Iowa General Assembly Daily Bills, Amendments & Study Bills March 17, 2009



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SSB 1308

Senate Study Bill 1308

SENATE FILE

BY (PROPOSED COMMITTEE ON

WAYS AND MEANS BILL BY

CHAIRPERSON BOLKCOM)

Passed Senate, Date Passed House, Date

Vote: Ayes Nays Vote: Ayes Nays

Approved


A BILL FOR
1 An Act relating to city and county revenues by amending

2 provisions related to city franchise fees and authorizing

3 cities and counties to impose certain local taxes and fees and

4 including effective date provisions.

5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

6 TLSB 2680XC 83

7 md/sc/5

Senate Study Bill 1308 continued


PAG LIN

1 1 DIVISION I

1 2 CITY FRANCHISE FEES

1 3 Section 1. Section 364.2, subsection 4, paragraph f, Code

1 4 2009, is amended to read as follows:

1 5 f. A franchise fee assessed by a city may be based upon a



1 6 percentage of gross revenues generated from sales of the

1 7 franchisee within the city not to exceed five percent, without

1 8 regard to the city's cost of inspecting, supervising, and

1 9 otherwise regulating the franchise. Franchise fees collected

1 10 may be credited to the city general fund and used for city

1 11 general fund purposes. However, at least twenty percent of


1 12 the fees collected shall be used for property tax relief. If

1 13 a city franchise fee is assessed to customers of a franchise,

1 14 the fee shall not be assessed to the city as a customer.

1 15 Before a city adopts or amends a franchise fee rate ordinance



1 16 or franchise ordinance to increase the percentage rate at

1 17 which franchise fees are assessed, a revenue purpose statement

1 18 shall be prepared specifying the purpose or purposes for which

1 19 the revenue collected from the increased rate will be

1 20 expended. If additional property tax relief is listed as a

1 21 purpose, the revenue purpose statement shall also include

1 22 information regarding the amount of the additional property

1 23 tax relief to be provided with revenue collected from the

1 24 increased rate. The revenue purpose statement shall be

1 25 published as provided in section 362.3.

1 26 Sec. 2. CERTAIN FRANCHISE FEES DECLARED LEGAL. To the

1 27 extent that any amount of franchise fees assessed by and paid

1 28 to a city prior to the effective date of this division of this

1 29 Act, pursuant to a franchise agreement between a city and any

1 30 person to erect, maintain, and operate plants and systems for

1 31 electric light and power, heating, telegraph, cable

1 32 television, district telegraph and alarm, motor bus, trolley

1 33 bus, street railway or other public transit, waterworks, or

1 34 gasworks, exceeds the city's reasonable costs of inspecting,

1 35 supervising, and otherwise regulating the franchise, such
Senate Study Bill 1308 continued
2 1 amount is deemed and declared to be authorized and legally

2 2 assessed by and paid to the city.

2 3 Sec. 3. EFFECTIVE DATE. This division of this Act, being

2 4 deemed of immediate importance, takes effect upon enactment.

2 5 DIVISION II

2 6 LOCAL GOVERNMENT

2 7 ALTERNATIVE REVENUE SOURCES

2 8 SUBCHAPTER I

2 9 LOCAL GOVERNMENT AUTHORIZATION

2 10 Sec. 4. NEW SECTION. 420A.101 LOCAL GOVERNMENT

2 11 ALTERNATIVE REVENUE SOURCES.

2 12 Unless otherwise provided in this chapter, a city or county

2 13 that meets the requirements established in this subchapter is

2 14 authorized to impose the taxes and fees specified in this

2 15 chapter.

2 16 Sec. 5. NEW SECTION. 420A.102 AUTHORIZATION.

2 17 The following governmental entities are authorized to

2 18 impose the taxes and fees specified in this chapter:

2 19 1. A county. A county may only impose taxes and fees

2 20 under this chapter in the unincorporated area of the county.

2 21 2. A city. A city may only impose taxes and fees under

2 22 this chapter within the corporate boundaries of the city.

2 23 Sec. 6. NEW SECTION. 420A.103 ALTERNATIVE REVENUE ==

2 24 IMPOSITION == PUBLIC HEARING == REVENUE PURPOSE STATEMENT.

