Senate File 604 - Reprinted SENATE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1356) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to assessment of property for property tax 2 purposes by establishing the minimum percentage of actual 3 value at which residential property and certain commercial 4 residential property are assessed for purposes of property 5 taxation, providing an annual appropriation for a specified 6 number of years to replace commercial property tax revenues 7 lost to counties and cities, and by allowing multiple 8 assessments of a parcel of commercial residential property in 9 certain circumstances, and by establishing a legislative 10 property tax study committee. 11 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 12 SF 604 13 sc/cc/26 PAG LIN 1 1 DIVISION I 1 2 PROPERTY ASSESSMENT AND STATE REPLACEMENT FUND 1 3 Section 1. NEW SECTION. 426C.1 COMMERCIAL PROPERTY TAX 1 4 REPLACEMENT FUND CREATED. 1 5 A commercial property tax replacement fund is created under 1 6 the control of the department of revenue. For the fiscal 1 7 period beginning July 1, 2009, and ending June 30, 2016, there 1 8 is appropriated annually from the general fund of the state to 1 9 the department of revenue to be credited to the commercial 1 10 property tax replacement fund the sum of eighteen million 1 11 dollars. Any balance in the fund on June 30 shall revert to 1 12 the general fund of the state. 1 13 Sec. 2. NEW SECTION. 426C.2 REPLACEMENT. 1 14 For the fiscal year beginning July 1, 2009, through the 1 15 fiscal year ending June 30, 2016, each county treasurer shall 1 16 be paid from the commercial property tax replacement fund an 1 17 amount equal to the amount of the commercial property tax 1 18 replacement claim calculated in section 426C.3. 1 19 If the amount appropriated to the commercial property tax 1 20 replacement fund for a fiscal year is insufficient to pay all 1 21 claims, the director shall prorate the disbursements to the 1 22 county treasurers and shall notify the county auditors of the 1 23 pro rata percentage on or before September 30. 1 24 Sec. 3. NEW SECTION. 426C.3 COMPUTATION OF REPLACEMENT 1 25 CLAIM. 1 26 1. On or before July 1 of each year of the fiscal period 1 27 specified in section 426C.1, the county auditor shall prepare 1 28 a statement listing for the county and each city in the 1 29 county: 1 30 a. The difference between the assessed value of the 1 31 property defined in section 441.21, subsection 13, paragraph 1 32 "b", as assessed on January 1, 2007, and the assessed value of 1 33 such property as assessed pursuant to section 441.21, 1 34 subsection 13, paragraph "a", for the assessment year 1 35 beginning January 1, 2008, January 1, 2009, January 1, 2010, 2 1 January 1, 2011, January 1, 2012, January 1, 2013, or January 2 2 1, 2014, as applicable. 2 3 b. The tax levy rate for the county and each city 2 4 certified for the fiscal year previous to the fiscal year in 2 5 which the claim will be paid. 2 6 c. The commercial property tax replacement claim for the 2 7 county and each city, which is equal to the amount determined 2 8 pursuant to paragraph "a" multiplied by the applicable tax 2 9 levy rate specified in paragraph "b". 2 10 2. The county auditor shall certify and forward one copy 2 11 of the statement to the department of revenue not later than 2 12 July 1 of each year of the fiscal period specified in section 2 13 426C.1. 2 14 Sec. 4. NEW SECTION. 426C.4 REIMBURSEMENT. 2 15 Each county treasurer shall be reimbursed an amount equal 2 16 to the commercial property tax replacement claim for that 2 17 county determined pursuant to section 426C.3, subsection 1, 2 18 paragraph "c". The reimbursement shall be made in two equal 2 19 installments on or before September 30 and March 31 of each 2 20 year. The county treasurer shall apportion the disbursement 2 21 to the county and to each city in the county, as applicable, 2 22 in the manner provided in section 445.57. 