Observations / June 2023

HBA of Iowa Legislative Recap

Story courtesy Jay Iverson

The first session of the 90th General Assembly adjourned sine die at 12:34 pm on Thursday, May 4th. The Iowa Legislature went into just a few days of overtime as the initial adjournment date was April 28. The House, Senate and Governor worked over the last few weeks to come to an agreement on a variety of policy provisions and the overall state budget.

The HBA of Iowa tracked several hundred pieces of legislation and had a significant role in killing many bad bills. Our priorities will always include workforce, regulatory relief, tort reform, and doing everything possible to create a healthy pro-business and pro-citizen tax environment.

Here are a few highlights:

Design Standards SF174 HF490: This was a top priority in several states and is somewhat of a heavy lift when fighting cities when they mandate dumb ideas that drive up the cost of housing—oftentimes that’s intentional as they try to drive up assessed valuation. Mandating certain surface materials, square footage minimums, large garages, etc. A single city with significant influence kept this from moving forward despite the bill not having a ton of opposition. Generally, we like local control and not having to pass state laws, but certain cities are out of control and it’s really bad in other states.
Storm Water SF455: Several cities throughout Iowa are out of control with their control of new development ground, requiring enormous costs to solve problems upstream and downstream that are not the fault of the developer. So many people worked hard on this bill every step of the way, but the Iowa House had enough Republicans that were scared of the effects to ag land (which there were none) or from areas that do not see any houses being built anyway. The bill made it out of the Senate but was hung up in the House. It remains a top priority for next session and does not have to go back to the Senate.
Youth Employment Opportunities SF542: This is a great bill and provides many new opportunities for our younger citizens to explore the trades and begin working for our members at an earlier age. It passed and we are working on a signing ceremony with Governor Reynolds now. This was an Iowa Workforce Development bill – HBAI Executive Officer Jay Iverson chairs the State Workforce Development Board of Directors and Workforce Development Coordinator Brandon Patterson worked hard on the bill.
Energy Benchmarking HF605: This is a really good bill and prohibits state and local building codes from requiring energy benchmarking on private property. We tried to add an amendment to eliminate the energy code, but it wouldn’t make it through if we did. Awaiting the Governor’s signature.
Land Redevelopment Trusts SF182 HF665: We’ve worked on this for several years and it remains on unfinished business.
Property Tax Reform HF718: The process on this bill was fascinating. Both chambers had their own plans and it didn’t look like they were going to be able to come together. Then the new assessed valuations were delivered to just about every property owner in the state—with giant increases. The people spoke and that is what should happen more often—it forced a beautiful start at relief with bipartisan support in both chambers during the final days of session. This will save property tax owners over $100 million once implemented. It seems to be the theme this year—because cities are out of control with insatiable appetites for increasing revenues. This was signed 5/4/2023.

The highlights include:
- Consolidates 15 city levies into a general fund levy.
- Creates a ratcheting down mechanism whereby if cities and counties see certain levels of growth, the windfall must be applied to reducing taxes. This will help slow the budget growth of local governments.
- Iowans 65 and older will be eligible for a $6,500 property tax exemption.
- Veterans are eligible for a $4,000 property tax exemption.
- New transparency measures aim to clarify property tax information for taxpayers, including proposed budget impacts and potential actions to be taken.
- Bonding elections are moved to the general election timeframe.
Iowa Registered Apprenticeship Act SF318: The legislation consolidates all apprenticeship government programs and oversight to Iowa Workforce Development (IWD). The state of Iowa will now perform many functions previously done federally by the U.S. Department of Labor. This streamlining should allow for more timely approvals of new apprenticeship programs and oversight closer to the workplace. Waiting for Governor’s signature.
Pass Through Entity Tax Changes HF352: legislation affecting pass-through entities has already passed in more than 20 states. The legislation is a result of the 2017 federal income tax reduction legislation that capped the amount of state and local taxes that could be deducted on federal returns at $10,000. The Internal Revenue Service allows for pass-through entities to move some expensing to the entity level, resulting in a reduced tax obligation at the federal level for individuals. Waiting for Governor’s signature.
Government Reorganization SF514: This reduces 37 cabinet level departments to 16. Similar functions that have developed in multiple departments will be centralized. For example, all professional licensing will now have one agency of oversight and issuance.

Here’s some other key details:
- The practice of budgeting for unfilled positions or “ghost employees” will end.
- State government property ownership and leases will be reviewed and reduced.
- Coordinated computing and database systems will be pursued.
- All of the above concepts are continual improvements in the private sector, but required legislative action and coordinated effort to bring it to state government. As part of the review, the Governor has also issued a moratorium on new rules. Signed by Governor 4/4/2023.
IJag Funding SF560: this was part of a much larger bill, but iJag funding was increased by $1 million to establish 15 new programs across the state. Waiting to be signed.
Property Taxes and Income Taxes Assessment Limitations SF181: this bill clarified legislative intent on the multi-residential assessment limitation and prevented a property tax increase of $112M. Governor signed 2/20/23.
Established a Red Tape Review process to reduce burdensome regulations and simplify Iowa’s administrative code through a comprehensive review all administrative rules. (Executive Order 10).
State Rulemaking HF688: This bill repealed a total of 31 pages of rules, including 6 rule chapters, 56 rules, and 215 restrictions. Governor signed 5/3/2023.
Land Surveyors SF197: This bill modernized education and experience requirements for land surveyors making the profession easier to enter while maintaining high quality. Governor signed 4/28/2023.
Interior Design SF135: This bill specialized scope of practice for registered interior designers and allowed registered interior designers to stamp and seal building plans that do not make structural or life safety code changes that require review by an architect, reducing unnecessary costs for building plans. Governor signed 4/27/2023.

Jay Iverson is Executive Officer of the Home Builders Association of Iowa, which represents over 1,800 members in construction, land development, design, and remodeling who employ over 25,000 people in the State. Contact Jay at (515) 278-0255 or JayIverson@HBAIowa.org.