19.  Section 331.441, subsection 2, paragraph b, subparagraphs (7), (12), and (14), Code 2026, are amended to read as follows:
   (7)  Enlargement and improvement of a county hospital acquired and operated under chapter 347A, subject to a maximum of two percent of the assessed value of the taxable property in the county. However, notice of the proposed bond issue shall be published once each week for two consecutive weeks and if, within twenty days following the date of the first publication, a petition requesting an election on the proposal and signed by eligible electors of the county equal in number to at least twenty percent of the votes cast at the preceding election for governor is filed with the county auditor, the proposal is subject to the election requirements in section 331.442, subsections 2, 3, and 4, for general county purpose bonds.
   (12)  (a)  Funding the acquisition, construction, reconstruction, improvement, repair, or equipping of waterworks, water mains and extensions, ponds, reservoirs, capacity, wells, dams, pumping installations, real and personal property, or other facilities available or used for the storage, transportation, or utilization of water.
   (a)  (b)  The county board of supervisors may on its own motion or upon a written petition of a water supplier established under chapter 357A or 504 direct the county auditor to establish a special service area tax district for the purpose of issuing general obligation bonds. The special service area tax district shall include only unincorporated portions of the county and shall be drawn according to engineering recommendations provided by the water supplier or the county engineer and, in addition, shall be drawn in order that an election provided for in subparagraph division (b) section 331.443 can be administered. The county’s debt service tax levy for the county general obligation bonds issued for the purposes set out in this subparagraph shall be levied only against taxable property within the county which is included within the boundaries of the special service area tax district. An owner of property not included within the boundaries of the special service area tax district may petition the board of supervisors to be included in the special service area tax district subsequent to its establishment.
   (b)  General obligation bonds for the purposes described in this subparagraph are subject to an election held in the manner provided in section 331.442, subsections 1 through 4, if not later than fifteen days following the action by the county board of supervisors, eligible electors file a petition with the county commissioner of elections asking that the question of issuing the bonds be submitted to the registered voters of the special service area tax district. The petition must be signed by eligible electors equal in number to at least five percent of the registered voters residing in the special service area tax district. If the petition is duly filed within the fifteen days, the board of supervisors shall either adopt a resolution declaring that the proposal to issue the bonds is abandoned, or direct the county commissioner of elections to call a special election within a special service area tax district upon the question of issuing the bonds.
   (14)  The aiding of the planning, undertaking, and carrying out of urban renewal projects under the authority of chapter 403 and for the purposes set out in section 403.12. However, bonds issued for this purpose are subject to the right of petition for an election as provided in section 331.442, subsection 5, without limitation on the amount of the bond issue or the population of the county, and the board shall include notice of the right of petition in the notice of proposed action required under section 331.443, subsection 2.
    Sec. 20.  Section 331.443, subsections 2 and 3, Code 2026, are amended to read as follows:
   2.  Before the board may institute proceedings for the issuance of bonds for an essential county purpose, a notice of the proposed action, including a statement of the amount and purposes of the bonds, an estimate of the annual increase in property taxes as the result of the bond issuance on a residential property with an actual value of one hundred thousand dollars, a statement of the right to petition for an election under subsection 3, and the time and place of the meeting at which the board proposes to take action for the issuance of the bonds, shall be published as provided in section 331.305. At the meeting, the board shall receive oral or written objections from any resident or property owner of the county. After all objections have been received and considered, the board, at that meeting or a date to which it is adjourned, may take additional action for the issuance of the bonds or abandon the proposal to issue the bonds. Any resident or property owner of the county may appeal the decision of the board to take additional action to the district court of the county, within fifteen days after the additional action is taken, but the additional action of the board is final and conclusive unless the court finds that the board exceeded its authority. The provisions of this subsection with respect to notice, hearing, and appeal, are in lieu of any other law.
