H.F. 653 Section 1. Section 427A.1, subsection 1, paragraph h, Code 1 2011, is amended to read as follows: 2 h. Property assessed by the department of revenue pursuant 3 to sections 428.24 to 428.29 , or chapters 433 , chapter 433 4 if such property is not owned by a qualifying local exchange 5 carrier, as defined in section 433.16, or chapters 434 , 437 , 6 437A , and 438 . 7 Sec. 2. Section 433.4, Code 2011, is amended to read as 8 follows: 9 433.4 Assessment. 10 The Except as otherwise provided in section 433.16, the 11 director of revenue shall on or before October 31 each year, 12 proceed to find the actual value of the property of these 13 companies in this state, taking into consideration the 14 information obtained from the statements required, and any 15 further information the director can obtain, using the same as 16 a means for determining the actual cash value of the property 17 of these companies within this state. The director shall 18 also take into consideration the valuation of all property 19 of these companies, including franchises and the use of the 20 property in connection with lines outside the state, and 21 making these deductions as may be necessary on account of 22 extra value of property outside the state as compared with 23 the value of property in the state, in order that the actual 24 cash value of the property of the company within this state 25 may be ascertained. The assessment shall include all property 26 of every kind and character whatsoever, real, personal, or 27 mixed, used by the companies in the transaction of telegraph 28 and telephone business; and the property so included in the 29 assessment shall not be taxed in any other manner than as 30 provided in this chapter . 31 Sec. 3. NEW SECTION . 433.16 Qualifying local exchange 32 carriers —— assessment. 33 1. For assessment years beginning on or after January 34 1, 2012, the property of qualifying local exchange carriers 35 -1- HF 653 (5) 84 rn/sc/mb 1/ 4

H.F. 653 shall be assessed for taxation according to this section. For 1 purposes of this section, “qualifying local exchange carrier” 2 means a telecommunications company that provides local exchange 3 service and has less than fifty thousand customer access lines 4 located in this state. 5 2. a. For assessment years beginning on or after January 1, 6 2012, but before January 1, 2018, the director of revenue shall 7 on or before October 31 of each year and using information from 8 statements required under this chapter or otherwise acquired 9 from the local assessors, determine the value of the qualifying 10 local exchange carrier’s land, buildings, structures, and 11 improvements. 12 b. For the assessment years beginning on or after January 13 1, 2012, but before January 1, 2018, the value of such 14 property shall equal the sum of the value of the qualifying 15 local exchange carrier’s land, buildings, structures, and 16 improvements, assessed in the same manner as all other 17 commercial property pursuant to chapters 427, 427A, 427B, 428, 18 and 441, and the qualifying local exchange carrier adjustment 19 for the applicable assessment year. 20 c. The qualifying local exchange carrier base value shall 21 be the total assessed value of the qualifying local exchange 22 carrier’s property assessed pursuant to section 433.4, Code 23 2011, for the assessment year beginning January 1, 2011. 24 However, if the qualifying local exchange carrier adds or 25 disposes of property in an amount exceeding ten percent of 26 the local exchange carrier’s total assessed value for the 27 assessment year beginning January 1, 2011, or ten percent of 28 the base value most recently adjusted under this paragraph, 29 the qualifying local exchange carrier’s base value shall be 30 adjusted to reflect those additions or dispositions. 31 d. The qualifying local exchange carrier adjustment shall be 32 determined as follows: 33 (1) For the assessment year beginning January 1, 2012, 34 the qualifying local exchange carrier adjustment shall equal 35 -2- HF 653 (5) 84 rn/sc/mb 2/ 4

H.F. 653 eighty-five percent of the difference between the qualifying 1 local exchange carrier’s base value and the assessed value 2 of the qualifying local exchange carrier’s land, buildings, 3 structures, and improvements assessed in the same manner as 4 all other property assessed as commercial property pursuant to 5 chapters 427, 427A, 427B, 428, and 441. 6 (2) For the assessment year beginning January 1, 2013, 7 the qualifying local exchange carrier adjustment shall equal 8 seventy percent of the difference between the qualifying 9 local exchange carrier’s base value and the assessed value 10 of the qualifying local exchange carrier’s land, buildings, 11 structures, and improvements assessed in the same manner as 12 all other property assessed as commercial property pursuant to 13 chapters 427, 427A, 427B, 428, and 441. 14 (3) For the assessment year beginning January 1, 2014, 15 the qualifying local exchange carrier adjustment shall equal 16 fifty-five percent of the difference between the qualifying 17 local exchange carrier’s base value and the assessed value 18 of the qualifying local exchange carrier’s land, buildings, 19 structures, and improvements assessed in the same manner as 20 all other property assessed as commercial property pursuant to 21 chapters 427, 427A, 427B, 428, and 441. 22 (4) For the assessment year beginning January 1, 2015, the 23 qualifying local exchange carrier adjustment shall equal forty 24 percent of the difference between the qualifying local exchange 25 carrier’s base value and the assessed value of the qualifying 26 local exchange carrier’s land, buildings, structures, and 27 improvements assessed in the same manner as all other property 28 assessed as commercial property pursuant to chapters 427, 427A, 29 427B, 428, and 441. 30 (5) For the assessment year beginning January 1, 2016, 31 the qualifying local exchange carrier adjustment shall equal 32 twenty-five percent of the difference between the qualifying 33 local exchange carrier’s base value and the assessed value 34 of the qualifying local exchange carrier’s land, buildings, 35 -3- HF 653 (5) 84 rn/sc/mb 3/ 4

H.F. 653 structures, and improvements assessed in the same manner as 1 all other property assessed as commercial property pursuant to 2 chapters 427, 427A, 427B, 428, and 441. 3 (6) For the assessment year beginning January 1, 2017, the 4 qualifying local exchange carrier adjustment shall equal ten 5 percent of the difference between the qualifying local exchange 6 carrier’s base value and the assessed value of the qualifying 7 local exchange carrier’s land, buildings, structures, and 8 improvements assessed in the same manner as all other property 9 assessed as commercial property pursuant to chapters 427, 427A, 10 427B, 428, and 441. 11 3. For valuations established on or after January 1, 2018, 12 the local assessor shall determine the value of the land, 13 buildings, structures, and improvements of qualifying local 14 exchange carriers in the same manner as all other property 15 assessed as commercial property pursuant to chapters 427, 427A, 16 427B, 428, and 441, and all reporting, protest, and appeal 17 procedures for qualifying local exchange carriers shall be 18 determined according to those provisions. 19 4. Notwithstanding any other provision of this chapter 20 or chapter 427, 427A, 427B, 428, or 441 to the contrary, 21 telephone wires, fiber optic cables, electronics, and similar 22 items used by qualifying local exchange carriers to transmit 23 sounds or data shall not be included when determining the value 24 of a qualifying local exchange carrier’s land, buildings, 25 structures, and improvements for purposes of this section. 26 -4- HF 653 (5) 84 rn/sc/mb 4/ 4