House File 2745 - Introduced HOUSE FILE 2745 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 596) A BILL FOR An Act relating to state and local government taxes, budgets, 1 and authority, by modifying provisions relating to the 2 assessment and taxation of property, funding from the secure 3 an advanced vision for education fund, urban renewal areas, 4 establishing a program for certain first-time homebuyers, 5 establishing a local government efficiency grant fund, 6 making appropriations, and including effective date, 7 applicability, and retroactive applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 6158HV (4) 91 md/jh

H.F. 2745 DIVISION I 1 PROPERTY TAX REVENUE LIMITATIONS —— BOND REVENUE USE 2 LIMITATIONS 3 Section 1. Section 11.11, Code 2026, is amended to read as 4 follows: 5 11.11 Scope of audits. 6 The written report of the audit of a governmental 7 subdivision shall include the auditor’s opinion as to whether a 8 governmental subdivision’s financial statements are presented 9 fairly in all material respects in conformity with generally 10 accepted accounting principles or with an other another 11 comprehensive basis of accounting. As a part of conducting an 12 audit of a governmental subdivision, an evaluation of internal 13 control and tests for compliance with laws and regulations 14 shall be performed. As part of conducting an audit of a 15 governmental subdivision, an examination of the governmental 16 subdivision’s compliance with the reporting requirements of 17 section 331.403, subsection 3 , or section 384.22, subsection 2 , 18 if applicable, shall be performed. As part of conducting an 19 audit of a governmental subdivision for fiscal years beginning 20 on or after July 1, 2027, an examination of the governmental 21 subdivision’s compliance with section 24.35 shall be performed, 22 including verification of the circumstances resulting in actual 23 reserve funds exceeding the specified limits. 24 Sec. 2. Section 24.34, Code 2026, is amended to read as 25 follows: 26 24.34 Unliquidated obligations. 27 A city, county, or other political subdivision governmental 28 entity, as defined in section 24.35, may establish an 29 encumbrance system for any obligation not liquidated at the 30 close of the fiscal year in which the obligation has been 31 encumbered assigned, committed, restricted, or specified as 32 nonspendable . The encumbered obligations may be retained upon 33 the books of the city, county, or other political subdivision 34 until liquidated, all in accordance with generally accepted 35 -1- LSB 6158HV (4) 91 md/jh 1/ 57

H.F. 2745 governmental accounting practices principles, as established by 1 the governmental accounting standards board . 2 Sec. 3. NEW SECTION . 24.35 General fund reserves —— 3 limitations. 4 1. For purposes of this section: 5 a. “Budget year” is the fiscal year beginning during the 6 calendar year in which a budget is certified. 7 b. “Current fiscal year” is the fiscal year ending during 8 the calendar year in which a budget for the budget year is 9 certified. 10 c. “General fund” means a governmental entity’s fund 11 designated as such by law or the governmental entity’s fund 12 from which primary general operations of the governmental 13 entity are funded. 14 d. “Governmental entity” means any unit of government 15 or other public body or public corporation, including any 16 intergovernmental entity, that has the power to impose or 17 certify a property tax levy. “Governmental entity” does not 18 include a school district. 19 e. “Unassigned” means funds that are not restricted, 20 committed, assigned, or nonspendable within the meaning of 21 generally accepted accounting principles, as established by the 22 governmental accounting standards board. 23 2. a. For budgets certified for budget years beginning 24 on or after July 1, 2027, proposed unassigned reserve funds 25 identified within a governmental entity’s general fund shall 26 not exceed an amount equal to thirty-five percent of the 27 budgeted expenditures from the governmental entity’s general 28 fund for the current fiscal year prior to budgeted transfers 29 from such general fund. 30 b. If the governmental entity’s budget does not comply with 31 the requirements of paragraph “a” , the department of management 32 shall not certify the governmental entity’s taxes back to the 33 county auditor under section 24.17 and the governmental entity 34 shall remedy the violation and recertify the budget. 35 -2- LSB 6158HV (4) 91 md/jh 2/ 57

