Bill Summary – FastDemocracy

Senate File 112 - Introduced
                                  SENATE FILE 112
                                  BY ROZENBOOM and SINCLAIR
                            A BILL FOR
An Act relating to the property tax exemption for forest
  reservations and fruit-tree reservations and including
  effective date, applicability, and retroactive applicability
  provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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    Section 1. Section 427C.1, Code 2021, is amended to read as
 follows:
    427C.1 Tax exemption —— amount of exemption.
    1. Any person who establishes a forest or fruit-tree
 reservation as provided in this chapter shall be entitled to
 the tax exemption provided by law.
    2. a. For assessment years beginning before January 1,
 2022, the exemption for forest or fruit-tree reservations
 authorized in this chapter shall be one hundred percent of the
 actual value of the property comprising the reservation.
    b. For assessment years beginning on or after January 1,
 2022, the exemption for forest or fruit-tree reservations
 authorized in this chapter shall be seventy-five percent of the
 actual value of the property comprising the reservation.
    Sec. 2. Section 427C.2, Code 2021, is amended to read as
 follows:
    427C.2 Reservations.
    1. On For assessment years beginning before January 1, 2022,
 on any tract of land in the state of Iowa, the owner or owners
 may select a permanent forest reservation or reservations, each
 not less than two acres in continuous area, or a fruit-tree
 reservation or reservations, not less than one nor more than
 ten acres in total area, or both, and upon compliance with
 the provisions of this chapter, such owner or owners shall be
 entitled to the benefits provided by law.
    2. For assessment years beginning on or after January
 1, 2022, on any tract of land in the state of Iowa, the
 owner or owners may select a permanent forest reservation or
 reservations, each not less than ten acres in continuous area,
 or a fruit-tree reservation or reservations, not less than
 one nor more than ten acres in total area, or both, and upon
 compliance with the provisions of this chapter, such owner or
 owners shall be entitled to the benefits provided by law.
    Sec. 3. Section 427C.3, Code 2021, is amended to read as
 follows:
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    427C.3 Forest reservation —— duration of exemption.
    1. A forest reservation shall contain not less than two
 hundred growing forest trees on each acre. If Except as
 provided in subsection 2, if the area selected is a forest
 containing the required number of growing forest trees, it
 shall be accepted as a forest reservation under this chapter
 for a period of five years provided application is made or
 on file on or before February 1 of the exemption year. If
 any buildings are standing on an area selected as a forest
 reservation under this section or a fruit-tree reservation
 under section 427C.7, one acre of that area shall be excluded
 from the tax exemption. However, the exclusion of that acre
 shall not affect the area’s meeting the acreage requirement of
 section 427C.2.
    2. a. For forest reservation exemption applications filed
 on or before February 1, 2021, unless the reservation fails
 to meet the acreage requirement of section 427C.2, subsection
 2, and is terminated under paragraph “b”, the period of the
 exemption ends at the conclusion of the fifth assessment year
 following the certification conducted by the department of
 natural resources under section 427C.13, subsection 2.
    b. For forest reservation exemption applications filed on
 or before February 1, 2021, if the reservation fails to meet
 the acreage requirement of section 427C.2, subsection 2, the
 reservation’s exemption shall terminate beginning with the
 assessment year beginning January 1, 2022.
    3. For forest reservation exemption applications filed
 after February 1, 2021, in addition to the other requirements
 of this chapter, if the department of natural resources
 determines that the forest reservation meets the criteria for
 depredation licenses and permits, the owner shall enter into a
 depredation agreement with the department of natural resources
 under section 481C.2A for each of the remaining years of the
 exemption period following determination by the department and
 the depredation agreement shall be subject to section 481C.2A,
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 subsection 1, paragraph “e”.
    Sec. 4. Section 427C.6, Code 2021, is amended to read as
 follows:
    427C.6 Groves.
    The trees of a forest reservation shall be in groves not
 less than four rods wide except when the trees are growing or
 are planted in or along a gully or ditch to control erosion in
 which case any width will qualify provided the area meets the
 size acreage requirement of two acres.
    Sec. 5. Section 427C.7, Code 2021, is amended to read as
 follows:
    427C.7 Fruit-tree reservation —— duration of exemption.
    A fruit-tree reservation shall contain on each acre,
 at least forty apple trees, or seventy other fruit trees,
 growing under proper care and annually pruned and sprayed.
