Bill Text: IA HF1 | 2023-2024 | 90th General Assembly | Introduced


Bill Title: A bill for an act relating to local government funding by modifying school district funding provisions, property assessment provisions, and bond issuance requirements, and including effective date and applicability provisions.(See HF 718.)

Spectrum: Partisan Bill (Republican 34-0)

Status: (Introduced - Dead) 2023-04-19 - Withdrawn. H.J. 886. [HF1 Detail]

Download: Iowa-2023-HF1-Introduced.html
House File 1 - Introduced HOUSE FILE 1 BY GRASSLEY , HOLT , WHEELER , STONE , DUNWELL , GUSTOFF , MOORE , JENEARY , CARLSON , FISHER , COLLINS , VONDRAN , MEGGERS , BRADLEY , WULF , SHIPLEY , WILLS , P. THOMPSON , JOHNSON , HARRIS , NORDMAN , SORENSEN , GEHLBACH , KAUFMANN , FRY , ANDREWS , YOUNG , HENDERSON , WOOD , HORA , GRABER , WINDSCHITL , BOSSMAN , and GERHOLD A BILL FOR An Act relating to local government funding by modifying school 1 district funding provisions, property assessment provisions, 2 and bond issuance requirements, and including effective date 3 and applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1284YH (10) 90 md/jh
H.F. 1 DIVISION I 1 SCHOOL FOUNDATION PROPERTY TAX 2 Section 1. Section 257.3, subsection 1, paragraph a, Code 3 2023, is amended to read as follows: 4 a. Except as provided in subsections 2 and 3 , a school 5 district shall cause to be levied each year, for the school 6 general fund, a foundation property tax equal to five four 7 dollars and forty ninety cents per thousand dollars of assessed 8 valuation on all taxable property in the district. The county 9 auditor shall spread the foundation levy over all taxable 10 property in the district. 11 Sec. 2. Section 257.3, subsection 2, paragraphs a and b, 12 Code 2023, are amended to read as follows: 13 a. Notwithstanding subsection 1 , a reorganized school 14 district shall cause a foundation property tax of four three 15 dollars and forty ninety cents per thousand dollars of assessed 16 valuation to be levied on all taxable property which, in the 17 year preceding a reorganization, was within a school district 18 affected by the reorganization as defined in section 275.1 , 19 or in the year preceding a dissolution was a part of a school 20 district that dissolved if the dissolution proposal has 21 been approved by the director of the department of education 22 pursuant to section 275.55 . 23 b. In succeeding school years, the foundation property 24 tax levy on that portion shall be increased to the rate of 25 four dollars and ninety fifty cents per thousand dollars of 26 assessed valuation the first succeeding year, five four dollars 27 and fifteen sixty-five cents per thousand dollars of assessed 28 valuation the second succeeding year, and five four dollars and 29 forty ninety cents per thousand dollars of assessed valuation 30 the third succeeding year and each year thereafter. 31 Sec. 3. Section 425A.3, subsection 1, Code 2023, is amended 32 to read as follows: 33 1. The family farm tax credit fund shall be apportioned 34 each year in the manner provided in this chapter so as to give 35 -1- LSB 1284YH (10) 90 md/jh 1/ 22
H.F. 1 a credit against the tax on each eligible tract of agricultural 1 land within the several school districts of the state in which 2 the levy for the general school fund exceeds five dollars and 3 forty cents per thousand dollars of assessed value the levy 4 rate under section 257.1, subsection 1, paragraph “a” . The 5 amount of the credit on each eligible tract of agricultural 6 land shall be the amount the tax levied for the general school 7 fund exceeds the amount of tax which would be levied on each 8 eligible tract of agricultural land were the levy for the 9 general school fund five dollars and forty cents per thousand 10 dollars of assessed value the levy rate under section 257.1, 11 subsection 1, paragraph “a” , for the previous year. However, 12 in the case of a deficiency in the family farm tax credit fund 13 to pay the credits in full, the credit on each eligible tract 14 of agricultural land in the state shall be proportionate and 15 applied as provided in this chapter . 16 Sec. 4. Section 425A.5, Code 2023, is amended to read as 17 follows: 18 425A.5 Computation by county auditor. 19 The family farm tax credit allowed each year shall be 20 computed as follows: On or before April 1, the county auditor 21 shall list by school districts all tracts of agricultural 22 land which are entitled to credit, the taxable value for the 23 previous year, the budget from each school district for the 24 previous year, and the tax rate determined for the general 25 fund of the school district in the manner prescribed in 26 section 444.3 for the previous year, and if the tax rate is in 27 excess of five dollars and forty cents per thousand dollars of 28 assessed value the levy rate under section 257.1, subsection 29 1, paragraph “a” , the auditor shall multiply the tax levy which 30 is in excess of five dollars and forty cents per thousand 31 dollars of assessed value the levy rate under section 257.1, 32 subsection 1, paragraph “a” , by the total taxable value of the 33 agricultural land entitled to credit in the school district, 34 and on or before April 1, certify the total amount of credit 35 -2- LSB 1284YH (10) 90 md/jh 2/ 22