H.F. 2745 3. To ensure uniformity, accuracy, and efficiency in the 1 certification of governmental entity budgets according to the 2 requirements of this section, the department of management 3 shall prescribe the procedures to be used and instruct the 4 appropriate officials of the various governmental entities on 5 implementation of the procedures. 6 Sec. 4. Section 24.48, Code 2026, is amended by adding the 7 following new subsection: 8 NEW SUBSECTION . 6. The authority to suspend property tax 9 levy limitations under this section shall not apply to the 10 limitations of section 444.25. 11 Sec. 5. Section 176A.8, subsection 13, Code 2026, is amended 12 by striking the subsection. 13 Sec. 6. NEW SECTION . 444.25 Maximum property tax levy 14 dollars. 15 1. For purposes of this section, unless the context 16 otherwise requires: 17 a. “Budget year” is the fiscal year beginning during the 18 calendar year in which a budget is certified. 19 b. “Current fiscal year” is the fiscal year ending during 20 the calendar year in which a budget for the budget year is 21 certified. 22 c. “Governmental entity” means any unit of government 23 or other public body or public corporation, including any 24 intergovernmental entity or special purpose district, that 25 has the power to impose or certify a property tax levy. 26 “Governmental entity” does not include a school district. 27 d. “New valuation” means the increase from the current 28 fiscal year to the budget year in taxable valuation, as shown 29 on the assessment roll due to the following, the amount of each 30 as reported under section 331.510 by the county auditor to the 31 department of management: 32 (1) New construction. 33 (2) Additions or improvements to existing structures that 34 are not normal and necessary repairs under section 441.21, 35 -3- LSB 6158HV (4) 91 md/jh 3/ 57

H.F. 2745 subsection 8. 1 (3) Net boundary adjustments, including annexation, 2 severance, incorporation, consolidation, or discontinuance as 3 those terms are defined in section 368.1. 4 (4) Valuation exempt from property tax for the current 5 fiscal year as the result of prior new construction, additions, 6 or improvements under section 15.332, Code 2025, section 7 15.500, chapter 404, or chapter 427B, subchapter I, but which 8 is not exempt from property tax in the budget year. 9 e. “Property tax levy” means each ad valorem property tax 10 authorized by law to be imposed by a governmental entity, but 11 excluding any levy the revenue from which is specified by law 12 for debt service or required to be used exclusively for the 13 repayment of bonds or other indebtedness. 14 2. a. For the budget year beginning July 1, 2027, and 15 each budget year thereafter, the maximum aggregate amount of 16 property tax dollars that may be certified for levy among all 17 property tax levies imposed by a governmental entity against 18 property that is not new valuation shall not exceed an amount 19 equal to the sum of one hundred two percent of the aggregate 20 amount of property tax dollars certified for levy by the 21 governmental entity among all property tax levies imposed by 22 the governmental entity for the current fiscal year. 23 b. If the budget year includes a voter-approved property tax 24 levy that was not approved for imposition in the current fiscal 25 year, the maximum aggregate amount of property tax dollars for 26 the governmental entity under paragraph “a” for the budget 27 year shall be increased by the amount of the voter-approved 28 property tax levy approved at election for the budget year. If 29 the current fiscal year includes a voter-approved property tax 30 levy that is not approved for imposition in the budget year, 31 the maximum aggregate amount of property tax dollars for the 32 governmental entity under paragraph “a” for the budget year 33 shall be reduced by the amount of the voter-approved property 34 tax levy for the current fiscal year. 35 -4- LSB 6158HV (4) 91 md/jh 4/ 57

H.F. 2745 c. The amount of property tax dollars calculated under this 1 section includes those amounts budgeted by the governmental 2 entity as replacement taxes under chapter 437A or 437B, if 3 applicable. 4 3. For purposes of this section, if the governmental 5 entity’s taxes for a property tax levy were not certified 6 back by the department of management under section 24.17 for 7 the current fiscal year due to an act or omission of the 8 governmental entity, the current fiscal year’s property tax 9 dollars certified for levy for that property tax levy shall 10 be equal to the amount certified for levy for the fiscal year 11 immediately preceding the current fiscal year. 12 4. If a governmental entity certifies a budget that violates 13 this section, the department of management shall reduce each of 14 the applicable governmental entity’s property tax levies on a 15 pro rata basis so that the governmental entity is in compliance 16 with this section. 17 5. This section shall not be construed as removing or 18 otherwise affecting the property tax limitations, including 19 levy rate and use limitations, otherwise provided by law for 20 any property tax levy of the governmental entity. 21 Sec. 7. NEW SECTION . 444.26 Use of bonds and indebtedness 22 for general operations —— prohibition. 23 1. For purposes of this section: 24 a. “General operations” means services or activities 25 generally funded from the governmental entity’s general fund, 26 which are necessary for the operation of the governmental 27 entity, including salaries and benefits, or which are for the 28 health and welfare of the governmental entity’s citizens or 29 primarily intended to benefit all residents of the governmental 30 entity, but excluding services financed by statutory funds 31 other than a debt service fund. 32 b. “Governmental entity” means any unit of government 33 or other public body or public corporation, including any 34 intergovernmental entity, that has the power to impose or 35 -5- LSB 6158HV (4) 91 md/jh 5/ 57

