S.F. 652 DIVISION I 1 HOUSING 2 Section 1. Section 15A.1, subsection 1, paragraph b, Code 3 2025, is amended to read as follows: 4 b. For purposes of this chapter , “economic development” 5 means private or joint public and private investment involving 6 the creation of new jobs and income or the retention of 7 existing jobs and income that would otherwise be lost or the 8 provision of workforce housing . 9 Sec. 2. Section 15A.1, subsection 2, Code 2025, is amended 10 by adding the following new paragraph: 11 NEW PARAGRAPH . e. Development policies that advance the 12 development of workforce housing. 13 Sec. 3. Section 403.17, subsection 14, Code 2025, is amended 14 to read as follows: 15 14. “Low or and moderate income families” means those 16 families, including single person households, earning no 17 more than eighty percent of the higher of the median family 18 income of the county or the statewide nonmetropolitan area as 19 determined by the latest United States department of housing 20 and urban development, section 8 income guidelines. 21 Sec. 4. Section 403.17, Code 2025, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 14A. “Low and moderate income family 24 housing” means housing for low and moderate income families and 25 includes housing that meets the requirements of section 15.353. 26 DIVISION II 27 DIVISION OF REVENUE —— SCHOOL FOUNDATION LEVY 28 Sec. 5. Section 403.19, subsection 2, paragraph a, Code 29 2025, is amended to read as follows: 30 a. That portion of the taxes each year in excess of such 31 amount shall be allocated to and when collected be paid into a 32 special fund of the municipality to pay the principal of and 33 interest on loans, moneys advanced to, or indebtedness, whether 34 funded, refunded, assumed, or otherwise, including bonds 35 -1- LSB 2933SV (2) 91 jm/md 1/ 9

S.F. 652 issued under the authority of section 403.9, subsection 1 , 1 incurred by the municipality to finance or refinance, in whole 2 or in part, an urban renewal project within the area, and to 3 provide assistance for low and moderate income family housing 4 as provided in section 403.22 . However, except as provided 5 in paragraph “b” , taxes for the regular and voter-approved 6 physical plant and equipment levy of a school district imposed 7 pursuant to section 298.2 , foundation property taxes of a 8 school district imposed under section 257.3, and taxes for the 9 instructional support program of a school district imposed 10 pursuant to section 257.19 , taxes for the payment of bonds 11 and interest of each taxing district, and taxes imposed under 12 section 346.27, subsection 22 , related to joint county-city 13 buildings shall be collected against all taxable property 14 within the taxing district without limitation by the provisions 15 of this subsection . 16 Sec. 6. APPLICABILITY. This division of this Act applies 17 to property taxes due and payable in fiscal years beginning 18 on or after July 1, 2027, that are levied against any of the 19 following: 20 1. Property located in an urban renewal area for which the 21 ordinance providing for a division of revenue takes effect on 22 or after January 1, 2026. 23 2. Property annexed or otherwise included in an urban 24 renewal area after the effective date of the ordinance 25 providing for a division of revenue if the annexation or 26 inclusion occurs on or after January 1, 2026. 27 DIVISION III 28 DIVISION OF REVENUE —— CHAPTER 422D PROPERTY TAX LEVY 29 Sec. 7. Section 403.19, subsection 2, paragraph a, Code 30 2025, is amended to read as follows: 31 a. That portion of the taxes each year in excess of such 32 amount shall be allocated to and when collected be paid into a 33 special fund of the municipality to pay the principal of and 34 interest on loans, moneys advanced to, or indebtedness, whether 35 -2- LSB 2933SV (2) 91 jm/md 2/ 9

