House Study Bill 726 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN) A BILL FOR An Act placing assessment limitations for property tax 1 purposes on commercial child care facilities, and including 2 effective date, applicability, and retroactive applicability 3 provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 6319YC (1) 90 dg/jh
H.F. _____ Section 1. Section 441.21, subsection 5, paragraph b, 1 subparagraph (2), unnumbered paragraph 1, Code 2024, is amended 2 to read as follows: 3 For Except as prescribed for property subject to 4 subparagraph (3), for valuations established for the assessment 5 year beginning January 1, 2022, and each assessment year 6 thereafter, the portion of actual value at which each property 7 unit of commercial property shall be assessed shall be the sum 8 of the following: 9 Sec. 2. Section 441.21, subsection 5, paragraph b, Code 10 2024, is amended by adding the following new subparagraph: 11 NEW SUBPARAGRAPH . (3) (a) For valuations established 12 for the assessment year beginning January 1, 2024, and each 13 assessment year thereafter, the portion of actual value at 14 which each portion of a property unit of commercial property 15 that is primarily used as a child care facility as defined 16 in section 237A.1, and for which an application has been 17 allowed under this subparagraph, shall be assessed at an amount 18 equal to the product of the assessment limitation percentage 19 applicable to residential property under subsection 4 for that 20 assessment year multiplied by the actual value of the property. 21 (b) Applications to qualify a child care facility for the 22 assessment limitation allowed under this subparagraph shall be 23 filed with the assessor not later than July 1 of the assessment 24 year for which the person is requesting the assessment 25 limitation. The application shall be on forms prescribed by 26 the department of revenue and must include all of the following 27 information: 28 (i) A description of the property, including the propertys 29 location. 30 (ii) A copy of the license to operate as a child care 31 facility issued by the department of health and human services, 32 or other proof of eligibility as set forth by the department 33 of revenue by rule. 34 (iii) Any other information as required by the department 35 -1- LSB 6319YC (1) 90 dg/jh 1/ 6
H.F. _____ of revenue. 1 (c) Upon allowance of the application, the assessment 2 limitation shall be applied on the portion of the property 3 unit of commercial property that is primarily used as a child 4 care facility for successive years without further filing as 5 long as the property continues to be classified as commercial 6 property and is used for the purposes specified in the original 7 application for assessment limitation. 8 (d) No later than July 6 of each year, the assessor shall 9 remit the applications for assessment limitation to the county 10 auditor with the assessors recommendation for allowance or 11 disallowance of the assessment limitation. If the assessor 12 recommends disallowance, the assessor shall submit the reasons 13 for the recommendation in writing to the county auditor. 14 (e) No later than July 15 of each year, the county auditor 15 shall forward the applications for assessment limitation to 16 the board of supervisors. The board shall determine the 17 eligibility for each application on or before September 1 of 18 each year. 19 (i) If the board disallows a claim, the board shall send 20 written notice by mail to the applicant at the applicants 21 last known address. The notice shall state the reasons for 22 disallowing the application and shall state the applicants 23 right to appeal the boards action to the district court. An 24 applicant may appeal the boards decision to the district court 25 of the county in which the property is located within thirty 26 days of the date of the notice of disallowance. 27 (ii) No later than October 1 of each year, the board of 28 supervisors shall certify all allowed assessment limitations 29 received for that year with the county auditor. 30 (f) If a property that has been granted an assessment 31 limitation ceases to be used as a child care facility, the 32 owner of the child care facility shall give written notice to 33 the assessor by the July 1 following the date the property 34 ceased to be used as a child care facility. 35 -2- LSB 6319YC (1) 90 dg/jh 2/ 6
H.F. _____ (g) (i) If the board determines at any time within 1 thirty-six months of allowing an assessment limitation that the 2 assessment limitation was allowed in error, the board shall 3 notify the property owner by mail and conduct a hearing on the 4 matter. 5 (ii) If, after a hearing required by subparagraph 6 subdivision (i), the board determines the assessment limitation 7 was allowed in error and the assessment limitation should be 8 disallowed, the treasurer shall collect from the property owner 9 the amount of tax that would have been assessed on the property 10 if there had been no allowance of the assessment limitation 11 under this subparagraph (3). The amount due shall become a 12 lien on the property that received the assessment limitation 13 and shall be collected by the county treasurer in the same 14 manner as other taxes. 15 (h) The assessor shall retain a permanent file of properties 16 that have approved assessment limitations pursuant to this 17 subparagraph. If the assessor receives notice of a title 18 transfer pursuant to subparagraph division (i), then the 19 assessor shall file a notice of transfer of property. 20 (i) The county recorder shall give notice to the assessor 21 of each transfer of title filed in the recorders office for a 22 property which has an allowed assessment limitation pursuant to 23 this subparagraph. The notice from the county recorder shall 24 describe the property transferred, the name of the person who 25 transferred title, and the name of the person to whom title is 26 transferred. 27 (j) The department of revenue shall adopt rules to implement 28 and administer this subparagraph. 29 Sec. 3. Section 441.21, subsection 5, paragraph e, 30 subparagraphs (1) and (3), Code 2024, are amended to read as 31 follows: 32 (1) For the fiscal year beginning July 1, 2023, there 33 is appropriated from the general fund of the state to the 34 department of revenue the sum of one hundred twenty-two million 35 -3- LSB 6319YC (1) 90 dg/jh 3/ 6