H.F. 2745 certify a property tax levy. 1 2. On or after July 1, 2026, the governing body of a 2 governmental entity shall not issue bonds or other indebtedness 3 payable from an ad valorem property tax levy for the purpose of 4 funding the general operations of the governmental entity or 5 otherwise use proceeds from the sale of bonds or issuance of 6 other indebtedness to fund general operations. 7 3. The department of management, following consultation 8 with the city finance committee and the county finance 9 committee, may adopt rules under chapter 17A for governmental 10 entities to implement this section. 11 DIVISION II 12 COMMERCIAL AND INDUSTRIAL PROPERTY ASSESSMENT LIMITATIONS 13 Sec. 8. Section 441.21, subsection 5, paragraph b, 14 subparagraph (2), subparagraph divisions (a) and (b), Code 15 2026, are amended to read as follows: 16 (a) An amount equal to the product of the assessment 17 limitation percentage applicable to residential property under 18 subsection 4 for that assessment year multiplied by the actual 19 value of the property that exceeds zero dollars but does not 20 exceed one three hundred fifty thousand dollars. 21 (b) An amount equal to ninety percent of the actual value of 22 the property for that assessment year that exceeds one three 23 hundred fifty thousand dollars. 24 Sec. 9. Section 441.21, subsection 5, paragraph c, 25 subparagraph (2), subparagraph divisions (a) and (b), Code 26 2026, are amended to read as follows: 27 (a) An amount equal to the product of the assessment 28 limitation percentage applicable to residential property under 29 subsection 4 for that assessment year multiplied by the actual 30 value of the property that exceeds zero dollars but does not 31 exceed one three hundred fifty thousand dollars. 32 (b) An amount equal to ninety percent of the actual value of 33 the property for that assessment year that exceeds one three 34 hundred fifty thousand dollars. 35 -6- LSB 6158HV (4) 91 md/jh 6/ 57

H.F. 2745 Sec. 10. Section 441.21, subsection 5, paragraph e, 1 subparagraphs (1), (2), and (3), Code 2026, are amended to read 2 as follows: 3 (1) For the fiscal year beginning July 1, 2023, there 4 is appropriated from the general fund of the state to the 5 department of revenue the sum of one hundred twenty-two million 6 three hundred fifty thousand dollars to be used for payments 7 under this paragraph calculated as a result of the assessment 8 limitations imposed under paragraph “b” , subparagraph (2), 9 subparagraph division (a), and paragraph “c” , subparagraph (2), 10 subparagraph division (a). For each fiscal year beginning 11 on or after July 1, 2024, but before July 1, 2027, there 12 is appropriated from the general fund of the state to the 13 department of revenue the sum of one hundred twenty-five 14 million dollars to be used for payments under this paragraph 15 calculated as a result of the assessment limitations imposed 16 under paragraph “b” , subparagraph (2), subparagraph division 17 (a), and paragraph “c” , subparagraph (2), subparagraph division 18 (a). 19 (2) For fiscal years beginning on or after July 1, 2023, but 20 before July 1, 2027, each county treasurer shall be paid by the 21 department of revenue an amount calculated under subparagraph 22 (4) for the applicable fiscal year . If an amount appropriated 23 for the fiscal year is insufficient to make all payments as 24 calculated under subparagraph (4), the director of revenue 25 shall prorate the payments to the county treasurers and shall 26 notify the county auditors of the pro rata percentage on or 27 before September 30. 28 (3) On or before July 1 of each applicable fiscal year, the 29 assessor shall report to the county auditor that portion of the 30 total actual value of all commercial property and industrial 31 property in the county that is subject to the assessment 32 limitations imposed under paragraph “b” , subparagraph (2), 33 subparagraph division (a), and paragraph “c” , subparagraph (2), 34 subparagraph division (a), for the assessment year used to 35 -7- LSB 6158HV (4) 91 md/jh 7/ 57

