Revitalization Law Changes Effective July 1, 2024

House File 718 (HF718) that passed during the 2023 legislative session made changes impacting urban revitalization tax exemptions which will take effect on July 1, 2024.   The tax reform bill imposes two limitations on Chapter 404 Urban Revitalization Act tax abatement which will have a direct impact on the City of Creston’s Urban Revitalization Plan.  The two limitations are as follows:

1. Commercial Property Limitation: Improvements on a property assessed as commercial will not be eligible for abatement under the revitalization plan unless the property owner enters into a written assessment agreement with the city specifying a minimum actual value for the completed improvements, which minimum actual value must be certified by the Assessor. The new law does require that the assessment agreement imposes the minimum actual value for the duration of the tax abatement/exemption schedule.        The City’s Urban Revitalization Plan allows for a 5-year exemption on commercial property so the written assessment agreement would need to impose the minimum actual value for the 5-year period that the tax exemption was being applied by the Assessor.  

2. Residential Property Limitation: When applying an urban revitalization tax abatement/exemption to a property assessed as residential, which also includes residential with three or more separate dwelling units, the taxes levied by a school district will be EXCLUDED from the abatement/exemption. To illustrate, if $X of new assessed value was created by improvements on the residential property, under current law, it is possible that no taxes would be levied against the $X of new value added by the improvements. (Note, X is capped at $75,000 for residential properties.) Under the new proposed law, if $X of new assessed value was created by improvements on the residential property, the property owner will have to pay taxes levied for the school district on the new $X of added value; however, the $X of added value may still be exempt from taxes levied by other taxing entities.