S.F. 652 funded, refunded, assumed, or otherwise, including bonds 1 issued under the authority of section 403.9, subsection 1 , 2 incurred by the municipality to finance or refinance, in whole 3 or in part, an urban renewal project within the area, and to 4 provide assistance for low and moderate income family housing 5 as provided in section 403.22 . However, except as provided 6 in paragraph “b” , taxes for the regular and voter-approved 7 physical plant and equipment levy of a school district imposed 8 pursuant to section 298.2 and taxes for the instructional 9 support program of a school district imposed pursuant to 10 section 257.19 , taxes for the payment of bonds and interest 11 of each taxing district, taxes for emergency medical services 12 imposed pursuant to chapter 422D, and taxes imposed under 13 section 346.27, subsection 22 , related to joint county-city 14 buildings shall be collected against all taxable property 15 within the taxing district without limitation by the provisions 16 of this subsection . 17 Sec. 8. APPLICABILITY. This division of this Act applies 18 to property taxes due and payable in fiscal years beginning on 19 or after July 1, 2026. 20 DIVISION IV 21 LIMITATIONS ON DIVISION OF REVENUE 22 Sec. 9. Section 403.19, subsection 2, Code 2025, is amended 23 by adding the following new paragraph: 24 NEW PARAGRAPH . e. For urban renewal areas for which an 25 ordinance providing for a division of revenue is not limited 26 in duration under section 403.17, subsection 10, or section 27 403.22, subsection 5, after fifteen years following the 28 effective date of this division of this Act or after fifteen 29 years from the calendar year following the calendar year in 30 which the municipality first certifies to the county auditor 31 the amount of any loans, advances, indebtedness, or bonds which 32 qualify for payment from the division of revenue, whichever 33 is later, the amount determined under paragraph “a” that may 34 be paid into the municipality’s special fund shall not exceed 35 -3- LSB 2933SV (2) 91 jm/md 3/ 9

S.F. 652 seventy-five percent of the amount otherwise determined under 1 paragraph “a” but for this paragraph and such excess amounts 2 shall be allocated and paid to the respective taxing districts 3 in the same manner as amounts under subsection 1. However, 4 beginning with the sixth year that such an urban renewal area 5 is subject to this paragraph, the amount determined under 6 paragraph “a” that may be paid into the municipality’s special 7 fund shall not exceed sixty percent of the amount otherwise 8 determined under paragraph “a” but for this paragraph and such 9 excess amounts shall be allocated and paid to the respective 10 taxing districts in the same manner as amounts under subsection 11 1. 12 DIVISION V 13 URBAN RENEWAL AREA HOUSING AND RESIDENTIAL DEVELOPMENT 14 REQUIREMENTS 15 Sec. 10. Section 403.22, subsection 1, Code 2025, is amended 16 by adding the following new paragraph: 17 NEW PARAGRAPH . d. (1) For municipalities of any population 18 size, and notwithstanding any minimum low and moderate income 19 family housing requirement, if the public improvement project 20 is approved on or after July 1, 2025, but before July 1, 2026, 21 and is related to housing and residential development in an 22 economic development area containing property that has been 23 located entirely within the corporate limits of a city for 24 twenty years or more, the amount to be provided for low and 25 moderate income family housing for such projects shall not be 26 required to be greater than an amount equal to twenty percent 27 of the original project cost. 28 (2) In addition, and notwithstanding subsection 5, the 29 division of the revenue under section 403.19 for each project 30 under this paragraph shall be limited to tax collections for 31 twenty fiscal years beginning with the second fiscal year after 32 the year in which the municipality first certifies to the 33 county auditor the amount of any loans, advances, indebtedness, 34 or bonds which qualify for payment from the division of the 35 -4- LSB 2933SV (2) 91 jm/md 4/ 9