H.F. 2745 calculate the taxes due and payable in that fiscal year. 1 Sec. 11. Section 441.21, subsection 5, paragraph e, 2 subparagraph (4), unnumbered paragraph 1, Code 2026, is amended 3 to read as follows: 4 On or before September 1 of each applicable fiscal year, the 5 county auditor shall prepare a statement, based on the report 6 received in subparagraph (3) and information transmitted to 7 the county auditor under chapter 434 , listing for each taxing 8 district in the county: 9 Sec. 12. RETROACTIVE APPLICABILITY. The following apply 10 retroactively to assessment years beginning on or after January 11 1, 2026: 12 1. The section of this division of this Act amending 13 section 441.21, subsection 5, paragraph “b”, subparagraph (2), 14 subparagraph divisions (a) and (b). 15 2. The section of this division of this Act amending 16 section 441.21, subsection 5, paragraph “c”, subparagraph (2), 17 subparagraph divisions (a) and (b). 18 DIVISION III 19 HOMESTEAD PROPERTY TAX EXEMPTION 20 Sec. 13. Section 427.1, Code 2026, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 43. Residential homestead property. 23 a. For assessment years beginning on or after January 1, 24 2026, an exemption from taxation shall be allowed on each 25 property classified as residential property as defined in 26 section 441.21, subsection 14, that is a homestead receiving 27 the homestead credit under chapter 425, subchapter I, for the 28 assessment year. The exemption under this subsection shall be 29 in addition to any exemption or credit for such property under 30 any other provision of law, if applicable. The exemption from 31 taxation under this subsection shall be ten percent of the 32 taxable value of the property or twenty-five thousand dollars 33 in taxable value, whichever is less. However, the exemption 34 under this subsection shall not apply to a property tax imposed 35 -8- LSB 6158HV (4) 91 md/jh 8/ 57

H.F. 2745 by a school district. 1 b. Section 25B.7, subsection 1, shall not apply to the 2 property tax exemption provided in this subsection. 3 Sec. 14. RETROACTIVE APPLICABILITY. This division of this 4 Act applies retroactively to assessment years beginning on or 5 after January 1, 2026. 6 DIVISION IV 7 SECURE AN ADVANCED VISION FOR EDUCATION FUND —— EQUITY TRANSFER 8 PERCENTAGE —— FUTURE REPEAL 9 Sec. 15. Section 423.2, subsection 12, Code 2026, is amended 10 to read as follows: 11 12. The sales tax rate of six percent is reduced to five 12 percent on January 1, 2051 2071 . 13 Sec. 16. Section 423.2A, subsection 2, paragraph c, Code 14 2026, is amended to read as follows: 15 c. Transfer one-sixth of the remaining revenues to the 16 secure an advanced vision for education fund created in section 17 423F.2 . This paragraph “c” is repealed January 1, 2051 2071 . 18 Sec. 17. Section 423.5, subsection 4, Code 2026, is amended 19 to read as follows: 20 4. The use tax rate of six percent is reduced to five 21 percent on January 1, 2051 2071 . 22 Sec. 18. Section 423.43, subsection 1, paragraph b, Code 23 2026, is amended to read as follows: 24 b. Subsequent to the deposit into the general fund of 25 the state and after the transfer of such revenues collected 26 under chapter 423B , the department shall transfer one-sixth of 27 such remaining revenues to the secure an advanced vision for 28 education fund created in section 423F.2 . This paragraph is 29 repealed January 1, 2051 2071 . 30 Sec. 19. Section 423F.2, subsection 3, paragraph b, 31 subparagraph (2), subparagraph division (b), Code 2026, is 32 amended to read as follows: 33 (b) For each fiscal year beginning on or after July 1, 34 2020, but before July 1, 2026, the equity transfer percentage 35 -9- LSB 6158HV (4) 91 md/jh 9/ 57

