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PAG LIN 1 1 Section 1. NEW SECTION. 15E.175 DEFINITIONS. 1 2 As used in this section and sections 15E.176 and 15E.177: 1 3 1. "Affordable housing assistance" means money, real or 1 4 personal property, or professional services expended or 1 5 devoted to the construction or rehabilitation of housing for 1 6 low and moderate income families. 1 7 2. "Low or moderate income families" has the same meaning 1 8 as in section 16.1, subsection 24. 1 9 3. "Taxpayer" means a person subject to tax under chapter 1 10 422, division II, III, or V, or chapter 432. 1 11 4. "Tax year" means for individuals and entities subject 1 12 to the state personal net income tax, corporate income tax, or 1 13 the state franchise tax under chapter 422, division II, III, 1 14 or V, respectively, the tax year as defined for those 1 15 divisions or means for insurance companies subject to the 1 16 gross premiums tax under chapter 432, the calendar year for 1 17 which the premiums are taxed. 1 18 Sec. 2. NEW SECTION. 15E.176 TAX CREDITS. 1 19 1. For tax years beginning on or after January 1, 1997, 1 20 there is allowed a credit against that tax imposed under the 1 21 personal net income tax in chapter 422, division II, the 1 22 corporate income tax in chapter 422, division III, the 1 23 franchise tax in chapter 422, division V, or the gross 1 24 premiums tax in chapter 432, for affordable housing assistance 1 25 provided by the taxpayer. 1 26 2. The amount of credit allowed under subsection 1, 1 27 subject to subsection 4, is equal to not more than fifty-five 1 28 percent of the affordable housing assistance provided by the 1 29 taxpayer. 1 30 3. The taxpayer is allowed the credit as computed each 1 31 year in subsection 2 for up to ten consecutive years beginning 1 32 with the first year for which the credit is taken. 1 33 If the amount of the credit exceeds the taxpayer's tax 1 34 liability for the tax year, the excess may be credited to the 1 35 tax liability for the following five tax years or until 2 1 depleted, whichever is the earlier, and is in addition to any 2 2 other credit allowed under this section. For purposes of this 2 3 section, an individual may claim a credit for affordable 2 4 housing assistance incurred by a partnership, subchapter S 2 5 corporation, estate, or trust electing to have the income 2 6 taxed directly to the individual. The amount claimed by the 2 7 individual shall be based upon the pro rata share of the 2 8 individual's earnings of a partnership, subchapter S 2 9 corporation, estate, or trust. 2 10 4. Notwithstanding the amount of credit allowed in 2 11 subsection 2, the total amount of credits for all taxpayers 2 12 that shall be allowed under subsection 1 for any fiscal year 2 13 of the qualified venture capital company shall not exceed two 2 14 million dollars and shall not exceed a total amount of ten 2 15 million dollars. In determining if the credit allowed has 2 16 exceeded the fiscal year limit, credits carried over from a 2 17 previous tax year are not counted. 2 18 5. The credit provided for in subsection 2, to the extent 2 19 not previously utilized, shall be freely transferable to and 2 20 by subsequent transferees for a period of ten years from the 2 21 date the credit is first available to the taxpayer. 2 22 Sec. 3. NEW SECTION. 15E.177 AFFORDABLE HOUSING 2 23 ASSISTANCE – APPROVAL. 2 24 A taxpayer who wishes to engage in affordable housing 2 25 assistance shall submit a proposal regarding the assistance to 2 26 the department of economic development. The proposal shall 2 27 contain the program of affordable housing assistance to be 2 28 conducted by the taxpayer, the location and number of units, 2 29 reasons why the program is needed, the time period for which 2 30 affordable housing assistance shall be provided, the estimated 2 31 amount to be invested in the program, plans for implementing 2 32 the program, and a list of other taxpayers who plan to 2 33 participate in the program, if any. 2 34 In the case of rental units, all proposals approved by the 2 35 department shall require a land use restriction agreement 3 1 stating that the units shall be devoted to affordable housing 3 2 for a period deemed reasonable by the department. In the case 3 3 of owner-occupied units, all proposals approved by the 3 4 department shall require a land use restriction agreement for 3 5 a time period deemed reasonable by the department requiring 3 6 any subsequent owner, except a lender with a security interest 3 7 in the property, to be a low or moderate income family and 3 8 further requiring the acquisition price to any subsequent 3 9 owner not to exceed, by more than five percent annual 3 10 appreciation, the acquisition price to the original low or 3 11 moderate income owner at the time the tax credit is first 3 12 claimed. The restriction shall be approved by the property 3 13 owner and shall be binding on any subsequent owner of the 3 14 property unless otherwise approved by the department. 