I-1 - Preliminary Official Statement Series 2021A Refunding

IOWA PROPERTY VALUATIONS; DEBT LIMITATIONS Actual Value The Code of Iowa uses the terms “actual value,” “assessed value,” “market value” and “actual assessed value” interchangeably. The actual value of all taxable property of a local jurisdiction, except utility property, is determined by the local county or city assessor, who must be certified by the State Department of Revenue. Utility property is assessed by the State Department of Revenue. The actual value of all property, with the exception of agricultural property, is determined by establishing the fair and reasonable market value of the property. The actual value of agricultural property is determined by its productivity and net earning capacity pursuant to the Code of Iowa, Section 441.21 (1)(e). The State Department of Revenue and Finance periodically adjusts inequities among the 99 county and 10 city assessing jurisdictions by issuing equalization orders pursuant to the Code of Iowa, Sections 441.47 to 441.49. The actual value of a jurisdiction is the value utilized for computing debt limitations of counties, municipalities, school districts, and other political subdivisions. Taxable Value The taxable value of counties, municipalities, school districts, or other political subdivisions is determined by adjusting or “rolling back” the assessed value of residential property, agricultural property, commercial property, industrial property, and other classes of property by applying percentages certified to the county auditors of each county by the Director of Revenue no later than November 1 of each fiscal year pursuant to the Code of Iowa, Section 441.21(10). These adjustments colloquially referred to as “rollbacks” are meant to provide an appropriate balance of market value fluctuation that might disproportionately impact the property tax burden placed on classes of property affected by those fluctuations. Following are classes of property that were adjusted by the corresponding percentages for 2020 assessed valuations collected in 2021/2022: Rollback Agricultural (excluding agricultural dwellings) 84.0305% Residential (rural and urban including agricultural dwellings) 56.4094 Multi-Residential 67.5000 Commercial (excluding machinery and equipment) 90.0000 Industrial (excluding machinery and equipment) 90.0000 Railroad 90.0000 Utility 98.5489 Phase-out of Taxes on Industrial Machinery and Equipment Historically, industrial machinery, equipment and certain computer property have been taxed as real property at 30% of the net acquisition cost. A phase-out of tax on that class of property began with the taxable valuations of January 1, 1995, under legislation approved during the 1995 and 1996 sessions of the Iowa General Assembly. New property of that class which is first assessed on or after January 1, 1995 is exempt from taxation. Existing property currently on the tax rolls will be phased down from the current level of 30% of acquisition cost to 22% for January 1, 1999 assessment, to 14% for the January 1, 2000 assessment, to 6% for the January 1, 2001 assessment and to zero percent thereafter. Utility Property Tax Replacement Beginning in 1999, the State replaced its previous property tax assessment procedure in valuing the property of entities involved primarily in the production, delivery, service and sale of electricity and natural gas with a replacement tax formula based upon the delivery of energy by these entities. Under the new law, electric and natural gas utilities will pay replacement taxes to the State. All replacement taxes will be allocated among local taxing issuers (including the County) by the State Department of Revenue and Finance and the Department of Management. This allocation will be made in accordance with a general allocation formula developed by the Department of Management on the basis of general property tax equivalents. Properties of those utilities will be exempt from the levy of property tax by political subdivisions, including the County. Utility property will continue to be valued by a special method as provided in the statute and taxed at the rate of three cents per one thousand dollars for the general fund of the State. For tax years 1999, 2000, and 2001, each county treasurer shall compute a special utility property tax levy and levy a special utility property tax equal to the shortfall. Thereafter, this special tax is repealed. Given the wide scope of the statutory changes and the interpretive and administrative questions presented by the utility property tax replacement, the impact of this legislation on the County is uncertain. The bill provides for the immediate creation of a task force to study the effects of the legislation on all local taxing issuers and report to the General Assembly on an annual basis through January 1, 2003, including its specific recommendations for any needed modifications to the bill. The new law provides for a three-year transition period (during which local taxing issuers may continue to levy a special utility property tax for any difference between the A-7