H.F. 2745 is equal to the equity transfer percentage for the immediately 1 preceding fiscal year, unless the amount of moneys available 2 in the secure an advanced vision for education fund in the 3 immediately preceding fiscal year equals or exceeds one hundred 4 two percent of the amount of moneys available in the fund for 5 the fiscal year prior to the immediately preceding fiscal year, 6 in which case the equity transfer percentage shall be the 7 equity transfer percentage for the immediately preceding fiscal 8 year plus one percent subject to the limitation in subparagraph 9 division (c). 10 Sec. 20. Section 423F.2, subsection 3, paragraph b, 11 subparagraph (2), subparagraph division (c), Code 2026, is 12 amended by striking the subparagraph division and inserting in 13 lieu thereof the following: 14 (c) (i) For the fiscal year beginning July 1, 2026, the 15 equity transfer percentage is ten percent. 16 (ii) For the fiscal year beginning July 1, 2027, the equity 17 transfer percentage is twelve and one-half percent. 18 (iii) For the fiscal year beginning July 1, 2028, the equity 19 transfer percentage is fifteen percent. 20 (iv) For the fiscal year beginning July 1, 2029, the equity 21 transfer percentage is seventeen and one-half percent. 22 (v) For the fiscal year beginning July 1, 2030, the equity 23 transfer percentage is twenty percent. 24 (vi) For the fiscal year beginning July 1, 2031, the equity 25 transfer percentage is twenty-two and one-half percent. 26 (vii) For the fiscal year beginning July 1, 2032, the equity 27 transfer percentage is twenty-five percent. 28 (viii) For the fiscal year beginning July 1, 2033, the 29 equity transfer percentage is twenty-seven and one-half 30 percent. 31 (ix) For the fiscal year beginning July 1, 2034, and each 32 fiscal year thereafter, the equity transfer percentage is 33 thirty percent. 34 Sec. 21. Section 423F.6, Code 2026, is amended to read as 35 -10- LSB 6158HV (4) 91 md/jh 10/ 57

H.F. 2745 follows: 1 423F.6 Repeal. 2 This chapter is repealed January 1, 2051 2071 . 3 Sec. 22. SCHOOL DISTRICT FUNDING RECONCILIATION. 4 For amounts allocated under section 423F.2 for fiscal 5 years beginning on or after July 1, 2026, the department of 6 management shall adjust or reconcile actual amounts to be 7 received by school districts in the fiscal year immediately 8 following the fiscal year during which the revenues were 9 collected. 10 DIVISION V 11 PROPERTY PARCEL INFORMATION 12 Sec. 23. Section 331.510, Code 2026, is amended by adding 13 the following new subsection: 14 NEW SUBSECTION . 5. a. An annual report not later 15 than January 1 to the department of management containing 16 parcel-level property data, including parcel identification 17 information, location, size, valuation, classification, types 18 of structures and improvements, exemptions, credits, historical 19 amounts of property taxes due and payable, and whether the 20 parcel is subject to a division of revenue. 21 b. In addition to the information required under paragraph 22 “a” , the department of management may require additional 23 parcel-level data deemed necessary by the director of the 24 department of management. The department shall prescribe the 25 form and manner of submitting the annual report under this 26 subsection. 27 DIVISION VI 28 URBAN RENEWAL 29 Sec. 24. Section 15A.1, subsection 1, paragraph b, Code 30 2026, is amended to read as follows: 31 b. For purposes of this chapter , “economic development” 32 means private or joint public and private investment involving 33 the creation of new jobs and income or the retention of 34 existing jobs and income that would otherwise be lost or the 35 -11- LSB 6158HV (4) 91 md/jh 11/ 57

H.F. 2745 provision of workforce housing . 1 Sec. 25. Section 15A.1, subsection 2, Code 2026, is amended 2 by adding the following new paragraph: 3 NEW PARAGRAPH . e. Development policies that advance the 4 development of workforce housing. 5 Sec. 26. Section 403.17, subsection 14, Code 2026, is 6 amended to read as follows: 7 14. “Low or and moderate income families” means those 8 families, including single person households, earning no 9 more than eighty percent of the higher of the median family 10 income of the county or the statewide nonmetropolitan area as 11 determined by the latest United States department of housing 12 and urban development, section 8 income guidelines. 13 Sec. 27. Section 403.17, Code 2026, is amended by adding the 14 following new subsection: 15 NEW SUBSECTION . 14A. “Low and moderate income family 16 housing” means housing for low and moderate income families and 17 includes housing that meets the requirements of section 15.353. 18 Sec. 28. Section 403.19, subsection 2, paragraph a, Code 19 2026, is amended to read as follows: 20 a. That portion of the taxes each year in excess of such 21 amount shall be allocated to and when collected be paid into 22 a special fund of the municipality to pay the principal of 23 and interest on loans, moneys advanced to, or indebtedness, 24 whether funded, refunded, assumed, or otherwise, including 25 bonds issued under the authority of section 403.9, subsection 26 1 , incurred by the municipality to finance or refinance, in 27 whole or in part, an urban renewal project within the area, 28 and to provide assistance for low and moderate income family 29 housing as provided in section 403.22 . However, except 30 as provided in paragraph “b” , taxes for the regular and 31 voter-approved physical plant and equipment levy of a school 32 district imposed pursuant to section 298.2 ; and taxes for the 33 instructional support program of a school district imposed 34 pursuant to section 257.19 , ; taxes for the payment of bonds 35 -12- LSB 6158HV (4) 91 md/jh 12/ 57

