Bill Summary – FastDemocracy

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
  district funding provisions, property assessment provisions,
  and bond issuance requirements, and including effective date
  and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
                                         TLSB 1284YH (10) 90
                                         md/jh
                                 H.F. 1
                            DIVISION I
                  SCHOOL FOUNDATION PROPERTY TAX
    Section 1. Section 257.3, subsection 1, paragraph a, Code
 2023, is amended to read as follows:
    a. Except as provided in subsections 2 and 3, a school
 district shall cause to be levied each year, for the school
 general fund, a foundation property tax equal to five four
 dollars and forty ninety cents per thousand dollars of assessed
 valuation on all taxable property in the district. The county
 auditor shall spread the foundation levy over all taxable
 property in the district.
    Sec. 2. Section 257.3, subsection 2, paragraphs a and b,
 Code 2023, are amended to read as follows:
    a. Notwithstanding subsection 1, a reorganized school
 district shall cause a foundation property tax of four three
 dollars and forty ninety cents per thousand dollars of assessed
 valuation to be levied on all taxable property which, in the
 year preceding a reorganization, was within a school district
 affected by the reorganization as defined in section 275.1,
 or in the year preceding a dissolution was a part of a school
 district that dissolved if the dissolution proposal has
 been approved by the director of the department of education
 pursuant to section 275.55.
    b. In succeeding school years, the foundation property
 tax levy on that portion shall be increased to the rate of
 four dollars and ninety fifty cents per thousand dollars of
 assessed valuation the first succeeding year, five four dollars
 and fifteen sixty-five cents per thousand dollars of assessed
 valuation the second succeeding year, and five four dollars and
 forty ninety cents per thousand dollars of assessed valuation
 the third succeeding year and each year thereafter.
    Sec. 3. Section 425A.3, subsection 1, Code 2023, is amended
 to read as follows:
    1. The family farm tax credit fund shall be apportioned
 each year in the manner provided in this chapter so as to give
                                           LSB 1284YH (10) 90
                               -1-         md/jh                  1/22
                                 H.F. 1
 a credit against the tax on each eligible tract of agricultural
 land within the several school districts of the state in which
 the levy for the general school fund exceeds five dollars and
 forty cents per thousand dollars of assessed value the levy
 rate under section 257.1, subsection 1, paragraph “a”. The
 amount of the credit on each eligible tract of agricultural
 land shall be the amount the tax levied for the general school
 fund exceeds the amount of tax which would be levied on each
 eligible tract of agricultural land were the levy for the
 general school fund five dollars and forty cents per thousand
 dollars of assessed value the levy rate under section 257.1,
 subsection 1, paragraph “a”, for the previous year. However,
 in the case of a deficiency in the family farm tax credit fund
 to pay the credits in full, the credit on each eligible tract
 of agricultural land in the state shall be proportionate and
 applied as provided in this chapter.
    Sec. 4. Section 425A.5, Code 2023, is amended to read as
 follows:
    425A.5 Computation by county auditor.
    The family farm tax credit allowed each year shall be
 computed as follows: On or before April 1, the county auditor
 shall list by school districts all tracts of agricultural
 land which are entitled to credit, the taxable value for the
 previous year, the budget from each school district for the
 previous year, and the tax rate determined for the general
 fund of the school district in the manner prescribed in
 section 444.3 for the previous year, and if the tax rate is in
 excess of five dollars and forty cents per thousand dollars of
 assessed value the levy rate under section 257.1, subsection
 1, paragraph “a”, the auditor shall multiply the tax levy which
 is in excess of five dollars and forty cents per thousand
 dollars of assessed value the levy rate under section 257.1,
 subsection 1, paragraph “a”, by the total taxable value of the
 agricultural land entitled to credit in the school district,
 and on or before April 1, certify the total amount of credit
                                           LSB 1284YH (10) 90
                               -2-         md/jh                  2/22
                                 H.F. 1
 and the total number of acres entitled to the credit to the
 department of revenue.
