House File 540 - IntroducedA Bill ForAn Act 1providing a property tax exemption for land used to
2produce food within the limits of a city.
1   Section 1.  Section 427.1, Code 2019, is amended by adding
2the following new subsection:
3   NEW SUBSECTION.  25.  Urban farm.  Property certified as an
4urban farm by a city in compliance with this subsection.
   5a.  The city council must adopt an ordinance providing for
6terms and conditions of the exemption.
   7b.  The property must be owned by a nonprofit entity as
8defined in section 501(c)(3) of the Internal Revenue Code
9or must be leased by another person to such a nonprofit
10entity. The lease must be for at least five consecutive
11assessment years. The lease must be supported by no or nominal
12consideration. A lease may be renewed or extended.
   13c.  The property must be located within the corporate limits
14of the city.
   15d.  The nonprofit entity must use the property as an urban
16farm to produce food suitable for human consumption. The food
17may be further processed or packaged prior to distribution as
18provided in this subsection.
   19e.  The food must be used by, sold to, or otherwise
20distributed to a food bank, emergency feeding organization,
21or other nonprofit organization recognized by the department
22of revenue. The food bank, emergency feeding organization,
23or other nonprofit organization must prepare and serve or
24distribute the food within the corporate limits of the city.
   25f.  Prior to adopting a proposed ordinance providing for
26the terms and conditions of the tax exemption, the city shall
27mail a copy of the proposed ordinance to each affected taxing
28entity, including a county or school district which levied
29or certified for levy a property tax on any portion of the
30property subject to the proposed ordinance in the fiscal year
31beginning prior to the calendar year in which a proposed
32ordinance is to be adopted. Unless an affected taxing entity
33objects to the ordinance by resolution adopted within fourteen
34days after delivery of the notice, the affected taxing entity
35shall be deemed to have approved any approval of the ordinance
-1-1by the city during that calendar year. If an affected taxing
2entity objects to the proposed ordinance, future consideration
3of the proposed ordinance shall be indefinitely tabled.
   4g.  The city must certify that the property is an urban
5farm. The city must send a copy of the certification to
6the appropriate assessor not later than February 1 of the
7assessment year for which the exemption is requested. The
8city may subsequently withdraw certification of the property
9if the lease is terminated or the property is not used as an
10urban farm. The assessor shall be given written notice of the
   12h.  The exemption granted under this subsection shall
13apply until the property is decertified or the lease expires,
14whichever occurs earlier.
   15i.  If the property was used as an urban farm for less than
16five years and the property was decertified because the lease
17was terminated by the owner for a cause other than a breach of
18the lease by the nonprofit entity, the ordinance may provide
19that all taxes that would have been levied for the period of
20time the exemption was in effect under this subsection shall
21be immediately entered against the property on the tax list
22for the current year and shall constitute a lien against the
23property in the same manner as a lien for property taxes. The
24tax when collected shall be apportioned in the same manner
25provided for the apportionment of property taxes for the
26applicable tax year.
27   Sec. 2.  IMPLEMENTATION OF ACT.  Section 25B.7 shall not
28apply to the property tax exemption enacted in this Act.
30The inclusion of this explanation does not constitute agreement with
31the explanation’s substance by the members of the general assembly.
   32This bill provides a property tax exemption for property
33located within a city and certified as an urban farm by a
34city council pursuant to an ordinance. The ordinance cannot
35be adopted if another affected taxing entity objects. The
-2-1property must be owned by or leased to a nonprofit entity
2which must use the property to produce food use by, sale to,
3or otherwise distributed to a nonprofit organization such as
4a food bank or emergency feeding organization recognized by
5the department of revenue. A lease must be for at least five
6years and the exemption applies until the lease expires or
7until the property is decertified. A lease may be renewed
8or extended and, if the property is still eligible, the
9exemption continues. The ordinance may provide that upon
10decertification, the exemption is disallowed and the amount
11of the property taxes that had been exempted shall be entered
12against the property on the tax list for the current year.
   13The bill makes inapplicable Code section 25B.7. Code
14section 25B.7 provides that for a property tax credit or
15exemption enacted on or after January 1, 1997, if a state
16appropriation made to fund the credit or exemption is not
17sufficient to fully fund the credit or exemption, the political
18subdivision shall be required to extend to the taxpayer only
19that portion of the credit or exemption estimated by the
20department of revenue to be funded by the state appropriation.