HB 1474 — A BILL for an Act to provide for a legislative management study of property tax reform for residential property.

The board of directors shall establish a general emergency medical service policy for the district and annually shall estimate the probable expense for carrying out that policy.

The estimate must be certified by the president and secretary to the proper county auditor or county auditors, on or before August tenth of each year.

In the year for which the levy is sought, a board of directors of a rural ambulance service district seeking approval of a property tax levy under this chapter shall file with the county auditor of the counties within the rural ambulance service district, at a time and in a format prescribed by the county auditors, a financial report for the preceding calendar year showing the ending balances of each fund held by the rural ambulance service district during that year.

The board or boards of county commissioners may levy a tax not to exceed the mill rate and square footage rates approved by the electors of the district under section 11-28.3-04.

If the board wishes to levy a tax in excess of that approved by the electors, the board, upon its own motion, may place the question of Page No.

3 25.1184.01002 Sixty-ninth Legislative Assembly increasing the maximum allowable mill levy and square footage rates for the electors to approve at a regular or special election.

The amount of ad valorem tax levied under this section may not exceed a mill rate of fifteen mills upon the taxable property within the district for the maintenance of the rural ambulance service district for the fiscal year as provided by law.

2.

The tax levied for a rural ambulance service district must be:

a.

Collected as other taxes are collected in the county.

b.

Deposited by the secretary-treasurer in a bank or credit union account.

c.

Paid out upon warrants drawn upon the district account by authority of the board of directors of the district, bearing the signature of the secretary-treasurer and the countersignature of the president.

3.

The amount of the tax levy, including ad valorem taxes and square footage taxes authorized under section 18 of this Act, may not exceed the amount of funds required to defray the expenses of the district for a period of one year as embraced in the annual estimate of expense, including the amount of principal and interest upon the indebtedness of the district for the ensuing year.

The district may include in its operating budget no more than ten percent of its annual operating budget as a depreciation expense to be set aside in a dedicated emergency medical services sinking fund deposited with the treasurer for the replacement of equipment and ambulances.

The ten percent emergency medical services sinking fund may be in addition to the actual annual operating budget, but the total of the annual operating budget and the annual ten percent emergency medical services sinking fund shall not exceed the amount of revenue that would be generated by application of the maximum mill levy and square footage rates approved by the electors.

4.

If an ambulance operations area identified by the department of health and human services under section 23-27-01 is situated, in whole or in part, within the boundaries of a rural ambulance service district formed under this chapter, and the district does not provide emergency medical services to the territory in the ambulance operations area, whether directly or through a contract under section 11-28.3-12, the property situated in the ambulance operations area which does not receive emergency medical services from the district is exempt from the district's tax levy under this section.

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4 25.1184.01002 Sixty-ninth Legislative Assembly Changes to the ambulance operations area will not impact the district under this section until the subsequent tax year.

The excluded territory remains responsible and must discharge its proportionate share of outstanding obligations pursuant to the procedure under section 11-28.3-17.

SECTION 5.

AMENDMENT.

Subsection 2 of section 11-28.3-17 of the North Dakota Century Code is amended and reenacted as follows:

2.

Mill leviesLevies imposed under section 11-28.3-09 remain in effect until the proportionate share of outstanding obligations are paid.

SECTION 6.

AMENDMENT.

Subsection 4 of section 15.1-27-04.1 of the North Dakota Century Code, as effective after June 30, 2025, is amended and reenacted as follows:

4.

After determining the product in accordance with subsection 3, the superintendent of public instruction shall:

a.

Subtract an amount equal to sixty mills multiplied by the taxable valuation of all property classifications in the school district in taxable year 2025;

and b.

Subtract an amount equal to seventy-five percent of all revenue types listed in subdivisions c and d of subsection 1.

Before determining the deduction for seventy-five percent of all revenue types, the superintendent of public instruction shall adjust revenues as follows:

(1) Tuition revenue shall be adjusted as follows:

(a) In addition to deducting tuition revenue received specifically for the operation of an educational program provided at a residential treatment facility, tuition revenue received for the provision of an adult farm management program, tuition received for the education of high-cost and special education students, and tuition received under an agreement to educate students from a school district on an air force base with funding received through federal impact aid as directed each school year in paragraph 3 of subdivision c of subsection 1, the superintendent of public instruction also shall reduce the total tuition reported by the school district by the amount of tuition revenue received for the education of students not residing in the Page No.

5 25.1184.01002 Sixty-ninth Legislative Assembly state and for which the state has not entered a cross-border education contract;

and (b) The superintendent of public instruction also shall reduce the total tuition reported by admitting school districts meeting the requirements of subdivision e of subsection 2 of section 15.1-29-12 by the amount of tuition revenue received for the education of students residing in an adjacent school district.

(2) After adjusting tuition revenue as provided in paragraph 1, the superintendent shall reduce all remaining revenues from all revenue types by the percentage of mills levied in 2022 by the school district for sinking and interest relative to the total mills levied in 2022 by the school district for all purposes.

SECTION 7.

AMENDMENT.

Section 18-10-07 of the North Dakota Century Code is amended and reenacted as follows:

18-10-07.

Fire protection policy to be determined - Financial report - Tax levy limit - Vote-approved ad valorem levy authority.

1.

The board of directors shall determine a general fire protection policy for the district and shall annually estimate the probable expense for carrying out the contemplated program.

The annual estimate of probable expense may include an amount determined by the board of directors to be necessary to be carried over to a future year for purchase of firefighting equipment, ambulances, or other emergency vehicles.