H.F. 1 and the total number of acres entitled to the credit to the 1 department of revenue. 2 Sec. 5. Section 426.3, Code 2023, is amended to read as 3 follows: 4 426.3 Where credit given. 5 The agricultural land credit fund shall be apportioned each 6 year in the manner hereinafter provided so as to give a credit 7 against the tax on each tract of agricultural lands within the 8 several school districts of the state in which the levy for 9 the general school fund exceeds five dollars and forty cents 10 per thousand dollars of assessed value the levy rate under 11 section 257.1, subsection 1, paragraph “a” ; the amount of such 12 credit on each tract of such lands shall be the amount the tax 13 levied for the general school fund exceeds the amount of tax 14 which would be levied on said tract of such lands were the 15 levy for the general school fund five dollars and forty cents 16 per thousand dollars of assessed value the levy rate under 17 section 257.1, subsection 1, paragraph “a” , for the previous 18 year, except in the case of a deficiency in the agricultural 19 land credit fund to pay said credits in full, in which case the 20 credit on each eligible tract of such lands in the state shall 21 be proportionate and shall be applied as hereinafter provided. 22 Sec. 6. Section 426.6, subsection 1, Code 2023, is amended 23 to read as follows: 24 1. The agricultural land tax credit allowed each year 25 shall be computed as follows: On or before April 1, the 26 county auditor shall list by school districts all tracts of 27 agricultural lands which are entitled to credit, together with 28 the taxable value for the previous year, together with the 29 budget from each school district for the previous year, and the 30 tax rate determined for the general fund of the district in 31 the manner prescribed in section 444.3 for the previous year, 32 and if such tax rate is in excess of five dollars and forty 33 cents per thousand dollars of assessed value the levy rate 34 under section 257.1, subsection 1, paragraph “a” , the auditor 35 -3- LSB 1284YH (10) 90 md/jh 3/ 22
H.F. 1 shall multiply the tax levy which is in excess of five dollars 1 and forty cents per thousand dollars of assessed value the 2 levy rate under section 257.1, subsection 1, paragraph “a” , by 3 the total taxable value of the agricultural lands entitled to 4 credit in the district, and on or before April 1, certify the 5 amount to the department of revenue. 6 Sec. 7. ADJUSTMENT OF CALCULATIONS. For property tax 7 credits under chapters 425A and 426 for property taxes due and 8 payable in the fiscal year beginning July 1, 2023, the tax rate 9 determined for the general fund of the school district in the 10 manner prescribed in section 444.3 for the previous year shall 11 be determined using the property tax levy rate under section 12 257.1, as amended in this division of this Act. 13 Sec. 8. EFFECTIVE DATE. This division of this Act, being 14 deemed of immediate importance, takes effect upon enactment. 15 Sec. 9. APPLICABILITY. The following apply July 1, 2023, 16 for school budget years beginning on or after that date: 17 1. The section of this division of this Act amending section 18 257.3, subsection 1, paragraph “a”. 19 2. The section of this division of this Act amending section 20 257.3, subsection 2, paragraphs “a” and “b”. 21 DIVISION II 22 PROPERTY ACTUAL VALUATION LIMITATION 23 Sec. 10. Section 441.21, subsection 1, paragraph a, Code 24 2023, is amended to read as follows: 25 a. (1) All property subject to taxation shall be valued 26 at its actual value which shall be entered opposite each item, 27 and, except as otherwise provided in this section , shall be 28 assessed at one hundred percent of its actual value, and the 29 value so assessed shall be taken and considered as the assessed 30 value and taxable value of the property upon which the levy 31 shall be made. 32 (2) For assessment years beginning on or after January 33 1, 2024, and notwithstanding any provision of law to the 34 contrary, the actual value of each individual property, 35 -4- LSB 1284YH (10) 90 md/jh 4/ 22
H.F. 1 including after adjustments to actual values made as 1 the result of equalization, shall not exceed one hundred 2 three percent of the actual value of the property for the 3 immediately preceding assessment year unless the property was 4 not assessed in the immediately preceding assessment year, 5 the property’s boundaries change, there is a change to the 6 property’s classification, or new construction, additions, 7 or improvements have been made to the property other than 8 normal and necessary maintenance or repairs, not amounting to 9 structural replacements or modification. 10 Sec. 11. Section 441.21, subsection 1, paragraph b, 11 subparagraph (1), Code 2023, is amended to read as follows: 12 (1) The Subject to the limitation under paragraph “a” , 13 subparagraph (2), the actual value of all property subject 14 to assessment and taxation shall be the fair and reasonable 15 market value of such property except as otherwise provided 16 in this section . “Market value” is defined as the fair and 17 reasonable exchange in the year in which the property is listed 18 and valued between a willing buyer and a willing seller, 19 neither being under any compulsion to buy or sell and each 20 being familiar with all the facts relating to the particular 21 property. Sale prices of the property or comparable property 22 in normal transactions reflecting market value, and the 23 probable availability or unavailability of persons interested 24 in purchasing the property, shall be taken into consideration 25 in arriving at its market value. In arriving at market value, 26 sale prices of property in abnormal transactions not reflecting 27 market value shall not be taken into account, or shall be 28 adjusted to eliminate the effect of factors which distort 29 market value, including but not limited to sales to immediate 30 family of the seller, foreclosure or other forced sales, 31 contract sales, discounted purchase transactions or purchase of 32 adjoining land or other land to be operated as a unit. 33 Sec. 12. Section 441.21, subsection 1, paragraph g, Code 34 2023, is amended to read as follows: 35 -5- LSB 1284YH (10) 90 md/jh 5/ 22