3 15 The department, in approving the proposal, may authorize 3 16 the use of tax credits by one or more taxpayers listed in the 3 17 proposal and shall establish specific requirements regarding 3 18 the degree of completion of affordable housing assistance 3 19 necessary to be eligible for the tax credits under this 3 20 division. The approval shall state the maximum credit 3 21 allowable to each taxpayer listed in the proposal. 3 22 Sec. 4. NEW SECTION. 15E.180 COMMUNITY DEVELOPMENT BLOCK 3 23 GRANTS – PRIORITY. 3 24 In awarding community development block grant funds, the 3 25 department shall give priority to requests for upgrading water 3 26 and sewer facilities which result from a twenty-five percent 3 27 or more increase, since the current water and sewer facilities 3 28 were upgraded, in housing units in the community. 3 29 Sec. 5. Section 331.441, subsection 2, paragraph b, 3 30 subparagraph 10, Code Supplement 1995, is amended to read as 3 31 follows: 3 32 (10) The establishment or funding of programs to provide 3 33 for or assist in providing for the acquisition, restoration, 3 34 or demolition of housing, as part of a municipal housing 3 35 project under chapter 403A or otherwise, or for other purposes 4 1 as may be authorized under chapter 403A. 4 2 Sec. 6. Section 384.24, subsection 3, paragraph u, Code 4 3 1995, is amended to read as follows: 4 4 u. The establishment or funding of programs to provide for 4 5 or assist in providing for the acquisition, restoration, or 4 6 demolition of housing, as part of a municipal housing project 4 7 under chapter 403A or otherwise, or for other purposes as may 4 8 be authorized under chapter 403A. 4 9 Sec. 7. Section 403.17, subsection 9, Code 1995, is 4 10 amended to read as follows: 4 11 9. "Economic development area" means an area of a 4 12 municipality designated by the local governing body as 4 13 appropriate for commercial and industrial enterprises, public 4 14 improvements related to housing and residential development, 4 15 or construction or rehabilitation of housing and residential 4 16 developmentfor low and moderate income families, including 4 17 single or multifamily housing. If an urban renewal plan for 4 18 an urban renewal area is based upon a finding that the area is 4 19 an economic development area and that no part contains slum or 4 20 blighted conditions, then the division of revenue provided in 4 21 section 403.19 and stated in the plan shall be limited to 4 22 twenty years from the calendar year following the calendar 4 23 year in which the city first certifies to the county auditor 4 24 the amount of any loans, advances, indebtedness, or bonds 4 25 which qualify for payment from the division of revenue 4 26 provided in section 403.19. Such area designated before July 4 27 1, 1994, shall not include land which is part of a century 4 28 farm. 4 29 Sec. 8. Section 403.19, subsection 2, Code 1995, is 4 30 amended to read as follows: 4 31 2. That portion of the taxes each year in excess of such 4 32 amount shall be allocated to and when collected be paid into a 4 33 special fund of the municipality to pay the principal of and 4 34 interest on loans, moneys advanced to, or indebtedness, 4 35 whether funded, refunded, assumed, or otherwise, including 5 1 bonds issued under the authority of section 403.9, subsection 5 2 1, incurred by the municipality to finance or refinance, in 5 3 whole or in part, an urban renewal project within the area, 5 4 and to provide assistance for low and moderate income family 5 5 housing as provided in section 403.22, except that taxes for 5 6 the payment of bonds and interest of each taxing district must 5 7 be collected against all taxable property within the taxing 5 8 district without limitation by the provisions of this 5 9 subsection. Unless and until the total assessed valuation of 5 10 the taxable property in an urban renewal area exceeds the 5 11 total assessed value of the taxable property in such area as 5 12 shown by the last equalized assessment roll referred to in 5 13 subsection 1, all of the taxes levied and collected upon the 5 14 taxable property in the urban renewal area shall be paid into 5 15 the funds for the respective taxing districts as taxes by or 5 16 for the taxing districts in the same manner as all other 5 17 property taxes. When such loans, advances, indebtedness, and 5 18 bonds, if any, and interest thereon, have been paid, all 5 19 moneys thereafter received from taxes upon the taxable 5 20 property in such urban renewal area shall be paid into the 5 21 funds for the respective taxing districts in the same manner 5 22 as taxes on all other property. 5 23 Sec. 9. NEW SECTION. 403.22 FINANCING PUBLIC 5 24 IMPROVEMENTS RELATED TO LOW INCOME HOUSING AND RESIDENTIAL 5 25 DEVELOPMENT. 