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1 1 Section 1. NEW SECTION. 15.351 SHORT TITLE.
1 2 This chapter shall be known as the "Iowa Enterprise Zone
1 3 Act."
1 4 Sec. 2. NEW SECTION. 15.352 DEFINITIONS.
1 5 As used in this chapter:
1 6 1. "Enterprise zone" means an area of this state declared
1 7 by the department to be eligible for the benefits of this
1 8 part.
1 9 2. "Qualified business" means any person, corporation, or
1 10 other entity engaged in the active conduct of a trade or
1 11 business, limited to the business location within the
1 12 enterprise zone and not extending to related interests or
1 13 business locations outside the zone, which meets the following
1 14 criteria:
1 15 a. Has at least fifty percent of its employees performing
1 16 substantially all of their services within an enterprise zone.
1 17 b. Has individuals from one or more of the following three
1 18 categories constituting at least twenty-five percent of the
1 19 employees of the business.
1 20 (1) Residents of an enterprise zone.
1 21 (2) Individuals who have been unemployed for at least the
1 22 entire year prior to obtaining employment with the business.
1 23 (3) Individuals who have rejected public assistance
1 24 benefits, based on need and intended to alleviate poverty, for
1 25 at least the entire year prior to obtaining employment with
1 26 the business.
1 27 3. "Qualified employee" means any employee who works for a
1 28 qualified business.
1 29 4. "Qualified property" means any of the following:
1 30 a. Any tangible personal property located in an enterprise
1 31 zone used predominantly by the taxpayer in the zone in the
1 32 active conduct of a trade or business.
1 33 b. Any real property located in such zone which is used
1 34 predominantly by the taxpayer in the active conduct of a trade
1 35 or business.
2 1 Sec. 3. NEW SECTION. 15.353 APPLICATION TO DEPARTMENT.
2 2 1. Any city or county may designate any area or areas
2 3 within its jurisdiction to be an economically depressed area.
2 4 The city or county may then make written application to the
2 5 department to have the area declared to be an enterprise zone.
2 6 The application shall include a description of the location of
2 7 the area or areas in question and such other information as
2 8 the department may require.
2 9 2. Upon receipt of an application from a city or county
2 10 the department shall review the application to determine
2 11 whether the area or areas described in the application qualify
2 12 to be designated an enterprise zone.
2 13 3. The department shall complete its review within one
2 14 hundred twenty days of receipt of the application, but may
2 15 extend this time period an additional sixty days if necessary.
2 16 If the department denies the application, it shall inform the
2 17 city or county of the fact along with the reasons for the
2 18 denial.
2 19 Sec. 4. NEW SECTION. 15.354 ENTERPRISE ZONES –
2 20 1. Any area of a city or county may be designated an
2 21 enterprise zone if the area has a continuous boundary, and is
2 22 an area of low standard of living, unemployment above the
2 23 statewide average, and economic distress.
2 24 2. An area meets the requirements of subsection 1 if any
2 25 of the following exist:
2 26 a. The average rate of unemployment in the area for the
2 27 most recent eighteen-month period for which data is available
2 28 was at least one and one-half times the average state rate of
2 29 unemployment for the eighteen-month period.
2 30 b. At least seventy percent of the residents living in the
2 31 area have incomes below eighty percent of the median income of
2 32 the residents of the city or county requesting designation.
2 33 c. The population of the area decreased by ten percent or
2 34 more between 1980 and 1990 as indicated by the appropriate
2 35 federal census.
3 1 Sec. 5. NEW SECTION. 15.355 DESIGNATION OF ENTERPRISE
3 2 ZONES.
3 3 1. In each of the three calendar years beginning January
3 4 1, 1997, the authority may designate four enterprise zones.
3 5 In the year 2000, the authority may designate two enterprise
3 6 zones. In deciding which areas should be designated as
3 7 enterprise zones, the authority shall give preference to:
3 8 a. Areas with the lowest average wages, highest
3 9 unemployment, and general distress.