2 25 1. Each tax or fee imposed by a city or county under this

2 26 chapter shall be adopted by ordinance of the governing body of

2 27 the city or county. Each tax or fee imposed by a city under

2 28 this chapter shall be adopted in a separate ordinance. Each

2 29 tax or fee imposed by a county under this chapter shall be

2 30 adopted in a separate ordinance.

2 31 2. Except as otherwise provided in this chapter, an

2 32 ordinance to impose a tax or fee under this chapter may be

2 33 repealed by motion of the local governing body.

2 34 3. a. Before adoption or amendment of an ordinance that

2 35 imposes a tax or fee under this chapter, the governing body of
Senate Study Bill 1308 continued
3 1 the city or county shall hold a public hearing on the proposed

3 2 ordinance. Notice of the public hearing shall be published as

3 3 provided in section 331.305 or 362.3, as appropriate.

3 4 b. Not less than four nor more than twenty days before the

3 5 public hearing required in paragraph "a", the governing body

3 6 of the city or county shall prepare and publish a revenue

3 7 purpose statement specifying the purpose or purposes for which

3 8 the revenue collected from the tax or fee will be expended.

3 9 The revenue purpose statement shall include information

3 10 regarding the amount of the property tax relief to be provided

3 11 with revenue collected from the tax or fee. Publication of

3 12 the revenue purpose statement shall be in a manner consistent

3 13 with section 331.305 or 362.3, as appropriate.

3 14 Sec. 7. NEW SECTION. 420A.104 ALTERNATIVE REVENUE FUND

3 15 == USE OF REVENUES.

3 16 1. Each city or county that imposes a tax or fee under

3 17 this chapter shall establish an alternative revenue fund. All

3 18 revenues collected as a result of the imposition of taxes or

3 19 fees specified in this chapter shall be deposited into the

3 20 alternative revenue fund of the city or county, as

3 21 appropriate, and shall be expended pursuant to this section.

3 22 Interest earned on revenues deposited in the fund shall remain

3 23 in the fund and shall be used for the purposes specified in

3 24 this section.

3 25 2. All revenues deposited in the alternative revenue fund

3 26 of a city or county shall be expended as follows:

3 27 a. Not less than seventy=five percent shall be used to

3 28 provide property tax relief for all taxable property within

3 29 the corporate boundaries of the city or in the unincorporated

3 30 area of the county, as applicable, pursuant to subsection 3.

3 31 b. Not more than twenty=five percent shall be used for

3 32 core government purposes.

3 33 3. At least seventy=five percent of the revenues in the

3 34 city alternative revenue fund or the county alternative

3 35 revenue fund as of June 1 of each year shall be used to
Senate Study Bill 1308 continued
4 1 provide property tax credits for taxes due and payable in the

4 2 following fiscal year.

4 3 a. The county treasurer shall determine the tax credit for

4 4 taxable property within the corporate boundaries of the city

4 5 as follows:

4 6 (1) Determine the amount in the city's alternative revenue

4 7 fund as of June 1 that is to be used to provide property tax

4 8 credits.

4 9 (2) Divide the amount determined under subparagraph (1) by

4 10 the total of the taxable value of all taxable property in the

4 11 city.

4 12 (3) Calculate the amount of tax credit for each taxable

4 13 parcel of property by multiplying the amount calculated under

4 14 subparagraph (2) by the taxable value of that parcel.

4 15 b. The county treasurer shall determine the tax credit for

4 16 taxable property in the unincorporated area of the county as

4 17 follows:

4 18 (1) Determine the amount in the county's alternative

4 19 revenue fund as of June 1 that is to be used to provide

4 20 property tax credits.

4 21 (2) Divide the amount determined under subparagraph (1) by

4 22 the total of the taxable value of all taxable property in the

4 23 unincorporated area of the county.

4 24 (3) Calculate the amount of tax credit for each taxable

4 25 parcel of property by multiplying the amount calculated under

4 26 subparagraph (2) by the taxable value of that parcel.

4 27 c. The property tax credit shall be stated as a separate

4 28 and distinct credit on each property tax statement under

4 29 section 445.5.