5 26 1. a. In a county with a population over twenty thousand, 5 27 with respect to any urban renewal area established upon the 5 28 determination that the area is an economic development area, a 5 29 division of revenue as provided in section 403.19 shall not be 5 30 allowed for the purpose of providing or aiding in the 5 31 provision of public improvements related to housing and 5 32 residential development or construction or rehabilitation of 5 33 housing, unless the municipality assures that the project will 5 34 include assistance for low and moderate income family housing. 5 35 The amount to be provided for low and moderate income family 6 1 housing for such projects shall be equal to or greater than 6 2 the percentage of the original project cost that is equal to 6 3 the percentage of low and moderate income residents for the 6 4 county in which the urban renewal area is located as 6 5 determined by the United States department of housing and 6 6 urban development using section 8 guidelines. 6 7 b. The assistance to low and moderate income housing may 6 8 be in, but is not limited to, any of the following forms: 6 9 (1) Lots for low and moderate income housing within or 6 10 outside the urban renewal area. 6 11 (2) Construction or rehabilitation of low and moderate 6 12 income housing within or outside the urban renewal area. 6 13 (3) Grants, credits, or other direct assistance to low and 6 14 moderate income families living within or outside the urban 6 15 renewal area, but within the area of operation of the 6 16 municipality. 6 17 (4) Payments to a low and moderate income housing fund 6 18 established by the municipality to be expended for one or more 6 19 of the above purposes, including matching funds for any state 6 20 or federal moneys used for such purposes. 6 21 c. Sources for low and moderate income family housing 6 22 assistance may include the following: 6 23 (1) Proceeds from loans, advances, bonds, or indebtedness 6 24 incurred. 6 25 (2) Annual distributions from the division of revenues 6 26 pursuant to section 403.19 related to the urban renewal area. 6 27 (3) Lump sum or periodic direct payments from developers 6 28 or other private parties under an agreement for development or 6 29 redevelopment between the municipality and a developer. 6 30 (4) Any other sources which are legally available for this 6 31 purpose. 6 32 d. The assistance to low and moderate income family 6 33 housing may be expended outside the boundaries of the urban 6 34 renewal area. 6 35 2. The division of the revenue under section 403.19 for 7 1 each project under this section shall be limited to ten years 7 2 from the calendar year following the calendar year in which 7 3 the municipality first certifies to the county auditor the 7 4 amount of any loans, advances, indebtedness, or bonds which 7 5 qualify for payment from the division of the revenue in 7 6 connection with the project. The portion of the urban renewal 7 7 area which is involved in a project under this section shall 7 8 not be subject to any subsequent division of revenue under 7 9 section 403.19. 7 10 Sec. 10. Section 422.7, Code Supplement 1995, is amended 7 11 by adding the following new subsection: 7 12 NEW SUBSECTION. 18. Subtract, to the extent included, 7 13 interest earned on bonds and notes issued by a city, a county, 7 14 or other political subdivision. 7 15 Sec. 11. NEW SECTION. 422.9A AFFORDABLE HOUSING 7 16 ASSISTANCE CREDIT. 7 17 There is allowed as a credit against the tax determined in 7 18 section 422.5 for a tax year an amount equal to the affordable 7 19 housing assistance credit as provided in section 15E.176. 7 20 Notwithstanding any other provision, the credit allowed for in 7 21 this section shall be applied prior to all other credits 7 22 allowed the taxpayer. 7 23 Sec. 12. Section 422.33, Code Supplement 1995, is amended 7 24 by adding the following new subsection: 7 25 NEW SUBSECTION. 9. There is allowed as a credit against 7 26 the tax determined in subsection 1 for a tax year an amount 7 27 equal to the affordable housing assistance credit as provided 7 28 in section 15E.176. Notwithstanding any other provision, the 7 29 credit allowed for in this subsection shall be applied prior 7 30 to all other credits allowed the taxpayer. The taxpayer shall 7 31 not receive for the same investment a credit under subsection 7 32 8 and this subsection. 7 33 Sec. 13. Section 422.60, Code Supplement 1995, is amended 7 34 by adding the following new subsection: 7 35 NEW SUBSECTION. 4. There is allowed as a credit against 8 1 the tax determined in this division for a tax year an amount 8 2 equal to the affordable housing assistance credit as provided 8 3 in section 15E.176. Notwithstanding any other provision, the 8 4 credit allowed for in this subsection shall be applied prior 8 5 to all other credits allowed the taxpayer. The allocation of 8 6 revenues to a city or county under section 422.65 shall be 8 7 determined as if the credit under this subsection had not been 8 8 taken. 