3 10 b. Areas that have the widest support from the city or
3 11 county seeking designation, the community, residents, local
3 12 business, and private organizations.
3 13 c. Areas for which the city or county seeking designation
3 14 has made or will make the greatest effort to encourage
3 15 economic activity and remove impediments to job creation,
3 16 including but not limited to a reduction of tax rates or fees,
3 17 an increase in the level or efficiency of local services, and
3 18 a simplification or streamlining of governmental requirements
3 19 on employers or employees, taking into account the resources
3 20 available to the city or county to make such efforts.
3 21 2. Any designation of an area as an enterprise zone shall
3 22 remain in effect during the period beginning on the date of
3 23 designation and ending on December 31 of the twentieth year
3 24 following designation.
3 25 3. The department may remove designation of any area as an
3 26 enterprise zone if such area no longer meets the criteria for
3 27 designation as set out in this part or by rule adopted by the
3 28 department, provided that no designation shall be removed less
3 29 than ten years from the date of original designation.
3 30 Sec. 6. NEW SECTION. 15.356 ADMINISTRATION.
3 31 The department shall administer this part and shall have
3 32 the following powers and duties:
3 33 1. To establish criteria for determining which areas shall
3 34 be designated as enterprise zones.
3 35 2. To monitor the implementation of this part and submit
4 1 reports evaluating the effectiveness of the program and any
4 2 suggestions for legislation to the governor and general
4 3 assembly by October 1 of any year.
4 4 3. To conduct a continuing evaluation program of
4 5 enterprise zones.
4 6 4. To assist the city or county in obtaining federal
4 7 status as enterprise zones.
4 8 5. To assist the city or county which designated the
4 9 enterprise zone in obtaining assistance from any other agency
4 10 of state government, including, but not limited to, assistance
4 11 in providing training and technical assistance to qualified
4 12 businesses within an enterprise zone.
4 13 Sec. 7. NEW SECTION. 15.357 LICENSES.
4 14 1. The department shall establish and design for public
4 15 display a master business license which shall certify that the
4 16 qualifying business has obtained all necessary state agency
4 17 permits, licenses, certificates, approvals, registrations,
4 18 charters, or any other form of permission required by law,
4 19 including agency rule, to engage in business in an enterprise
4 20 zone.
4 21 2. The department shall provide information and
4 22 appropriate assistance to persons desiring to locate and
4 23 engage in business in a zone regarding the state licenses,
4 24 permits, certificates, approvals, registrations, charters, and
4 25 any other forms of permission required by law to engage in
4 26 business in the state.
4 27 3. Notwithstanding any provision of this part, the
4 28 authority for determining if any requested licenses, permits,
4 29 certificates, approvals, registrations, charters, or any other
4 30 form of permission required by law to be issued shall remain
4 31 with the agency otherwise legally authorized to issue the
4 32 license.
4 33 Sec. 8. NEW SECTION. 15.358 DEVELOPMENT BENEFITS.
4 34 1. A qualified business may claim a corporate tax credit
4 35 up to a maximum of ten percent. Any credit in excess of the
5 1 tax liability for the tax year may be credited to the tax
5 2 liability for the following seven years or until depleted,
5 3 whichever occurs earlier. If the business is a partnership,
5 4 subchapter S corporation, limited liability company, or estate
5 5 or trust electing to have the income taxed directly to the
5 6 individual, an individual may claim the tax credit allowed.
5 7 The amount claimed by the individual shall be based upon the
5 8 pro rata share of the individual's earnings of the
5 9 partnership, subchapter S corporation, limited liability
5 10 company, or estate or trust.
5 11 2. Employees shall receive, for the purpose of determining
5 12 their state income tax liability, a deduction of up to ten
5 13 thousand dollars for wage income earned from employment within
5 14 an enterprise zone.
