Iowa Administrative Code › Agency 701 - Revenue Department › Title II - Property Tax › Chapter 110 - Property Tax Credits and Exemptions › Rule 701-110.6 - Industrial Property Tax Exemption

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Authority of city council and
				board of supervisors.
A partial exemption ordinance enacted pursuant
				to Iowa Code section 427B.1 shall be available to all
				qualifying property. A city council or county board of supervisors does not
				have the authority to enact an ordinance granting a partial exemption to only
				certain qualifying properties (1980 O.A.G. 639). As used in this rule, the term
				"qualifying property" means property classified and assessed as real estate
				pursuant to 701-subrule 71.1(7), warehouses and distribution centers, research
				service facilities, and owner-operated cattle facilities. "Warehouse" means a
				building or structure used as a public warehouse for the storage of goods
				pursuant to Iowa Code sections
				554.7101 to 554.7603, except
				that it does not mean a building or structure used primarily to store raw
				agricultural products or from which goods are sold at retail. "Distribution
				center" means a building or structure used primarily for the storage of goods
				which are intended for subsequent shipment to retail outlets. Distribution
				center does not mean a building or structure used primarily to store raw
				agricultural products, used primarily by a manufacturer to store goods to be
				used in the manufacturing process, used primarily for the storage of petroleum
				products, or used for the retail sale of goods. A "research service facility"
				is one or more buildings devoted primarily to research and development
				activities or corporate research services. Research and development activities
				include, but are not limited to, the design and production or manufacture of
				prototype products for experimental use. A research service facility does not
				have as its primary purpose the providing of on-site services to the public.
				"Owner-operated cattle facility" means a building or structure used primarily
				in the raising of cattle and which is operated by the person owning the
				facility.
(2)
Prior
				approval.
Only upon enactment of a partial property tax exemption
				ordinance in accordance with Iowa Code section
				427B.1 may a city council or
				board of supervisors enact a prior approval ordinance for pending individual
				projects in accordance with Iowa Code section
				427B.4. To obtain prior approval
				for a project, a property owner's proposal must be approved by a specific
				ordinance addressing the proposal and passed by the city council or board of
				supervisors. The original ordinance providing for the partial exemption does
				not constitute the granting of prior approval for a project. Also, prior
				approval for a project can only be granted by ordinance of the city council or
				board of supervisors; an official or representative of a city or county does
				not have the independent authority to grant prior approval for a project. If a
				taxpayer has obtained a prior approval ordinance from a city council or board
				of supervisors, the partial exemption cannot be obtained until the year in
				which all value added for the project is first assessed. (1980 O.A.G.
				639)
(3)
Repeal of
				ordinance.
A new construction project having received prior approval
				for exemption in accordance with subrule 80.6(2) shall be granted such
				exemption upon completion of the project even if the city council or board of
				supervisors subsequently repeals the ordinance passed in accordance with Iowa
				Code section 427B.1. (1980 O.A.G.
				639)
(4)
Annexation of
				property previously granted exemption.
A partial property tax
				exemption which has been granted and is in existence shall not be discontinued
				or disallowed in the event that the property upon which such exemption has been
				previously granted is located in an area which is subsequently annexed by a
				city or becomes subject to the jurisdiction of a county in which an ordinance
				has not been passed by the city council or county board of supervisors allowing
				such exemptions within that jurisdiction. The existing exemption shall continue
				until its expiration.
(5)
Eligibility for exemption.
a. The value added by new construction or
				reconstruction and first assessed prior to January 1 of the calendar year in
				which an ordinance authorizing a partial property tax exemption becomes
				effective, and new machinery and equipment assessed as real estate acquired and
				utilized prior to January 1 of the calendar year in which the ordinance or
				resolution becomes effective, are not eligible for exemption. However, the
				value added as of January 1 of the calendar year in which the ordinance becomes
				effective is eligible for exemption if the ordinance is in effect prior to
				February 1 of that calendar year and if all other eligibility and application
				requirements are satisfied.
EXAMPLE 1: A $1,000,000 new construction project on
				  qualifying property is begun in July 1984. $500,000 in value of the partially
				  completed project is completed in 1984 and first assessed as of January 1,
				  1985. The project is completed in 1985 adding an additional value of $500,000
				  which is first assessed as of January 1, 1986, bringing the total assessed
				  value of the completed project to $1,000,000 as of the January 1, 1986,
				  assessment.
A city ordinance authorizing the partial exemption program is
				  passed and becomes effective January 15, 1987. This project is not eligible for
				  a property tax exemption for any value added as a result of the new
				  construction project.
EXAMPLE 2: Assuming the same factual situation as in Example
				  1, except that the ordinance authorizing the partial exemption program becomes
				  effective on January 15, 1986, the $500,000 in assessed value added as of the
				  January 1, 1986, assessment is eligible for the partial exemption if an
				  application is filed with the assessor between January 1 and February 1, 1986,
				  inclusive.
EXAMPLE 3: Assuming the same factual situation as in Example
				  1, except that the ordinance authorizing the partial exemption program becomes
				  effective on February 15, 1986. Since the statutory application filing deadline
				  is February 1, no value added and first assessed as of January 1, 1986, is
				  eligible for a partial exemption. The project in this example would receive no
				  exemption for any value added as a result of the new construction.
This subrule does not apply to new construction projects
				  having received prior approval in accordance with subrule 80.6(2).
b. New machinery and equipment
				assessed as real estate shall be eligible for partial exemption only if used
				primarily in the manufacturing process. For example, computer equipment used
				primarily to maintain payroll records would not be eligible for exemption,
				whereas computer equipment utilized primarily to control or monitor actual
				product assembly would be eligible.
c. If any other property tax exemption is
				granted for the same assessment year for all or any of the property which has
				been granted a partial exemption, the partial property tax exemption shall be
				disallowed for the year in which the other exemption is actually
				received.
d. Only qualifying
				property is eligible to receive the partial property tax exemption (O.A.G.
				81-2-18).
e. A taxpayer cannot
				receive the partial property tax exemption for industrial machinery or
				equipment if the machinery or equipment was previously assessed in the state of
				Iowa. Industrial machinery and equipment previously used in another state may
				qualify for the partial exemption if all criteria for receiving the partial
				exemption are satisfied.
f.
				Industrial machinery and equipment is eligible to receive the partial property
				tax exemption if it changes the existing operational status other than by
				merely maintaining or expanding the existing operational status. This rule
				applies whether the machinery and equipment is placed in a new building, an
				existing building, or a reconstructed building. If new machinery is used to
				produce an existing product more efficiently or to produce merely a more
				advanced version of the existing product, the existing operational status would
				only be maintained or expanded and the machinery would not be eligible for the
				exemption. However, if the new machinery produces a product distinctly
				different from that currently produced, the existing operational status has
				been changed.