Bill Text: IA HF418 | 2021-2022 | 89th General Assembly | Enrolled

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Bill Title: A bill for an act relating to property tax levies, exemptions, classifications, assessment limitations, and administration, and including effective date and applicability provisions. (Formerly HSB 93.) Effective date: 01/01/2022. Applicability date: 01/01/2022.

Spectrum: Committee Bill

Status: (Passed) 2021-03-08 - Signed by Governor. H.J. 646. [HF418 Detail]

Download: Iowa-2021-HF418-Enrolled.html

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House File 418 - Enrolled
House File 418
AN ACT
RELATING TO PROPERTY TAX LEVIES, EXEMPTIONS, CLASSIFICATIONS,
ASSESSMENT LIMITATIONS, AND ADMINISTRATION, AND INCLUDING
EFFECTIVE DATE AND APPLICABILITY PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 386.8, Code 2021, is amended to read as
follows:
386.8 Operation tax.
A city may establish a self-supported improvement district
operation fund, and may certify taxes not to exceed the
rate limitation as established in the ordinance creating the
district, or any amendment thereto, each year to be levied
for the fund against all of the property in the district,
for the purpose of paying the administrative expenses of
the district, which may include but are not limited to
administrative personnel salaries, a separate administrative
office, planning costs including consultation fees, engineering
fees, architectural fees, and legal fees and all other expenses
reasonably associated with the administration of the district
and the fulfilling of the purposes of the district. The taxes
levied for this fund may also be used for the purpose of paying
maintenance expenses of improvements or self-liquidating
improvements for a specified length of time with one or more
options to renew if such is clearly stated in the petition
which requests the council to authorize construction of the
improvement or self-liquidating improvement, whether or not

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such petition is combined with the petition requesting creation
of a district. Parcels of property which are assessed as
residential property for property tax purposes are exempt
from the tax levied under this section except residential
properties within a duly designated historic district or
property classified as residential property under section
441.21, subsection 14, paragraph “a” , subparagraph (6) . A tax
levied under this section is not subject to the levy limitation
in section 384.1 .
Sec. 2. Section 386.9, Code 2021, is amended to read as
follows:
386.9 Capital improvement tax.
A city may establish a capital improvement fund for a
district and may certify taxes, not to exceed the rate
established by the ordinance creating the district, or any
subsequent amendment thereto, each year to be levied for
the fund against all of the property in the district, for
the purpose of accumulating moneys for the financing or
payment of a part or all of the costs of any improvement or
self-liquidating improvement. However, parcels of property
which are assessed as residential property for property tax
purposes are exempt from the tax levied under this section
except residential properties within a duly designated historic
district or property classified as residential property under
section 441.21, subsection 14, paragraph “a” , subparagraph (6) .
A tax levied under this section is not subject to the levy
limitations in section 384.1 or 384.7 .
Sec. 3. Section 386.10, Code 2021, is amended to read as
follows:
386.10 Debt service tax.
A city shall establish a self-supported municipal
improvement district debt service fund whenever any
self-supported municipal improvement district bonds are issued
and outstanding, other than revenue bonds, and shall certify
taxes to be levied against all of the property in the district
for the debt service fund in the amount necessary to pay
interest as it becomes due and the amount necessary to pay,
or to create a sinking fund to pay, the principal at maturity
of all self-supported municipal improvement district bonds as

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authorized in section 386.11 , issued by the city. However,
parcels of property which are assessed as residential property
for property tax purposes at the time of the issuance of the
bonds are exempt from the tax levied under this section until
the parcels are no longer assessed as residential property
or until the residential properties are designated as a part
of a historic district or property classified as residential
property under section 441.21, subsection 14, paragraph “a” ,
subparagraph (6) .
Sec. 4. Section 404.2, subsection 2, paragraph f, Code 2021,
is amended to read as follows:
f. A statement specifying whether the revitalization is
applicable to none, some, or all of the property assessed as
residential, multiresidential, agricultural, commercial, or
industrial property within the designated area or a combination
thereof and whether the revitalization is for rehabilitation
and additions to existing buildings or new construction or
both. If revitalization is made applicable only to some
property within an assessment classification, the definition of
that subset of eligible property must be by uniform criteria
which further some planning objective identified in the plan.
The city shall state how long it is estimated that the area
shall remain a designated revitalization area which time
shall be longer than one year from the date of designation
and shall state any plan by the city to issue revenue bonds
for revitalization projects within the area. For a county,
a revitalization area shall include only property which
will be used as industrial property, commercial property,
multiresidential property, or residential property. However, a
county shall not provide a tax exemption under this chapter to
commercial property , multiresidential property, or residential
property which is located within the limits of a city.
Sec. 5. Section 404.3, subsection 4, paragraph a, Code 2021,
is amended by striking the paragraph and inserting in lieu
thereof the following:
a. All qualified real estate assessed as residential
property is eligible to receive a one hundred percent exemption
from taxation on the actual value added by the improvements.
Sec. 6. Section 404.3A, Code 2021, is amended to read as

