HSB 316 (LSB 2954YC (3) 91)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act placing assessment limitations for property tax purposes on commercial child care facilities, and including effective date, applicability, and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 441.21, subsection 5, paragraph b, subparagraph (2), unnumbered paragraph 1, Code 2025, is amended to read as follows:
   For Except as prescribed for property subject to subparagraph (3), for valuations established for the assessment year beginning January 1, 2022, and each assessment year thereafter, the portion of actual value at which each property unit of commercial property shall be assessed shall be the sum of the following:
    Sec. 2.  Section 441.21, subsection 5, paragraph b, Code 2025, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (3)  (a)  For valuations established for the assessment year beginning January 1, 2025, and each assessment year thereafter, the portion of actual value at which each portion of a property unit of commercial property that is primarily used as a child care facility as defined in section 237A.1, and for which an application has been allowed under this subparagraph, shall be assessed at an amount equal to the product of the assessment limitation percentage applicable to residential property under subsection 4 for that assessment year multiplied by the actual value of the property.
   (b)  Applications to qualify a child care facility for the assessment limitation allowed under this subparagraph shall be filed with the assessor not later than July 1 of the assessment year for which the person is requesting the assessment limitation. The application shall be on forms prescribed by the department of revenue and must include all of the following information:
   (i)  A description of the property, including the property’s location.
   (ii)  A copy of the license to operate as a child care facility issued by the department of health and human services, or other proof of eligibility as set forth by the department of revenue by rule.
   (iii)  Any other information as required by the department of revenue.
   (c)  Upon allowance of the application, the assessment limitation shall be applied on the portion of the property unit of commercial property that is primarily used as a child care facility for successive years without further filing as long as the property continues to be classified as commercial property and is used for the purposes specified in the original application for assessment limitation.
   (d)  No later than July 15 of each year, the assessor shall remit the applications for assessment limitation to the county auditor with the assessor’s recommendation for allowance or disallowance of the assessment limitation. If the assessor recommends disallowance, the assessor shall submit the reasons for the recommendation in writing to the county auditor.
   (e)  No later than July 24 of each year, the county auditor shall forward the applications for assessment limitation to the board of supervisors. The board shall determine the eligibility for each application on or before September 1 of each year. 
   (i)  If the board disallows a claim, the board shall send written notice by mail to the applicant at the applicant’s last known address. The notice shall state the reasons for disallowing the application and shall state the applicant’s right to appeal the board’s action to the district court. An applicant may appeal the board’s decision to the district court of the county in which the property is located within thirty days of the date of the notice of disallowance.
   (ii)  No later than October 1 of each year, the board of supervisors shall certify all allowed assessment limitations received for that year with the county auditor.
   (f)  If a property that has been granted an assessment limitation ceases to be used as a child care facility, the owner of the child care facility shall give written notice to the assessor by the July 1 following the date the property ceased to be used as a child care facility. 
   (g)  (i)  If the board determines at any time within thirty-six months of allowing an assessment limitation that the assessment limitation was allowed in error, the board shall notify the property owner by mail and conduct a hearing on the matter.
   (ii)  If, after a hearing required by subparagraph subdivision (i), the board determines the assessment limitation was allowed in error and the assessment limitation should be disallowed, the treasurer shall collect from the property owner the amount of tax that would have been assessed on the property if there had been no allowance of the assessment limitation under this subparagraph (3). The amount due shall become a lien on the property that received the assessment limitation and shall be collected by the county treasurer in the same manner as other taxes.
   (h)  The assessor shall retain a permanent file of properties that have approved assessment limitations pursuant to this subparagraph. If the assessor receives notice of a title transfer pursuant to subparagraph division (i), then the assessor shall file a notice of transfer of property.
   (i)  The county recorder shall give notice to the assessor of each transfer of title filed in the recorder’s office for a property which has an allowed assessment limitation pursuant to this subparagraph. The notice from the county recorder shall describe the property transferred, the name of the person who transferred title, and the name of the person to whom title is transferred.