    Sec. 5. Section 426.3, Code 2023, is amended to read as
 follows:
    426.3 Where credit given.
    The agricultural land credit fund shall be apportioned each
 year in the manner hereinafter provided so as to give a credit
 against the tax on each tract of agricultural lands within the
 several school districts of the state in which the levy for
 the general school fund exceeds five dollars and forty cents
 per thousand dollars of assessed value the levy rate under
 section 257.1, subsection 1, paragraph “a”; the amount of such
 credit on each tract of such lands shall be the amount the tax
 levied for the general school fund exceeds the amount of tax
 which would be levied on said tract of such lands were the
 levy for the general school fund five dollars and forty cents
 per thousand dollars of assessed value the levy rate under
 section 257.1, subsection 1, paragraph “a”, for the previous
 year, except in the case of a deficiency in the agricultural
 land credit fund to pay said credits in full, in which case the
 credit on each eligible tract of such lands in the state shall
 be proportionate and shall be applied as hereinafter provided.
    Sec. 6. Section 426.6, subsection 1, Code 2023, is amended
 to read as follows:
    1. The agricultural land tax credit allowed each year
 shall be computed as follows: On or before April 1, the
 county auditor shall list by school districts all tracts of
 agricultural lands which are entitled to credit, together with
 the taxable value for the previous year, together with the
 budget from each school district for the previous year, and the
 tax rate determined for the general fund of the district in
 the manner prescribed in section 444.3 for the previous year,
 and if such tax rate is in excess of five dollars and forty
 cents per thousand dollars of assessed value the levy rate
 under section 257.1, subsection 1, paragraph “a”, the auditor
                                           LSB 1284YH (10) 90
                               -3-         md/jh                  3/22
                                 H.F. 1
 shall multiply the tax levy which is in excess of five dollars
 and forty cents per thousand dollars of assessed value the
 levy rate under section 257.1, subsection 1, paragraph “a”, by
 the total taxable value of the agricultural lands entitled to
 credit in the district, and on or before April 1, certify the
 amount to the department of revenue.
    Sec. 7. ADJUSTMENT OF CALCULATIONS. For property tax
 credits under chapters 425A and 426 for property taxes due and
 payable in the fiscal year beginning July 1, 2023, the tax rate
 determined for the general fund of the school district in the
 manner prescribed in section 444.3 for the previous year shall
 be determined using the property tax levy rate under section
 257.1, as amended in this division of this Act.
    Sec. 8. EFFECTIVE DATE. This division of this Act, being
 deemed of immediate importance, takes effect upon enactment.
    Sec. 9. APPLICABILITY. The following apply July 1, 2023,
 for school budget years beginning on or after that date:
    1. The section of this division of this Act amending section
 257.3, subsection 1, paragraph “a”.
    2. The section of this division of this Act amending section
 257.3, subsection 2, paragraphs “a” and “b”.
                           DIVISION II
               PROPERTY ACTUAL VALUATION LIMITATION
    Sec. 10. Section 441.21, subsection 1, paragraph a, Code
 2023, is amended to read as follows:
    a. (1) All property subject to taxation shall be valued
 at its actual value which shall be entered opposite each item,
 and, except as otherwise provided in this section, shall be
 assessed at one hundred percent of its actual value, and the
 value so assessed shall be taken and considered as the assessed
 value and taxable value of the property upon which the levy
 shall be made.
    (2) For assessment years beginning on or after January
 1, 2024, and notwithstanding any provision of law to the
 contrary, the actual value of each individual property,
                                           LSB 1284YH (10) 90
                               -4-         md/jh                 4/22
                                 H.F. 1
 including after adjustments to actual values made as
 the result of equalization, shall not exceed one hundred
 three percent of the actual value of the property for the
 immediately preceding assessment year unless the property was
 not assessed in the immediately preceding assessment year,
 the property’s boundaries change, there is a change to the
 property’s classification, or new construction, additions,
 or improvements have been made to the property other than
 normal and necessary maintenance or repairs, not amounting to
 structural replacements or modification.
    Sec. 11. Section 441.21, subsection 1, paragraph b,
 subparagraph (1), Code 2023, is amended to read as follows:
    (1) The Subject to the limitation under paragraph “a”,
 subparagraph (2), the actual value of all property subject
 to assessment and taxation shall be the fair and reasonable
 market value of such property except as otherwise provided
 in this section. “Market value” is defined as the fair and
 reasonable exchange in the year in which the property is listed
 and valued between a willing buyer and a willing seller,
 neither being under any compulsion to buy or sell and each
 being familiar with all the facts relating to the particular
 property. Sale prices of the property or comparable property
 in normal transactions reflecting market value, and the
 probable availability or unavailability of persons interested
 in purchasing the property, shall be taken into consideration
 in arriving at its market value. In arriving at market value,
 sale prices of property in abnormal transactions not reflecting
 market value shall not be taken into account, or shall be
 adjusted to eliminate the effect of factors which distort
 market value, including but not limited to sales to immediate
 family of the seller, foreclosure or other forced sales,
 contract sales, discounted purchase transactions or purchase of
 adjoining land or other land to be operated as a unit.