H.F. 2745 and interest of each taxing district , ; foundation property 1 taxes of a school district imposed under section 257.3 levied 2 against property located in an incorporated area upon which new 3 construction or renovations begin on or after the effective 4 date of this division of this Act, unless such construction or 5 renovations were approved and subject to an agreement adopted 6 before January 1, 2026; taxes for emergency medical services 7 imposed pursuant to chapters 357F, 357G, or 422D; and taxes 8 imposed under section 346.27, subsection 22 , related to joint 9 county-city buildings shall be collected against all taxable 10 property within the taxing district without limitation by the 11 provisions of this subsection . 12 Sec. 29. Section 403.19, subsection 2, Code 2026, is amended 13 by adding the following new paragraph: 14 NEW PARAGRAPH . e. For urban renewal areas for which an 15 ordinance providing for a division of revenue is not limited 16 in duration under section 403.17, subsection 10, or section 17 403.22, subsection 5, after twenty years following the 18 effective date of this division of this Act or after twenty 19 years from the calendar year following the calendar year in 20 which the municipality first certifies to the county auditor 21 the amount of any loans, advances, indebtedness, or bonds which 22 qualify for payment from the division of revenue, whichever 23 is later, the amount determined under paragraph “a” that 24 may be paid into the municipality’s special fund shall not 25 exceed sixty percent of the amount otherwise determined under 26 paragraph “a” but for this paragraph and such excess amounts 27 shall be allocated and paid to the respective taxing districts 28 in the same manner as amounts under subsection 1. The 29 municipality may exceed the limitation in this paragraph to the 30 extent necessary for payments of bonds or other indebtedness 31 incurred before the effective date of this division of this 32 Act. This paragraph shall not apply to divisions of revenue 33 established by community colleges under chapter 260E or rural 34 improvement zones under chapter 357H. 35 -13- LSB 6158HV (4) 91 md/jh 13/ 57

H.F. 2745 Sec. 30. Section 403.19, Code 2026, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 3A. Unless otherwise limited in duration 3 under section 403.17, subsection 10, an ordinance providing 4 for a division of revenue under this section that is adopted 5 on or after the effective date of this division of this Act 6 shall be limited to twenty-three years from the calendar year 7 following the calendar year in which the municipality first 8 certifies to the county auditor the amount of any loans, 9 advances, indebtedness, or bonds that qualify for payment 10 from the division of revenue provided for in this section. 11 The ordinance shall terminate and be of no further force and 12 effect following the twenty-three-year period provided in this 13 subsection. This subsection shall not apply to divisions of 14 revenue established by community colleges under chapter 260E or 15 rural improvement zones under chapter 357H. 16 Sec. 31. Section 403.22, subsection 1, paragraphs a, b, and 17 c, Code 2026, are amended to read as follows: 18 a. For a municipality with a population over fifteen five 19 thousand, the amount to be provided for low and moderate income 20 family housing for such projects shall be either equal to 21 or greater than the percentage of the original project cost 22 that is equal to the percentage of low and moderate income 23 residents for the county in which the urban renewal area is 24 located as determined by the United States department of 25 housing and urban development using section 8 guidelines or 26 by providing such other amount as set out in a plan adopted 27 by the municipality and approved by the economic development 28 authority if the municipality can show that it cannot undertake 29 the project if it has to meet the low and moderate income 30 assistance requirements . However, the amount provided for low 31 and moderate income family housing for such projects shall not 32 be less than an amount equal to ten percent of the original 33 project cost required to exceed the lesser of twenty percent 34 of the original project cost or three hundred fifty thousand 35 -14- LSB 6158HV (4) 91 md/jh 14/ 57