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follows:
404.3A Residential development area exemption.
Notwithstanding the schedules provided for in section 404.3 ,
all qualified real estate assessed as residential property ,
excluding property classified as residential property under
section 441.21, subsection 14, paragraph “a” , subparagraph (6),
in an area designated under section 404.1, subsection 5 , is
eligible to receive an exemption from taxation on the first
seventy-five thousand dollars of actual value added by the
improvements. The exemption is for a period of five years.
Sec. 7. Section 441.21, subsection 2, Code 2021, 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 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 Internal Revenue Code,
as amended, and which section limits the amount that the

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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
multiresidential residential property unless the property
otherwise fails to meet the requirements of subsection 13 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,
forms, and guidelines shall not be inconsistent with or change
the foregoing means of determining the actual, market, taxable
and assessed values.
Sec. 8. Section 441.21, subsection 8, paragraph b, Code
2021, is amended to read as follows:

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b. Notwithstanding paragraph “a” , any construction or
installation of a solar energy system on property classified
as agricultural, residential, commercial, multiresidential, or
industrial property shall not increase the actual, assessed,
and taxable values of the property for five full assessment
years.
Sec. 9. Section 441.21, subsections 9 and 10, Code 2021, are
amended to read as follows:
9. Not later than November 1, 1979, and November 1 of each
subsequent year, the director shall certify to the county
auditor of each county the percentages of actual value at
which residential property, agricultural property, commercial
property, industrial property, multiresidential property,
property valued by the department of revenue pursuant to
chapter 434 , and property valued by the department of revenue
pursuant to chapters 428 , 433 , 437 , and 438 in each assessing
jurisdiction in the county shall be assessed for taxation. The
county auditor shall proceed to determine the assessed values
of agricultural property, residential property, commercial
property, industrial property, multiresidential property,
property valued by the department of revenue pursuant to
chapter 434 , and property valued by the department of revenue
pursuant to chapters 428 , 433 , 437 , and 438 by applying such
percentages to the current actual value of such property,
as reported to the county auditor by the assessor, and the
assessed values so determined shall be the taxable values of
such properties upon which the levy shall be made.
10. The percentage of actual value computed by the
department of revenue for agricultural property, residential
property, commercial property, industrial property,
multiresidential property, property valued by the department
of revenue pursuant to chapter 434 , and property valued by the
department of revenue pursuant to chapters 428 , 433 , 437 , and
438 and used to determine assessed values of those classes
of property does not constitute a rule as defined in section
17A.2, subsection 11 .
Sec. 10. Section 441.21, subsection 13, paragraphs a, b, and
c, Code 2021, are amended to read as follows:
a. (1) For the assessment year beginning January 1, 2015,