The estimate must be certified by the president and secretary to the proper county auditor or county auditors, on or before June thirtieth of each year, who shall levy a tax, including ad valorem tax and square footage tax as authorized under section 18 of this Act, upon the taxable property within the district for the maintenance of the fire protection district for the fiscal year as provided by law.

2.

In the year for which the levy is sought, a board of directors of a rural fire protection district seeking approval of a property tax levy under this chapter must file with the county auditor of the counties within the rural fire district, at a time and in a format prescribed by the county auditors, a financial report for the preceding calendar year Page No.

6 25.1184.01002 Sixty-ninth Legislative Assembly showing the ending balances of each fund held by the rural fire protection district during that year.

3.

The ad valorem tax may not exceed a tax rate of five mills per dollar of the taxable valuation of property in the district except upon resolution adopted by the board of directors and approval by a majority of the qualified electors voting on the question at an annual or special meeting of electors called by the board of directors, the ad valorem levy may be made in an amount not exceeding thirteen mills.

If an election to approve or reauthorize an excess ad valorem tax levy will be held at an annual or special meeting of electors of the district called by the board of directors, notice of the meeting and the proposed excess ad valorem levy election must be provided by at least one publication in the official newspaper of each county in which the district is located at least seven days, but not more than fourteen days, before the date of the public meeting.

The published notice must include the amount of the proposed ad valorem tax rate increase in mills and the duration for which elector approval of the increase is sought and must include the location where, and hours during which, ballots may be cast.

4.

Votes to approve or disapprove the ad valorem levy increase must be cast on the date of the meeting.

The polling place must remain open for at least six hours on the date of the meeting.

The secretary-treasurer of the district shall prepare and distribute to qualified electors at the polling place paper ballots to conduct the election on the question of increased ad valorem levy authority.

Three election judges to receive and count the ballots, who are qualified electors of the district but not members of the board, must be selected at least seven days before the meeting by approval of a majority of the members of the board.

A marked ballot must be delivered to one of the judges, folded to conceal its contents, the judge shall deposit it in the ballot box, and another judge shall enter the name of the elector who cast the ballot in the pollbook.

When the election is closed, the judges shall count the ballots and announce the result.

Results of the election must be certified by the secretary-treasurer of the district and each of the election judges to the tax commissioner and to the county auditor of each county in which the district is located within ten days after the election.

The certificate must include a statement of the question as it appeared on the ballot, Page No.

7 25.1184.01002 Sixty-ninth Legislative Assembly together with the total number of votes cast in favor, and the number of votes cast against, authorizing the excess ad valorem levy.

5.

After July 31, 2015, approval or reauthorization by electors of increased ad valorem levy authority under this section may not be effective for more than ten taxable years or the period of time necessary for repayment of indebtedness incurred which was intended to be repaid from the increased ad valorem levy, whichever expires later.

Additional ad valorem levy authority authorized by the board of directors after petition of electors before August 1, 2015, remains in effect under the provisions of law at the time the levy was authorized for the time period authorized by the electors but not exceeding ten taxable years or the period of time necessary for repayment of indebtedness incurred which was intended to be repaid from the increased levy, whichever expires later.

6.

The ad valorem tax and square footage tax levied under section 18 of this Act must be:

1.a.

Collected as other taxes are collected in the county.

2.b.

Turned over to the secretary-treasurer of the rural fire protection district, who shall have a surety bond in the amount of at least five thousand dollars.

3.c.

Placed to the credit of the rural fire protection district so authorizing the same by its secretary-treasurer in a state or national bank, except amounts to be carried over to a future year for purchase of firefighting equipment, ambulances, or other emergency vehicles may be invested to earn the maximum return available.

4.d.

Paid out upon warrants drawn upon the fund by authority of the board of directors of the district, bearing the signature of the secretary-treasurer and the countersignature of the president of the rural fire protection district.

7.

The amount of tax levy, including ad valorem taxes and square footage taxes, may not exceed the amount of funds required to defray the expenses of the district for a period of one year as embraced in the annual estimate of expense, including the amount of principal and interest upon the indebtedness of the district for the ensuing year and including any amount determined by the board of directors to be necessary to be carried over to a future year for purchase of firefighting equipment, ambulances, or other emergency vehicles.

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8 25.1184.01002 Sixty-ninth Legislative Assembly SECTION 8.

AMENDMENT.

Section 18-10-12.1 of the North Dakota Century Code is amended and reenacted as follows:

18-10-12.1.

Withdrawal from rural fire protection district.

Any person having an ownership interest in property subject to a millan ad valorem or square footage tax levy as provided for in section 18-10-07 and wishing to withdraw such property from the rural fire protection district may do so as provided in this section, subject to the following restrictions:

1.

The territory to be withdrawn from the district must border on the outer boundary of the district.

2.

The territory to be withdrawn from the district remains subject to and chargeable for the payment and discharge of the proportion of obligations outstanding at the time of filing the petition for the withdrawal of the territory that the taxable valuation of property in the territory to be withdrawn bears to the taxable valuation of all property within the district prior to withdrawal.

3.

Mill leviesLevies imposed under section 18-10-07 remain in effect until the proportionate share of outstanding obligations are paid.

4.

The proceedings for withdrawal must be initiated by the filing of a petition with the appropriate county auditor or auditors signed by the fee title holders of sixty percent of the surface acreage in the territory sought to be withdrawn and contain a description of the boundaries of the territory sought to be withdrawn and a map or plat illustrating such area.