H.F. 2745 dollars if the municipality is a city or three hundred thousand 1 dollars if the municipality is a county . 2 b. For a municipality with a population of fifteen thousand 3 or less, the amount to be provided for low and moderate income 4 family housing shall be the same as for a municipality of over 5 fifteen thousand in population, except that a municipality 6 of fifteen thousand or less in population is not subject to 7 the requirement to provide not less than an amount equal to 8 ten percent of the original project cost for low and moderate 9 income family housing. 10 c. b. For a municipality with a population of five thousand 11 or less, the municipality need not provide any low and moderate 12 income family housing assistance if the municipality has 13 completed a housing needs assessment meeting the standards set 14 out by the economic development authority, which shows no low 15 and moderate income housing need, and the economic development 16 authority agrees that no low and moderate income family housing 17 assistance is needed . 18 Sec. 32. Section 403.22, subsection 5, paragraph a, Code 19 2026, is amended to read as follows: 20 a. Except For ordinances providing for a division of 21 revenue adopted before the effective date of this division of 22 this Act, except for a municipality with a population under 23 fifteen thousand, the division of the revenue under section 24 403.19 for each project under this section shall be limited 25 to tax collections for ten fiscal years beginning with the 26 second fiscal year after the year in which the municipality 27 first certifies to the county auditor the amount of any loans, 28 advances, indebtedness, or bonds which qualify for payment from 29 the division of the revenue in connection with the project. 30 Sec. 33. Section 403.22, subsection 5, paragraph d, Code 31 2026, is amended by striking the paragraph. 32 Sec. 34. EFFECTIVE DATE. This division of this Act, being 33 deemed of immediate importance, takes effect upon enactment. 34 Sec. 35. APPLICABILITY. The following applies to property 35 -15- LSB 6158HV (4) 91 md/jh 15/ 57

H.F. 2745 taxes due and payable in fiscal years beginning on or after 1 July 1, 2027: 2 The section of this division of this Act amending section 3 403.19, subsection 2, paragraph “a”. 4 Sec. 36. APPLICABILITY. The following apply to urban 5 renewal areas in existence on or established on or after the 6 effective date of this division of this Act: 7 1. The section of this division of this Act amending section 8 403.22, subsection 1, paragraphs “a”, “b”, and “c”. 9 2. The section of this division of this Act amending section 10 403.22, subsection 5, paragraph “d”. 11 DIVISION VII 12 ASSESSMENT PROCEDURES 13 Sec. 37. Section 441.21, subsection 3, Code 2026, is amended 14 to read as follows: 15 3. a. “Actual value” , “taxable value” , or “assessed 16 value” as used in other sections of the Code in relation to 17 assessment of property for taxation shall mean the valuations 18 as determined by this section ; however, other provisions of 19 the Code providing special methods or formulas for assessing 20 or valuing specified property shall remain in effect, but this 21 section shall be applicable to the extent consistent with such 22 provisions. The assessor and department of revenue shall 23 disclose at the written request of the taxpayer all information 24 in any formula or method used to determine the actual value of 25 the taxpayer’s property. In addition, for assessment years 26 beginning on or after January 1, 2027, if the taxpayer’s 27 property has increased in actual value by ten percent or more 28 from the immediately preceding assessment year, the assessor 29 shall provide the taxpayer with a statement of the reasons 30 for the increase in actual value, information specifying the 31 portion of actual value increase attributable to a change in 32 classification, revaluation, new construction, improvements, or 33 renovations to the property, and all information in any formula 34 or method used to determine the actual value. 35 -16- LSB 6158HV (4) 91 md/jh 16/ 57