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mobile home parks, manufactured home communities, land-leased
communities, assisted living facilities, property primarily
used or intended for human habitation containing three or more
separate dwelling units, and that portion of a building that is
used or intended for human habitation and a proportionate share
of the land upon which the building is situated, regardless of
the number of dwelling units located in the building, if the
use for human habitation is not the primary use of the building
and such building is not otherwise classified as residential
property, shall be valued as a separate class of property
known as multiresidential property and, excluding properties
referred to in section 427A.1, subsection 9 , shall be assessed
at a percentage of its actual value, as determined in this
subsection .
(2) Beginning with valuations established on or after
January 1, 2016, but before January 1, 2022, all of the
following shall be valued as a separate class of property
known as multiresidential property and, excluding properties
referred to in section 427A.1, subsection 9 , shall be assessed
at a percentage of its actual value, as determined in this
subsection :
(a) (1) Mobile home parks.
(b) (2) Manufactured home communities.
(c) (3) Land-leased communities.
(d) (4) Assisted living facilities.
(e) (5) A parcel primarily used or intended for human
habitation containing three or more separate dwelling units.
If a portion of such a parcel is used or intended for a purpose
that, if the primary use, would be classified as commercial
property or industrial property, each such portion, including
a proportionate share of the land included in the parcel, if
applicable, shall be assigned the appropriate classification
pursuant to paragraph “c” .
(f) (6) For a parcel that is primarily used or intended for
use as commercial property or industrial property, that portion
of the parcel that is used or intended for human habitation,
regardless of the number of dwelling units contained on the
parcel, including a proportionate share of the land included
in the parcel, if applicable. The portion of such a parcel

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used or intended for use as commercial property or industrial
property, including a proportionate share of the land included
in the parcel, if applicable, shall be assigned the appropriate
classification pursuant to paragraph “c” .
b. For valuations established for the assessment year
beginning January 1, 2015, the percentage of actual value as
equalized by the department of revenue as provided in section
441.49 at which multiresidential property shall be assessed
shall be the greater of eighty-six and twenty-five hundredths
percent or the percentage of actual value determined by the
department of revenue at which property assessed as residential
property is assessed for the same assessment year under
subsection 4 . For valuations established for the assessment
year beginning January 1, 2016, the percentage of actual
value as equalized by the department of revenue as provided
in section 441.49 at which multiresidential property shall be
assessed shall be the greater of eighty-two and five-tenths
percent or the percentage of actual value determined by the
department of revenue at which property assessed as residential
property is assessed for the same assessment year under
subsection 4 . For valuations established for the assessment
year beginning January 1, 2017, the percentage of actual
value as equalized by the department of revenue as provided
in section 441.49 at which multiresidential property shall be
assessed shall be the greater of seventy-eight and seventy-five
hundredths percent or the percentage of actual value determined
by the department of revenue at which property assessed as
residential property is assessed for the same assessment
year under subsection 4 . For valuations established for the
assessment year beginning January 1, 2018, the percentage of
actual value as equalized by the department of revenue as
provided in section 441.49 at which multiresidential property
shall be assessed shall be the greater of seventy-five percent
or the percentage of actual value determined by the department
of revenue at which property assessed as residential property
is assessed for the same assessment year under subsection 4 .
For valuations established for the assessment year beginning
January 1, 2019, the percentage of actual value as equalized
by the department of revenue as provided in section 441.49 at

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which multiresidential property shall be assessed shall be the
greater of seventy-one and twenty-five hundredths percent or
the percentage of actual value determined by the department
of revenue at which property assessed as residential property
is assessed for the same assessment year under subsection 4 .
For valuations established for the assessment year beginning
January 1, 2020, the percentage of actual value as equalized
by the department of revenue as provided in section 441.49
at which multiresidential property shall be assessed shall
be the greater of sixty-seven and five-tenths percent or the
percentage of actual value determined by the department of
revenue at which property assessed as residential property
is assessed for the same assessment year under subsection 4 .
For valuations established for the assessment year beginning
January 1, 2021, the percentage of actual value as equalized
by the department of revenue as provided in section 441.49 at
which multiresidential property shall be assessed shall be the
greater of sixty-three and seventy-five hundredths percent or
the percentage of actual value determined by the department
of revenue at which property assessed as residential property
is assessed for the same assessment year under subsection 4 .
For valuations established for the assessment year beginning
January 1, 2022, and each assessment year thereafter, the
percentage of actual value as equalized by the department of
revenue as provided in section 441.49 at which multiresidential
property shall be assessed shall be equal to the percentage of
actual value determined by the department of revenue at which
property assessed as residential property is assessed under
subsection 4 for the same assessment year.
c. (1) For the assessment year beginning January 1,
2015, for parcels that, in part, satisfy the requirements for
classification as multiresidential property, the assessor
shall assign to that portion of the parcel the classification
of multiresidential property and to such other portions of
the parcel the property classification for which such other
portions qualify.
(2) Beginning with valuations established on or after
January 1, 2016, but before January 1, 2022, for parcels for
which a portion of the parcel satisfies the requirements

