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1 1 Section 1. NEW SECTION. 15E.181 TITLE OF ACT.
1 2 This division shall be known and may be cited as the
1 3 "Economic Development Enterprise Zone Act".
1 4 Sec. 2. NEW SECTION. 15E.182 PURPOSE.
1 5 The purpose of the economic development enterprise zone Act
1 6 is to promote new economic development and create jobs paying
1 7 family-supporting wages in economically distressed areas by
1 8 encouraging communities to target resources and planning
1 9 strategies in ways that attract economically productive
1 10 private investment.
1 11 Sec. 3. NEW SECTION. 15E.183 ELIGIBILITY CRITERIA.
1 12 1. A county may create an economic development enterprise
1 13 zone by designating up to one percent of the county area for
1 14 that purpose. A county may establish more than one enterprise
1 15 zone, however, the total amount of county area designated as
1 16 enterprise zones shall not exceed one percent of the county
1 17 area. An enterprise zone shall only be established on
1 18 commercial or industrial property or property that is planned
1 19 for future commercial or industrial development.
1 20 2. An enterprise zone shall only be formed in an area of
1 21 the county which meets at least one of the following criteria:
1 22 a. The county has an unemployment rate of at least one
1 23 hundred fifty percent of the state unemployment rate.
1 24 b. The county has experienced a population loss of ten
1 25 percent or greater between the 1980 and 1990 censuses.
1 26 c. At least twenty percent of the population of the county
1 27 is economically disadvantaged. For the purposes of this
1 28 division, "economically disadvantaged" means the same as in
1 29 section 7B.2, subsection 3.
1 30 d. At least fifteen percent of the residents in the area
1 31 designated as an enterprise zone earn less than the average
1 32 wage in the state.
1 33 3. The county shall do the following regarding an
1 34 enterprise zone:
1 35 a. Certify to the department of revenue and finance that
2 1 an area designated as an enterprise zone meets at least one of
2 2 the requirements of subsection 2 and that a business which has
2 3 entered into an agreement with the county to locate or expand
2 4 in an enterprise zone is an eligible business under section
2 5 15E.184.
2 6 b. Provide annual recertification to the department of
2 7 revenue and finance that the area remains eligible for
2 8 designation as an enterprise zone and that each business
2 9 receiving assistance remains an eligible business.
2 10 c. Monitor the enterprise zone and each eligible business
2 11 for compliance with the requirements for establishing an
2 12 enterprise zone or with the agreement between the business and
2 13 the county.
2 14 d. Decertify the enterprise zone when the area no longer
2 15 meets any of the requirements for an enterprise zone.
2 16 e. Notify the department of revenue and finance that an
2 17 eligible business has not complied with the agreement entered
2 18 into with the county for the purposes of the sanctions imposed
2 19 in section 15E.185.
2 20 4. A county may enter into an agreement with a local
2 21 economic development organization for the organization to
2 22 perform the duties of the county under subsection 3.
2 23 Sec. 4. NEW SECTION. 15E.184 ELIGIBLE BUSINESS.
2 24 Only a business which is or will be located in an
2 25 enterprise zone and which meets the following requirements
2 26 shall receive assistance under this division:
2 27 1. The business has not closed or substantially reduced
2 28 its operation in one area of the state and relocated
2 29 substantially the same operation in the enterprise zone. This
2 30 subsection does not prohibit a business from expanding its
2 31 operation in the enterprise zone if existing operations of a
2 32 similar nature in the state are not closed or substantially
2 33 reduced.
2 34 2. Provide and pay at least eighty percent of the cost of
2 35 a standard medical and dental insurance plan for all full-time
3 1 employees working at the facility in the enterprise zone.
3 2 3. The business shall agree to pay, within two years of
3 3 the date the business begins operations in the facility in the
3 4 enterprise zone, an average wage for new full-time hourly
3 5 nonmanagement employees of at least the average state hourly
3 6 wage. For the purposes of this division, "begins operations"
3 7 means the date upon which the business informs the county and
3 8 the department of revenue and finance that its facility is
3 9 ready to begin the operations for which it was designed.