H.F. 1 g. Notwithstanding any other provision of this section , 1 the actual value of any property shall not exceed its fair and 2 reasonable market value, subject to paragraph “a” , subparagraph 3 (2), except agricultural property which shall be valued 4 exclusively as provided in paragraph “e” and paragraph “a” , 5 subparagraph (2), of this subsection . 6 Sec. 13. Section 441.21, subsection 2, Code 2023, is amended 7 to read as follows: 8 2. In the event market value of the property being assessed 9 cannot be readily established in the foregoing manner, then 10 the assessor may , subject to the limitation under subsection 11 1, paragraph “a” , subparagraph (2), determine the value of 12 the property using the other uniform and recognized appraisal 13 methods including its productive and earning capacity, if 14 any, industrial conditions, its cost, physical and functional 15 depreciation and obsolescence and replacement cost, and all 16 other factors which would assist in determining the fair and 17 reasonable market value of the property but the actual value 18 shall not be determined by use of only one such factor. The 19 following shall not be taken into consideration: Special value 20 or use value of the property to its present owner, and the 21 goodwill or value of a business which uses the property as 22 distinguished from the value of the property as property. In 23 addition, for assessment years beginning on or after January 24 1, 2018, and unless otherwise required for property valued 25 by the department of revenue pursuant to chapters 428 , 433 , 26 437 , and 438 , the assessor shall not take into consideration 27 and shall not request from any person sales or receipts data, 28 expense data, balance sheets, bank account information, or 29 other data related to the financial condition of a business 30 operating in whole or in part on the property if the property 31 is both classified as commercial or industrial property and 32 owned and used by the owner of the business. However, in 33 assessing property that is rented or leased to low-income 34 individuals and families as authorized by section 42 of the 35 -6- LSB 1284YH (10) 90 md/jh 6/ 22
H.F. 1 Internal Revenue Code, as amended, and which section limits 1 the amount that the individual or family pays for the rental 2 or lease of units in the property, the assessor shall, unless 3 the owner elects to withdraw the property from the assessment 4 procedures for section 42 property, use the productive and 5 earning capacity from the actual rents received as a method 6 of appraisal and shall take into account the extent to which 7 that use and limitation reduces the market value of the 8 property. The assessor shall not consider any tax credit 9 equity or other subsidized financing as income provided to 10 the property in determining the assessed value. The property 11 owner shall notify the assessor when property is withdrawn 12 from section 42 eligibility under the Internal Revenue Code 13 or if the owner elects to withdraw the property from the 14 assessment procedures for section 42 property under this 15 subsection . The property shall not be subject to section 42 16 assessment procedures for the assessment year for which section 17 42 eligibility is withdrawn or an election is made. This 18 notification must be provided to the assessor no later than 19 March 1 of the assessment year or the owner will be subject to a 20 penalty of five hundred dollars for that assessment year. The 21 penalty shall be collected at the same time and in the same 22 manner as regular property taxes. An election to withdraw 23 from the assessment procedures for section 42 property is 24 irrevocable. Property that is withdrawn from the assessment 25 procedures for section 42 property shall be classified and 26 assessed as residential property unless the property otherwise 27 fails to meet the requirements of subsection 14 . Upon 28 adoption of uniform rules by the department of revenue or 29 succeeding authority covering assessments and valuations of 30 such properties, the valuation on such properties shall be 31 determined in accordance with such rules and in accordance with 32 forms and guidelines contained in the real property appraisal 33 manual prepared by the department as updated from time to time 34 for assessment purposes to assure uniformity, but such rules, 35 -7- LSB 1284YH (10) 90 md/jh 7/ 22
H.F. 1 forms, and guidelines shall not be inconsistent with or change 1 the foregoing means of determining the actual, market, taxable 2 and assessed values. 3 DIVISION III 4 LOCAL GOVERNMENT BONDING REQUIREMENTS 5 Sec. 14. Section 296.3, Code 2023, is amended to read as 6 follows: 7 296.3 Election called —— notice . 8 1. Within ten days of receipt of a petition filed under 9 section 296.2 , the president of the board of directors shall 10 call a meeting of the board. The meeting shall be held within 11 thirty days after the petition was received. At the meeting, 12 the board shall call the election, fixing the time of the 13 election, which may be at the time and place of holding the 14 regular school election , and approve publication of the notice 15 required under subsection 2 . However, if 16 2. a. The board of directors shall publish notice of the 17 proposal to issue the bonds, including a statement of the 18 amount and purpose of the bonds, a statement of the estimated 19 cost of the project for which the bonds are to be issued, and 20 a statement of the amount of and repository for the school 21 district funds designated for the project to satisfy the 22 requirement of paragraph “b” . The notice shall be published 23 at least once, not more than twenty days after the meeting 24 under subsection 1, in one or more newspapers having general 25 circulation within the district. In addition to the published 26 notice of the proposal to issue the bonds, an individual 27 notice shall be mailed to each property owner and contract 28 purchaser of record of property in the school district not less 29 than thirty but not more than forty-five days prior to the 30 election. Each individual notice shall include all information 31 in the published notice and shall also provide examples of the 32 estimated property tax amount that would be due and payable 33 each year on a property in each property classification with an 34 assessed value of one hundred thousand dollars or one hundred 35 -8- LSB 1284YH (10) 90 md/jh 8/ 22