S.F. 652 revenue in connection with the project. 1 DIVISION VI 2 URBAN RENEWAL AREA LIMITATIONS 3 Sec. 11. Section 331.403, subsection 3, paragraph b, Code 4 2025, is amended by adding the following new subparagraph: 5 NEW SUBPARAGRAPH . (22) For purposes of determining 6 compliance with section 403.5A, the percentage of actual value 7 of all property within the county’s area of operation, as 8 defined in section 403.17, that is located in an urban renewal 9 area established by the municipality and in effect for the 10 applicable fiscal year. 11 Sec. 12. Section 384.22, subsection 2, paragraph b, Code 12 2025, is amended by adding the following new subparagraph: 13 NEW SUBPARAGRAPH . (22) For purposes of determining 14 compliance with section 403.5A, the percentage, of actual 15 value of all property within the city’s area of operation, as 16 defined in section 403.17, that is located in an urban renewal 17 area established by the municipality and in effect for the 18 applicable fiscal year. 19 Sec. 13. NEW SECTION . 403.5A Percentage of municipal value 20 within urban renewal areas —— limitations. 21 For fiscal years beginning on or after July 1, 2026, 22 and notwithstanding any provision of this chapter to the 23 contrary, each municipality shall be subject to the following 24 limitations: 25 1. For the fiscal year beginning July 1, 2026, the actual 26 value in the aggregate of all property located in urban 27 renewal areas established and in effect for the fiscal year 28 by a municipality shall not exceed ninety-six and one-fourth 29 percent of the total actual value of all property within the 30 municipality’s area of operation. 31 2. For each fiscal year beginning on or after July 1, 2027, 32 but before July 1, 2047, the actual value in the aggregate of 33 all property located in urban renewal areas established and in 34 effect for the fiscal year by a municipality shall not exceed 35 -5- LSB 2933SV (2) 91 jm/md 5/ 9

S.F. 652 the limitation percentage of the total actual value of all 1 property within the municipality’s area of operation. For 2 purposes of this subsection, the “limitation percentage” for 3 each fiscal year shall be a percentage equal to the limitation 4 percentage applicable under this subsection for the immediately 5 preceding fiscal year, or for the fiscal year beginning July 1, 6 2027, the percentage applicable under subsection 1, minus three 7 and three-fourths percent. 8 3. For each fiscal year beginning on or after July 1, 2047, 9 the actual value in the aggregate of all property located in 10 urban renewal areas established and in effect for the fiscal 11 year by a municipality shall not exceed twenty percent of the 12 total actual value of all property within the municipality’s 13 area of operation. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill relates to economic development and housing by 18 modifying provisions concerning economic development programs 19 and modifying provisions concerning Iowa’s urban renewal law. 20 DIVISION I —— HOUSING. The bill amends the definition of 21 “economic development” for purposes of Code chapter 15 to also 22 include the provision of workforce housing. 23 The bill adds development policies that advance the 24 development of workforce housing to the list of factors 25 required to be considered by the public body before public 26 funds are used for grants, loans, tax incentives, or other 27 financial assistance to private persons or on behalf of private 28 persons for economic development under Code chapter 15. 29 The bill also defines “low and moderate income family 30 housing” for Code chapter 403 to mean housing for low 31 and moderate income families and housing that meets the 32 requirements of Code section 15.353 (workforce housing). 33 The bill also modifies the defined term “low or moderate 34 income families” in Code chapter 403 to “low and moderate 35 -6- LSB 2933SV (2) 91 jm/md 6/ 9

S.F. 652 income families” to align with the terminology usage within the 1 Code chapter. 2 DIVISION II —— DIVISION OF REVENUE —— SCHOOL FOUNDATION 3 LEVY. The bill excludes the school district foundation 4 property tax imposed under Code section 257.3 from the division 5 of revenue under Code section 403.19 (tax increment financing). 6 The bill prohibits the foundation property tax from being 7 divided and paid into the municipality’s special fund for the 8 payment of urban renewal indebtedness but instead requires the 9 tax to be levied, collected, and paid to the school district 10 in the same manner as all other property taxes. The exclusion 11 in the bill applies to property taxes due and payable in 12 fiscal years beginning on or after July 1, 2027, that are 13 levied against either of the following: (1) property located 14 in an urban renewal area for which the ordinance providing 15 for a division of revenue takes effect on or after January 16 1, 2026; or (2) property annexed or otherwise included in an 17 urban renewal area after the effective date of the ordinance 18 providing for a division of revenue if the annexation or 19 inclusion occurs on or after January 1, 2026. 20 DIVISION III —— DIVISION OF REVENUE —— CHAPTER 422D PROPERTY 21 TAX LEVY. The bill excludes property taxes for emergency 22 medical services imposed pursuant to Code chapter 422D from 23 a division of revenue (tax increment financing) under Code 24 section 403.19. 25 The division applies to property taxes due and payable in 26 fiscal years beginning on or after July 1, 2026. 27 DIVISION IV —— LIMITATIONS ON DIVISION OF REVENUE. Under the 28 bill, for urban renewal areas for which an ordinance providing 29 for a division of revenue is not limited in duration under 30 Code section 403.17(10) (20 years) or Code section 403.22(5) 31 (10 years), after 15 years following the effective date of 32 this division of the bill or after 15 years from the calendar 33 year following the calendar year in which the municipality 34 first certifies to the county auditor the amount of any loans, 35 -7- LSB 2933SV (2) 91 jm/md 7/ 9

