Text: HF02563 Text: HF02565 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. NEW SECTION. 15.380 SHORT TITLE.
1 2 This part shall be known as and may be cited as the
1 3 "Community Development Program Act".
1 4 Sec. 2. NEW SECTION. 15.381 DEFINITIONS.
1 5 As used in this part, unless the context otherwise
1 6 requires:
1 7 1. "Business" means all businesses operating within the
1 8 state and includes individuals operating a sole proprietorship
1 9 or having rental, royalty, or farm income in this state.
1 10 2. "Community services" means, but is not limited to,
1 11 individual, group, and family counseling; mental health
1 12 services; primary care and community medical health centers;
1 13 child and adult care services; senior citizen service centers;
1 14 recreation programs; nutrition programs; emergency shelters
1 15 for persons suffering from physical abuse or rape; services
1 16 for the handicapped; sheltered workshops, vocational
1 17 counseling; substance abuse counseling; and referral services.
1 18 3. "Contribution" includes cash, material or supplies,
1 19 real estate, labor, professional services, technical
1 20 assistance, or equipment. "Contribution" does not include
1 21 investments made by a financial institution or insurance
1 22 company in the normal course of its business.
1 23 4. "Crime prevention" means activities which include but
1 24 are not limited to services to ex-offenders, local civilian
1 25 organizations that help prevent crime or provide aid to
1 26 victims of crime, mediation services aimed at resolving
1 27 disputes and conflicts before they become criminal incidents,
1 28 or services to juveniles who have had contact with the court
1 29 or police.
1 30 5. "Distressed or blighted area" means an area designated
1 31 or that qualifies under section 15E.194 to be designated an
1 32 enterprise zone pursuant to chapter 15E, division XVIII,
1 33 designated as a slum or blighted area pursuant to chapter 403,
1 34 or designated as a revitalization area pursuant to chapter
1 35 404.
2 1 6. "Economic development" means the acquisition,
2 2 renovation, improvement, or the furnishing or equipping of
2 3 existing buildings and real estate in distressed or blighted
2 4 areas of the state when this acquisition, renovation,
2 5 improvement, or the furnishing or equipping of the existing
2 6 buildings and real estate will result in the creation or
2 7 retention of jobs within the state.
2 8 7. "Education" includes literacy programs, adult basic
2 9 education and general educational development certificate
2 10 programs, training for the physically or mentally challenged,
2 11 and education for a person disenfranchised by public primary
2 12 or secondary school systems.
2 13 8. "Job training" means those activities which provide
2 14 specific vocational skills including special apprenticeship or
2 15 on-the-job training programs not otherwise available.
2 16 9. "Neighborhood area" means a specific geographic area
2 17 certified by the department as having a readily identifiable
2 18 residential population and which may include, but is not
2 19 limited to, any of the following factors:
2 20 a. A sense of belonging or identity that ties residents to
2 21 a given area.
2 22 b. Social, cultural, political, or economic activities
2 23 around which people organize themselves.
2 24 c. The existence of cohesive organizations formed by
2 25 residents.
2 26 d. A city with a population of less than ten thousand or a
2 27 region within a rural area may be certified as a neighborhood
2 28 area.
2 29 e. A history of acting or being treated as a distinct or
2 30 cohesive unit.
2 31 10. a. "Qualifying organization" means an organization
2 32 performing community services or economic development
2 33 activities in the state and is any of the following:
2 34 (1) A person or organization that is exempt from federal
2 35 income taxation under the Internal Revenue Code as defined in
3 1 section 422.3.
3 2 (2) A nonprofit corporation organized under the laws of
3 3 this state.
3 4 (3) Designated as a community development corporation by
3 5 the federal government pursuant to, Title VII of the Economic
3 6 Opportunity Act of 1964, Pub. L. No. 88-452.
3 7 b. "Qualifying organization" does not include any of the
3 8 following:
3 9 (1) A unit or agency of the state, local government, or
3 10 educational institution.
3 11 (2) A foundation or trust of a postsecondary educational
3 12 institution.
3 13 (3) A church-affiliated religious organization unless the
3 14 organization is without religious discrimination or is not
3 15 controlled by a single denomination.