2 23 Sec. 5. Section 441.21, subsection 4, Code 2007, is 2 24 amended by adding the following new unnumbered paragraph: 2 25 NEW UNNUMBERED PARAGRAPH. For valuations established as of 2 26 January 1, 2008, and each year thereafter, the percentage of 2 27 actual value, as equalized by the director of revenue as 2 28 provided in section 441.49, at which residential property 2 29 shall be assessed shall not be less than the percentage of 2 30 actual value determined for residential property for the 2 31 assessment year beginning January 1, 2006. If the percentage 2 32 of actual value of residential property as calculated in 2 33 accordance with this subsection is less than the percentage of 2 34 actual value determined for residential property for the 2 35 assessment year beginning January 1, 2006, the director of 3 1 revenue shall increase the percentage to the percentage of 3 2 actual value determined for residential property for the 3 3 assessment year beginning January 1, 2006. For purposes of 3 4 determining valuations in the assessment year beginning 3 5 January 1, 2009, and for each subsequent assessment year, the 3 6 percentage for the prior year as determined under this 3 7 subsection before adjustment under this paragraph, if 3 8 necessary, shall be the percentage used in making the 3 9 calculation of the dividend for that assessment year. 3 10 Sec. 6. Section 441.21, Code 2007, is amended by adding 3 11 the following new subsection: 3 12 NEW SUBSECTION. 13. a. Beginning with valuations 3 13 established on or after January 1, 2008, property that is an 3 14 apartment building, a mobile home park, a manufactured home 3 15 community, or a land=leased community shall be valued as a 3 16 separate class as commercial residential property and shall be 3 17 assessed at a percentage of actual value, as equalized by the 3 18 director of revenue as provided in section 441.49, as follows: 3 19 (1) For valuations established for the assessment year 3 20 beginning January 1, 2008, ninety=two and five=tenths percent 3 21 of actual value or the percentage of actual value established 3 22 for residential property, whichever is higher. 3 23 (2) For valuations established for the assessment year 3 24 beginning January 1, 2009, eighty=five percent of actual value 3 25 or the percentage of actual value established for residential 3 26 property, whichever is higher. 3 27 (3) For valuations established for the assessment year 3 28 beginning January 1, 2010, seventy=seven and five=tenths 3 29 percent of actual value or the percentage of actual value 3 30 established for residential property, whichever is higher. 3 31 (4) For valuations established for the assessment year 3 32 beginning January 1, 2011, seventy percent of actual value or 3 33 the percentage of actual value established for residential 3 34 property, whichever is higher. 3 35 (5) For valuations established for the assessment year 4 1 beginning January 1, 2012, sixty=two and five=tenths percent 4 2 of actual value or the percentage of actual value established 4 3 for residential property, whichever is higher. 4 4 (6) For valuations established for the assessment year 4 5 beginning January 1, 2013, fifty=five percent of actual value 4 6 or the percentage of actual value established for residential 4 7 property, whichever is higher. 4 8 (7) For valuations established for the assessment year 4 9 beginning January 1, 2014, and each year thereafter, the same 4 10 percentage as the percentage of actual value established for 4 11 residential property. 4 12 b. As used in paragraph "a": 4 13 (1) "Apartment building" means the land and building used 4 14 primarily for human habitation and containing three or more 4 15 separate living quarters, as well as structures and 4 16 improvements used primarily as a part of or in conjunction 4 17 with such land and building. "Apartment building" does not 4 18 include a hotel, motel, inn, or other building where rooms are 4 19 usually rented for less than one month, a nursing home, or a 4 20 rest home. 4 21 (2) "Land=leased community" means the same as defined in 4 22 sections 335.30A and 414.28A. 4 23 (3) "Manufactured home community" means the same as a 4 24 land=leased community. 4 25 (4) "Mobile home park" means the same as defined in 4 26 section 435.1. 4 27 c. Notwithstanding paragraph "a", if a portion of a parcel 4 28 of property defined in paragraph "b" is not used for or in 4 29 conjunction with human habitation, the assessor shall 4 30 separately assess the multiple uses of the property according 4 31 to guidelines set forth by rule by the department of revenue. 