Senate Study Bill 1214 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON DAWSON) A BILL FOR An Act relating to economic development and housing by 1 modifying provisions concerning economic development 2 programs and modifying provisions concerning Iowa’s urban 3 renewal law, and including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2933XC (3) 91 jm/md

S.F. _____ Section 1. Section 15A.1, subsection 1, paragraph b, Code 1 2025, is amended to read as follows: 2 b. For purposes of this chapter , “economic development” 3 means private or joint public and private investment involving 4 the creation of new jobs and income or the retention of 5 existing jobs and income that would otherwise be lost or the 6 provision of workforce housing . 7 Sec. 2. Section 15A.1, subsection 2, Code 2025, is amended 8 by adding the following new paragraph: 9 NEW PARAGRAPH . e. Development policies that advance the 10 development of workforce housing. 11 Sec. 3. Section 403.17, subsection 14, Code 2025, is amended 12 to read as follows: 13 14. “Low or and moderate income families” means those 14 families, including single person households, earning no 15 more than eighty percent of the higher of the median family 16 income of the county or the statewide nonmetropolitan area as 17 determined by the latest United States department of housing 18 and urban development, section 8 income guidelines. 19 Sec. 4. Section 403.17, Code 2025, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 14A. “Low and moderate income family 22 housing” means housing for low and moderate income families and 23 includes housing that meets the requirements of section 15.353. 24 Sec. 5. Section 403.19, subsection 2, paragraph a, Code 25 2025, is amended to read as follows: 26 a. That portion of the taxes each year in excess of such 27 amount shall be allocated to and when collected be paid into a 28 special fund of the municipality to pay the principal of and 29 interest on loans, moneys advanced to, or indebtedness, whether 30 funded, refunded, assumed, or otherwise, including bonds 31 issued under the authority of section 403.9, subsection 1 , 32 incurred by the municipality to finance or refinance, in whole 33 or in part, an urban renewal project within the area, and to 34 provide assistance for low and moderate income family housing 35 -1- LSB 2933XC (3) 91 jm/md 1/ 5

S.F. _____ as provided in section 403.22 . However, except as provided 1 in paragraph “b” , taxes for the regular and voter-approved 2 physical plant and equipment levy of a school district imposed 3 pursuant to section 298.2 , foundation property taxes of a 4 school district imposed under section 257.3, and taxes for the 5 instructional support program of a school district imposed 6 pursuant to section 257.19 , taxes for the payment of bonds 7 and interest of each taxing district, and taxes imposed under 8 section 346.27, subsection 22 , related to joint county-city 9 buildings shall be collected against all taxable property 10 within the taxing district without limitation by the provisions 11 of this subsection . 12 Sec. 6. Section 403.19, subsection 2, Code 2025, is amended 13 by adding the following new paragraph: 14 NEW PARAGRAPH . e. For urban renewal areas for which 15 an ordinance providing for a division of revenue is not 16 limited in duration under section 403.17, subsection 10, or 17 section 402.22, subsection 5, after twenty years following 18 the effective date of this Act or after twenty years from 19 the calendar year following the calendar year in which the 20 municipality first certifies to the county auditor the amount 21 of any loans, advances, indebtedness, or bonds which qualify 22 for payment from the division of revenue, whichever is later, 23 the amount determined under paragraph “a” that may be paid into 24 the municipality’s special fund shall not exceed sixty percent 25 of the amount otherwise determined under paragraph “a” but for 26 this paragraph and such excess amounts shall be allocated and 27 paid to the respective taxing districts in the same manner as 28 amounts under subsection 1. 29 Sec. 7. Section 403.22, subsection 1, Code 2025, is amended 30 by adding the following new paragraph: 31 NEW PARAGRAPH . d. (1) For municipalities of any population 32 size, and notwithstanding any minimum low and moderate income 33 family housing requirement, if the public improvement project 34 is approved on or after July 1, 2025, and is related to housing 35 -2- LSB 2933XC (3) 91 jm/md 2/ 5

