Relating to the assessment and taxation of certain sanitary sewage and storm water drainage property and including effective date and retroactive applicability provisions

Sponsored by the House Ways and Means Committee

Topics:Taxes

Same legislation: HSB 64, SF 132

Write your legislators about itWhat changed before it passed

Official bill page Lobbyist declarations One-pager to print

Where it is now

Done: IntroducedJanuary 20, 2023
Done: SubcommitteeJanuary 20, 2023
Done: House committeeFebruary 1, 2023
Done: Passes the HouseFebruary 15, 202399–0
Done: Senate committeeApril 18, 2024
Done: Passes the SenateApril 19, 202446–0
Done: To the GovernorApril 29, 2024
Done: Signed into lawMay 1, 2024

Signed into law What’s a funnel?

What’s in it

AI summary Public utilities that provide sewage or storm water drainage services through pipes would no longer have to pay property taxes on that equipment. These companies must update their rates by October 1, 2023, and may need to give a credit to the people paying for these services. This change applies to property used for these services starting from the 2023 assessment year.¹

Read the official explanation

1 to establish a property tax exemption for property owned or operated by a public utility that is directly and primarily used for furnishing sanitary sewage or storm water drainage disposal by piped collection system to the public for compensation.1.1 in all assessor jurisdictions in the state. The bill requires public utilities that own or operate the property exempted under the bill to file revised tariffs under Code chapter 476 on or before October 1, 2023, to reflect the exemption in the bill and, if applicable, provide a credit to ratepayers. 7.7 provides that for a property tax credit or exemption enacted on or after January 1, 1997, if a state appropriation made to fund the credit or exemption is not sufficient to fully fund the credit or exemption, the political subdivision shall be required to extend to the taxpayer only that portion of the credit or exemption estimated by the department of revenue to be funded by the state appropriation. The bill takes effect upon enactment and applies retroactively to assessment years beginning on or after January 1, 2023.

Changed since by amendment S-5198; see Amendments.

Full bill text · What changed before it passed²

Senate subcommittee

Named April 1, 2024. On April 2, 2024 it recommended amendment and passage. [].

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Fiscal note

Cost: up to $68,000 Compare with other bills

AI summary This bill creates a new property tax exemption for property owned or operated by a public utility that provides sanitary or storm water drainage. This exemption is estimated to reduce annual property taxes by $68,000 beginning in fiscal year 2026. This change will increase the state's General Fund appropriation for school aid by an estimated $11,000 and reduce local government property tax revenue by an estimated $57,000.³

Read the fiscal note

Description

House File 207 establishes a new property tax exemption for property owned or operated by a public utility as defined in Iowa Code section 476.1 where the property is used to provide sanitary or storm water drainage for compensation through a piped collection system. The Bill makes Iowa Code section 25B.7 (State funding of property tax credits and exemptions) inapplicable to the new property tax exemption.

The Bill takes effect upon enactment and applies retroactively to assessment year 2024 and after.

Background

The Department of Revenue reports that a private, rate-regulated water utility company recently purchased an existing municipal wastewater system. As a municipal system, the property involved was exempt from property tax. As a system owned by a private company, the property is subject to property tax. With acquisition occurring after January 1, 2022, but before January 1, 2023, the system would first become taxable for assessment year 2023 under existing law.

Assumptions

The wastewater system situation described above is assumed to be the only property fitting the exemption requirements specified in the Bill at this time.
The assessed value of the wastewater property is not known. The purchase price of the property was $2.0 million. This purchase price is used as the assessed value for property tax fiscal impact calculations.
Property taxes owed for assessment year 2024 are due in the fall of 2025 and the spring of 2026 (FY 2026).
The consolidated property tax rate for the particular property is assumed to equal $33.85 per $1,000 of taxed value. The State basic school levy equals $5.40 of the $33.85 consolidated rate.

Fiscal Impact

Creating a new property tax exemption for a privately-owned wastewater system will reduce the annual property taxes owed by an estimated $68,000, beginning with FY 2026. The reduction in taxes owed will increase the State standing General Fund appropriation for school aid by an estimated $11,000 and reduce local government property tax revenue by an estimated $57,000. The property tax exemption will also apply to any future purchases of existing wastewater facilities by privately owned public wastewater utility companies.