S.F. 652 advances, indebtedness, or bonds which qualify for payment 1 from the division of revenue, whichever is later, the amount 2 of taxes that is authorized to be paid into the municipality’s 3 urban renewal special fund shall not exceed 75 percent of the 4 amount otherwise authorized, but for the bill, and such excess 5 amounts shall be allocated and paid to the respective taxing 6 districts in the same manner as other taxes. Beginning with 7 the sixth year that such an urban renewal area is subject to 8 this new provision, the amount of taxes that is authorized to 9 be paid into the municipality’s urban renewal special fund 10 shall not exceed 60 percent of the amount otherwise authorized. 11 DIVISION V —— URBAN RENEWAL AREA HOUSING AND RESIDENTIAL 12 DEVELOPMENT REQUIREMENTS. Under current law, any urban renewal 13 area established upon the determination that the area is an 14 economic development area, a division of revenue (tax increment 15 financing) shall not be allowed for the purpose of providing 16 or aiding in the provision of public improvements related to 17 housing and residential development, unless the municipality 18 assures that the project will include assistance for low and 19 moderate income family housing, subject to certain municipality 20 population thresholds. 21 Under the bill, for municipalities of any population size, 22 and notwithstanding any minimum low and moderate income family 23 housing requirement, if the public improvement project is 24 approved on or after July 1, 2025, but before July 1, 2026, 25 and is related to housing and residential development in an 26 economic development area containing property that has been 27 located entirely within the corporate limits of a city for 20 28 years or more, the amount to be provided for low and moderate 29 income family housing for such projects shall not be required 30 to be greater than an amount equal to 20 percent of the 31 original project cost. The bill also extends the division of 32 the revenue for such projects to tax collections for 20 fiscal 33 years instead of the current law maximum of 10 years. 34 DIVISION VI —— URBAN RENEWAL AREA LIMITATIONS. The bill 35 -8- LSB 2933SV (2) 91 jm/md 8/ 9

S.F. 652 amends Code chapter 403 to provide that for the fiscal year 1 beginning July 1, 2026, the actual value in the aggregate of 2 all property located in urban renewal areas established and 3 in effect for the fiscal year by a municipality shall not 4 exceed 96.25 percent of the total actual value of all property 5 within the municipality’s area of operation, as defined in 6 Code section 403.17. For each fiscal year beginning on or 7 after July 1, 2027, but before July 1, 2047, the percentage 8 limitation on the amount of actual value of the municipality 9 that may be within urban renewal areas is reduced by 3.75 10 percent each fiscal year until, starting with the fiscal 11 year beginning July 1, 2047, the percentage limitation is 20 12 percent. 13 The bill also requires cities and counties to include, as 14 part of their urban renewal reporting to the department of 15 management, the percentage of actual value of all property 16 within the city’s or county’s area of operation that is located 17 in an urban renewal area established by the municipality and in 18 effect for the applicable fiscal year. 19 -9- LSB 2933SV (2) 91 jm/md 9/ 9