Bill > SF652

Introduced Session

This bill relates to economic development and housing by modifying provisions concerning economic development programs and modifying provisions concerning Iowa’s urban renewal law. DIVISION I —— HOUSING. The bill amends the definition of “economic development” for purposes of Code chapter 15 to also include the provision of workforce housing. The bill adds development policies that advance the development of workforce housing to the list of factors required to be considered by the public body before public funds are used for grants, loans, tax incentives, or other financial assistance to private persons or on behalf of private persons for economic development under Code chapter 15. The bill also defines “low and moderate income family housing” for Code chapter 403 to mean housing for low and moderate income families and housing that meets the requirements of Code section 15.353 (workforce housing). The bill also modifies the defined term “low or moderate income families” in Code chapter 403 to “low and moderate income families” to align with the terminology usage within the Code chapter. DIVISION II —— DIVISION OF REVENUE —— SCHOOL FOUNDATION LEVY. The bill excludes the school district foundation property tax imposed under Code section 257.3 from the division of revenue under Code section 403.19 (tax increment financing). The bill prohibits the foundation property tax from being divided and paid into the municipality’s special fund for the payment of urban renewal indebtedness but instead requires the tax to be levied, collected, and paid to the school district in the same manner as all other property taxes. The exclusion in the bill applies to property taxes due and payable in fiscal years beginning on or after July 1, 2027, that are levied against either of the following: (1) property located in an urban renewal area for which the ordinance providing for a division of revenue takes effect on or after January 1, 2026; or (2) property annexed or otherwise included in an urban renewal area after the effective date of the ordinance providing for a division of revenue if the annexation or inclusion occurs on or after January 1, 2026. DIVISION III —— DIVISION OF REVENUE —— CHAPTER 422D PROPERTY TAX LEVY. The bill excludes property taxes for emergency medical services imposed pursuant to Code chapter 422D from a division of revenue (tax increment financing) under Code section 403.19. The division applies to property taxes due and payable in fiscal years beginning on or after July 1, 2026. DIVISION IV —— LIMITATIONS ON DIVISION OF REVENUE. Under the bill, for urban renewal areas for which an ordinance providing for a division of revenue is not limited in duration under Code section 403.17(10) (20 years) or Code section 403.22(5) (10 years), after 15 years following the effective date of this division of the bill or after 15 years from the calendar year following the calendar year in which the municipality first certifies to the county auditor the amount of any loans, advances, indebtedness, or bonds which qualify for payment from the division of revenue, whichever is later, the amount of taxes that is authorized to be paid into the municipality’s urban renewal special fund shall not exceed 75 percent of the amount otherwise authorized, but for the bill, and such excess amounts shall be allocated and paid to the respective taxing districts in the same manner as other taxes. Beginning with the sixth year that such an urban renewal area is subject to this new provision, the amount of taxes that is authorized to be paid into the municipality’s urban renewal special fund shall not exceed 60 percent of the amount otherwise authorized. DIVISION V —— URBAN RENEWAL AREA HOUSING AND RESIDENTIAL DEVELOPMENT REQUIREMENTS. Under current law, any urban renewal area established upon the determination that the area is an economic development area, a division of revenue (tax increment financing) shall not be allowed for the purpose of providing or aiding in the provision of public improvements related to housing and residential development, unless the municipality assures that the project will include assistance for low and moderate income family housing, subject to certain municipality population thresholds. Under the bill, for municipalities of any population size, and notwithstanding any minimum low and moderate income family housing requirement, if the public improvement project is approved on or after July 1, 2025, but before July 1, 2026, and is related to housing and residential development in an economic development area containing property that has been located entirely within the corporate limits of a city for 20 years or more, the amount to be provided for low and moderate income family housing for such projects shall not be required to be greater than an amount equal to 20 percent of the original project cost. The bill also extends the division of the revenue for such projects to tax collections for 20 fiscal years instead of the current law maximum of 10 years. DIVISION VI —— URBAN RENEWAL AREA LIMITATIONS. The bill amends Code chapter 403 to provide that for the fiscal year beginning July 1, 2026, the actual value in the aggregate of all property located in urban renewal areas established and in effect for the fiscal year by a municipality shall not exceed 96.25 percent of the total actual value of all property within the municipality’s area of operation, as defined in Code section 403.17. For each fiscal year beginning on or after July 1, 2027, but before July 1, 2047, the percentage limitation on the amount of actual value of the municipality that may be within urban renewal areas is reduced by 3.75 percent each fiscal year until, starting with the fiscal year beginning July 1, 2047, the percentage limitation is 20 percent. The bill also requires cities and counties to include, as part of their urban renewal reporting to the department of management, the percentage of actual value of all property within the city’s or county’s area of operation that is located in an urban renewal area established by the municipality and in effect for the applicable fiscal year.

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Other Sponsors (1)

Withdrawn. S.J. 1001. (on 05/13/2025)

Official Document