H.F. 1 acres of average agricultural property in the school district. 1 b. The school district shall, prior to publishing the notice 2 of the proposal under paragraph “a” , designate and deposit in 3 one or more funds of the school district an amount equal to or 4 greater than ten percent of the total cost of the project or 5 purpose for which the bonds are proposed to be issued. The 6 amount so deposited and designated shall be used solely for 7 the project or purpose unless the proposition of issuing the 8 bonds fails at election or the proposal to issue the bonds is 9 abandoned by the board of directors. 10 3. If the board determines by unanimous vote that the 11 proposition or propositions requested by a petition to be 12 submitted at an election are grossly unrealistic or contrary to 13 the needs of the school district, no election shall be called 14 and the notice under subsection 2 shall not be published . 15 If more than one petition has been received by the time the 16 board meets to consider the petition triggering the meeting, 17 the board shall act upon the petitions in the order they 18 were received at the meeting called to consider the initial 19 petition. The decision of the board may be appealed to the 20 state board of education as provided in chapter 290 . The 21 president shall notify the county commissioner of elections of 22 the time of the election. 23 Sec. 15. Section 298.2, subsection 4, paragraph a, Code 24 2023, is amended to read as follows: 25 a. The board may on its own motion, and upon the written 26 request of not less than one hundred eligible electors or 27 thirty percent of the number of eligible electors voting 28 at the last regular school election, whichever is greater, 29 shall, direct the county commissioner of elections to provide 30 for submitting the proposition of levying the voter-approved 31 physical plant and equipment levy for a period of time 32 authorized by the voters at the election, not to exceed ten 33 years. The election shall be held on a date specified in 34 section 39.2, subsection 4 , paragraph “c” . Individual notices 35 -9- LSB 1284YH (10) 90 md/jh 9/ 22
H.F. 1 shall be mailed to each property owner and contract purchaser 1 of record of property in the school district not less than 2 thirty but not more than forty-five days prior to the election. 3 Each individual notice shall include all information in the 4 published election notice and shall also provide examples of 5 the estimated property tax amount that would be due and payable 6 each year on a property in each property classification with an 7 assessed value of one hundred thousand dollars or one hundred 8 acres of average agricultural property in the school district. 9 The proposition is adopted if a majority of those voting on the 10 proposition at the election approves it. The voter-approved 11 physical plant and equipment levy shall be funded either by a 12 physical plant and equipment property tax or by a combination 13 of a physical plant and equipment property tax and a physical 14 plant and equipment income surtax, as determined by the board. 15 However, if the board intends to enter into a rental or lease 16 arrangement under section 279.26 , or intends to enter into a 17 loan agreement under section 297.36 , only a property tax shall 18 be levied for those purposes. Subject to the limitations 19 of section 298.14 , if the board uses a combination of a 20 physical plant and equipment property tax and a physical plant 21 and equipment surtax, for each fiscal year the board shall 22 determine the percent of income surtax to be imposed expressed 23 as full percentage points, not to exceed twenty percent. 24 Sec. 16. Section 298.18, subsection 3, Code 2023, is amended 25 to read as follows: 26 3. Notice of the election shall be given by the county 27 commissioner of elections according to section 49.53 . In 28 addition to the notice of the election, an individual notice 29 of the proposition shall be mailed to each property owner 30 and contract purchaser of record of property in the school 31 district not less than thirty but not more than forty-five 32 days prior to the election. Each individual notice shall 33 include all information in the election notice and shall also 34 provide examples of the estimated property tax amount that 35 -10- LSB 1284YH (10) 90 md/jh 10/ 22
H.F. 1 would be due and payable each year on a property in each 1 property classification with an assessed value of one hundred 2 thousand dollars or one hundred acres of average agricultural 3 property in the school district. The county commissioner of 4 elections shall conduct the election pursuant to the provisions 5 of chapters 39 through 53 and certify the results to the board 6 of directors. The proposition shall not be deemed carried 7 or adopted unless the vote in favor of such proposition is 8 equal to at least sixty percent of the total vote cast for 9 and against the proposition at the election. Whenever such 10 a proposition has been approved by the voters of a school 11 corporation as hereinbefore provided, no further approval of 12 the voters of such school corporation shall be required as 13 a result of any subsequent change in the boundaries of such 14 school corporation. 15 Sec. 17. Section 331.441, subsection 2, paragraph b, 16 subparagraph (10), Code 2023, is amended to read as follows: 17 (10) The establishment or funding of programs to provide 18 for or assist in providing for the acquisition, restoration, or 19 demolition of housing, as part of a municipal housing project 20 under chapter 403 or otherwise, or for other and purposes as 21 may be authorized under chapter 403A . 