5.

The county auditor shall verify from the tax schedules and determine whether the petition complies with the requirements of subsection 4.

6.

The county auditor shall determine and certify the respective percentage proportions of the taxable valuation of the territory petitioned to be withdrawn to the taxable valuation of all property in the district prior to withdrawal to the board of directors of the district concerned.

7.

Within twenty days after receipt of the petition, verification, and computation of respective percentage proportions, the board of directors of the district concerned shall attach to the petition a statement of outstanding obligations of the district and shall forward the petition to the appropriate board or boards of county commissioners.

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9 25.1184.01002 Sixty-ninth Legislative Assembly 8.

The board or boards of county commissioners shall, at a regular meeting, compute the indebtedness proportionately assignable to the territory sought to be withdrawn, and shall, by written order, describe the boundaries of the territory withdrawn and the indebtedness of the district assigned to the territory and subject to continued levy under section 18-10-07.

The order and computation must be filed in the office of the county auditor or auditors.

9.

The annual estimate required under section 18-10-07 must reflect the annual expense of retiring principal and interest upon the proportionate share of district indebtedness assigned to withdrawn territory.

SECTION 9.

AMENDMENT.

Section 40-40-06 of the North Dakota Century Code is amended and reenacted as follows:

40-40-06.

Notice of preliminary budget statement - Contents - How given.

1.

On or before August tenth of each year, after the governing body has prepared the preliminary budget statement, the auditor of the municipality shall:

a.

Provide the county auditor with a copy of the preliminary budget statement.

b.

Set a public budget hearing date no earlier than September seventh and no later than October seventh for the purpose of adopting the final budget and square footage tax rates for purposes of the tax authorized under section 18 of this Act and making the annual ad valorem and square footage tax levy.

c.

Provide notice of the public budget and proposed square footage tax rate hearing date to the county auditor.

2.

For municipalities anticipating levying a square footage tax or less than one hundred thousand dollars in ad valorem tax levies in the current year, the notice must:

a.

Contain a statement of the proposed square footage tax rate and the total proposed expenditures for each fund in the preliminary budget, but need not contain any detailed statement of the proposed expenditures;

b.

Be published at least once, not less than six days prior to the budget hearing, in a newspaper published in the municipality, if there is one, and if no newspaper is published in the municipality, the notice must be published not less than six days prior to the meeting in the official city newspaper as provided by section 40-01-09;

and Page No.

10 25.1184.01002 Sixty-ninth Legislative Assembly c.

Provide that any taxpayer may appear and discuss with the governing body the proposed square footage tax rates or any item of proposed expenditures, or may object to any item or, amount, or rate.

SECTION 10.

AMENDMENT.

Section 40-40-10 of the North Dakota Century Code is amended and reenacted as follows:

40-40-10.

Certified copies of levy and final budget sent to county auditor.

Immediately after the completion of the final budget, square footage tax rates for purposes of the tax under section 18 of this Act, and the adoption of the annual ad valorem and square footage tax levy by the governing body of a municipality in accordance with the provisions of this chapter, and in no case later than October tenth, the auditor of the municipality shall send to the county auditor a certified copy of the levy and square footage tax rates for purposes of the tax under section 18 of this Act as adopted and a certified copy of the final budget.

SECTION 11.

AMENDMENT.

Section 40-58-20 of the North Dakota Century Code is amended and reenacted as follows:

40-58-20.

Tax increment financing.

1.

At any time after the governing body of a municipality has approved a development or renewal plan for any development or renewal area and has filed that plan with the department of commerce division of community services, it may request the county auditor and treasurer to compute, certify, and remit tax increments resulting from the development or renewal of the area in accordance with the plan and any modifications thereof, and the county auditor and treasurer shall do so in accordance with this section.

a.

For a tax increment district established before July 1, 2011, the base year for tax increments computed for a development or renewal area under this section or section 40-58-20.1 may not be used for more than twenty-five taxable years without the governing body of the municipality establishing a new base year using taxable values, established as of February first of the following year, or square footage taxes levied in the following taxable year, which are not more than fifteen years old.

Regardless of length of the initial district, the new base year may be used to compute tax increments for up to an additional fifteen years after which time the tax increment district must be closed, except that the original Page No.

11 25.1184.01002 Sixty-ninth Legislative Assembly base year for tax increments pledged for an indebtedness incurred before July 1, 2011, may continue until the indebtedness is paid.

b.

For a tax increment district established after July 1, 2011, the base year for tax increments computed for a development or renewal area under this section or section 40-58-20.1 may not be used for more than twenty-five taxable years without the governing body of the municipality establishing a new base year using taxable values, established as of February first of the following year, or square footage taxes levied in the following taxable year, which are not more than fifteen years old.

The new base year may be used to compute tax increments for up to an additional five years after which time the tax increment district must be closed.

2.

Notwithstanding any other provision in this section, for a tax increment district established before January 1, 2026, the tax increment or tax losses must be calculated as the difference between the square footage tax and ad valorem tax levied in dollars against the lots and parcels of real estate in the district in the current taxable year and the amount of ad valorem property tax levied in dollars against the original taxable value of the lots and parcels of real estate in the district in taxable year 2025.

For purposes of this subsection, "original taxable value" means the taxable value of the lots and parcels of real estate in the year the tax increment district was established.

3.

For a tax increment district established on or after January 1, 2026:

a.