3 10 4. The business will make a capital investment at a
3 11 facility in the enterprise zone of at least five hundred
3 12 thousand dollars. If the business is occupying a vacant
3 13 building suitable for industrial use, the fair market value of
3 14 the building shall be counted toward the capital investment
3 15 threshold.
3 16 5. The business shall agree to create at least twenty-five
3 17 full-time positions at the facility in the enterprise zone for
3 18 a specified period of time which will be negotiated with the
3 19 county, but which shall be at least five years.
3 20 Sec. 5. NEW SECTION. 15E.185 AGREEMENT – NONCOMPLIANCE
3 21 – PENALTIES.
3 22 A business shall enter into an agreement with the county
3 23 specifying the requirements which must be met to satisfy the
3 24 criteria of section 15E.184. The agreement shall contain the
3 25 following provisions:
3 26 1. If the business has not met more than ninety percent of
3 27 the job creation requirement in section 15E.184, the business
3 28 shall pay a percentage of the assistance received under
3 29 section 15E.190, or if the business does not receive the
3 30 assistance under section 15E.190, then under section 15E.186
3 31 as follows:
3 32 a. If the business has met fifty percent or less of the
3 33 requirement, the business shall pay the same percentage in
3 34 assistance as the business failed to create in jobs.
3 35 b. If the business has met more than fifty percent but not
4 1 more than seventy-five percent of the requirement, the
4 2 business shall pay one half of the percentage in assistance as
4 3 the business failed to create in jobs.
4 4 c. If the business has met more than seventy-five percent
4 5 but not more than ninety percent of the requirement, the
4 6 business shall pay one quarter of the percentage in assistance
4 7 as the business failed to create in jobs.
4 8 2. If a business does not meet the wage requirement of
4 9 section 15E.184, in any one year, it must meet that
4 10 requirement in the following year or forfeit the assistance
4 11 for that year.
4 12 The department of revenue and finance shall adopt rules for
4 13 repayment of assistance by the business if the business does
4 14 not meet the requirements of section 15E.184.
4 15 Sec. 6. NEW SECTION. 15E.186 NEW JOBS CREDIT FROM
4 16 WITHHOLDING.
4 17 An eligible business may enter into an agreement with the
4 18 department of revenue and finance and a community college, for
4 19 a supplemental new jobs credit from withholding from jobs
4 20 created in the enterprise zone. The agreement shall be for
4 21 program services for an additional job training project, as
4 22 defined in chapter 260E. The agreement shall provide for the
4 23 following:
4 24 1. That the project shall be administered in the same
4 25 manner as a project under chapter 260E and that a supplemental
4 26 new jobs credit from withholding in an amount equal to one and
4 27 one-half percent of the gross wages paid by the eligible
4 28 business pursuant to section 422.16 is authorized to fund the
4 29 program services for the additional project.
4 30 2. That the supplemental new jobs credit from withholding
4 31 shall be collected, accounted for, and may be pledged by the
4 32 community college in the same manner as described in section
4 33 260E.5.
4 34 3. That the auditor of state shall perform an annual audit
4 35 regarding the manner in which the training funds are being
5 1 used.
5 2 To provide funds for the payment of the costs of the
5 3 additional project, a community college may borrow money,
5 4 issue and sell certificates, and secure the payment of the
5 5 certificates in the same manner as described in section
5 6 260E.6, including, but not limited to, providing the
5 7 assessment of an annual levy as described in section 260E.6,
5 8 subsection 4. The program and credit authorized by this
5 9 section is in addition to, and not in lieu of, the program and
5 10 credit authorized in chapter 260E.
5 11 Sec. 7. NEW SECTION. 15E.187 INVESTMENT TAX CREDIT.