   3.  a.  Notwithstanding subsection 2, a board may institute proceedings for the issuance of bonds for an essential county purpose specified in section 331.441, subsection 2, paragraph “b”, subparagraph (18) or (19), in an amount equal to or greater than three million dollars by causing a notice of the proposal to issue the bonds, including a statement of the amount and purpose of the bonds, together with the maximum rate of interest which the bonds are to bear, and the right to petition for an election, to be published at least once in a newspaper of general circulation within the county at least ten days prior to the meeting at which it is proposed to take action for the issuance of the bonds.
   b.  a.  If at any time before the date fixed for taking action for the issuance of the bonds, a petition is filed with the county auditor, signed by eligible electors of the county equal in number to twenty ten percent of the persons in the county who voted for the office of president of the United States at the last preceding general election that had such office on the ballot, asking that the question of issuing the bonds be submitted to the registered voters of the county, the board shall either by resolution declare the proposal to issue the bonds to have been abandoned or shall direct the county commissioner of elections to call a special election upon the question of issuing the bonds. Notice of the election and its conduct shall be in the manner provided in section 331.442.
   c.  b.  If a petition is not filed, or if a petition is filed and the proposition of issuing the bonds is approved at an election, the board may proceed with the authorization and issuance of the bonds.
    Sec. 21.  Section 384.24, subsection 3, paragraph q, Code 2026, is amended to read as follows:
   q.  The aiding in the planning, undertaking, and carrying out of urban renewal projects under the authority of chapter 403, and all of the purposes set out in section 403.12. However, bonds issued for this purpose are subject to the right of petition for an election as provided in section 384.26, without limitation on the amount of the bond issue or the size of the city, and the council shall include notice of the right of petition in the notice required under section 384.25, subsection 2.
    Sec. 22.  Section 384.25, subsections 2 and 3, Code 2026, are amended to read as follows:
   2.  Before the council may institute proceedings for the issuance of bonds for an essential corporate purpose, a notice of the proposed action, including a statement of the amount and purposes of the bonds, and an estimate of the annual increase in property taxes as the result of the bond issuance on a residential property with an actual value of one hundred thousand dollars, a statement of the right to petition for an election under subsection 3, and the time and place of the meeting at which the council proposes to take action for the issuance of the bonds, must be published as provided in section 362.3. At the meeting, the council shall receive oral or written objections from any resident or property owner of the city. After all objections have been received and considered, the council may, at that meeting or any adjournment thereof, take additional action for the issuance of the bonds or abandon the proposal to issue the bonds. Any resident or property owner of the city may appeal the decision of the council to take additional action to the district court of the county in which any part of the city is located, within fifteen days after the additional action is taken, but the additional action of the council is final and conclusive unless the court finds that the council exceeded its authority. The provisions of this subsection with respect to notice, hearing, and appeal, are in lieu of the provisions contained in chapter 73A, or any other law.
   3.  a.  Notwithstanding subsection 2, a council may institute proceedings for the issuance of bonds for an essential corporate purpose specified in section 384.24, subsection 3, paragraph “w” or “x”, in an amount equal to or greater than three million dollars by causing a notice of the proposal to issue the bonds, including a statement of the amount and purpose of the bonds, together with the maximum rate of interest which the bonds are to bear, and the right to petition for an election, to be published at least once in a newspaper of general circulation within the city at least ten days prior to the meeting at which it is proposed to take action for the issuance of the bonds.
   b.  a.  If at any time before the date fixed for taking action for the issuance of the bonds, a petition is filed with the clerk of the city signed by eligible electors of the city equal in number to twenty ten percent of the persons in the city who voted for the office of president of the United States at the last preceding general election that had such office on the ballot, asking that the question of issuing the bonds be submitted to the registered voters of the city, the council shall either by resolution declare the proposal to issue the bonds to have been abandoned or shall direct the county commissioner of elections to call a special election upon the question of issuing the bonds. Notice of the election and its conduct shall be in the manner provided in section 384.26.
   c.  b.  If a petition is not filed, or if a petition is filed and the proposition of issuing the bonds is approved at an election, the council may proceed with the authorization and issuance of the bonds.