The auditor shall compute and certify the original taxable value ofsquare footage tax or ad valorem tax levied in dollars against each lot and parcel of real estate in the area, as last assessed and equalizedlevied before the date of the request, including the taxable value oftax levied against any lot or parcel previously acquired by the municipality or its urban renewal agency, as last assessed and equalizedtaxed before it was acquired.

However, any real property acquired by the city or the city's urban renewal agency prior to July 1, 1973, or more than five years prior to the approval of a development or renewal plan for any development or renewal area, whichever is later, is deemed to have an original taxable value of a zero tax levy and the county auditor shall so certify.

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12 25.1184.01002 Sixty-ninth Legislative Assembly 3.

b.

In each subsequent year, the auditor shall compute and certify the net amount by which the original taxable value of square footage tax and ad valorem tax levied in dollars against all lots and parcels of real estate in the area, as then assessed and equalizedlevied, including real estate then held by the municipality or urban renewal agency valuedtaxed at zero, has increased or decreased in comparison with the original taxable value of all suchsquare footage tax and ad valorem tax levied in dollars against the real estate.

The net amount of the increase or decrease is referred to in this section as the incremental valuetax increment or the lost valuetax losses for that year, as the case may berespectively.

4.

In any year when there is an incremental value, the auditor shall exclude it from the taxable value upon which the auditor computes the mill rates of taxes levied in that year by the state, the county, the municipality, the school district, and every other political subdivision having power to tax the development or renewal area, until the cost of development or renewal of the area has been reimbursed in accordance with this section.

However, the auditor shall extend the aggregate mill rate of those taxes against the incremental value as well as the original taxable value, and the amount of taxes received from that extension against the incremental value is referred to in this section as the tax increment for that year.

5.

In any year when there is a lost value, the auditor shall compute and certify the amounts of taxes which would have resulted from the extension against the lost value of the mill rate of taxes levied that year by the state and each political subdivision having power to tax the development or renewal area.

The amounts so computed are referred to in this section as the tax losses for that year.

6.

The county auditor shall segregate all tax increments from the development or renewal area in a special fund, crediting to the fund an amount equal to the tax increment, in each year when there is an incremental value, that proportion of each collection of taxes on real estate within the area which the incremental value bears to the total taxable value in that yeara tax increment.

7.5.

Upon receipt of any tax increments in the fund, the county treasurer, at the times when the county treasurer distributes collected taxes to the state and to each political subdivision for which a tax loss has previously been recorded, shall also remit to each Page No.

13 25.1184.01002 Sixty-ninth Legislative Assembly of them from the tax increment fund an amount proportionate to the amount of that tax loss, until all those tax losses have been reimbursed.

Thereafter, at the time of each distribution, the county treasurer shall remit the entire balance then on hand in the fund to the municipality, until the cost of development or renewal of the area has been reimbursed to the municipality as provided in this section.

8.6.

The cost of development or renewal subject to reimbursement from the tax increment fund for each development or renewal area must include all expenditures incident to carrying out the development or renewal plan for the area and any modifications thereof, not otherwise reimbursed in one of the ways referred to below, including all expenses of the clearance, development, redevelopment, rehabilitation, and conservation of the area, and all interest and redemption premiums paid on bonds, notes, or other obligations issued by the municipality or urban renewal agency to provide funds for payment of those expenses, subject to section 40-58-20.1 for the purpose of determining eligible cost of development of industrial or commercial property.

From the total cost to be reimbursed there must be deducted, except as provided below, all amounts received from the federal government or others, and all special assessments, revenues, and other receipts except property taxes, which are actually collected and applied to the payment of the cost or the bonds, notes, or other obligations, at the times when those payments are due.

However, if the proceeds of tax increments or of bonds, notes, or other obligations are loaned to finance part or all of the cost of a project comprising the restoration, reconstruction, and improvement of a privately owned state historical site situated within the development or renewal area or any buildings or structures thereon, as contemplated in section 55-10-08, or of a property listed in the national register of historic places, as contemplated in section 55-10-11, in consideration of the grant to the city of a historic easement with respect thereto, repayments of the loan may not be deducted from the cost of development or renewal subject to reimbursement.

9.7.

The tax increments from any development or renewal area may be appropriated by the governing body of the municipality for the payment of any general obligation bonds, special improvement warrants, or refunding improvement bonds issued by the municipality to provide funds for payment of the cost of development or renewal, Page No.

14 25.1184.01002 Sixty-ninth Legislative Assembly together with interest and redemption premiums thereon, other than that portion, if any, of such principal, interest, and redemption premiums which can be paid when due from collections of special assessments, revenues, or other funds, excluding property taxes, which are pledged for the payment thereof.

When special improvement warrants or refunding improvement bonds are issued to pay the cost of public improvements of special benefit to properties within the development or renewal area, the governing body may cause those special benefits to be computed, together with the cost properly assessable against those properties, and may appropriate the tax increments from the area to the payment of that cost, in lieu of levying special assessments upon the property.

In this event, the amount so appropriated, divided into the same number of installments as the special assessments and with interest at the same rate on the declining balance thereof, is deemed a part of the special assessments appropriated for payment of the cost, within the meaning of section 40-26-08.

10.8.

When the cost of development or renewal of any development or renewal area has been fully paid and all bonds, notes, or other obligations issued by the municipality to pay that cost have been retired, or funds sufficient for the retirement thereof have been received by the municipality, the governing body shall cause this to be reported to the county auditor, who shall thereafter compute the mill rates oflevy all taxes upon the total taxable value, for property subject to ad valorem tax, or the total square footage, for property subject to the tax under section 18 of this Act, of the development or renewal area.