8 9 Sec. 14. Section 432.1, Code 1995, is amended by adding 8 10 the following new subsection: 8 11 NEW SUBSECTION. 5. There is allowed as a credit against 8 12 the tax determined in subsection 1 or 2 for a tax year an 8 13 amount equal to the affordable housing assistance credit as 8 14 provided in section 15E.176. Notwithstanding any other 8 15 provision, the credit allowed for in this subsection shall be 8 16 applied prior to all other credits allowed the taxpayer. 8 17 Sec. 15. APPLICABILITY. Sections 1 through 3 and 11 8 18 through 14 of this Act apply for tax years of individuals 8 19 subject to the personal net income tax and entities subject to 8 20 the state corporate income tax or franchise tax which begin on 8 21 or after January 1, 1997. Sections 1 through 3 and 11 through 8 22 14 of this Act apply for calendar years beginning on or after 8 23 January 1, 1997, for entities subject to the gross premiums 8 24 tax under chapter 432. 8 25 EXPLANATION 8 26 This bill allows an individual, corporation, financial 8 27 institution, or insurance company to take an individual, 8 28 corporate, franchise, or insurance premiums tax credit for an 8 29 investment in affordable housing assistance. Affordable 8 30 housing assistance is money, property, or services provided 8 31 for the construction or rehabilitation of housing for low and 8 32 moderate income families. 8 33 The amount of the credit is not more than 55 percent of the 8 34 investment in affordable housing assistance by the taxpayer. 8 35 The credit may be had for up to 10 years and may be carried 9 1 forward if it is greater than the taxpayer's tax liability in 9 2 any year. The maximum credit allowed for all taxpayers is $2 9 3 million per year, not to exceed $10 million total. 9 4 The department of economic development must approve 9 5 affordable housing assistance programs before the taxpayer may 9 6 receive the credit. The department shall also determine the 9 7 amount of the credit received by the taxpayer. 9 8 The bill also provides that community development block 9 9 grant funds are to be awarded with a priority given to 9 10 upgrading water and sewer facilities necessitated by a 25 9 11 percent or greater increase in local housing since the last 9 12 water or sewer system upgrade. 9 13 Further, the bill provides that housing programs are an 9 14 essential city or county purpose whether or not the programs 9 15 are undertaken as part of a municipal housing project under 9 16 chapter 403A. 9 17 This bill also makes the following changes to chapter 403 9 18 regarding urban renewal: 9 19 Section 403.17 is amended to add public improvements 9 20 related to housing development to the definition of economic 9 21 development area and makes construction of low and moderate 9 22 income housing an alternative use (along with commercial and 9 23 industrial enterprise and public improvements for housing) for 9 24 an economic development area. The division of revenue under 9 25 tax increment financing based upon a finding that the area is 9 26 an economic development area is limited to 20 years. 9 27 Section 403.19 and new section 403.22 add low and moderate 9 28 income housing assistance to the uses for which revenue from 9 29 tax increment financing may be used and set out the manner in 9 30 which assistance for public improvements related to housing 9 31 and residential development, both low and moderate income and 9 32 otherwise, may be provided. 9 33 New section 403.22 also provides that property in an urban 9 34 renewal area upon which public improvements related to housing 9 35 and residential development are being placed as part of a 10 1 project financed by tax increment financing can only be used 10 2 for tax increment financing once. 10 3 Tax increment financing for housing or residential 10 4 development is not allowed in counties with a population of 10 5 over 20,000 unless the municipality assures that the project 10 6 will include assistance for low and moderate income family 10 7 housing in an amount based on the percentage of low and 10 8 moderate income persons in the county. Assistance for low and 10 9 moderate income housing may take many forms, including lots 10 10 for low and moderate income housing within or outside the 10 11 urban renewal area or payments to a low and moderate income 10 12 housing fund established by the municipality. Funding sources 10 13 may include revenue from tax increment financing or any other 10 14 legal source. Counties with populations of 20,000 or under 10 15 need not include assistance for low and moderate income 10 16 housing in tax increment financing-supported projects. Tax 10 17 increment financing for housing projects is limited in 10 18 duration to 10 years. 10 19 The bill exempts interest from bonds and notes issued by a 10 20 city, county, or other political subdivision. 10 21 LSB 3562SS 76 10 22 mk/jw/5.1
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