Senate File 327 - Introduced SENATE FILE 327 BY SMITH A BILL FOR An Act relating to the targeted jobs withholding tax credit 1 program by modifying the number and qualifications of cities 2 and types of businesses that may participate in the program, 3 and including applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2467XS (2) 86 mm/sc

S.F. 327 Section 1. Section 403.19A, subsection 1, paragraph a, Code 1 2015, is amended to read as follows: 2 a. “Business” means an a manufacturing or industrial 3 enterprise that is located in this state and that is operated 4 for profit and under a single management. “Business” includes 5 professional services and industrial enterprises, including 6 but not limited to medical treatment facilities, manufacturing 7 facilities, corporate headquarters, and research facilities. 8 “Business” does not include a retail operation, professional 9 services, a government entity, or any other enterprise that 10 is not primarily engaged in manufacturing or industrial 11 operations, or a business which closes or substantially 12 reduces its operation in one area of this state and relocates 13 substantially the same operation to another area of this state. 14 Sec. 2. Section 403.19A, subsection 2, Code 2015, is amended 15 to read as follows: 16 2. a. An eligible city may apply for designation as a pilot 17 project city pursuant to this subsection . An eligible city is 18 a city that wholly contains three or more census tracts and is 19 located in a county meeting one of the following requirements: 20 (1) A county that borders Nebraska. 21 (2) A county that borders South Dakota. 22 (3) A county that borders a state other than Nebraska or 23 South Dakota. 24 (4) A county that borders Illinois. 25 (5) A county that borders Wisconsin. 26 b. (1) The department of economic development authority 27 shall approve four six eligible cities as pilot project 28 cities, one pursuant to paragraph “a” , subparagraph (1), one 29 pursuant to paragraph “a” , subparagraph (2), and two pursuant 30 to paragraph “a” , subparagraph (3) , one pursuant to paragraph 31 “a” , subparagraph (4), and one pursuant to paragraph “a” , 32 subparagraph (5) . The city approved pursuant to paragraph 33 “a” , subparagraph (4), shall have a population of at least 34 eighty-five thousand six hundred residents but not more than 35 -1- LSB 2467XS (2) 86 mm/sc 1/ 4

S.F. 327 one hundred ten thousand residents, which city shall be located 1 in a county with a population of at least one hundred twenty 2 thousand residents but not more than one hundred seventy 3 thousand residents, as determined by the 2010 certified 4 federal census. The city approved pursuant to paragraph 5 “a” , subparagraph (5), shall have a population of at least 6 fifty-five thousand residents but not more than sixty-five 7 thousand residents, which city shall be located in a county 8 with a population of at least ninety thousand residents but not 9 more than ninety-seven thousand residents, as determined by 10 the 2010 certified federal census. If two eligible cities are 11 approved which are located in the same county and the county 12 has a population of less than forty-five thousand, the two 13 approved eligible cities shall be considered one pilot project 14 city. If more than two cities meeting the requirements of 15 paragraph “a” , subparagraph (3), apply to be designated as 16 a pilot project city, the department of economic development 17 authority shall determine which two cities hold the most 18 potential to create new jobs or generate the greatest capital 19 within their areas. Applications from eligible cities seeking 20 approval under paragraph “a” , subparagraph (1), (2), or (3), 21 filed on or after October 1, 2006, shall not be considered. 22 Applications from eligible cities seeking approval under 23 paragraph “a” , subparagraph (4) or (5), filed on or after 24 January 1, 2016, shall not be considered. 25 (2) If a pilot project city does not enter into a 26 withholding agreement within one year of its approval as a 27 pilot project city, the city shall lose its status as a pilot 28 project city. If two pilot project cities are located in the 29 same county, the loss of status by one pilot project city shall 30 not cause the second pilot project city in the county to lose 31 its status as a pilot project city. Upon such occurrence, 32 the department of economic development authority shall take 33 applications from other eligible cities to replace that city. 34 Another city shall be designated within six months. 35 -2- LSB 2467XS (2) 86 mm/sc 2/ 4

S.F. 327 (3) On July 1, 2011, the economic development authority 1 shall assume responsibility for the administration of this 2 subsection . 3 Sec. 3. APPLICABILITY. The section of this Act amending 4 section 403.19A, subsection 1, applies to withholding 5 agreements entered into on or after July 1, 2015, and 6 withholding agreements entered into before July 1, 2015, shall 7 be governed by section 403.19A, subsection 1, Code 2015. 8 EXPLANATION 9 The inclusion of this explanation does not constitute agreement with 10 the explanation’s substance by the members of the general assembly. 11 This bill relates to the targeted jobs withholding tax 12 credit pilot project, which is a program that allows pilot 13 project cities to enter into withholding agreements with 14 businesses that meet certain job creation, capital investment, 15 and private financial support requirements within the city. 16 Withholding agreements provide for the diversion of a certain 17 percentage of the gross wages paid by the business to the pilot 18 project city for a project related to the employer pursuant to 19 the agreement. 20 Under current law, the program is restricted to four pilot 21 project cities; one in a county bordering Nebraska, one in a 22 county bordering South Dakota, and two in counties bordering 23 states other than Nebraska or South Dakota. However, a county 24 with a population of less than 45,000 residents may count 25 two cities as one pilot project city. The current pilot 26 project cities are Sioux City, Fort Madison, Council Bluffs, 27 Burlington, and Keokuk. 28 The bill amends the requirement that eligible cities contain 29 three or more census tracts to specify that eligible cities 30 wholly contain three or more census tracts. 31 The bill allows two additional eligible cities to be 32 designated as pilot project cities, one from a county that 33 borders Illinois and one from a county that borders Wisconsin. 34 In order to qualify, the city bordering Illinois must have a 35 -3- LSB 2467XS (2) 86 mm/sc 3/ 4

S.F. 327 population of 86,500 to 110,000 residents, and must be located 1 in a county with a population of 120,000 to 170,000 residents, 2 as determined by the 2010 certified federal census. The city 3 bordering Wisconsin must have a population of 55,000 to 65,000 4 residents, and must be located in a county with a population of 5 90,000 to 97,000 residents, as determined by the 2010 certified 6 federal census. The bill allows applications from eligible 7 cities for designation as these pilot project cities to be 8 filed before January 1, 2016. 9 The bill also changes the types of businesses that are 10 eligible to enter into withholding agreements under the 11 program. Under current law, any business enterprise located in 12 Iowa and operated for profit and under single management may 13 qualify unless the business is a retail operation, government 14 entity, or is closing or substantially reducing its operations 15 in another area of the state. 16 The bill provides that only businesses that are 17 manufacturing or industrial enterprises located in Iowa 18 and operated for profit and under single management may 19 qualify under the program. Excluded are retail operations, 20 professional services, government entities, or any other 21 enterprise that is not primarily engaged in manufacturing or 22 industrial operations, or that is closing or substantially 23 reducing its operations in another area of the state. This 24 provision applies to withholding agreements entered into on or 25 after July 1, 2015. 26 -4- LSB 2467XS (2) 86 mm/sc 4/ 4