22 Sec. 18. Section 331.441, subsection 2, paragraph b, 23 subparagraphs (13) and (14), Code 2023, are amended by striking 24 the subparagraphs. 25 Sec. 19. Section 331.441, subsection 2, paragraph c, Code 26 2023, is amended by adding the following new subparagraphs: 27 NEW SUBPARAGRAPH . (12) The acquisition, pursuant to a 28 chapter 28E agreement, of a city convention center or veterans 29 memorial auditorium, including the renovation, remodeling, 30 reconstruction, expansion, improvement, or equipping of such a 31 center or auditorium, provided that debt service funds shall 32 not be derived from the division of taxes under section 403.19. 33 NEW SUBPARAGRAPH . (13) The aiding of the planning, 34 undertaking, and carrying out of urban renewal projects under 35 -11- LSB 1284YH (10) 90 md/jh 11/ 22
H.F. 1 the authority of chapter 403 and for the purposes set out in 1 section 403.12. However, bonds issued for this purpose are 2 subject to the right of petition for an election as provided 3 in section 331.442, subsection 5, without limitation on the 4 amount of the bond issue or the population of the county, and 5 the board shall include notice of the right of petition in 6 the notice of proposed action required under section 331.443, 7 subsection 2. 8 Sec. 20. Section 331.442, subsection 2, paragraph a, Code 9 2023, is amended to read as follows: 10 a. The board shall publish notice of the proposal to issue 11 the bonds, including a statement of the amount and purpose 12 of the bonds , and a statement of the estimated cost of the 13 project for which the bonds are to be issued , and a statement 14 of the amount of and repository for the county funds designated 15 for the project to satisfy the requirement of paragraph “0b” . 16 The notice shall be published as provided in section 331.305 17 with the minutes of the meeting at which the board adopts a 18 resolution to call a county special election to vote upon 19 the question of issuing the bonds. The cost of the project, 20 as published in the notice pursuant to this paragraph, is an 21 estimate and is not intended to be binding on the board in 22 later proceedings related to the project. In addition to 23 the published notice of the proposal to issue the bonds, an 24 individual notice shall be mailed to each property owner and 25 contract purchaser of record of property in the county not less 26 than thirty but not more than forty-five days prior to the 27 election. Each individual notice shall include all information 28 in the published notice and shall also provide examples of the 29 estimated property tax amount that would be due and payable 30 each year on a property in each property classification with an 31 assessed value of one hundred thousand dollars or one hundred 32 acres of average agricultural property in the county. 33 Sec. 21. Section 331.442, subsection 2, Code 2023, is 34 amended by adding the following new paragraph: 35 -12- LSB 1284YH (10) 90 md/jh 12/ 22
H.F. 1 NEW PARAGRAPH . 0b. A county which proposes to contract 1 indebtedness and issue general obligation bonds for a general 2 county purpose under this section shall, prior to publishing 3 the notice of the proposal under paragraph “a” , designate and 4 deposit in one or more funds of the county an amount equal to 5 or greater than ten percent of the total cost of the project 6 or purpose for which the bonds are proposed to be issued. The 7 amount so deposited and designated shall be used solely for 8 the project or purpose unless the proposition of issuing the 9 bonds fails at election or the proposal to issue the bonds is 10 abandoned by the board. 11 Sec. 22. Section 331.442, subsection 5, paragraph a, 12 unnumbered paragraph 1, Code 2023, is amended to read as 13 follows: 14 Notwithstanding subsection 2 , a board, in lieu of calling 15 an election, may institute proceedings for the issuance of 16 bonds for a general county purpose by causing a notice of the 17 proposal to issue the bonds, including a statement of the 18 amount and purpose of the bonds, a statement of the amount of 19 and repository for the county funds designated for the project 20 to satisfy the requirement of subsection 2, paragraph “0b” , 21 and the right to petition for an election, to be published as 22 provided in section 331.305 at least ten days prior to the 23 meeting at which it is proposed to take action for the issuance 24 of the bonds subject to the following limitations: 25 Sec. 23. Section 384.24, subsection 3, paragraph q, Code 26 2023, is amended by striking the paragraph. 27 Sec. 24. Section 384.24, subsection 3, paragraph u, Code 28 2023, is amended to read as follows: 29 u. The establishment or funding of programs to provide for 30 or assist in providing for the acquisition, restoration, or 31 demolition of housing, as part of a municipal housing project 32 under chapter 403 or otherwise, or for other and purposes as 33 may be authorized under chapter 403A . 34 Sec. 25. Section 384.24, subsection 4, Code 2023, is amended 35 -13- LSB 1284YH (10) 90 md/jh 13/ 22
