Relating to certain bonds issued for urban renewal purposes

9 states that bonds issued under the authority of that section for purposes of urban renewal shall not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, presumably including Iowa Constitution, Article XI, section 3, which prohibits counties or other political or municipal corporations from becoming indebted in any manner to an aggregate amount exceeding percent of the value of taxable property within the corporation. The Iowa supreme court in Richards v. 9, although payable with incremental property tax revenues deposited in the special fund, are indebtedness subject to the constitutional limitation because the bonds are payable from the general revenues of the city and not from a special assessment or from the operating revenues of a municipal enterprise that generates income. In Fults v.2d 548 (Iowa 2003), the Iowa supreme court ruled that urban renewal indebtedness subject to an annual appropriation provision is a contingent obligation that does not constitute debt for purposes of the constitutional limitation on indebtedness of a municipality. An annual appropriation provision (also known as a “nonappropriation clause”) means that the indebtedness incurred by a municipality is subject to repayment only if the governing body of the municipality annually appropriates the funds necessary for repayment in the coming fiscal year and there is no legally enforceable obligation to continue repayments in the future. The Iowa supreme court stated that debt subject to the constitutional limitation is that which a municipality obligates itself to pay without further action on the part of the city. The Iowa supreme court stated that the repayment of debt that is not certain to take place is not subject to the constitutional debt limitation because the city cannot be held legally responsible for the debt for a year other than one in which funds for repayment have been appropriated. Therefore, the city’s obligation is restricted to the fiscal year within which the city council appropriates money for repayment. It is that annual amount appropriated, therefore, that is included in the aggregate amount of debt when computing whether a municipality exceeds the constitutional limitation.9 stating that bonds issued under the authority of that section for purposes of urban renewal shall not constitute indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.