3 16 11. "Physical revitalization" means activities designed
3 17 for the physical improvement of any part or all of a
3 18 neighborhood area. These activities may include, but are not
3 19 limited to, such programs as commercial area revitalization;
3 20 housing construction or rehabilitation; improvements to or
3 21 acquisition or construction of facilities used by nonprofit
3 22 organizations for community purposes or related planning and
3 23 promotional activities designed to aid in those programs.
3 24 Sec. 3. NEW SECTION. 15.382 COMMUNITY DEVELOPMENT TAX
3 25 CREDITS – APPROVAL OF PROJECTS AND PROPOSALS.
3 26 1. TAX CREDITS. A business which engages in the
3 27 activities of providing physical revitalization, economic
3 28 development, job training or education for individuals,
3 29 community services, or crime prevention in the state shall
3 30 receive a community development tax credit as provided in
3 31 section 15.383 if the director annually approves the proposal
3 32 of the business. However, a proposal shall not be approved
3 33 which does not have the endorsement of the agency of local
3 34 government within the area in which the business is engaging
3 35 in such activities that the proposal is consistent with the
4 1 overall community or neighborhood development plan adopted by
4 2 that local government.
4 3 2. ECONOMIC DEVELOPMENT PROJECTS. For economic
4 4 development projects in distressed or blighted areas for which
4 5 tax credits under this part may be approved, the following
4 6 guidelines apply:
4 7 a. Applications shall be accepted from any locally based
4 8 qualifying organization wishing to conduct an economic
4 9 development project in a distressed or blighted area.
4 10 b. Applicants may not administer more than one economic
4 11 development project at a time. A project may include more
4 12 than one building, provided that the proposal meets all other
4 13 eligibility requirements as set forth in this subsection and
4 14 rules of the department.
4 15 c. Applications will be accepted by the department at any
4 16 time of the year and will be approved on a case-by-case basis
4 17 as all the necessary requirements are met and as credits
4 18 become available.
4 19 d. A maximum authorization of one hundred fifty thousand
4 20 dollars in tax credits will be permitted per project and no
4 21 more than five percent of the credits authorized for the
4 22 project shall normally be allowed for administrative and
4 23 operating expenses. In unusual circumstances, a higher
4 24 percentage may be allowed at the discretion of the department.
4 25 e. Applicants must obtain a nonbinding commitment from a
4 26 prospective business or businesses willing to locate to the
4 27 facility and demonstrate that at least one job will be created
4 28 or retained for every ten thousand dollars in credits
4 29 requested. Eligible types of businesses include retail,
4 30 commercial, service, and manufacturing.
4 31 f. Applicants must agree to retain ownership of all
4 32 properties acquired under this part for a minimum of five
4 33 years and agree to contractual conditions with the department
4 34 governing the use or eventual disposition, or both, of those
4 35 properties. Contract conditions shall include, but are not
5 1 limited to, lease terms and arrangements for the first five
5 2 years, and a clause stipulating that the eventual purchase
5 3 price will be no less than seventy-five percent of the fair
5 4 market value of the facility, excluding the value of leasehold
5 5 improvements.
5 6 3. COMMUNITY DEVELOPMENT PROJECTS. For community
5 7 development projects, other than economic development
5 8 projects, for which tax credits under this part may be
5 9 approved, the following procedures, criteria, and priorities
5 10 apply:
5 11 a. A proposal for a proposed program shall be submitted by
5 12 a qualifying organization for carrying out a specific project
5 13 consistent with the purposes of this part.
5 14 b. All proposals shall be made on the forms supplied by
5 15 the department. Each proposal shall contain a project budget
5 16 and shall identify, if possible, the items and amounts of the
5 17 budget which will be provided for from contributions for any
5 18 business. A project budget shall be approved by the
5 19 department. The department may request any additional
5 20 information it determines necessary to evaluate a proposal or
5 21 plan.
5 22 c. Community development projects and the budgets for them
5 23 may be approved for a period of up to three years at the
5 24 discretion of the director.
5 25 d. An annual application deadline shall be determined by
5 26 the department and application materials shall be distributed
5 27 upon request no less than sixty days prior to the actual
5 28 application deadline.