5 12 An eligible business may claim a corporate tax credit up to
5 13 a maximum of ten percent of the new investment related to the
5 14 location or expansion of an eligible business in an enterprise
5 15 zone. Any credit in excess of the tax liability for the tax
5 16 year may be credited to the tax liability for the following
5 17 twenty years or until depleted, whichever occurs earlier. If
5 18 the business is a partnership, subchapter S corporation,
5 19 limited liability company, or estate or trust electing to have
5 20 the income taxed directly to the individual, an individual may
5 21 claim the tax credit allowed. The amount claimed by the
5 22 individual shall be based upon the pro rata share of the
5 23 individual's earnings of the partnership, subchapter S
5 24 corporation, limited liability company, or estate or trust.
5 25 For purposes of this section, "new investment related to the
5 26 location or expansion of an eligible business in an enterprise
5 27 zone" means the cost of machinery and equipment, as defined in
5 28 section 427A.1, subsection 1, paragraphs "e" and "j",
5 29 purchased for use in the operation of the eligible business,
5 30 the purchase price of which has been depreciated in accordance
5 31 with generally accepted accounting principles, and the cost of
5 32 improvements made to real property which is used in the
5 33 operation of the eligible business and which receives the
5 34 property tax exemption under section 15E.188.
5 35 Sec. 8. NEW SECTION. 15E.188 PROPERTY TAX EXEMPTION.
6 1 The county may exempt from taxation all or a portion of the
6 2 property upon which an eligible business locates or expands in
6 3 an enterprise zone and which is used in the operation of the
6 4 eligible business. The exemption may be allowed for a period
6 5 not to exceed ten years beginning the year the eligible
6 6 business enters into an agreement with the county to locate or
6 7 expand operations in an enterprise zone.
6 8 Sec. 9. NEW SECTION. 15E.189 RESEARCH ACTIVITIES CREDIT.
6 9 An eligible business may claim a corporate tax credit for
6 10 increasing research activities in an enterprise zone during
6 11 the period the eligible business is located in an enterprise
6 12 zone. The credit equals thirteen percent of the state's
6 13 apportioned share of the qualifying expenditures for
6 14 increasing research activities. The state's apportioned share
6 15 of the qualifying expenditures for increasing research
6 16 activities is a percent equal to the ratio of qualified
6 17 research expenditures in this state to total qualified
6 18 research expenditures. The credit authorized in this section
6 19 is in lieu of the credit authorized in section 422.33,
6 20 subsection 5. If the eligible business is a partnership,
6 21 subchapter S corporation, limited liability company, or estate
6 22 or trust electing to have the income taxed directly to the
6 23 individual, an individual may claim the tax credit allowed.
6 24 The amount claimed by the individual shall be based upon the
6 25 pro rata share of the individual's earnings of the
6 26 partnership, subchapter S corporation, limited liability
6 27 company, or estate or trust. Any credit in excess of the tax
6 28 liability for the tax year shall be refunded with interest
6 29 computed under section 422.25. In lieu of claiming a refund,
6 30 the eligible business may elect to have the overpayment shown
6 31 on its final return credited to its tax liability for the
6 32 following tax year.
6 33 For the purposes of this section, "qualifying expenditures
6 34 for increasing research activities" means the qualifying
6 35 expenditures as defined for the federal credit for increasing
7 1 research activities which would be allowable under section 41
7 2 of the Internal Revenue Code in effect on January 1, 1996.
7 3 Sec. 10. NEW SECTION. 15E.190 SALES, SERVICES, AND USE
7 4 TAX REFUND – CONTRACTOR OR SUBCONTRACTOR.
7 5 1. An eligible business under section 15E.184 shall be
7 6 entitled to a refund of the taxes paid under chapters 422 and
7 7 423 for gas, electricity, water, or sewer utility services,
7 8 goods, wares, or merchandise, or on services rendered,
7 9 furnished, or performed to or for a contractor or
7 10 subcontractor and used in the fulfillment of a written
7 11 contract relating to the construction or equipping of a
7 12 facility within an enterprise zone. Taxes attributable to
7 13 intangible property and furniture and furnishings shall not be
7 14 refunded.