5 15 3. Sales, services, and use tax refund – contractor or
5 16 subcontractor. The qualified business shall be entitled to a
5 17 refund of the taxes paid under chapters 422 and 423 for gas,
5 18 electricity, water, or sewer utility services, goods, wares,
5 19 or merchandise, or on services rendered, furnished, or
5 20 performed to or for a contractor or subcontractor and used in
5 21 the fulfillment of a written contract relating to the
5 22 construction or rehabilitation or equipping of a facility
5 23 within the zone of the qualified business. Taxes attributable
5 24 to intangible property and furniture and furnishings shall not
5 25 be refunded.
5 26 To receive the refund a claim shall be filed by the
5 27 qualified business with the department of revenue and finance
5 28 as follows:
5 29 a. The contractor or subcontractor shall state under oath,
5 30 on forms provided by the department, the amount of the sales
5 31 of goods, wares, or merchandise or services rendered,
5 32 furnished, or performed, including water, sewer, gas, and
5 33 electric utility services for use in the zone upon which sales
5 34 or use tax has been paid, and shall file the forms with the
5 35 qualified business before final settlement is made.
6 1 b. The qualified business shall, not more than six months
6 2 after project completion, make application to the department
6 3 for any refund of the amount of the taxes paid pursuant to
6 4 chapter 422 or 423 upon any goods, wares, or merchandise, or
6 5 services rendered, furnished, or performed, including water,
6 6 sewer, gas, and electric utility services. The application
6 7 shall be made in the manner and upon forms to be provided by
6 8 the department, and the department shall audit the claim and,
6 9 if approved, issue a warrant to the qualified business in the
6 10 amount of the sales or use tax which has been paid to the
6 11 state of Iowa under a contract. A claim filed by the
6 12 qualified business in accordance with this subsection shall
6 13 not be denied by reason of a limitation provision set forth in
6 14 chapter 421, 422, or 423.
6 15 c. A contractor or subcontractor who willfully makes a
6 16 false report of tax paid under the provisions of this
6 17 subsection is guilty of a simple misdemeanor and in addition
6 18 is liable for the payment of the tax and any applicable
6 19 penalty and interest.
6 20 4. All property taxes within an enterprise zone may be
6 21 reduced by the city or county by up to fifty percent ratable
6 22 over the first two years after the zone is established and in
6 23 operation.
6 24 Sec. 9. NEW SECTION. 15.361 PERIOD OF TAX BENEFITS.
6 25 All tax reductions provided by this Act applying within a
6 26 particular enterprise zone are to continue for twenty years
6 27 after the zone is established. The reductions are then to be
6 28 phased out over the next five years. Any qualified business
6 29 that is relying on the particular enterprise zone during this
6 30 five-year period to meet the criteria for a qualified business
6 31 shall have the reductions applied to it reduced accordingly,
6 32 with the reductions completely phased out after the five-year
6 33 period.
6 34 EXPLANATION
6 35 This bill provides for the establishment of enterprise
7 1 zones by the department of economic development. To establish
7 2 an enterprise zone, a city or county designates an area as
7 3 economically depressed and applies to the department to have
7 4 the area declared an enterprise zone.
7 5 The department may designate an area an enterprise zone if
7 6 the area is one of a low standard of living, unemployment
7 7 above the statewide average, and economic distress. Four
7 8 enterprise zones may be designated in years 1997, 1998, and
7 9 1999 and two enterprise zones may be designated in the year
7 10 2000 for a total of 14.
7 11 The department is to design a master license for use by
7 12 qualified businesses indicating that the business has all
7 13 necessary permits and licenses to engage in business. The
7 14 department is to assist in obtaining the master license but
7 15 each agency currently issuing the permit or license shall
7 16 continue to have authority to issue the permit or license.
7 17 Development benefits to a qualified business include an
7 18 income tax credit of 10 percent, a state income tax deduction
7 19 of up to $10,000 for each employee of the qualified business,
7 20 and a reduction in property taxes of up to 50 percent. Tax
7 21 benefits in enterprise zones last for 20 years.
7 22 LSB 3929HH 76
7 23 mk/sc/14
Text: HF02409 Text: HF02411 Text: HF02400 - HF02499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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