    Sec. 23.  Section 423F.4, subsection 2, paragraphs a and b, Code 2026, are amended to read as follows:
   a.  Bonds issued on or after July 1, 2019 2026, shall not be sold at public sale as provided in chapter 75, or at a private sale, without notice and hearing. Notice of the time and place of the public hearing and a statement of the right to petition for an election under paragraph “b” shall be published not less than ten nor more than twenty days before the public hearing in a newspaper which is a newspaper of general circulation in the school district.
   b.  For bonds subject to the requirements of paragraph “a”, if at any time prior to the fifteenth day following the hearing, the secretary of the board of directors receives a petition containing the required number of signatures and asking that the question of the issuance of such bonds be submitted to the voters of the school district, the board shall either rescind its adoption of the resolution or direct the county commissioner of elections to submit the question to the registered voters of the school district at an election held on the date specified in section 39.2, subsection 4, paragraph “d”. The petition must be signed by eligible electors equal in number to not less than one hundred or thirty ten percent of the number of voters at the last preceding election of school officials under section 277.1, whichever is greater. If the board submits the question at an election and a majority sixty percent of those voting on the question favors issuance of the bonds, the board shall be authorized to issue the bonds.
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 by modifying the methodology for determining actual value of residential, commercial, and industrial property, assessment limitations of certain classes of property, and certain levy rate limitations.
   DIVISION I —— ACTUAL VALUE LIMITATION. Under Code section 441.21, all property subject to taxation shall be valued at its actual value and, except as otherwise provided by law, shall be assessed at 100 percent of its actual value, and the value so assessed shall be taken and considered as the assessed value and taxable value of the property upon which the levy shall be made. Actual value is generally required to be the fair and reasonable market value. “Market value” is defined as the fair and reasonable exchange in the year in which the property is listed and valued between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and each being familiar with all the facts relating to the particular property, but excluding certain abnormal sales.
   The bill provides that for assessment years beginning on or after January 1, 2027, but before January 1, 2030, the actual value of each individual residential, commercial, and industrial property, including after adjustments to actual values made as the result of equalization, shall not exceed 100 percent of the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, the property changed ownership, the property’s boundaries change, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and cost of the construction, additions, or improvements exceeds 5 percent of the property’s actual value.
   The bill provides that for assessment years beginning on or after January 1, 2030, the actual value of each such individual property, including after adjustments to actual values made as the result of equalization, shall not exceed the product of the annual inflation factor, as defined in the bill, and the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, the property changed ownership, the property’s boundaries changed, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and the cost of the construction, additions, or improvements exceeds 5 percent of the property’s actual value. The bill defines “annual inflation factor” to be an index, expressed as a percentage, determined based upon the consumer price for all urban consumers for the midwest region, but shall not be less than 100 percent nor greater than 103 percent.
   The bill also makes conforming changes to other provisions of law relating to the valuation of property.
   DIVISION II —— MODIFICATION OF ASSESSMENT LIMITATIONS.  Code section 441.21(4) establishes the calculation for assessment limitations (rollback) for residential property and agricultural property. The bill strikes the calculation of the residential property assessment limitation for assessment years beginning on or after January 1, 2026, and strikes the provision within the agricultural property assessment limitation calculation that limits growth of residential or agricultural property to the growth in the other classification (ag-residential tie). The bill increases assessment limitations for residential property each assessment year from the assessment year beginning January 1, 2026, until the assessment limitation reaches 50 percent for assessment years beginning on or after January 1, 2028. By operation of the scheduled increases to the residential property assessment limitation, the assessment limitation applicable to that portion of commercial, and industrial property that is equal to or less than $150,000 is also increased.
   This division of the bill applies retroactively to assessment years beginning on or after January 1, 2026.