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for classification as multiresidential property pursuant
to paragraph “a” , subparagraph (2), subparagraph division
(e) or (f) (5) or (6) , the assessor shall assign to that
portion of the parcel the classification of multiresidential
property and to such other portions of the parcel the property
classification for which such other portions qualify.
Sec. 11. Section 441.21, Code 2021, is amended by adding the
following new subsection:
NEW SUBSECTION . 14. a. Beginning with valuations
established on or after January 1, 2022, all of the following
shall be classified and valued as residential property:
(1) Property primarily used or intended for human
habitation containing two or fewer dwelling units.
(2) Mobile home parks.
(3) Manufactured home communities.
(4) Land-leased communities.
(5) Assisted living facilities.
(6) A parcel primarily used or intended for human habitation
containing three or more separate dwelling units. If a
portion of such a parcel is used or intended for a purpose
that, if the primary use, would be classified as commercial
property or industrial property, each such portion, including
a proportionate share of the land included in the parcel, if
applicable, shall be assigned the appropriate classification
pursuant to paragraph “b” .
(7) For a parcel that is primarily used or intended for use
as commercial property or industrial property, that portion
of the parcel that is used or intended for human habitation,
regardless of the number of dwelling units contained on the
parcel, including a proportionate share of the land included
in the parcel, if applicable. The portion of such a parcel
used or intended for use as commercial property or industrial
property, including a proportionate share of the land included
in the parcel, if applicable, shall be assigned the appropriate
classification pursuant to paragraph “b” .
b. Beginning with valuations established on or after
January 1, 2022, for parcels for which a portion of the parcel
satisfies the requirements for classification as residential
property pursuant to paragraph “a” , subparagraph (6) or (7),

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the assessor shall assign to that portion of the parcel the
classification of residential property and to such other
portions of the parcel the property classification for which
such other portions qualify.
c. Property that is rented or leased to low-income
individuals and families as authorized by section 42 of the
Internal Revenue Code, and that has not been withdrawn from
section 42 assessment procedures under subsection 2 of this
section, or a hotel, motel, inn, or other building where rooms
or dwelling units are usually rented for less than one month
shall not be classified as residential property under this
subsection.
d. As used in this subsection:
(1) “Assisted living facility” means property for providing
assisted living as defined in section 231C.2. “Assisted living
facility” also includes a health care facility, as defined in
section 135C.1, an elder group home, as defined in section
231B.1, a child foster care facility under chapter 237, or
property used for a hospice program as defined in section
135J.1.
(2) “Dwelling unit” means an apartment, group of rooms,
or single room which is occupied as separate living quarters
or, if vacant, is intended for occupancy as separate living
quarters, in which a tenant can live and sleep separately from
any other persons in the building.
(3) “Land-leased community” means the same as defined in
sections 335.30A and 414.28A.
(4) “Manufactured home community” means the same as a
land-leased community.
(5) “Mobile home park” means the same as defined in section
435.1.
Sec. 12. Section 558.46, subsection 5, Code 2021, is amended
by striking the subsection.
Sec. 13. SAVINGS PROVISION. This Act, pursuant to section
4.13, does not affect the operation of, or prohibit the
application of, prior provisions of the Code sections amended
by this Act, or rules adopted under chapter 17A to administer
such prior provisions, for assessment years beginning before
January 1, 2022, and for duties, powers, protests, appeals,

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proceedings, actions, or remedies attributable to an assessment
year beginning before January 1, 2022.
Sec. 14. EFFECTIVE DATE. This Act takes effect January 1,
2022.
Sec. 15. APPLICABILITY. This Act applies to assessment
years beginning on or after January 1, 2022.
______________________________ ______________________________
PAT GRASSLEY JAKE CHAPMAN
Speaker of the House President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 418, Eighty-ninth General Assembly.
______________________________
MEGHAN NELSON
Chief Clerk of the House
Approved _______________, 2021 ______________________________
KIM REYNOLDS
Governor