(1) Any physical improvement to single-family dwellings upon real property, including constructing an accessory dwelling unit, whether attached to or within the single-family dwelling or as a detached unit on the same real property, shall be exempt from taxation for the three assessment years subsequent to the completion of the improvement to the extent that the improvement represents 30 percent or less of the value of the original structure. A taxpayer desiring to obtain the exemption granted by this section must file notice of his or her intention to construct the improvement prior to the improvement being made on forms prescribed by the department of revenue and furnished to the taxpayer by the county assessor. The exemption in this subsection cannot be claimed more than once in a five-year period.
The department of revenue shall promulgate such rules and regulations as are necessary and convenient to properly administer the provisions of this subsection (1).
(2)(a) A county legislative authority for a county with a population of 1,500,000 or more or a city or county legislative authority located in a county with a population of at least 900,000 but not more than 1,500,000 may exempt from taxation the value of an accessory dwelling unit if the following conditions are met:
(i) The improvement represents 30 percent or less of the value of the original structure;
(ii) The taxpayer demonstrates that the unit is maintained as a rental property for low-income households by submitting an affidavit stating the tenant's income and a document that demonstrates the tenant's income. For the purposes of this subsection, "low-income household" means a single person, family, or unrelated persons living together whose adjusted income is at or below 60 percent of the median household income adjusted for household size, for the county where the household is located, as reported by the United States department of housing and urban development;
(iii) The taxpayer files notice of the taxpayer's intention to participate in the exemption program on forms prescribed by and furnished to the taxpayer by the county assessor, including verification of the tenant's income through an affidavit as described in (a)(ii) of this subsection (2), and a copy of a lease that is at least 12 months in duration and includes the rent rate;
(iv) Rent charged to a tenant does not exceed more than 30 percent of the tenant's monthly income;
(v) The accessory dwelling unit is not occupied by an immediate family member of the taxpayer. For purposes of this subsection (2)(a), "immediate family" means any person under age sixty that is a state registered domestic partner, spouse, parents, grandparents, children, including foster children, siblings, and in-laws; and
(vi) If located in a county with a population of at least 900,000 but not more than 1,500,000, the city legislative authority or the county legislative authority passes a resolution authorizing the exemption to be offered within the geographic boundaries of the city or county. The resolution must outline the process whereby the enacting legislative authority will provide the county assessor with information to verify that both the low-income household and the taxpayer are in compliance with the requirements of this subsection (2).
(b) An exemption granted under this subsection (2) must be applied for annually but may continue for as long as the exempted accessory dwelling unit is leased to a low-income household.
(c) A county legislative authority with a population greater than 1,500,000 that has opted to exempt accessory dwelling units under this subsection (2) may:
(i) Allow the exemption for dwelling units that are attached to or within a single-family dwelling or are detached units on the same real property, or both;
(ii) Collect a fee from the taxpayer to cover the costs of administering this subsection (2);
(iii) Designate administrative officials or agents that will verify that both the low-income household and the taxpayer are in compliance with the requirements of this subsection (2). The designated official or agent may not be the county assessor but may include housing authorities or other qualified organizations as determined by the county legislative authority; and
(iv) Determine what property tax and penalties will be due, if any, in the case of a finding of noncompliance by a taxpayer.
(d) If located in a county with a population of at least 900,000 but not more than 1,500,000, the following applies:
(i) The exemption must only apply to detached units on the same real property.
(ii) The assessor may collect a fee from the taxpayer in an amount necessary to cover the costs of administering this section.
(iii) The assessor may determine what property tax and penalties will be due, if any, in the case that the enacting legislative authority finds noncompliance by a taxpayer.
(e) A legislative authority that has opted to exempt accessory dwelling units under this subsection (2) shall establish policies to assist and support tenants upon expiration of an exemption granted under this subsection (2), such as providing information on services available at the time of expiration.