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HF 2777

A bill for an act relating to Iowa’s urban renewal law by modifying the division of revenue, and including applicability provisions.

2025-2026 Regular Session

HF 2777 changes how property tax revenue is divided for urban renewal, exempting EMS taxes from TIF division and taking effect for FYs after July 1, 2027.

Withdrawn.
#publicfunds #taxation #urbanrenewal
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Bill Summary · HF 2777

Summary of House File 2777 (HF 2777) – Iowa, 2025-2026 Session

Purpose and intent

HF 2777 seeks to modify Iowa’s urban renewal law by altering how revenue is divided (the division of revenue) and by clarifying applicability provisions. The bill specifically excludes certain categories of property tax revenue from being subject to the tax increment financing (TIF) division rules, thereby affecting how TIF districts capture and allocate property tax dollars for urban renewal projects.

Key provisions

  • Modification to division of revenue (TIF):

    • Amends Code section 403.19, subsection 2, paragraph a, to describe how the portion of property taxes collected beyond a specified base amount is allocated. The funds would be paid into a special municipal fund to be used to:
    • Pay the principal and interest on loans or indebtedness incurred to finance or refinance urban renewal projects within the area.
    • Provide assistance for low- and moderate-income housing as provided in Code section 403.22.
    • The amendment includes exceptions for certain taxes, meaning these taxes are not subject to the same division rules.

  • Taxes exempt from TIF division (exception language):

    • The bill expressly excludes property taxes for emergency medical services (EMS) imposed under Code chapters 357F, 357G, or 422D from the TIF division of revenue.

  • Applicability and effective date:

    • The changes apply to property taxes due and payable in fiscal years beginning on or after July 1, 2027.

Who is affected

  • Municipalities and urban renewal agencies: They would implement the revised division of revenue rules for financing urban renewal projects and related housing programs.
  • Property tax levies related to EMS: EMS taxes under the specified Code chapters would no longer be governed by the same TIF division constraints, potentially changing how those funds are allocated or used within TIF structures.
  • Taxpayers in districts with urban renewal projects: Indirectly affected through changes in how tax dollars are diverted toward debt service and housing programs within urban renewal areas.

Procedural and timeline notes

  • Introduced and referred to Ways and Means (as of mid-April 2026).
  • Effective date: Fiscal years starting on or after July 1, 2027.
  • This is a successor measure to HF 92, indicating it may be part of a larger ongoing reform of urban renewal financing.

Practical impact

  • The bill narrows the scope of taxes subject to TIF revenue division by explicitly excluding EMS-related property taxes from the division, which could alter the pool of revenue available for urban renewal debt service and affordable housing programs.
  • Jurisdictionally, municipalities will need to adjust budgeting and accounting practices to reflect the revised allocation rules and the new exempt EMS tax treatment once the law takes effect.

For readers seeking a quick takeaway: HF 2777 reshapes how property tax revenues are split for urban renewal, with a specific exemption for EMS taxes, and sets the new rules to take effect for fiscal years beginning after July 1, 2027.

Compiled from official sources — confirm details with the bill’s official record.

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