 A reservation may be claimed as a fruit-tree reservation,
 under this chapter, for a period of eight years after planting
 provided application is made or on file on or before February
 1 of the exemption year. If any buildings are standing on an
 area selected as a fruit-tree reservation under this section,
 one acre of that area shall be excluded from the tax exemption.
 However, the exclusion of that acre shall not affect the area’s
 meeting the acreage requirement of section 427C.2.
    Sec. 6. Section 427C.12, Code 2021, is amended to read as
 follows:
    427C.12 Application —— inspection —— continuation of
 exemption —— recapture of tax.
    1. It shall be the duty of the assessor to secure the facts
 relative to fruit-tree and forest reservations by taking the
 sworn statement, or affirmation, of the owner or owners making
 application under this chapter; and to make special report to
 the county auditor of all reservations made in the county under
 the provisions of this chapter.
    2. a. The board of supervisors shall designate the county
 conservation board or the assessor who shall inspect the area
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 for which an application is filed for a fruit-tree or forest
 reservation tax exemption before the application is accepted.
    b. The department of natural resources shall inspect the
 area for which an application is filed for a forest reservation
 tax exemption before the application is accepted.
    c. Use of aerial photographs may be substituted for on-site
 inspection when appropriate.
    3. The application can only be accepted if it meets the
 criteria established by the natural resource commission to be a
 fruit-tree or forest reservation.
    4. Once the application has been accepted, the area shall
 continue to receive the tax exemption during each year of the
 exemption period under section 427C.3 or 427C.7 in which the
 area is maintained as a fruit-tree or forest or fruit-tree
 reservation without the owner having to refile. If the
 property is sold or transferred, the seller shall notify the
 buyer that all, or part of, the property is in fruit-tree or
 forest reservation and subject to the recapture tax provisions
 of this section. The tax exemption shall continue to be
 granted for the remainder of the eight-year exemption period
 for fruit-tree reservation and for the following years for
 forest reservation under section 427C.3 or 427C.7, or until
 the property no longer qualifies as a fruit-tree or forest or
 fruit-tree reservation.
    5. a. The An area that is a fruit-tree reservation may
 be inspected each year by the county conservation board or
 the assessor to determine if the area is maintained as a
 fruit-tree or forest reservation. An area that is a forest
 reservation may be inspected each year by the department of
 natural resources to determine if the area is maintained as
 forest reservation. If the area is not maintained or is used
 for economic gain other than as a fruit-tree reservation during
 any year of the eight-year exemption period and any year of
 the following five years under section 427C.7 or as a forest
 reservation during any year for which of the exemption is
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 granted and any of the five years following those exemption
 years period under section 427C.3, the assessor shall assess
 the property for taxation at its fair market value as of
 January 1 of that year and in addition the area shall be
 subject to a recapture tax. However, the area shall not be
 subject to the recapture tax if the owner, including one
 possessing under a contract of sale, and the owner’s direct
 antecedents or descendants have owned the area for more than
 ten years.
    b. The recapture tax shall be computed by multiplying the
 consolidated levy for each of those years, if any, of the five
 preceding years for which the area received the exemption for
 fruit-tree or forest reservation times the assessed value of
 the area that would have been taxed but for the tax exemption.
 This tax shall be entered against the property on the tax list
 for the current year and shall constitute a lien against the
 property in the same manner as a lien for property taxes. The
 tax when collected shall be apportioned in the manner provided
 for the apportionment of the property taxes for the applicable
 tax year.
    Sec. 7. Section 427C.13, Code 2021, is amended to read as
 follows:
    427C.13 Report to department of natural resources.
    1. The county assessor shall keep a record of all forest
 and fruit-tree reservations in the county and submit a report
 of the reservations to the department of natural resources not
 later than June 15 of each year.
    2. a. Based on the reports submitted under subsection 1,
 the department of natural resources shall conduct an inspection
 of each forest reservation receiving an exemption that meets
 the acreage requirement of section 427C.2, subsection 2, and
 that was approved for an assessment year beginning before
 January 1, 2022.
    b. If the forest reservation meets the requirements for
 the exemption, the department shall certify the reservation’s
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 compliance to the county auditor of the county where the
 forest reservation is located to be used in determining the
 period of the exemption under section 427C.3, subsection 2.
