SF 327 (LSB 2467XS (2) 86)

SENATE FILE 327

BY  SMITH

A BILL FOR

An Act relating to the targeted jobs withholding tax credit program by modifying the number and qualifications of cities and types of businesses that may participate in the program, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 403.19A, subsection 1, paragraph a, Code 2015, is amended to read as follows:
   a.  “Business” means an a manufacturing or industrial enterprise that is located in this state and that is operated for profit and under a single management. “Business” includes professional services and industrial enterprises, including but not limited to medical treatment facilities, manufacturing facilities, corporate headquarters, and research facilities. “Business” does not include a retail operation, professional services, a government entity, or any other enterprise that is not primarily engaged in manufacturing or industrial operations, or a business which closes or substantially reduces its operation in one area of this state and relocates substantially the same operation to another area of this state.
    Sec. 2.  Section 403.19A, subsection 2, Code 2015, is amended to read as follows:
   2.  a.  An eligible city may apply for designation as a pilot project city pursuant to this subsection. An eligible city is a city that wholly contains three or more census tracts and is located in a county meeting one of the following requirements:
   (1)  A county that borders Nebraska.
   (2)  A county that borders South Dakota.
   (3)  A county that borders a state other than Nebraska or South Dakota.
   (4)  A county that borders Illinois.
   (5)  A county that borders Wisconsin.
   b.  (1)  The department of economic development authority shall approve four six eligible cities as pilot project cities, one pursuant to paragraph “a”, subparagraph (1), one pursuant to paragraph “a”, subparagraph (2), and two pursuant to paragraph “a”, subparagraph (3), one pursuant to paragraph “a”, subparagraph (4), and one pursuant to paragraph “a”, subparagraph (5).  The city approved pursuant to paragraph “a”, subparagraph (4), shall have a population of at least eighty-five thousand six hundred residents but not more than one hundred ten thousand residents, which city shall be located in a county with a population of at least one hundred twenty thousand residents but not more than one hundred seventy thousand residents, as determined by the 2010 certified federal census. The city approved pursuant to paragraph “a”, subparagraph (5), shall have a population of at least fifty-five thousand residents but not more than sixty-five thousand residents, which city shall be located in a county with a population of at least ninety thousand residents but not more than ninety-seven thousand residents, as determined by the 2010 certified federal census. If two eligible cities are approved which are located in the same county and the county has a population of less than forty-five thousand, the two approved eligible cities shall be considered one pilot project city. If more than two cities meeting the requirements of paragraph “a”, subparagraph (3), apply to be designated as a pilot project city, the department of economic development authority shall determine which two cities hold the most potential to create new jobs or generate the greatest capital within their areas. Applications from eligible cities seeking approval under paragraph “a”, subparagraph (1), (2), or (3), filed on or after October 1, 2006, shall not be considered.  Applications from eligible cities seeking approval under paragraph “a”, subparagraph (4) or (5), filed on or after January 1, 2016, shall not be considered.
   (2)  If a pilot project city does not enter into a withholding agreement within one year of its approval as a pilot project city, the city shall lose its status as a pilot project city. If two pilot project cities are located in the same county, the loss of status by one pilot project city shall not cause the second pilot project city in the county to lose its status as a pilot project city. Upon such occurrence, the department of economic development authority shall take applications from other eligible cities to replace that city. Another city shall be designated within six months.
   (3)  On July 1, 2011, the economic development authority shall assume responsibility for the administration of this subsection.
    Sec. 3.  APPLICABILITY.  The section of this Act amending section 403.19A, subsection 1, applies to withholding agreements entered into on or after July 1, 2015, and withholding agreements entered into before July 1, 2015, shall be governed by section 403.19A, subsection 1, Code 2015.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the targeted jobs withholding tax credit pilot project, which is a program that allows pilot project cities to enter into withholding agreements with businesses that meet certain job creation, capital investment, and private financial support requirements within the city. Withholding agreements provide for the diversion of a certain percentage of the gross wages paid by the business to the pilot project city for a project related to the employer pursuant to the agreement.
   Under current law, the program is restricted to four pilot project cities; one in a county bordering Nebraska, one in a county bordering South Dakota, and two in counties bordering states other than Nebraska or South Dakota. However, a county with a population of less than 45,000 residents may count two cities as one pilot project city. The current pilot project cities are Sioux City, Fort Madison, Council Bluffs, Burlington, and Keokuk.
   The bill amends the requirement that eligible cities contain three or more census tracts to specify that eligible cities wholly contain three or more census tracts. 
   The bill allows two additional eligible cities to be designated as pilot project cities, one from a county that borders Illinois and one from a county that borders Wisconsin. In order to qualify, the city bordering Illinois must have a population of 86,500 to 110,000 residents, and must be located in a county with a population of 120,000 to 170,000 residents, as determined by the 2010 certified federal census. The city bordering Wisconsin must have a population of 55,000 to 65,000 residents, and must be located in a county with a population of 90,000 to 97,000 residents, as determined by the 2010 certified federal census. The bill allows applications from eligible cities for designation as these pilot project cities to be filed before January 1, 2016.
   The bill also changes the types of businesses that are eligible to enter into withholding agreements under the program. Under current law, any business enterprise located in Iowa and operated for profit and under single management may qualify unless the business is a retail operation, government entity, or is closing or substantially reducing its operations in another area of the state.
   The bill provides that only businesses that are manufacturing or industrial enterprises located in Iowa and operated for profit and under single management may qualify under the program. Excluded are retail operations, professional services, government entities, or any other enterprise that is not primarily engaged in manufacturing or industrial operations, or that is closing or substantially reducing its operations in another area of the state. This provision applies to withholding agreements entered into on or after July 1, 2015.