4 32 DIVISION II 4 33 PROPERTY TAX STUDY 4 34 Sec. 7. LEGISLATIVE PROPERTY TAX STUDY COMMITTEE. 4 35 1. A legislative property tax study committee is 5 1 established on July 1, 2007. The study committee shall 5 2 conduct a comprehensive review of property taxation in Iowa 5 3 including but not limited to the continued use of property 5 4 taxes as a major funding source for local governments and for 5 5 local school districts in Iowa, the classification and 5 6 assessment of property for property tax purposes and the 5 7 impact of the tie between residential and agricultural 5 8 property assessments, the level of consistency employed in 5 9 classifying and assessing property for property tax purposes, 5 10 the various exemptions and credits currently available to 5 11 property taxpayers and the impact on local government and 5 12 state budgets and on other taxpayers of providing those 5 13 credits and exemptions, and the use of property taxes as an 5 14 economic development tool and the impact on local and state 5 15 government budgets and on other taxpayers of such use. In its 5 16 study, the committee shall address the goals of property tax 5 17 simplification and equity. 5 18 2. a. The committee shall be comprised of the following 5 19 voting members: 5 20 (1) Three members who are members of the senate, two of 5 21 whom shall be appointed by the majority leader of the senate 5 22 and one of whom shall be appointed by the minority leader of 5 23 the senate. 5 24 (2) Three members who are members of the house of 5 25 representatives, two of whom shall be appointed by the speaker 5 26 of the house of representatives and one of whom shall be 5 27 appointed by the minority leader of the house of 5 28 representatives. 5 29 b. The committee shall be comprised of the following 5 30 voting members who shall be appointed by the majority leader 5 31 of the senate and the speaker of the house of representatives 5 32 in consultation with the minority leaders of the senate and 5 33 the house of representatives: 5 34 (1) A representative of the Iowa state association of 5 35 counties. 6 1 (2) A representative of the Iowa league of cities. 6 2 (3) A representative of the Iowa association of school 6 3 boards. 6 4 (4) Local assessors. 6 5 (5) County auditors. 6 6 (6) A representative of an organization representing local 6 7 economic development entities. 6 8 (7) A representative of an association representing Iowa 6 9 telecommunications property taxpayers. 6 10 (8) A representative of commercial property taxpayers. 6 11 (9) A representative of industrial property taxpayers. 6 12 (10) A representative of residential property taxpayers. 6 13 (11) A representative of agricultural property taxpayers. 6 14 (12) Representatives of other interests as designated by 6 15 the legislative council. 6 16 c. The committee shall be comprised of the following 6 17 nonvoting members who shall be appointed by the governor: 6 18 (1) A representative employed by the department of 6 19 management. 6 20 (2) A representative employed by the department of 6 21 revenue. 6 22 (3) A representative employed by the department of 6 23 economic development. 6 24 (4) A representative employed by the department of 6 25 education. 6 26 3. The property tax study committee shall meet during the 6 27 2007 and 2008 legislative interims at the call of the 6 28 chairperson. The committee is authorized to hold as many 6 29 meetings as the committee deems necessary. 6 30 4. The property tax study committee may contract with one 6 31 or more tax consultants or experts familiar with the Iowa 6 32 property tax system. The legislative council, pursuant to its 6 33 authority in section 2.42, may allocate to the study committee 6 34 funding from moneys available to it in section 2.12 for the 6 35 purpose of contracting with the consultant or expert. 7 1 5. The property tax study committee shall submit a final 7 2 report to the general assembly on or before January 5, 2009. 7 3 The final report shall include but not be limited to findings, 7 4 analyses, and recommendations by the committee. 7 5 SF 604 7 6 sc:rj/cc/26