The Iowa State Association of Counties is alerting elected officials across the state that the latest buzz on commercial property tax legislation is that the Governor and legislative leadership are close to a deal that would allow apartment buildings to be classified as residential, a change that would allow them to qualify for the residential rollback.
The rumor mill is that the state is considering providing some backfill to local governments who would be hit by a significant loss of the amount of property taxes collected on such properties, experience shows that the state isn't so good at keeping its promises.
ISAC is urging county elected officials to contact their legislators to let them know what the negative consequences would be on local government finances should the apartment classification change.
Further, ISAC notes, rumor has it that the final property tax deal will include the changes telecommunications companies have long sought to reduce the property taxes they pay on their lines and equipment.
Interestingly, the Iowa Surpeme Court weighed in on the issue last year by allowing two Newton apartment buildings to be classified as redential due to their co-op ownership arrangement.
The Iowa League of Cities filed a friend of the court brief on behalf of Jasper County, which was fighting the classification change, by noting the financial impact to local governments if apartment buildings changed their ownership structure to a co-op.
"The potential conversion of all commercial apartments to residential classification through the formation of 'cooperatives' would impose severe limitations on the ability of cities to provide their citizens with services," the brief stated. "Based on the most recent levies and rollback figures, conversion of all commercial apartments to residential classification, based on 2007 values, would result in the statewide loss to cities of tens of millions of dollars annually."