SSB 3138 (LSB 6611XC (3) 91)

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 foundation property taxes for urban renewal projects, authorizing voluntary payments by school districts, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 403.19, subsection 2, paragraph a, Code 2026, is amended to read as follows:
   a.  That portion of the taxes each year in excess of such amount shall be allocated to and when collected be paid into a special fund of the municipality to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise, including bonds issued under the authority of section 403.9, subsection 1, incurred by the municipality to finance or refinance, in whole or in part, an urban renewal project within the area, and to provide assistance for low and moderate income family housing as provided in section 403.22. However, except as provided in paragraph “b”, taxes for the regular and voter-approved physical plant and equipment levy of a school district imposed pursuant to section 298.2, foundation property taxes of a school district imposed under section 257.3, and taxes for the instructional support program of a school district imposed pursuant to section 257.19, taxes for the payment of bonds and interest of each taxing district, and taxes imposed under section 346.27, subsection 22, related to joint county-city buildings shall be collected against all taxable property within the taxing district without limitation by the provisions of this subsection.
    Sec. 2.  Section 403.19, Code 2026, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.  For any fiscal year beginning on or after July 1, 2027, following written request filed with the county auditor and the board of directors of the school district, a school district may approve by resolution of the board of directors the payment from the school district’s general fund to the municipality for deposit in the special fund under this section all or a portion of the school district’s foundation property taxes under section 257.3 levied against property located in the urban renewal area for one or more applicable fiscal years. If approved, the board of directors shall file such resolution with the county auditor. Payments approved under this subsection are voluntary and a school district is not required to pay over the revenue to the municipality unless approved by resolution. Amounts paid by a school district under this subsection shall continue to be considered foundation property taxes levied under section 257.3 and such payment shall not result in the adjustment of state foundation aid or other amounts under chapter 257.
    Sec. 3.  APPLICABILITY.  This Act applies to property taxes due and payable in fiscal years beginning on or after July 1, 2027.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill excludes the school district foundation property tax imposed under Code section 257.3 from the division of revenue under Code section 403.19 (tax increment financing). The bill prohibits the foundation property tax from being divided and paid into the municipality’s special fund for the payment of urban renewal indebtedness and instead requires the tax to be levied, collected, and paid to the school district in the same manner as all other property taxes.
   In lieu of a division of revenue, the bill authorizes school districts to voluntarily approve by resolution the payment from the school district’s general fund to the municipality for deposit in the municipality’s special fund all or a portion of the foundation property taxes under Code section 257.3 levied for fiscal years beginning on or after July 1, 2027, against property located in the urban renewal area. Amounts paid by a school district under the bill shall continue to be considered foundation property taxes levied under Code section 257.3 and such payment shall not result in the adjustment of state foundation aid or other amounts under Code chapter 257.
   The bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2027.