Senate Study Bill 3138 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON LOCAL GOVERNMENT BILL BY CHAIRPERSON WEBSTER) A BILL FOR An Act relating to the division of revenue of school district 1 foundation property taxes for urban renewal projects, 2 authorizing voluntary payments by school districts, and 3 including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6611XC (3) 91 ms/md

S.F. _____ Section 1. Section 403.19, subsection 2, paragraph a, Code 1 2026, is amended to read as follows: 2 a. That portion of the taxes each year in excess of such 3 amount shall be allocated to and when collected be paid into a 4 special fund of the municipality to pay the principal of and 5 interest on loans, moneys advanced to, or indebtedness, whether 6 funded, refunded, assumed, or otherwise, including bonds 7 issued under the authority of section 403.9, subsection 1 , 8 incurred by the municipality to finance or refinance, in whole 9 or in part, an urban renewal project within the area, and to 10 provide assistance for low and moderate income family housing 11 as provided in section 403.22 . However, except as provided 12 in paragraph “b” , taxes for the regular and voter-approved 13 physical plant and equipment levy of a school district imposed 14 pursuant to section 298.2 , foundation property taxes of a 15 school district imposed under section 257.3, and taxes for the 16 instructional support program of a school district imposed 17 pursuant to section 257.19 , taxes for the payment of bonds 18 and interest of each taxing district, and taxes imposed under 19 section 346.27, subsection 22 , related to joint county-city 20 buildings shall be collected against all taxable property 21 within the taxing district without limitation by the provisions 22 of this subsection . 23 Sec. 2. Section 403.19, Code 2026, is amended by adding the 24 following new subsection: 25 NEW SUBSECTION . 12. For any fiscal year beginning on 26 or after July 1, 2027, following written request filed with 27 the county auditor and the board of directors of the school 28 district, a school district may approve by resolution of the 29 board of directors the payment from the school district’s 30 general fund to the municipality for deposit in the special 31 fund under this section all or a portion of the school 32 district’s foundation property taxes under section 257.3 levied 33 against property located in the urban renewal area for one 34 or more applicable fiscal years. If approved, the board of 35 -1- LSB 6611XC (3) 91 ms/md 1/ 2

S.F. _____ directors shall file such resolution with the county auditor. 1 Payments approved under this subsection are voluntary and a 2 school district is not required to pay over the revenue to the 3 municipality unless approved by resolution. Amounts paid by 4 a school district under this subsection shall continue to be 5 considered foundation property taxes levied under section 257.3 6 and such payment shall not result in the adjustment of state 7 foundation aid or other amounts under chapter 257. 8 Sec. 3. APPLICABILITY. This Act applies to property taxes 9 due and payable in fiscal years beginning on or after July 1, 10 2027. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill excludes the school district foundation property 15 tax imposed under Code section 257.3 from the division of 16 revenue under Code section 403.19 (tax increment financing). 17 The bill prohibits the foundation property tax from being 18 divided and paid into the municipality’s special fund for the 19 payment of urban renewal indebtedness and instead requires the 20 tax to be levied, collected, and paid to the school district in 21 the same manner as all other property taxes. 22 In lieu of a division of revenue, the bill authorizes school 23 districts to voluntarily approve by resolution the payment from 24 the school district’s general fund to the municipality for 25 deposit in the municipality’s special fund all or a portion of 26 the foundation property taxes under Code section 257.3 levied 27 for fiscal years beginning on or after July 1, 2027, against 28 property located in the urban renewal area. Amounts paid by a 29 school district under the bill shall continue to be considered 30 foundation property taxes levied under Code section 257.3 31 and such payment shall not result in the adjustment of state 32 foundation aid or other amounts under Code chapter 257. 33 The bill applies to property taxes due and payable in fiscal 34 years beginning on or after July 1, 2027. 35 -2- LSB 6611XC (3) 91 ms/md 2/ 2