   (j)  The department of revenue shall adopt rules to implement and administer this subparagraph.
    Sec. 3.  Section 441.21, subsection 5, paragraph e, subparagraphs (1) and (3), Code 2025, are amended to read as follows:
   (1)  For the fiscal year beginning July 1, 2023, there is appropriated from the general fund of the state to the department of revenue the sum of one hundred twenty-two million three hundred fifty thousand dollars to be used for payments under this paragraph calculated as a result of the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a). For each fiscal year beginning on or after July 1, 2024, there is appropriated from the general fund of the state to the department of revenue the sum of one hundred twenty-five million dollars to be used for payments under this paragraph calculated as a result of the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a), and paragraph “b”, subparagraph (3), for the portion of the actual value of the property unit equal to or less than one hundred fifty thousand dollars.
   (3)  On or before July 1 of each fiscal year, the assessor shall report to the county auditor that portion of the total actual value of all commercial property and industrial property in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a), and paragraph “c”, subparagraph (2), subparagraph division (a), and paragraph “b”, subparagraph (3), for the portion of the actual value of the property unit equal to or less than one hundred fifty thousand dollars, for the assessment year used to calculate the taxes due and payable in that fiscal year.
    Sec. 4.  Section 441.21, subsection 5, paragraph e, subparagraph (4), subparagraph division (a), Code 2025, is amended to read as follows:
   (a)  The product of the portion of the total actual value of all commercial property, industrial property, and property valued by the department under chapter 434 in the county that is subject to the assessment limitations imposed under paragraph “b”, subparagraph (2), subparagraph division (a);, and paragraph “c”, subparagraph (2), subparagraph division (a); and paragraph “b”, subparagraph (3), for the portion of the actual value of the property unit equal to or less than one hundred fifty thousand dollars, for the applicable assessment year used to calculate taxes which are due and payable in the applicable fiscal year multiplied by the difference, stated as a percentage, between ninety percent and the assessment limitation percentage applicable to residential property under subsection 4 for the applicable assessment year. 
    Sec. 5.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  APPLICABILITY.  The following apply to fiscal years beginning on or after July 1, 2026, for payments pursuant to section 441.21, subsection 5, paragraph “e”:
   1.  The section of this Act amending section 441.21, subsection 5, paragraph “e”, subparagraphs (1) and (3).
   2.  The section of this Act amending section 441.21, subsection 5, paragraph “e”, subparagraph (4), subparagraph division (a).
    Sec. 7.  RETROACTIVE APPLICABILITY.  The following apply retroactively to assessment years beginning on or after January 1, 2025:
   1.  The section of this Act amending section 441.21, subsection 5, paragraph “b”, subparagraph (2), unnumbered paragraph 1.
   2.  The section of this Act enacting section 441.21, subsection 5, paragraph “b”, subparagraph (3).
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 assessment limitations for property taxation purposes for commercial child care facilities, and includes effective date, applicability, and retroactive applicability provisions.
   Code section 441.21(5) determines the amount of actual value of commercial property that is subject to property tax. The amount is the sum of the residential assessment limitation to the portion of the property’s value that does not exceed $150,000 plus 90 percent of the property’s value in excess of $150,000. 
   The bill excludes property that is primarily used as a child care facility from the calculation of the actual value of the property. The bill instead specifies that for assessment years beginning on or after January 1, 2025, the amount of actual value used as child care facilities that is subject to tax is equal to the product of the assessment limitation percentage applicable to residential property multiplied by the actual value of the property provided that the property owner has applied for the assessment limitation and the county board of supervisors has allowed such an assessment limitation.
   The bill establishes application procedures, approval procedures, and recordkeeping procedures for the assessment limitation.
   The bill makes conforming changes to reflect the child care facility assessment limitation.
   The bill takes effect upon enactment.
   The bill applies retroactively to assessment years beginning on or after January 1, 2025, and applies to payments to local governments for fiscal years beginning on or after July 1, 2026.