H.F. _____ three hundred fifty thousand dollars to be used for payments 1 under this paragraph calculated as a result of the assessment 2 limitations imposed under paragraph b , subparagraph (2), 3 subparagraph division (a), and paragraph c , subparagraph (2), 4 subparagraph division (a). For each fiscal year beginning on 5 or after July 1, 2024, there is appropriated from the general 6 fund of the state to the department of revenue the sum of one 7 hundred twenty-five million dollars to be used for payments 8 under this paragraph calculated as a result of the assessment 9 limitations imposed under paragraph b , subparagraph (2), 10 subparagraph division (a), and paragraph c , subparagraph (2), 11 subparagraph division (a) , and paragraph b , subparagraph (3), 12 for the portion of the actual value of the property unit equal 13 to or less than one hundred fifty thousand dollars . 14 (3) On or before July 1 of each fiscal year, the assessor 15 shall report to the county auditor that portion of the total 16 actual value of all commercial property and industrial property 17 in the county that is subject to the assessment limitations 18 imposed under paragraph b , subparagraph (2), subparagraph 19 division (a), and paragraph c , subparagraph (2), subparagraph 20 division (a), and paragraph b , subparagraph (3), for the 21 portion of the actual value of the property unit equal to 22 or less than one hundred fifty thousand dollars, for the 23 assessment year used to calculate the taxes due and payable in 24 that fiscal year. 25 Sec. 4. Section 441.21, subsection 5, paragraph e, 26 subparagraph (4), subparagraph division (a), Code 2024, is 27 amended to read as follows: 28 (a) The product of the portion of the total actual value 29 of all commercial property, industrial property, and property 30 valued by the department under chapter 434 in the county 31 that is subject to the assessment limitations imposed under 32 paragraph b , subparagraph (2), subparagraph division (a) ; , 33 and paragraph c , subparagraph (2), subparagraph division (a) ; 34 and paragraph b , subparagraph (3), for the portion of the 35 -4- LSB 6319YC (1) 90 dg/jh 4/ 6
H.F. _____ actual value of the property unit equal to or less than one 1 hundred fifty thousand dollars , for the applicable assessment 2 year used to calculate taxes which are due and payable in the 3 applicable fiscal year multiplied by the difference, stated 4 as a percentage, between ninety percent and the assessment 5 limitation percentage applicable to residential property under 6 subsection 4 for the applicable assessment year. 7 Sec. 5. EFFECTIVE DATE. This Act, being deemed of immediate 8 importance, takes effect upon enactment. 9 Sec. 6. APPLICABILITY. The following apply to fiscal years 10 beginning on or after July 1, 2025, for payments pursuant to 11 section 441.21, subsection 5, paragraph e: 12 1. The section of this Act amending section 441.21, 13 subsection 5, paragraph e, subparagraphs (1) and (3). 14 2. The section of this Act amending section 441.21, 15 subsection 5, paragraph e, subparagraph (4), subparagraph 16 division (a). 17 Sec. 7. RETROACTIVE APPLICABILITY. The following apply 18 retroactively to assessment years beginning on or after January 19 1, 2024: 20 1. The section of this Act amending section 441.21, 21 subsection 5, paragraph b, subparagraph (2), unnumbered 22 paragraph 1. 23 2. The section of this Act enacting section 441.21, 24 subsection 5, paragraph b, subparagraph (3). 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanations substance by the members of the general assembly. 28 This bill relates to assessment limitations for property 29 taxation purposes for commercial child care facilities, 30 and includes effective date, applicability, and retroactive 31 applicability provisions. 32 Code section 441.21(5) determines the amount of actual value 33 of commercial property that is subject to property tax. The 34 amount is the sum of the residential assessment limitation 35 -5- LSB 6319YC (1) 90 dg/jh 5/ 6
H.F. _____ to the portion of the propertys value that does not exceed 1 $150,000 plus 90 percent of the propertys value in excess of 2 $150,000. 3 The bill excludes property that is primarily used as a child 4 care facility from the calculation of the actual value of the 5 property. The bill instead specifies that for assessment years 6 beginning on or after January 1, 2024, the amount of actual 7 value used as child care facilities that is subject to tax is 8 equal to the product of the assessment limitation percentage 9 applicable to residential property multiplied by the actual 10 value of the property provided that the property owner has 11 applied for the assessment limitation and the county board of 12 supervisors has allowed such an assessment limitation. 13 The bill establishes application procedures, approval 14 procedures, and recordkeeping procedures for the assessment 15 limitation. 16 The bill makes conforming changes to reflect the child care 17 facility assessment limitation. 18 The bill takes effect upon enactment. 19 The bill applies retroactively to assessment years beginning 20 on or after January 1, 2024, and applies to payments to local 21 governments for fiscal years beginning on or after July 1, 22 2025. 23 -6- LSB 6319YC (1) 90 dg/jh 6/ 6