Fiscal Note
Fiscal Services Division
HF 207 – Wastewater Infrastructure, Taxation (LSB1203HV.1)
Staff Contact: Michael Peters (515.281.6934) michael.peters@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 207 establishes a new property tax exemption for property owned or operated by a
public utility as defined in Iowa Code section 476.1 where the property is used to provide
sanitary or storm water drainage for compensation through a piped collection system.
The Bill makes Iowa Code section 25B.7 (State funding of property tax credits and exemptions)
inapplicable to the new property tax exemption.
The Bill takes effect upon enactment and applies retroactively to assessment year 2024 and
after.
Background
The Department of Revenue reports that a private, rate-regulated water utility company recently
purchased an existing municipal wastewater system. As a municipal system, the property
involved was exempt from property tax. As a system owned by a private company, the property
is subject to property tax. With acquisition occurring after January 1, 2022, but before
January 1, 2023, the system would first become taxable for assessment year 2023 under
existing law.
Assumptions
• The wastewater system situation described above is assumed to be the only property fitting
the exemption requirements specified in the Bill at this time.
• The assessed value of the wastewater property is not known. The purchase price of the
property was $2.0 million. This purchase price is used as the assessed value for property
tax fiscal impact calculations.
• Property taxes owed for assessment year 2024 are due in the fall of 2025 and the spring of
2026 (FY 2026).
• The consolidated property tax rate for the particular property is assumed to equal $33.85 per
$1,000 of taxed value. The State basic school levy equals $5.40 of the $33.85 consolidated
rate.
Fiscal Impact
Creating a new property tax exemption for a privately-owned wastewater system will reduce the
annual property taxes owed by an estimated $68,000, beginning with FY 2026. The reduction in
taxes owed will increase the State standing General Fund appropriation for school aid by an
estimated $11,000 and reduce local government property tax revenue by an estimated $57,000.
The property tax exemption will also apply to any future purchases of existing wastewater
facilities by privately owned public wastewater utility companies.
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Sources
Department of Revenue
Department of Management property tax rate files
Legislative Services Agency analysis
/s/ Jennifer Acton
May 7, 2024
Doc ID 1449925
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov
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Statutes affected:
Introduced: 427.1
Enrolled: 427.1