4 30 4. For the purposes of this section "core government

4 31 purpose" means any of the following:

4 32 a. The repair, remediation, restoration, cleanup,

4 33 replacement, and improvement of existing publicly owned

4 34 property, buildings, equipment, and facilities that have been

4 35 damaged by a disaster as defined in section 29C.2.
Senate Study Bill 1308 continued
5 1 b. Projects designed to prevent or mitigate future

5 2 disasters as defined in section 29C.2.

5 3 c. Energy conservation measures as defined in section

5 4 7D.34 for existing publicly owned property, buildings, and

5 5 facilities.

5 6 d. The equipping of fire, police, emergency services,

5 7 sanitation, street, and civil defense departments.

5 8 e. The establishment, construction, reconstruction,

5 9 repair, equipping, remodeling, and extension of public works,

5 10 public utilities, and public transportation systems.

5 11 f. The construction, reconstruction, or repair of streets,

5 12 highways, bridges, sidewalks, pedestrian underpasses and

5 13 overpasses, street lighting fixtures, and public grounds, and

5 14 the acquisition of real estate needed for such purposes.

5 15 g. Projects or activities that involve the sharing of

5 16 local government services and that encourage efficient use of

5 17 public resources including but not limited to projects or

5 18 activities conducted pursuant to chapter 28E.

5 19 SUBCHAPTER II

5 20 CITY FRANCHISE FEES

5 21 Sec. 8. NEW SECTION. 420A.201 CITY FRANCHISE FEES.

5 22 1. A city may assess by ordinance a franchise fee based

5 23 upon a percentage of gross revenues generated from sales of

5 24 the franchisee within the city not to exceed three percent.

5 25 The franchise fees assessed under this subchapter shall be in

5 26 addition to any franchise fees assessed pursuant to section

5 27 364.2, subsection 4, paragraph "f".

5 28 2. Franchise fees collected by the city under this

5 29 subchapter shall be deposited in the city alternative revenue

5 30 fund and used as provided in section 420A.104.

5 31 3. a. If within thirty days after adoption of the

5 32 ordinance that imposes a franchise fee under this subchapter,

5 33 or if after the ordinance has been in effect for more than one

5 34 year, the city council receives a valid petition as provided

5 35 in section 362.4 requesting that the question of whether to
Senate Study Bill 1308 continued
6 1 repeal the ordinance be submitted to the registered voters of

6 2 the city, the city council shall direct the county

6 3 commissioner of elections to submit to the voters at an

6 4 election held on a date specified in section 39.2, subsection

6 5 4, paragraph "b", the question of whether the ordinance that

6 6 imposes the fee shall be repealed.

6 7 b. If a majority of the total votes cast for and against

6 8 the proposition favors repeal of the franchise fee, the

6 9 ordinance shall be repealed, and collection of the fee shall

6 10 terminate on either June 30 or December 31 following the

6 11 election, whichever is sooner.

6 12 SUBCHAPTER III

6 13 HOTEL AND MOTEL TAX

6 14 Sec. 9. NEW SECTION. 420A.301 DEFINITIONS.

6 15 1. For the purposes of this subchapter, unless the context

6 16 otherwise requires:

6 17 a. "Department" means the department of revenue.

6 18 b. "Lessor" means any person engaged in the business of

6 19 renting lodging to users.

6 20 c. "Lodging" means rooms, apartments, or sleeping quarters

6 21 in a hotel, motel, inn, public lodging house, rooming house,

6 22 or manufactured or mobile home which is tangible personal

6 23 property, or in a tourist court, or in any place where

6 24 sleeping accommodations are furnished to transient guests for

6 25 rent, whether with or without meals.

6 26 d. "Person" means the same as the term is defined in

6 27 section 423.1.

6 28 e. "Renting" or "rent" means a transfer of possession or

6 29 control of lodging for a fixed or indeterminate term for

6 30 consideration and includes any kind of direct or indirect

6 31 charge for such lodging or its use.

6 32 f. "Sales price" means the consideration for renting of

6 33 lodging and means the same as the term is defined in section

6 34 423.1.

6 35 g. "User" means a person to whom lodging is rented.
Senate Study Bill 1308 continued
7 1 2. All other words and phrases used in this subchapter and

7 2 defined in section 423.1 have the meaning given them by

7 3 section 423.1 for the purposes of this subchapter, unless the

7 4 context otherwise requires.