Any balance then on hand in the tax increment fund must be distributed by the county treasurer to the state and all political subdivisions having power to tax property, including by ad valorem and square footage tax, in the area, in amounts proportionate to the amounts of the tax losses previously reimbursed to them.

11.9.

As an alternative to the sale of bonds to be amortized with tax increments as provided in this section, the governing body of a municipality may, in its discretion, grant a total or partial tax exemption for the project in order to provide assistance to a project developer in a development or renewal area, pursuant to agreement with the municipality.

However, if a developer of a development or renewal project receives a Page No.

15 25.1184.01002 Sixty-ninth Legislative Assembly tax exemption for that project pursuant to this subsection, that project developer may not receive a tax exemption for that project under section 40-57.1-03, 40-57.1-04, 40-57.1-04.1, or 40-57.1-04.3.

The amount of annual tax exemption under this subsection is limited to the tax increment as defined in this section as it applies to the development or renewal project and may extend for a period not to exceed fifteen years.

In determining the total amount of the tax exemption to be authorized, the municipality shall give due consideration to the same elements as are involved in the sale of bonds to be amortized by tax increments.

The amount to be reimbursed, by tax exemption, to the project developer must be all or a portion of eligible public costs which have been paid by the project developer, plus interest on those costs at a rate not to exceed ten percent per annum.

The amount of tax exemption must be an amount sufficient to reimburse the project operator for those eligible costs, amortized pursuant to the agreement between the project developer and the municipality.

If an exemption has been granted under this subdivision before taxable year 2026 for property that is subject to the square footage tax under section 18 of this Act in taxable year 2026 or later, the governing body of a municipality shall convert the exemption as necessary to allow the same tax benefit to be realized by the property owner under the square footage taxation system under section 18 of this Act as would have been realized under the ad valorem taxation system before taxable year 2026.

12.10.

The governing body of a municipality with an active tax increment financing district may at any time identify funds on hand that are in excess of the costs it determines necessary to complete the activities included in the last approved urban renewal plan for that district.

The governing body shall cause the identified surplus to be transferred to the county treasurer to be distributed to the state and all political subdivisions having power to tax property in the area, in amounts proportionate to the most recent five-year average of the ad valorem property tax or square footage tax levy within the district.

SECTION 12.

AMENDMENT.

Subsection 2 of section 40-58-20.2 of the North Dakota Century Code is amended and reenacted as follows:

2.

Before granting a property tax incentive, including an ad valorem tax or square footage tax incentive, on any parcel of property that is anticipated to receive a property tax Page No.

16 25.1184.01002 Sixty-ninth Legislative Assembly incentive for more than five years, the governing body of the municipality must comply with the requirements in section 40-05-24.

SECTION 13.

AMENDMENT.

Section 57-02-11 of the North Dakota Century Code is amended and reenacted as follows:

57-02-11.

Listing of property - Assessment thereof - Determination of square footage.

Certified assessment officials must list and assess property as follows:

1.

All real property subject to taxation must be listed and assessed every year with reference to its value, on February first of that year.

2.

An individual property record must be kept by the appropriate assessment official for each parcel of taxable property.

The record may be in electronic or paper form and must include identifying information as prescribed by the state supervisor of assessments.

Assessors shall prepare the records and provide copies of all property records prepared by the assessor to the county director of tax equalization.

The county director of tax equalization shall maintain those records for ten years from the date the records were received from the assessors.

A city with an assessor who holds a current certification as a class I assessor under section 57-02-01.1, and which has been determined by the state supervisor of assessments to have enough sales for an adequate sales ratio study, may elect to maintain the records required under this subsection on behalf of the county.

A city that makes this election must include these records in a city database of taxable property to be maintained in the office of city assessor for ten years from the assessment date.

3.

Whenever after the first day of February and before the first day of April in any year, it is made to appear to the assessor by the oath of the owner that any building, structure, or other improvement, or tangible personal property, which is listed for taxation for the current year has been destroyed or damaged by fire, flood, tornado, or other natural disaster, the assessor shall investigate the matter and deduct from the valuation of the property of the owner of such destroyed property an amount which in the assessor's judgment fairly represents such deduction as should be made.

4.

By December 31, 2025, the assessor shall determine the land square footage and structure square footage of each parcel of residential property in the assessor's Page No.

17 25.1184.01002 Sixty-ninth Legislative Assembly assessment district and record the land square footage and structure square footage in the individual property record for each parcel.

For purposes of this subsection:

a.

"Land square foot" or "land square footage" means the square footage measurement of the land area of a parcel of property, excluding the square footage of any structure or building situated on the land.

b.

"Structure square foot" or "structure square footage" means the square footage measurement of structures and buildings situated on a parcel of property above ground level, exclusive of the land on which the structures or buildings are situated.

The term excludes any areas of a building or structure considered below grade.

SECTION 14.

AMENDMENT.

Section 57-02-11 of the North Dakota Century Code is amended and reenacted as follows:

57-02-11.

Listing of property - Assessment thereof - Determination of square footage.

Certified assessment officials must list and assess property as follows:

1.

On February first of each year:

a.

All real property subject to ad valorem taxation must be listed and assessed every year with reference to its value, on February first of for that year.

b.

The land square footage and structure square footage of real property subject to the square footage tax under section 18 of this Act must be listed for that year.