7 15 2. To receive the refund a claim shall be filed by the
7 16 eligible business with the department of revenue and finance
7 17 as follows:
7 18 a. The contractor or subcontractor shall state under oath,
7 19 on forms provided by the department, the amount of the sales
7 20 of goods, wares, or merchandise or services rendered,
7 21 furnished, or performed including water, sewer, gas, and
7 22 electric utility services for use in the enterprise zone upon
7 23 which sales or use tax has been paid prior to the date the
7 24 eligible business begins operations, and shall file the forms
7 25 with the eligible business before final settlement is made.
7 26 b. The eligible business shall, not more than six months
7 27 after the date the eligible business begins operation, make
7 28 application to the department of revenue and finance for any
7 29 refund of the amount of the taxes paid pursuant to chapter 422
7 30 or 423 upon any goods, wares, or merchandise, or services
7 31 rendered, furnished, or performed, including water, sewer,
7 32 gas, and electric utility services. The application shall be
7 33 made in the manner and upon forms to be provided by the
7 34 department, and the department shall audit the claim and, if
7 35 approved, issue a warrant to the eligible business in the
8 1 amount of the sales or use tax which has been paid to the
8 2 state of Iowa under a contract. A claim filed by the eligible
8 3 business in accordance with this subsection shall not be
8 4 denied by reason of a limitation provision set forth in
8 5 chapter 421, 422, or 423.
8 6 c. A contractor or subcontractor who willfully makes a
8 7 false report of tax paid under the provisions of this
8 8 subsection is guilty of a simple misdemeanor and in addition
8 9 is liable for the payment of the tax and any applicable
8 10 penalty and interest.
8 11 EXPLANATION
8 12 This bill provides for the establishment of economic
8 13 development enterprise zones in counties which have an
8 14 unemployment rate which is one and a half times the state
8 15 average, which have had a 10 percent population loss between
8 16 1980 and 1990, which have 15 percent or more of the residents
8 17 of the area to be designated as an enterprise zone earning
8 18 less than the state average wage, or which have at least 20
8 19 percent of the county population classified as economically
8 20 disadvantaged for purposes of the job training partnership
8 21 program (chapter 7B). Economically disadvantaged includes
8 22 receiving welfare payments, food stamps, or being below the
8 23 federal poverty level.
8 24 A county can designate up to one percent of the area of the
8 25 county as one or more enterprise zones. Enterprise zones can
8 26 only be located in areas zoned industrial or commercial or
8 27 which are planned for use as future business property.
8 28 A county establishing an enterprise zone would certify its
8 29 eligibility to the department of revenue and finance and
8 30 monitor compliance by businesses receiving enterprize zone
8 31 benefits and continuing eligibility of the counts for
8 32 enterprize zones.
8 33 The bill also provides that businesses must agree to meet
8 34 certain requirements to be eligible for enterprize zone
8 35 benefits, including paying at least 80 percent of the cost of
9 1 medical and dental benefits, pay average wages to full-time
9 2 nonmanagement employees of at least the average state hourly
9 3 wage, and create at least 25 new jobs. Businesses which do
9 4 not meet the agreed to requirements forfeit some of the
9 5 benefits received by the business.
9 6 Enterprise zone benefits include a supplemental new jobs
9 7 credit from income tax withholding of 1.5 percent to be used
9 8 for job training projects under chapter 260E (industrial new
9 9 jobs training), an investment tax credit against the business
9 10 income tax liability equal to 10 percent of the new investment
9 11 by the business in the enterprize zone, an exemption from
9 12 property taxes, if agreed to by the county, and a refund of
9 13 sales, service, and use taxes paid on materials used to
9 14 construct or equip a facility in the enterprize zone.
9 15 LSB 3195SV 76
9 16 mk/jw/5.2
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