S.F. _____ and residential development in an economic development area 1 containing property that has been located entirely within the 2 corporate limits of a city for twenty years or more, the amount 3 to be provided for low and moderate income family housing for 4 such projects shall not be required to be greater than an 5 amount equal to twenty percent of the original project cost. 6 (2) In addition, notwithstanding subsection 5, the division 7 of the revenue under section 403.19 for each project under this 8 paragraph shall be limited to tax collections for twenty fiscal 9 years beginning with the second fiscal year after the year in 10 which the municipality first certifies to the county auditor 11 the amount of any loans, advances, indebtedness, or bonds 12 which qualify for payment from the division of the revenue in 13 connection with the project. 14 Sec. 8. APPLICABILITY. The section of this Act amending 15 section 403.19, subsection 2, applies to property taxes due and 16 payable in fiscal years beginning on or after July 1, 2027, 17 that are levied against any of the following: 18 1. Property located in an urban renewal area for which the 19 ordinance providing for a division of revenue takes effect on 20 or after January 1, 2026. 21 2. Property annexed or otherwise included in an urban 22 renewal area after the effective date of the ordinance 23 providing for a division of revenue if the annexation or 24 inclusion occurs on or after January 1, 2026. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill relates to economic development and housing by 29 modifying provisions concerning economic development programs 30 and modifying provisions concerning Iowa’s urban renewal law. 31 The bill amends the definition of “economic development” for 32 purposes of Code chapter 15 to also include the provision of 33 workforce housing. 34 The bill adds development policies that advance the 35 -3- LSB 2933XC (3) 91 jm/md 3/ 5

S.F. _____ development of workforce housing to the list of factors 1 required to be considered by the public body before public 2 funds are used for grants, loans, tax incentives, or other 3 financial assistance to private persons or on behalf of private 4 persons for economic development under Code chapter 15. 5 Under current law, any urban renewal area established upon 6 the determination that the area is an economic development 7 area, a division of revenue (tax increment financing) shall 8 not be allowed for the purpose of providing or aiding in 9 the provision of public improvements related to housing and 10 residential development, unless the municipality assures that 11 the project will include assistance for low and moderate income 12 family housing, subject to certain municipality population 13 thresholds. 14 Under the bill, for municipalities of any population size, 15 and notwithstanding any minimum low and moderate income family 16 housing requirement, if the public improvement project is 17 approved on or after July 1, 2025, and is related to housing 18 and residential development in an economic development area 19 containing property that has been located entirely within the 20 corporate limits of a city for 20 years or more, the amount to 21 be provided for low and moderate income family housing for such 22 projects shall not be required to be greater than an amount 23 equal to 20 percent of the original project cost. The bill 24 also extends the division of the revenue for such projects to 25 tax collections for 20 fiscal years instead of the current law 26 maximum of 10 years. 27 The bill also defines “low and moderate income family 28 housing” for Code chapter 403 to mean housing for low 29 and moderate income families and housing that meets the 30 requirements of Code section 15.353 (workforce housing). 31 The bill also modifies the defined term “low or moderate 32 income families” in Code chapter 403 to “low and moderate 33 income families” to align with the terminology usage within the 34 Code chapter. 35 -4- LSB 2933XC (3) 91 jm/md 4/ 5

S.F. _____ The bill excludes the school district foundation property 1 tax imposed under Code section 257.3 from the division of 2 revenue under Code section 403.19 (tax increment financing). 3 The bill prohibits the foundation property tax from being 4 divided and paid into the municipality’s special fund for the 5 payment of urban renewal indebtedness but instead requires the 6 tax to be levied, collected, and paid to the school district 7 in the same manner as all other property taxes. The exclusion 8 in the bill applies to property taxes due and payable in 9 fiscal years beginning on or after July 1, 2027, that are 10 levied against either of the following: (1) property located 11 in an urban renewal area for which the ordinance providing 12 for a division of revenue takes effect on or after January 13 1, 2026; or (2) property annexed or otherwise included in an 14 urban renewal area after the effective date of the ordinance 15 providing for a division of revenue if the annexation or 16 inclusion occurs on or after January 1, 2026. 17 Under the bill, for urban renewal areas for which an 18 ordinance providing for a division of revenue is not limited 19 in duration under Code section 403.17(10) (20 years) or Code 20 section 402.22(5) (10 years), after 20 years following the 21 effective date of the bill or after 20 years from the calendar 22 year following the calendar year in which the municipality 23 first certifies to the county auditor the amount of any loans, 24 advances, indebtedness, or bonds which qualify for payment 25 from the division of revenue, whichever is later, the amount 26 of taxes that is authorized to be paid into the municipality’s 27 urban renewal special fund shall not exceed 60 percent of the 28 amount otherwise authorized, but for the bill and such excess 29 amounts shall be allocated and paid to the respective taxing 30 districts in the same manner as other taxes. 31 -5- LSB 2933XC (3) 91 jm/md 5/ 5