2.

An individual property record must be kept by the appropriate assessment official for each parcel of taxable property.

The record may be in electronic or paper form and must include identifying information as prescribed by the state supervisor of assessments.

Assessors shall prepare the records and provide copies of all property records prepared by the assessor to the county director of tax equalization.

The county director of tax equalization shall maintain those records for ten years from the date the records were received from the assessors.

A city with an assessor who holds a current certification as a class I assessor under section 57-02-01.1, and which has been determined by the state supervisor of assessments to have enough sales for an adequate sales ratio study, may elect to maintain the records required under this subsection on behalf of the county.

A city that makes this election must include these Page No.

18 25.1184.01002 Sixty-ninth Legislative Assembly records in a city database of taxable property to be maintained in the office of city assessor for ten years from the assessment date.

3.

Whenever after the first day of February and before the first day of April in any year, it is made to appear to the assessor by the oath of the owner that any building, structure, or other improvement, or tangible personal property, which is listed for taxation for the current year has been destroyed or damaged by fire, flood, tornado, or other natural disaster, the assessor shall investigate the matter and deduct from the valuation or square footage of the property of the owner of such destroyed property an amount which in the assessor's judgment fairly represents such deduction as should be made.

4.

By December 31, 2025, the assessor shall determine the land square footage and structure square footage of each parcel of residential property in the assessor's assessment district and record the land square footage and structure square footage in the individual property record for each parcel.

For purposes of this subsection:

a.

"Land square foot" or "land square footage" means the square footage measurement of the land area of a parcel of property, excluding the square footage of any structure or building situated on the land.

b.

"Structure square foot" or "structure square footage" means the square footage measurement of structures and buildings situated on a parcel of property above ground level, exclusive of the land on which the structures or buildings are situated.

The term excludes any areas of a building or structure considered below grade.

SECTION 15.

AMENDMENT.

Section 57-02-51 of the North Dakota Century Code is amended and reenacted as follows:

57-02-51.

Notice of township and city equalization meetings to be published - Date of equalization meeting.

1.

Each year the county auditor shall publish in the official county newspaper for two successive weeks, a notice that proceedings for the equalization of assessments will be held by the several local equalization boards.

Page No.

19 25.1184.01002 Sixty-ninth Legislative Assembly 2.

The first publication of the notice may not be more than forty-five days before the date of the equalization proceedings and the second publication may not be less than fourteen days before the equalization proceedings.

3.

The notice must contain a statement that the:

a.

The proceedings will be held at the regular meeting place of the governing board or other place designated by that board of the township or city, as the case may be.

The notice must also contain a statement that each;

and b.

Each taxpayer has the right to appear before the appropriate board of review or equalization and petition for correction of the taxpayer's assessment of property valuation or square footage determination under section 18 of this Act.

4.

The equalization proceedings in a city must be held within the first fifteen days of April and the equalization proceedings in an organized township must be held in the month of April.

SECTION 16.

AMENDMENT.

Section 57-02-52 of the North Dakota Century Code is amended and reenacted as follows:

57-02-52.

Notice of county equalization meetings to be published - Date of equalization meeting.

1.

Each year the county auditor shall publish in the official county newspaper for two successive weeks, a notice that proceedings for the equalization of assessments for all real property in the county will be held by the county board of equalization.

2.

The first publication of the notice may not be earlier than May first and the second publication may not be later than May twentieth, however, the second notice must be published more than ten days prior to the date of the meeting.

3.

The notice must contain the:

a.

The date, time, and location of the meeting.

The notice must also contain a;

and b.

A statement that each taxpayer has the right to appear before the appropriate board of review or equalization and petition for correction of the taxpayer's assessment of property valuation or square footage determination under section 18 of this Act.

4.

The county equalization proceedings must be held no later than June tenth.

Page No.

20 25.1184.01002 Sixty-ninth Legislative Assembly SECTION 17.

A new section to chapter 57-02 of the North Dakota Century Code is created and enacted as follows:

Valuation of property subject to square footage tax - Exemption.

Notwithstanding any other provision of law:

1.

Except as provided in subsection 2, property subject to the square footage tax under section 18 of this Act is exempt from the valuation requirements under this chapter.

2.

For purposes of calculating the debt limits under sections 15 and 16 of article X of the Constitution of North Dakota:

a.

The true and full value of a property subject to the square footage tax under section 18 of this Act must be calculated as the sum of:

(1) The land square footage of the property multiplied by the average price per square foot of similarly situated land in the county based on real estate sales;

and (2) The structure square footage of the property multiplied by the average price per square foot of a similarly situated structure in the county based on real estate sales.

b.

The assessed value of a property subject to the square footage tax under section 18 of this Act is fifty percent of the amount calculated in subdivision a.

SECTION 18.

A new chapter to title 57 of the North Dakota Century Code is created and enacted as follows:

Definitions.

For purposes of this chapter:

1.

"Land square foot" or "land square footage" means the square footage measurement of the land area of a parcel of property, excluding the square footage of any structure or building situated on the land.

2.

"Structure square foot" or "structure square footage" means the square footage measurement of structures and buildings situated on a parcel of property above ground level, exclusive of the land on which the structures or buildings are situated.

The term excludes any areas of a building or structure considered below grade.

Page No.

21 25.1184.01002 Sixty-ninth Legislative Assembly Residential square footage tax - Imposition.