    Sec. 12. Section 441.21, subsection 1, paragraph g, Code
 2023, is amended to read as follows:
                                           LSB 1284YH (10) 90
                               -5-         md/jh                  5/22
                                 H.F. 1
    g. Notwithstanding any other provision of this section,
 the actual value of any property shall not exceed its fair and
 reasonable market value, subject to paragraph “a”, subparagraph
 (2), except agricultural property which shall be valued
 exclusively as provided in paragraph “e” and paragraph “a”,
 subparagraph (2), of this subsection.
    Sec. 13. Section 441.21, subsection 2, Code 2023, is amended
 to read as follows:
    2. In the event market value of the property being assessed
 cannot be readily established in the foregoing manner, then
 the assessor may, subject to the limitation under subsection
 1, paragraph “a”, subparagraph (2), determine the value of
 the property using the other uniform and recognized appraisal
 methods including its productive and earning capacity, if
 any, industrial conditions, its cost, physical and functional
 depreciation and obsolescence and replacement cost, and all
 other factors which would assist in determining the fair and
 reasonable market value of the property but the actual value
 shall not be determined by use of only one such factor. The
 following shall not be taken into consideration: Special value
 or use value of the property to its present owner, and the
 goodwill or value of a business which uses the property as
 distinguished from the value of the property as property. In
 addition, for assessment years beginning on or after January
 1, 2018, and unless otherwise required for property valued
 by the department of revenue pursuant to chapters 428, 433,
 437, and 438, the assessor shall not take into consideration
 and shall not request from any person sales or receipts data,
 expense data, balance sheets, bank account information, or
 other data related to the financial condition of a business
 operating in whole or in part on the property if the property
 is both classified as commercial or industrial property and
 owned and used by the owner of the business. However, in
 assessing property that is rented or leased to low-income
 individuals and families as authorized by section 42 of the
                                           LSB 1284YH (10) 90
                               -6-         md/jh                 6/22
                                 H.F. 1
 Internal Revenue Code, as amended, and which section limits
 the amount that the individual or family pays for the rental
 or lease of units in the property, the assessor shall, unless
 the owner elects to withdraw the property from the assessment
 procedures for section 42 property, use the productive and
 earning capacity from the actual rents received as a method
 of appraisal and shall take into account the extent to which
 that use and limitation reduces the market value of the
 property. The assessor shall not consider any tax credit
 equity or other subsidized financing as income provided to
 the property in determining the assessed value. The property
 owner shall notify the assessor when property is withdrawn
 from section 42 eligibility under the Internal Revenue Code
 or if the owner elects to withdraw the property from the
 assessment procedures for section 42 property under this
 subsection. The property shall not be subject to section 42
 assessment procedures for the assessment year for which section
 42 eligibility is withdrawn or an election is made. This
 notification must be provided to the assessor no later than
 March 1 of the assessment year or the owner will be subject to a
 penalty of five hundred dollars for that assessment year. The
 penalty shall be collected at the same time and in the same
 manner as regular property taxes. An election to withdraw
 from the assessment procedures for section 42 property is
 irrevocable. Property that is withdrawn from the assessment
 procedures for section 42 property shall be classified and
 assessed as residential property unless the property otherwise
 fails to meet the requirements of subsection 14. Upon
 adoption of uniform rules by the department of revenue or
 succeeding authority covering assessments and valuations of
 such properties, the valuation on such properties shall be
 determined in accordance with such rules and in accordance with
 forms and guidelines contained in the real property appraisal
 manual prepared by the department as updated from time to time
 for assessment purposes to assure uniformity, but such rules,
                                           LSB 1284YH (10) 90
                               -7-         md/jh                  7/22
                                 H.F. 1
 forms, and guidelines shall not be inconsistent with or change
 the foregoing means of determining the actual, market, taxable
 and assessed values.
                           DIVISION III
              LOCAL GOVERNMENT BONDING REQUIREMENTS
    Sec. 14. Section 296.3, Code 2023, is amended to read as
 follows:
    296.3