H.F. 2745 b. (1) For assessment years beginning before January 1 1, 2018, the burden of proof shall be upon any complainant 2 attacking such valuation as excessive, inadequate, inequitable, 3 or capricious. However, in protest or appeal proceedings when 4 the complainant offers competent evidence by at least two 5 disinterested witnesses that the market value of the property 6 is less than the market value determined by the assessor, the 7 burden of proof thereafter shall be upon the officials or 8 persons seeking to uphold such valuation to be assessed. 9 (2) (1) For assessment years beginning on or after January 10 1, 2018, the Except as provided in subparagraph (3), the burden 11 of proof shall be upon any complainant attacking such valuation 12 as excessive, inadequate, inequitable, or capricious. However, 13 in protest or appeal proceedings when the complainant offers 14 competent evidence that the market value of the property is 15 different than the market value determined by the assessor, 16 the burden of proof thereafter shall be upon the officials or 17 persons seeking to uphold such valuation to be assessed. 18 (3) (2) If the classification of a property has been 19 previously adjudicated by the property assessment appeal board 20 or a court as part of an appeal under this chapter , there 21 is a presumption that the classification of the property has 22 not changed for each of the four subsequent assessment years, 23 unless a subsequent such adjudication of the classification of 24 the property has occurred, and the burden of demonstrating a 25 change in use shall be upon the person asserting a change to 26 the property’s classification. 27 (3) For assessment years beginning on or after January 1, 28 2027, if the taxpayer’s property actual value increased by ten 29 percent or more from the immediately preceding assessment year, 30 including an increase as the result of an equalization order, 31 and the property did not change classification or primary use 32 and the increase in actual value is not the result of new 33 construction, improvements, or renovations to the property, the 34 actual value so determined by the assessor is not presumed to 35 -17- LSB 6158HV (4) 91 md/jh 17/ 57

H.F. 2745 be the actual value and in any protest or appeal the assessor 1 shall have the burden of proof that the valuation is not 2 excessive, inadequate, inequitable, or capricious. 3 Sec. 38. Section 441.33, Code 2026, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 3. Ex parte communications with board of 6 review members are prohibited in protests before the board. 7 DIVISION VIII 8 LOCAL GOVERNMENT EFFICIENCY GRANT PROGRAM 9 Sec. 39. NEW SECTION . 28E.20 Local government efficiency 10 grant program. 11 1. A local government efficiency grant fund is created 12 and established as a separate and distinct fund in the 13 state treasury under the control of Iowa state university 14 of science and technology. For purposes of this section, 15 “local government” means a county, city, township, or any 16 special-purpose district or authority. 17 2. a. There is appropriated from the general fund of 18 the state to the local government efficiency grant fund for 19 the fiscal year beginning July 1, 2026, and ending July 1, 20 2027, ten million dollars. In addition to moneys deposited 21 in the local government efficiency grant fund pursuant to 22 appropriations made by the general assembly, Iowa state 23 university of science and technology or the commission 24 established under paragraph “c” may accept gifts, grants, 25 bequests, and other private contributions, as well as state 26 or federal funds, and shall deposit the moneys in the fund 27 to be used for purposes of this section. Moneys in the fund 28 are appropriated to the Iowa state university of science and 29 technology and shall be used only, after commission approval, 30 to provide grants to local governments to assist in efforts 31 to increase government efficiency, including but not limited 32 to efforts to consolidate government positions and pursue 33 agreements with other local governments to share services 34 and reduce the use of property tax revenues for such shared 35 -18- LSB 6158HV (4) 91 md/jh 18/ 57

H.F. 2745 services. Grant funds may be used by the local government 1 for costs to implement efficiency initiatives including 2 but not limited to service-sharing or service-consolidation 3 initiatives and transitional or temporary costs of eliminating 4 services, and to the extent necessary shall be coordinated with 5 Iowa cooperative extension service in agriculture and home 6 economics of Iowa state university of science and technology 7 and extension districts under chapter 176A. 8 b. Notwithstanding section 8.33, moneys in the fund 9 that remain unawarded at the close of the fiscal year shall 10 not revert but shall remain in the fund for expenditure in 11 succeeding fiscal years. Notwithstanding section 12C.7, 12 subsection 2, interest earned on moneys in the local government 13 efficiency grant fund shall be credited to the fund. 14 c. A local government efficiency commission shall be 15 established at Iowa state university of science and technology 16 comprised of not more than ten individuals appointed by the 17 president of the university who have experience in local 18 government operations and budgeting, local government planning, 19 and cooperative extension services. The local government 20 efficiency commission shall review and approve or deny each 21 grant application. 22 3. The local government efficiency commission shall 23 establish and administer the grant program to provide for the 24 allocation of moneys in the fund in the form of competitive 25 grants to local governments in accordance with the purposes and 26 objectives of this section. The rules for the program adopted 27 by the commission shall specify the eligibility of applicants, 28 eligible services and items for grant funding, the electronic 29 application process, and the maximum award per grant. 30 DIVISION IX 31 FIRSTHOME IOWA ACCOUNTS 32 Sec. 40. Section 12G.2, Code 2026, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 6. Create strategies for coordination of 35 -19- LSB 6158HV (4) 91 md/jh 19/ 57