Property classified as residential property, which is not otherwise subject to a payment in lieu of tax, is subject to a tax at a rate equal to a price per land square foot and a price per structure square foot as approved by each taxing district as provided in this chapter.

Taxes in lieu of ad valorem property taxes.

Taxes imposed under this chapter are in lieu of all ad valorem property taxes levied by the state or any of its political subdivisions upon property subject to the tax under this chapter.

Exemptions.

1.

Property subject to tax under this chapter which meets the criteria of the exemptions listed in section 57-02-08, except subsection 27 of section 57-02-08, are exempt from the tax under this chapter to the extent provided in section 57-02-08.

2.

Notwithstanding any other provision of law:

a.

If an exemption or payment in lieu of tax was calculated based on the valuation of residential property and the applicable mill rate before taxable year 2026, and a conversion method is not provided under law, the county auditor shall convert the exemption or payment in lieu of tax as necessary to allow the same tax benefit to be realized by the property owner under this chapter as would have been realized by the property owner under the ad valorem taxation system before taxable year 2026.

b.

If a specific exemption or payment in lieu of tax was granted by a taxing district for a parcel of residential property for a specified number of taxable years under the ad valorem taxation system before taxable year 2026, the county auditor shall apply the exemption or payment in lieu of tax to the tax levied under this chapter for the remaining taxable years.

If a conversion method is not provided under law, the county auditor shall convert the exemption or payment in lieu of tax as necessary to allow the same tax benefit to be realized by the property owner under this chapter as would have been realized under the ad valorem taxation system before taxable year 2026.

Tax exemption certificate for real property to be filed - Exceptions.

1.

A person owning residential property located within a taxing district which claims that the real property is exempt from taxation under this chapter shall file with the assessor Page No.

22 25.1184.01002 Sixty-ninth Legislative Assembly and with the county auditor a certificate setting out the facts on which the claim for exemption is based, including the names of owners, the date the property was acquired, the legal description, the use to which the property was put during the twelve months preceding the assessment date, and any other information which the assessor may request.

2.

Unless otherwise provided by law, the certificate shall be filed with the assessor and the county auditor each year before February first.

3.

If the certificate is not filed as provided in this section, the assessor shall regard the property as nonexempt property.

4.

The provisions of this section do not apply in any case when the real property is owned by the United States or the state of North Dakota or any of its departments, institutions, agencies, or political subdivisions.

Solar, wind, or geothermal energy device credit.

1.

An owner is entitled to a credit of five percent of the taxes levied under this chapter against the structure square footage of a new or existing building in which a solar or wind energy device or geothermal energy device is installed.

The credit may be applied for up to five taxable years following the installation of the system.

2.

To qualify for the credit under subsection 1, an applicant shall sign and file with the county assessor, by April first of each year, an application containing a verified statement of facts establishing the applicant's eligibility as of the date of the claim on a form and in the manner prescribed by the tax commissioner.

3.

For the purposes of this subsection:

a.

"Geothermal energy device" has the meaning provided in section 57-38-01.8.

b.

"Solar or wind energy device" has the meaning provided in section 57-38-01.8.

New single-family, condominium, and townhouse residential property credit.

1.

An owner is entitled to a credit equal to thirty percent of the taxes levied under this chapter against the structure square footage of a new single-family, condominium, and townhouse residential property if the following conditions are met:

a.

The governing body of the city, for property within city limits, or the governing body of the county, for property outside city limits, has approved the credit under this section by resolution.

A resolution adopted under this subdivision may be Page No.

23 25.1184.01002 Sixty-ninth Legislative Assembly rescinded or amended at any time.

The governing body of the city or county may limit or impose conditions upon a credit under this section, including limitations on the time during which a credit is allowed.

b.

Special assessments and taxes on the property upon which the residence is situated are not delinquent.

2.

The credit may be applied for up to two taxable years after the taxable year in which construction is completed and the residence is owned and occupied for the first time.

Land and structure square footage - Determination - Certification.

1.

On or before February first of each year, certified assessment officials shall determine the land square footage and structure square footage of residential property subject to the tax under this chapter.

The assessment official shall record the information in the individual property record for each parcel of property subject to the tax under this chapter.

2.

For purposes of determining structure square footage of a townhouse, the structure square footage of the townhouse property must be increased by the square footage added by the right to use any common areas in connection with the townhouse development.

The common areas of the development may not be separately taxed.

The square footage of a common area of the townhouse development must be apportioned in an equal amount to each townhouse in the development unless a declaration setting out a different apportionment is recorded in the office of the county recorder.

The total structure square footage of the townhouse property, including the square footage added as provided in this subsection, must have the benefit of any credit, exemption, or other special classification if the townhouse otherwise qualifies.

3.

The assessor shall certify the land square footage and structure square footage of each parcel of real property subject to the tax under this chapter to the:

a.

Governing board of each taxing district in which the parcel is situated;

b.

County director of tax equalization;

and c.

County auditor.

4.

The assessor shall deliver written notice of the certified land square footage and structure square footage to the property owner of each parcel of real property subject Page No.

24 25.1184.01002 Sixty-ninth Legislative Assembly to the tax under this chapter at least fifteen days before the meeting of the local board of equalization.

a.

The tax commissioner shall prescribe suitable forms for written notices under this subsection.

The written notice must include the date prescribed by law for the meeting of the local board of equalization of the assessment district in which the property is located and the meeting date of the county board of equalization.

b.