7 5 Sec. 10. NEW SECTION. 420A.302 LOCALLY IMPOSED HOTEL AND

7 6 MOTEL TAX.

7 7 1. A city or county may impose by ordinance a hotel and

7 8 motel tax, at a rate not to exceed six percent, which shall be

7 9 imposed in increments of one or more full percentage points

7 10 upon the sales price from the renting of lodging.

7 11 2. A local hotel and motel tax shall be imposed on January

7 12 1 or July 1, following the notification of the director of

7 13 revenue. A local hotel and motel tax shall terminate only on

7 14 June 30 or December 31. At least forty=five days prior to the

7 15 tax being effective or prior to a revision in the tax rate or

7 16 prior to the repeal of the tax, the city or county, as

7 17 applicable, shall provide notice by mail of such action to the

7 18 director of revenue.

7 19 3. Imposition of the local hotel and motel tax under this

7 20 subchapter is in addition to any state or local hotel and

7 21 motel tax imposed pursuant to chapter 423A.

7 22 Sec. 11. NEW SECTION. 420A.303 EXEMPTIONS.

7 23 There is exempted from the provisions of this subchapter

7 24 and from the computation of any amount of tax imposed by

7 25 section 420A.302 all of the following:

7 26 1. The sales price from the renting of lodging which is

7 27 rented by the same person for a period of more than thirty=one

7 28 consecutive days.

7 29 2. The sales price from the renting of sleeping rooms in

7 30 dormitories and in memorial unions at all universities and

7 31 colleges located in the state of Iowa.

7 32 3. The sales price of lodging furnished to the guests of a

7 33 religious institution if the property is exempt under section

7 34 427.1, subsection 8, and the purpose of renting is to provide

7 35 a place for a religious retreat or function and not a place
Senate Study Bill 1308 continued
8 1 for transient guests generally.

8 2 4. The sales price from transactions exempt from state

8 3 sales tax under section 423.3.

8 4 Sec. 12. NEW SECTION. 420A.304 ADMINISTRATION BY

8 5 DIRECTOR.

8 6 1. The director of revenue shall administer the local

8 7 hotel and motel tax as nearly as possible in conjunction with

8 8 the administration of the state sales tax law, except that

8 9 portion of the law which implements the streamlined sales and

8 10 use tax agreement. The director shall provide appropriate

8 11 forms, or provide space on the regular state tax forms, for

8 12 reporting local hotel and motel tax liability. All moneys

8 13 received or refunded one hundred eighty days after the date on

8 14 which a city or county terminates its local hotel and motel

8 15 tax shall be deposited in or withdrawn from the general fund

8 16 of the state.

8 17 2. The director, in consultation with local officials,

8 18 shall collect and account for a local hotel and motel tax and

8 19 shall credit all revenues to the local hotel and motel tax

8 20 fund created in section 420A.305. Local authorities shall not

8 21 require any tax permit not required by the director of

8 22 revenue.

8 23 3. Section 422.25, subsection 4, sections 422.30, 422.67,

8 24 and 422.68, section 422.69, subsection 1, sections 422.70,

8 25 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection

8 26 1, and sections 423.23, 423.24, 423.25, 423.31, 423.33,

8 27 423.35, 423.37 through 423.42, and 423.47, consistent with the

8 28 provisions of this subchapter, apply with respect to the taxes

8 29 authorized under this subchapter, in the same manner and with

8 30 the same effect as if the local hotel and motel taxes were

8 31 retail sales taxes within the meaning of those statutes.

8 32 Frequency of deposits and quarterly reports of the local tax

8 33 with the department of revenue are governed by the tax

8 34 provisions in section 423.31. Local tax collections shall not

8 35 be included in computation of the total tax to determined
Senate Study Bill 1308 continued
9 1 frequency of filing under section 423.31. The director may

9 2 require all persons who are engaged in the business of

9 3 deriving any sales price subject to tax under this subchapter

9 4 to register with the department. All taxes collected under

9 5 this subchapter by a retailer or any individual are deemed to

9 6 be held in trust for the state of Iowa and the local

9 7 jurisdiction imposing the tax.