 If the forest reservation fails to meet the requirements for
 the exemption, the department shall deny certification and
 shall notify the owner and the county auditor of the county
 where the forest reservation is located of the denial and the
 exemption shall cease beginning with the immediately succeeding
 assessment year.
    c. The certification or denial of certification by the
 director of the department of natural resources for each of
 the forest reservations identified in paragraph “a” shall be
 completed by July 1, 2026.
    3. If, following approval of the exemption for a forest
 reservation, the department of natural resources determines
 that the area comprising the forest reservation meets the
 criteria for depredation under chapter 481C, the owner
 shall enter into an agreement as required by section 427C.3,
 subsection 3.
    Sec. 8. Section 441.22, Code 2021, is amended to read as
 follows:
    441.22 Forest and fruit-tree reservations.
    Forest and fruit-tree reservations fulfilling the conditions
 of sections 427C.1 to 427C.13 chapter 427C shall be exempt from
 taxation to the extent authorized in that chapter. In all
 other cases where trees are planted upon any tract of land,
 without regard to area, for forest, fruit, shade, or ornamental
 purposes, or for windbreaks, the assessor shall not increase
 the valuation of the property because of such improvements.
    Sec. 9. Section 481C.2A, subsection 1, Code 2021, is amended
 by adding the following new paragraph:
    NEW PARAGRAPH. e. For a depredation agreement entered into
 for land that is a forest reservation under section 427C.3, the
 number of licenses issued each year under this subsection to
 persons other than the landowner or a family member shall not
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 be less than twenty-five percent of the total licenses issued
 under this subsection for that year.
    Sec. 10. SAVINGS PROVISION. Except as provided in this
 Act, this Act, pursuant to section 4.13, does not affect the
 operation of, or prohibit the application of, prior provisions
 of chapter 427C or section 441.22, or rules adopted under
 chapter 17A to administer prior provisions of chapter 427C
 or section 441.22, for assessment years beginning before
 January 1, 2022, and for duties, powers, protests, appeals,
 proceedings, actions, or remedies attributable to an assessment
 year beginning before January 1, 2022.
    Sec. 11. EFFECTIVE DATE. This Act, being deemed of
 immediate importance, takes effect upon enactment.
    Sec. 12. APPLICABILITY. This Act applies to assessment
 years beginning on or after January 1, 2022.
    Sec. 13. RETROACTIVE APPLICABILITY. The following apply
 retroactively to February 1, 2021, for forest reservation
 property tax exemption applications filed on or after that
 date:
    1. The section of this Act amending section 427C.3.
    2. The provision of this Act enacting section 427C.12,
 subsection 2, paragraph “b”.
                           EXPLANATION
         The inclusion of this explanation does not constitute agreement with
          the explanation’s substance by the members of the general assembly.
    Current Code chapter 427C authorizes a property tax
 exemption for certain forest reservations and fruit-tree
 reservations. To qualify for the exemption as a forest
 reservation, the property must be at least two acres in
 continuous area and meet certain tree density requirements.
    The bill provides that for assessment years beginning on or
 after January 1, 2022, the exemption for forest reservations
 and fruit-tree reservations is 75 percent of the actual
 value of the property comprising the forest or fruit-tree
 reservation.
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    Current law requires each forest reservation to be not
 less than two acres in continuous area. For assessment
 years beginning on or after January 1, 2022, each forest
 reservation must be not less than 10 acres in continuous area
 and the period of the exemption is for a period of five years.
 However, the bill establishes provisions to governing forest
 reservation exemption applications filed on or before February
 1, 2021. For forest reservation exemption applications filed
 on or before February 1, 2021, unless the reservation fails
 to meet the 10-acre requirement, the period of the exemption
 ends at the conclusion of the fifth assessment year following
 the certification conducted by the department of natural
 resources as provided in the bill. For forest reservation
 exemption applications filed on or before February 1, 2021,
 if the reservation fails to meet the 10-acre requirement,
 the reservation’s exemption terminates beginning with the
 assessment year beginning January 1, 2022.
    The bill provides that for forest reservation exemption
 applications filed after February 1, 2022, if, following
 approval of the exemption, the department of natural resources
 determines that the forest reservation meets the criteria for
 depredation under Code chapter 481C, the owner must enter
 into a depredation agreement with the department of natural
 resources for each of the remaining years of the exemption
 period. For each such depredation agreement, the number of
 licenses issued each year to persons other than t