Delivery of written notice under this subdivision must be by personal delivery to the property owner, mail addressed to the property owner at the property owner's last-known address, or electronic mail to the property owner directed with verification of receipt to an electronic mail address at which the property owner has consented to receive notice.

5.

The determination of taxable land square footage and structure square footage may be appealed through the equalization or abatement process.

Square footage determination of real property exempt from taxation.

1.

At the time of making the determination of land square footage and structure square footage, the assessor shall enter in a separate list each description of property exempt from taxation under this chapter and shall determine the land square footage and structure square footage of the property in the same manner as other property subject to taxation under this chapter, designating in each case to whom the property belongs and for what purpose used.

2.

This section does not apply to property of the United States, this state, or a political subdivision of this state or farm buildings or farm residences exempt from property taxes by law.

Square footage tax rate - Determination - Limitation - Hearing.

1.

A taxing district shall:

a.

Propose square footage tax rates in an amount per structure square foot and an amount per land square foot, calculated as follows:

(1) Subject to the requirements and limitations in subsections 4 and 5, for taxable year 2026:

(a) The proposed price per structure square foot of residential property is equal to the ad valorem property tax levied in dollars in taxable year Page No.

25 25.1184.01002 Sixty-ninth Legislative Assembly 2025 attributable to residential structures situated in the taxing district divided by the total residential structure square footage in the taxing district.

(b) The proposed price per land square foot of residential property is equal to the ad valorem property tax levied in dollars in taxable year 2025 attributable to residential land situated in the taxing district divided by the total residential land square footage in the taxing district.

(2) Subject to the requirements and limitations in subsections 4 and 5, for taxable years after 2026:

(a) The proposed price per structure square foot of residential property is equal to the price per structure square foot imposed in the preceding taxable year multiplied by the percentage increase or decrease of the taxing district's proposed budget for the current taxable year compared to the preceding taxable year.

(b) The proposed price per land square foot of residential property is equal to the price per land square foot imposed in the preceding taxable year multiplied by the percentage increase or decrease of the taxing district's proposed budget for the current taxable year compared to the preceding taxable year.

b.

Notify the county auditor of the proposed square footage tax rates under subdivision a according to the procedures in section 57-15-02.2 on or before August tenth of each year.

c.

Notify members of the taxing district of the proposed square footage tax rates under subdivision a according to the procedures in section 57-15-02.2 on or before August thirty-first of each year.

2.

The taxing district shall consider the proposed square footage tax rates under subsection 1 during the taxing district's budget and proposed square footage tax rate hearing required under section 57-15-02.2.

3.

Subject to the requirements and limitations in subsections 4 and 5, after the taxing district's budget and proposed square footage tax rate hearing required under section Page No.

26 25.1184.01002 Sixty-ninth Legislative Assembly 57-15-02.2, the taxing district shall approve the following square footage tax rates by a resolution approved by the governing body of the taxing district:

a.

Price per structure square foot of residential property.

b.

Price per land square foot of residential property.

4.

For purposes of the square footage tax rates under this chapter, a taxing district shall impose a square footage tax rate at a rate which will generate sufficient revenue, together with the ad valorem tax assessed against commercial, agricultural, and centrally assessed property, to pay outstanding bonded indebtedness secured with ad valorem property tax in taxable years before 2026.

5.

The governing board of a taxing district, in levying taxes, including ad valorem taxes and square footage taxes under this chapter, is limited by the amount necessary to meet the appropriations included in the taxing district's budget for the ensuing fiscal year, and to provide a reserve fund as limited by law, together with a tax sufficient in amount to pay the interest on the bonded debt of the taxing district and to provide a sinking fund to pay the principal at maturity.

Certification of square footage tax rates.

The square footage tax rates approved by the governing board of a taxing district to be applied to a parcel subject to the tax under this chapter must be certified by the officer acting as business manager or clerk of the governing body of the taxing district to the county auditor of the county in which the parcel is situated immediately following the action of the governing body, or within ten days thereafter.

Duty of county auditor upon certification of square footage tax rate.

The county auditor of each county, upon receipt of the square footage tax rates certified to the county auditor by the proper authorities of a taxing district, shall acknowledge receipt of the certification to the official so certifying them immediately upon receiving the certification.

Square footage tax levy - Calculation.

The county auditor shall compute the amount of square footage tax to be levied against a parcel of residential property as the sum of:

1.

The combined land square footage tax rates for each taxing district in which the parcel is situated multiplied by the land square footage of the parcel;

and Page No.

27 25.1184.01002 Sixty-ninth Legislative Assembly 2.

The combined structure square footage rates for each taxing district in which the parcel is situated multiplied by the structure square footage of the parcel.

Enforcement - Administration - Collection - Penalties - Delinquency.

Provisions of law relating to enforcement, administration, collection, penalties, and delinquency proceedings for ad valorem taxes apply to taxes levied under this chapter.

Abatement procedure.

The procedures for abatement under chapter 57-23 apply to the tax levied under this chapter.

SECTION 19.

AMENDMENT.

Section 57-09-04 of the North Dakota Century Code is amended and reenacted as follows:

57-09-04.

Duties of board - Limitation on increase - Notice - Review of square footage determination.

1.

The township board of equalization shall ascertain whether all taxable property subject to ad valorem taxation in its township has been properly placed upon the assessment list and duly valued by the assessor.

In case any real property has been omitted by inadvertence or otherwise, the board shall place the same upon the list with the true value thereof.

The board shall proceed to correct the assessment so that each tract or lot of real property is entered on the assessment list at the true value thereof.