9 8 4. The director shall apply a boundary change of a city

9 9 imposing or collecting the local tax to the imposition or

9 10 collection of that tax only on the first day of a calendar

9 11 quarter which occurs sixty days or more after the director has

9 12 given notice of the boundary change to sellers.

9 13 Sec. 13. NEW SECTION. 420A.305 PAYMENT TO CITY OR COUNTY

9 14 == USE OF RECEIPTS.

9 15 1. A local hotel and motel tax fund is created in the

9 16 office of the treasurer of state which shall consist of all

9 17 moneys credited to such fund under section 420A.304.

9 18 2. All moneys in the local hotel and motel tax fund shall

9 19 be remitted at least quarterly by the department, pursuant to

9 20 rules of the director of revenue, to each city or county

9 21 imposing the tax in the amount collected from businesses in

9 22 that city or county.

9 23 3. Local hotel and motel revenues received by the city or

9 24 county under this subchapter shall be deposited in the city

9 25 alternative revenue fund or the county alternative revenue

9 26 fund, as appropriate, and used as provided in section

9 27 420A.104.

9 28 SUBCHAPTER IV

9 29 LOCAL ENTERTAINMENT TAX

9 30 Sec. 14. NEW SECTION. 420A.401 DEFINITIONS.

9 31 For the purposes of this subchapter, unless the context

9 32 otherwise requires:

9 33 1. "Alcoholic liquor", "wine", or "beer" means the same as

9 34 those terms are defined in section 123.3.

9 35 2. "Entertainment tickets" means all tickets or admissions
Senate Study Bill 1308 continued
10 1 subject to taxation pursuant to section 423.2, subsection 3.

10 2 3. "Food" means the same as defined in section 137F.1.

10 3 4. "Food establishment" means a home food establishment

10 4 licensed pursuant to chapter 137D or a food establishment

10 5 licensed pursuant to chapter 137F, at which food is served or

10 6 sold at retail.

10 7 5. "Licensed premises" means the same as defined in

10 8 section 123.3.

10 9 6. "Liquor establishment" means a licensed premises in or

10 10 at which beer, wine, or alcoholic beverages are sold at

10 11 retail.

10 12 Sec. 15. NEW SECTION. 420A.402 LOCAL ENTERTAINMENT TAX.

10 13 1. A city or county may impose by ordinance a local

10 14 entertainment tax pursuant to this subchapter. The tax shall

10 15 be imposed at a rate not to exceed five percent, which shall

10 16 be imposed in increments of one or more full percentage

10 17 points, upon all of the following:

10 18 a. The sales price of food and alcoholic liquor, wine, or

10 19 beer sold at retail at food establishments and liquor

10 20 establishments located in the city or in the unincorporated

10 21 area of the county, as applicable.

10 22 b. The sales price of all sales of entertainment tickets

10 23 sold in the city or in the unincorporated area of the county,

10 24 as applicable.

10 25 2. The local entertainment tax shall be imposed on the

10 26 same basis as the state sales tax under chapter 423,

10 27 subchapter II, and shall not be imposed on the sale of any

10 28 food, alcoholic liquor, wine, beer, or entertainment tickets

10 29 not taxed by the state.

10 30 3. a. A local entertainment tax shall be imposed or the

10 31 rate changed either January 1 or July 1 following the

10 32 notification of the director of revenue but not sooner than

10 33 ninety days following the passage of the ordinance imposing or

10 34 changing the rate of the tax and not sooner than sixty days

10 35 following notice to sellers, as defined in section 423.1.
Senate Study Bill 1308 continued
11 1 b. A local entertainment tax shall be repealed only on

11 2 June 30 or December 31 but not sooner than ninety days

11 3 following repeal of the ordinance. At least forty days before

11 4 the imposition, change in rate, or repeal of the tax, a city

11 5 or county shall provide notice of the action by certified mail

11 6 to the director of revenue.

11 7 4. a. (1) If within thirty days after adoption of the

11 8 ordinance that imposes a local entertainment tax, or if after

11 9 the ordinance has been in effect for one year, the board of

11 10 supervisors receives a valid petition as provided in section




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