Senate approves property tax exemption for fixing up public nuisance properties

BlightBy Bob Eschliman


The Iowa Senate voted unanimously Thursday to adopt a bill that would provide a limited property tax exemption for “eyesore properties” that are repaired by their owners.

Senate File 480 would authorize a city or county to provide a property tax exemption for up to the full value added by improvements to a “public nuisance properties.” The exemption could be extended for up to 10 years under the bill.

The owner of the property must apply for an exemption by Feb. 1 of the assessment year for which the exemption is first claimed, but not later than the year in which all improvements included in the application are first assessed for taxation.

SF 480 allows for prior approval for eligibility, and that prior approval does not entitle the owner to exemption until:

  • the improvements have been completed,
  • a physical review of the property has been conducted by the assessor, and
  • the assessor has determined that the actual value of the property has increased as a result of the improvements.

The proposed legislation also requires the application for the exemption must list all other federal, state, or local government tax credits, exemptions, grants, forgivable loans, or other forms of financial assistance received by or applied for by the owner for completion of the improvements. The bill requires the assessor to review each first-year application by making a physical review of the property, to determine if the improvements made increased the actual value of the approved property.

Under SF 480, if an application for exemption is denied as a result of failure to increase the value of the property, the owner may file a first application in a subsequent year when additional improvements are made. After the tax exemption is granted, the local assessor shall continue to grant the tax exemption, with periodic physical review by the assessor, for the time period authorized.

The proposed legislation includes a provision that exempts it from Iowa Code 25B.7. That section of state law states that for a property tax credit or exemption enacted on or after Jan. 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 is 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 Senate also unanimously adopted Senate File 479, which amends Iowa Code as it relates to the apportionment of gross receipts of a broadcaster for purposes of Iowa income tax calculation.