SF 17 (LSB 1088XS (3) 91)

SENATE FILE 17

BY  SINCLAIR

A BILL FOR

An Act modifying provisions governing the taxation of forest reservations and fruit-tree reservations, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 427C.3, Code 2025, is amended to read as follows:
   427C.3  Forest reservation.
   A forest reservation shall contain not less than two hundred growing forest trees on each acre. If the area selected is a forest containing the required number of growing forest trees, it shall be accepted as a forest reservation under this chapter provided a qualifying application under section 427C.12 is made or on file on or before February 1 of the exemption year. If any buildings are standing on an area selected as a forest reservation under this section or a fruit-tree reservation under section 427C.7, one acre of that area shall be excluded from the tax exemption. However, the exclusion of that acre shall not affect the area’s meeting the acreage requirement of section 427C.2.
    Sec. 2.  Section 427C.12, Code 2025, is amended to read as follows:
   427C.12  Application —— inspection —— continuation of exemption —— recapture of tax.
   1.  It shall be the duty of the assessor to secure the facts relative to fruit-tree and forest reservations by taking the sworn statement, or affirmation, of the owner or owners making an application under this chapter; and to make special report to the county auditor of all reservations made in the county under the provisions of this chapter.
   2.  a.  The board of supervisors shall designate the county conservation board or the assessor who shall inspect the area for which an application is filed for a fruit-tree or forest reservation tax exemption before the application is accepted. Use of aerial photographs may be substituted for on-site inspection when appropriate.
   b.  The application can shall only be accepted if it meets all of the criteria following conditions: 
   (1)  Any criteria established by the natural resource commission to be a fruit-tree or forest reservation.
   (2)  The owner or owners are receiving a homestead tax credit under chapter 425 at the time of the application.
   c.  Once the application has been accepted, the area shall continue to receive the tax exemption during each year in which the area is maintained as a fruit-tree or forest reservation without the owner having to refile, if the fruit-tree or forest reservation continues to meet all of the conditions under paragraph “b”, including that the owner or owners continue to receive a homestead credit for each applicable assessment year.
   d.  If the property is sold or transferred, the seller shall notify the buyer that all, or part of, the property is in fruit-tree or forest reservation and subject to the recapture tax provisions of this section. The If the new owner or owners satisfy the homestead credit requirement, the tax exemption shall continue to be granted for the remainder of the eight-year period for fruit-tree reservation and for the following years for forest reservation or until the property no longer qualifies as a fruit-tree or forest reservation.
   e.  The area may be inspected each year by the county conservation board or the assessor to determine if the area is maintained as a fruit-tree or forest reservation. If the owner or owners fail to satisfy the homestead credit requirement or the area is not maintained or is used for economic gain other than as a fruit-tree reservation during any year of the eight-year exemption period and any year of the following five years or as a forest reservation during any year for which the exemption is granted and any of the five years following those exemption years, the assessor shall assess the property for taxation at its fair market value as of January 1 of that year and in addition the area shall be subject to a recapture tax. However, the area shall not be subject to the recapture tax if the owner, including one possessing under a contract of sale, and the owner’s direct antecedents or descendants have owned the area for more than ten years. The tax shall be computed by multiplying the consolidated levy for each of those years, if any, of the five preceding years for which the area received the exemption for fruit-tree or forest reservation times the assessed value of the area that would have been taxed but for the tax exemption. This tax shall be entered against the property on the tax list for the current year and shall constitute a lien against the property in the same manner as a lien for property taxes. The tax when collected shall be apportioned in the manner provided for the apportionment of the property taxes for the applicable tax year.
    Sec. 3.  EFFECTIVE DATE.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 4.  RETROACTIVE APPLICABILITY.  This Act applies retroactively to existing and new exemptions under chapter 427C for assessment years beginning on or after January 1, 2025.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill modifies provisions governing the taxation of forest reservations and fruit-tree reservations.
   Current Code chapter 427C authorizes a property tax exemption for certain forest reservations and fruit-tree reservations, if the owner meets certain criteria established by the natural resource commission to be a forest or fruit-tree reservation.
   In addition to meeting the criteria established by the natural resource commission to be a forest or fruit-tree reservation, the bill requires the owner to also be receiving the homestead tax credit under Code chapter 425 in each assessment year the forest or fruit-tree tax exemption is received by the owner.
   The bill takes effect upon enactment and applies retroactively to existing and new exemptions under Code chapter 427C for assessment years beginning on or after January 1, 2025.