   DIVISION III —— PROPERTY TAX LEVY RATES. Under the bill, for the budget year beginning July 1, 2027, and each budget year thereafter, and notwithstanding any provision of law to the contrary, the maximum levy rate that may be imposed for a property tax levy by a governmental entity generally shall not exceed the levy rate for such property tax levy imposed by the governmental subdivision for the budget year beginning July 1, 2026, unless a higher levy rate is approved at election. The bill includes provisions to account for new voter-approved levies. Additionally, the limitation on any property tax levy rate under the bill may be increased provided the question has been submitted at the general election and received 60 percent of the votes cast on the proposition to authorize the levy rate increase for the proposed budget year.
   Under the bill, if the governmental entity is located in an area that is the subject of a governor’s proclamation of a state of disaster emergency or the declaration of a major disaster by the president of the United States, the limitation on any property tax levy rate may be temporarily increased for a budget year, unless approved at election for additional years.
   Under the bill, if the governmental entity is a city with a population of 5,000 or less, the city council may certify levy rates in excess of the rate limitation without an election. However, if at any time within 20 days following certification of the city’s budget, a petition is filed with the clerk of the city asking that the question of exceeding the levy rate limit be submitted to the registered voters of the city, the council shall direct the county commissioner of elections to call a special election upon the question of exceeding the levy rate limitation.
   DIVISION IV —— PROPERTY ASSESSMENT PROTESTS. Code section 441.37 establishes the period of time for filing protest of a property assessment with the local board of review. The bill amends the period of time for filing protests of property assessment from ending on April 30 to ending on May 30. The bill also makes corresponding changes to other deadlines following that change to the protest filing period.
   DIVISION V —— BONDING. The bill modifies the procedures and requirements for the issuance of certain bonds and indebtedness by various political subdivisions.
   Counties and cities may generally contract indebtedness and approve the issuance of general obligation bonds to carry out an essential county purpose or essential corporate purpose without voter approval, while the issuance of general obligation bonds to carry out a general county purpose or general corporate purpose generally requires voter approval by a 60 percent threshold. Current law also establishes circumstances under which the county or city may pursue the issuance of general obligation bonds for a general county purpose or general corporate purpose without voter approval, subject to the filing of a qualifying petition by eligible electors requesting an election. The bill provides that all bond issuances for essential county purposes or essential corporate purposes are subject to an election if a petition is filed that is signed by eligible electors of the applicable jurisdiction equal in number to 10 percent of the persons in the jurisdiction who voted for the office of president of the United States at the last preceding general election.
   The bill makes corresponding changes to other provisions of law governing the issuance of bonds and, by operation of law, the changes to county and city provisions governing the issuance of bonds apply to the issuances of certain other bonds or indebtedness by or on behalf of certain other political subdivisions.
   Code section 296.2 provides that before indebtedness can be contracted by a school district in excess of 1.25 percent of the assessed value of the taxable property, a petition shall be filed with the president of the board of directors, asking that an election be called. The bill strikes that portion of the section limiting the provision to the issuance of indebtedness in excess of 1.25 percent of the assessed value of the taxable property.
   Code section 423F.4 governs the ability of school districts to issue bonds payable from moneys from the secure an advanced vision for education fund. Under current law, such bonds may be issued without approval at election, unless a qualifying petition requesting an election is received. The bill makes all such bond issuances subject to 60 percent voter approval on or after July 1, 2026, and changes the number of voters required for a qualifying petition.
   The bill amends Code section 75.1, which governs elections held for the issuance of bonds by requiring 60 percent voter approval, to apply to merged areas and other political subdivisions.
    Code section 39.2(4)(d) provides that, for any political subdivision, if a special election is in whole or in part for the question of issuing bonds or other indebtedness, the election shall be held on the first Tuesday after the first Monday in November. The bill changes that provision to only apply to such date in November in an even-numbered year.