H.F. 1 by adding the following new paragraph: 1 NEW PARAGRAPH . 0i. The aiding in the planning, undertaking, 2 and carrying out of urban renewal projects under the authority 3 of chapter 403, and all of the purposes set out in section 4 403.12. However, bonds issued for this purpose are subject to 5 the right of petition for an election as provided in section 6 384.26, without limitation on the amount of the bond issue or 7 the size of the city, and the council shall include notice of 8 the right of petition in the notice required under section 9 384.25, subsection 2. 10 Sec. 26. Section 384.26, subsection 2, Code 2023, is amended 11 to read as follows: 12 2. a. The council shall publish notice of the proposal 13 to issue the bonds, including a statement of the amount and 14 purpose of the bonds, a statement of the estimated cost of the 15 project for which the bonds are to be issued, and a statement 16 of the amount of and repository for the city funds designated 17 for the project to satisfy the requirement of paragraph “b” . 18 The notice shall be published as provided in section 362.3 19 with the minutes of the meeting at which the council adopts 20 a resolution to call a city special election to vote upon 21 the question of issuing the bonds. The cost of the project, 22 as published in the notice pursuant to this paragraph, is an 23 estimate and is not binding on the council in later proceedings 24 related to the project. In addition to the published notice of 25 the proposal to issue the bonds, an individual notice shall be 26 mailed to each property owner and contract purchaser of record 27 of property in the city not less than thirty but not more than 28 forty-five days prior to the election. Each individual notice 29 shall include all information in the published notice and shall 30 also provide examples of the estimated property tax amount 31 that would be due and payable each year on a property in each 32 property classification with an assessed value of one hundred 33 thousand dollars or one hundred acres of average agricultural 34 property in the city. 35 -14- LSB 1284YH (10) 90 md/jh 14/ 22
H.F. 1 b. A city which proposes to contract indebtedness and issue 1 general obligation bonds for a general corporate purpose under 2 this section shall, prior to publishing the notice of the 3 proposal under paragraph “a” , designate and deposit in one or 4 more funds of the city an amount equal to or greater than ten 5 percent of the total cost of the project or purpose for which 6 the bonds are proposed to be issued. The amount so deposited 7 and designated shall be used solely for the project or purpose 8 unless the proposition of issuing the bonds fails at election 9 or the proposal to issue the bonds is abandoned by the council. 10 c. Before the council may institute proceedings for the 11 issuance of bonds for a general corporate purpose, it shall 12 call a special city election to vote upon the question of 13 issuing the bonds. At the election the proposition must be 14 submitted in the following form: 15 Shall the ............ (insert the name of the city) issue 16 its bonds in an amount not exceeding the amount of $ .... for 17 the purpose of .......... ? 18 Sec. 27. Section 384.26, subsection 5, paragraph a, 19 unnumbered paragraph 1, Code 2023, is amended to read as 20 follows: 21 Notwithstanding the provisions of subsection 2 , paragraph 22 “c” , a council may, in lieu of calling an election, institute 23 proceedings for the issuance of bonds for a general corporate 24 purpose by causing a notice of the proposal to issue the bonds, 25 including a statement of the amount and purpose of the bonds, a 26 statement of the amount of and repository for the city funds 27 designated for the project to satisfy the requirement of 28 subsection 2, paragraph “b” , together with the maximum rate of 29 interest which the bonds are to bear, and the right to petition 30 for an election, to be published at least once in a newspaper 31 of general circulation within the city at least ten days prior 32 to the meeting at which it is proposed to take action for the 33 issuance of the bonds subject to the following limitations: 34 Sec. 28. Section 403.2, subsection 3, Code 2023, is amended 35 -15- LSB 1284YH (10) 90 md/jh 15/ 22
H.F. 1 to read as follows: 1 3. It is further found and declared that there exists in 2 this state the continuing need for programs to alleviate and 3 prevent conditions of unemployment and a shortage of housing; 4 and that it is accordingly necessary to assist and retain 5 local industries and commercial enterprises to strengthen and 6 revitalize the economy of this state and its municipalities; 7 that accordingly it is necessary to provide means and methods 8 for the encouragement and assistance of industrial and 9 commercial enterprises in locating, purchasing, constructing, 10 reconstructing, modernizing, improving, maintaining, repairing, 11 furnishing, equipping, and expanding in this state and its 12 municipalities, for the provision of public improvements 13 related to housing and residential development, and for the 14 construction of housing for low and moderate income families; 15 that accordingly it is necessary to authorize local governing 16 bodies to designate areas of a municipality as economic 17 development areas for commercial and industrial enterprises, 18 public improvements related to housing and residential 19 development, or construction of housing for low and moderate 20 income families; and that it is also necessary to encourage 21 the location and expansion of commercial enterprises to more 22 conveniently provide needed services and facilities of the 23 commercial enterprises to municipalities and the residents of 24 the municipalities. Therefore, the powers granted in this 25 chapter constitute the performance of essential public purposes 26 for this state and its municipalities. 27 Sec. 29. Section 403.9, subsection 2, Code 2023, is amended 28 to read as follows: 29 2. Bonds issued under this section shall not constitute 30 an indebtedness within the meaning of any constitutional or 31 statutory debt limitation or restriction, and shall not be 32 subject to the provisions of any other law or charter relating 33 to the authorization, issuance or sale of bonds. Bonds issued 34 under the provisions of this chapter are declared to be issued 35 -16- LSB 1284YH (10) 90 md/jh 16/ 22
H.F. 1 for an essential public and governmental purpose and , together 1 with interest thereon and income therefrom, shall be exempted 2 from all taxes. 3 Sec. 30. Section 403.9, subsection 3, Code 2023, is amended 4 by adding the following new paragraph: 5 NEW PARAGRAPH . c. Beginning July 1, 2023, bonds issued 6 under this chapter shall only be issued, in the case of a city, 7 in the manner and within the limitations for general corporate 8 purpose bonds as prescribed by chapter 384, subchapter III, 9 or in the case of a county, in the manner and within the 10 limitations for general county purpose bonds prescribed by 11 chapter 331, subchapter IV, part 3. 12 Sec. 31. Section 403.12, subsection 5, Code 2023, is amended 13 to read as follows: 14 5. For the purposes of this section , or for the purpose 15 of aiding in the planning, undertaking, or carrying out of an 16 urban renewal project of a municipality, a municipality may, in 17 addition to any authority to issue bonds pursuant to section 18 403.9 , issue and sell its general obligation bonds. Any bonds 19 issued by a municipality pursuant to this section must be 20 issued, in the case of a city, by resolution of the council in 21 the manner and within the limitations prescribed for general 22 corporate purpose bonds by chapter 384, subchapter III , or in 23 the case of a county, by resolution of the board of supervisors 24 in the manner and within the limitations prescribed for general 25 county purpose bonds by chapter 331, subchapter IV, part 3 . 26 Bonds issued pursuant to the provisions of this subsection must 27 be sold in the manner prescribed by chapter 75 . The additional 28 power granted in this subsection for the financing of public 29 undertakings and activities by municipalities within an urban 30 renewal area shall not be construed as a limitation of the 31 existing powers of municipalities. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -17- LSB 1284YH (10) 90 md/jh 17/ 22
H.F. 1 This bill relates to local government funding by modifying 1 school district funding provisions, property assessment 2 provisions, and bond issuance requirements. 3 DIVISION I —— SCHOOL FOUNDATION PROPERTY TAX. As part 4 of Iowa’s system for funding school districts, Code section 5 257.3 requires each school district to levy each year, for 6 the school general fund, a foundation property tax equal to 7 $5.40 per $1,000 of assessed valuation on all taxable property 8 in the district. An exception to the $5.40 levy rate is for 9 recently reorganized and dissolved school districts. For such 10 districts, the first succeeding year requires a rate of $4.40, 11 the second succeeding year requires a rate of $4.90, and for 12 the third succeeding year and thereafter a rate of $5.40. The 13 bill reduces all of the applicable foundation property tax 14 rates by $0.50. 15 The bill provides for an adjustment of property tax credit 16 calculations under Code chapters 425A (family farm tax credit) 17 and 426 (agricultural land tax credit) for property taxes due 18 and payable in the fiscal year beginning July 1, 2023, to 19 account for the change to the property tax levy rate under Code 20 section 257.3 in the bill. 21 Division I takes effect upon enactment. 22 The sections of division I that amend Code section 257.3 23 apply July 1, 2023, for school budget years beginning on or 24 after that date. 25 DIVISION II —— PROPERTY ACTUAL VALUATION LIMITATION. Under 26 Code section 441.21, all property subject to taxation shall be 27 valued at its actual value and, except as otherwise provided 28 by law, shall be assessed at 100 percent of its actual value, 29 and the value so assessed shall be taken and considered as the 30 assessed value and taxable value of the property upon which 31 the levy shall be made. Actual value is generally required 32 to be the fair and reasonable market value. “Market value” 33 is defined as the fair and reasonable exchange in the year in 34 which the property is listed and valued between a willing buyer 35 -18- LSB 1284YH (10) 90 md/jh 18/ 22
H.F. 1 and a willing seller, neither being under any compulsion to buy 1 or sell and each being familiar with all the facts relating to 2 the particular property, but excluding certain abnormal sales. 3 The bill provides that for assessment years beginning 4 on or after January 1, 2024, the actual value of each 5 individual property, including after adjustments to actual 6 values made as the result of equalization, shall not exceed 7 103 percent of the actual value of the property for the 8 immediately preceding assessment year unless the property was 9 not assessed in the immediately preceding assessment year, 10 the property’s boundaries change, there is a change to the 11 property’s classification, or new construction, additions, 12 or improvements have been made to the property other than 13 normal and necessary maintenance or repairs, not amounting to 14 structural replacements or modification. 15 The bill also makes conforming changes to other provisions 16 of law relating to the assessment of property, including 17 provisions governing the valuation of agricultural property and 18 properties for which alternative valuation methods are used 19 and by operation of Code section 441.21(3). The provisions 20 of the bill apply to other special methods or formulas for 21 valuing specified property to the extent consistent with such 22 provisions. 23 DIVISION III —— LOCAL GOVERNMENT BONDING REQUIREMENTS. As 24 a condition of and prior to seeking voter approval for the 25 issuance of bonds under Code chapter 296, the bill requires the 26 school district to designate and deposit in one or more funds 27 of the school district an amount equal to or greater than 10 28 percent of the total cost of the project or purpose for which 29 the bonds are proposed to be issued. The amount so deposited 30 and designated shall be used solely for the project or purpose 31 unless the proposition of issuing the bonds fails at election 32 or the proposal to issue the bonds is abandoned by the school 33 board. 34 The bill also, as part of the bond approval process under 35 -19- LSB 1284YH (10) 90 md/jh 19/ 22
H.F. 1 Code chapter 296, requires the school board to publish a notice 1 of the proposal to issue bonds that includes a statement 2 of the amount and purpose of the bonds, a statement of the 3 estimated cost of the project for which the bonds are to be 4 issued, and a statement of the amount of and repository for the 5 school district funds designated for the project to satisfy 6 the requirement of the bill. In addition to the published 7 notice of the proposal to issue the bonds, the bill requires 8 an individual notice, containing certain information, to be 9 mailed to each property owner and contract purchaser of record 10 of property in the school district not less than 30 but not 11 more than 45 days prior to the election. 12 The bill also amends Code section 298.2 relating to the 13 voter-approved school district physical plant and equipment 14 levy and the provisions of Code section 298.18 authorizing the 15 imposition of a school district bonded indebtedness property 16 tax levy in excess of $2.70 per $1,000 of assessed value if 17 approved at election. The bill requires, in addition to the 18 notice of the election under each section, an individual notice 19 to be mailed to each property owner and contract purchaser of 20 record of property in the school district. Each individual 21 notice shall include all information in the election notice 22 and shall also provide examples of the estimated property tax 23 amount that would be due and payable each year on a property in 24 each property classification with an assessed value of $100,000 25 or 100 acres of average agricultural property in the school 26 district. 27 As a condition of and prior to seeking voter approval for 28 the issuance of bonds for general county purposes under Code 29 section 331.442, including those general county purpose bonds 30 for which an election is not called, the bill requires a county 31 to designate and deposit in one or more funds of the county an 32 amount equal to or greater than 10 percent of the total cost of 33 the project or purpose for which the bonds are proposed to be 34 issued. The amount so deposited and designated shall be used 35 -20- LSB 1284YH (10) 90 md/jh 20/ 22
H.F. 1 solely for the project or purpose unless the proposition of 1 issuing the bonds fails at election or the proposal to issue 2 the bonds is abandoned. 3 The bill also requires the published notice of the proposal 4 to issue such bonds to include a statement of the amount of 5 and repository for the county funds designated for the project 6 to satisfy the requirement in the bill. In addition to the 7 published notice of the proposal to issue the bonds, the bill 8 requires an individual notice, containing certain information 9 to be mailed to each property owner and contract purchaser of 10 record of property in the county not less than 30 but not more 11 than 45 days prior to the election. 12 As a condition of and prior to seeking voter approval for 13 the issuance of bonds for general corporate purposes under Code 14 section 384.26, including those general corporate purpose bonds 15 for which an election is not called, the bill requires a city 16 to designate and deposit in one or more funds of the city an 17 amount equal to or greater than 10 percent of the total cost of 18 the project or purpose for which the bonds are proposed to be 19 issued. The amount so deposited and designated shall be used 20 solely for the project or purpose unless the proposition of 21 issuing the bonds fails at election or the proposal to issue 22 the bonds is abandoned. 23 The bill also, as part of the general corporate purpose bond 24 approval process under Code section 384.26, requires the city 25 council to publish a notice of the proposal to issue bonds that 26 includes a statement of the amount and purpose of the bonds, 27 a statement of the estimated cost of the project for which 28 the bonds are to be issued, and a statement of the amount of 29 and repository for the city funds designated for the project 30 to satisfy the requirement of the bill. In addition to the 31 published notice of the proposal to issue the bonds, the bill 32 requires an individual notice, containing certain information, 33 to be mailed to each property owner and contract purchaser of 34 record of property in the city not less than 30 but not more 35 -21- LSB 1284YH (10) 90 md/jh 21/ 22
H.F. 1 than 45 days prior to the election. 1 Counties and cities may generally contract indebtedness 2 and approve the issuance of general obligation bonds to 3 carry out an essential county purpose or essential corporate 4 purpose without voter approval, while the issuance of general 5 obligation bonds to carry out a general county purpose or 6 general corporate purpose generally requires voter approval. 7 The bill modifies the definition of “essential county purpose” 8 by striking certain purposes under Code chapter 403 (Iowa’s 9 urban renewal law) and certain joint governmental purposes 10 under a Code chapter 28E agreement. The bill adds those 11 purposes to the definition of “general county purpose”. The 12 bill makes similar changes to the definitions of “essential 13 corporate purpose” and “general corporate purpose” under Code 14 section 384.24 and provides that beginning July 1, 2023, bonds 15 issued under Code chapter 403 shall only be issued, in the case 16 of a city, in the manner and within the limitations for general 17 corporate purpose bonds, or in the case of a county, in the 18 manner and within the limitations for general county purpose 19 bonds. 20 -22- LSB 1284YH (10) 90 md/jh 22/ 22
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