5 29 e. All proposals must address at least one of the
5 30 following priorities in order to qualify for approval:
5 31 (1) The project substantially contributes to self-help
5 32 efforts by residents of the neighborhood area to be served in
5 33 addressing locally defined objectives.
5 34 (2) The project will result in the provision of essential
5 35 services to low-income and moderate-income persons which would
6 1 not otherwise be provided in the affected neighborhood area
6 2 and for which there are not other resources.
6 3 (3) The project tangibly contributes to the development of
6 4 lasting cooperation and partnership efforts of neighborhood
6 5 organizations and businesses.
6 6 f. Approval or disapproval of proposals shall be based on
6 7 the following criteria:
6 8 (1) The director must certify an area as experiencing
6 9 problems endangering the area's existence as a viable and
6 10 stable neighborhood to be eligible for assistance.
6 11 (2) The business or qualifying organization submitting the
6 12 proposal must demonstrate its capacity to adequately
6 13 administer the project.
6 14 (3) There must be a demonstrated need for the program in
6 15 the neighborhood area within which the project is to be
6 16 carried out.
6 17 (4) The proposal must demonstrate that residents of the
6 18 affected neighborhood area have been involved in the planning
6 19 of the proposed project and describe the extent to which they
6 20 will be involved in its implementation.
6 21 (5) The proposal must be consistent with all locally
6 22 approved community or neighborhood development plans for the
6 23 area.
6 24 (6) Proposals submitted subsequent to the first year will
6 25 be evaluated on performance of the first-year project, other
6 26 resources developed, continued need, and potential for
6 27 eventual self-sufficiency.
6 28 g. In no case shall a project be approved that does not
6 29 have a written endorsement of the appropriate local public
6 30 authority.
6 31 h. The maximum amount of credits allowed per project is
6 32 one hundred fifty thousand dollars.
6 33 i. For purposes of the criterion in paragraph "f",
6 34 subparagraph (1), an area is experiencing problems endangering
6 35 its existence as a viable and stable neighborhood if some of
7 1 the following factors are present: declining population, high
7 2 percentage of people dependent on public assistance,
7 3 persistent or substantial unemployment or underemployment,
7 4 lower than average family incomes, financial disinvestment,
7 5 insurance and financial redlining, general weakened market
7 6 conditions on the neighborhood commercial strip as indicated
7 7 by declining rents or vacant stores, excessive abandonment of
7 8 properties, a significant percentage of neighborhood residents
7 9 on fixed incomes, unsanitary or inadequate housing,
7 10 overcrowding, property speculation, high rates of crime and
7 11 delinquency, high degree of drug or alcohol abuse, increasing
7 12 cases of mental health problems, significant numbers of
7 13 single-parent households, high degree of infant mortality and
7 14 disease, disabilities, general unsanitary conditions in the
7 15 area, or poor city and public utility services.
7 16 4. TAX CREDIT APPLICATION.
7 17 a. The department shall approve or disapprove applications
7 18 for tax credits to businesses which have invested in approved
7 19 economic development projects or other community development
7 20 projects. The director, upon approval of an application,
7 21 shall notify the director of revenue and finance and the
7 22 governor of those businesses entitled to a tax credit.
7 23 b. The procedures and requirements for filing a tax credit
7 24 application are as follows:
7 25 (1) Businesses wanting to donate to a particular community
7 26 development project, but first wishing to verify the
7 27 eligibility of the donation for a tax credit, may submit a tax
7 28 credit eligibility confirmation form to the department. The
7 29 department will confirm in writing whether or not the donation
7 30 qualifies for credit and how the value of the credit will be
7 31 determined. This confirmation will not constitute credit
7 32 approval. However, the qualifying organization for the
7 33 project may reserve credits for specific donors.
7 34 (2) In order to qualify for credit, donations must occur
7 35 during the approved project period with the exception of
8 1 donated audit services, which may occur anytime during the
8 2 six-month period following the project period, and must be
8 3 directly related to the approved project.
8 4 (3) Businesses wishing to apply for credit must complete a
8 5 community development tax credit application.
8 6 (4) Tax credit applications are to be signed by the
8 7 qualifying organization and submitted directly to the
8 8 department not later than one year following the date of
8 9 donation.
8 10 (5) The order in which completed credit applications are
8 11 received by the department will determine the order in which
8 12 credits are approved. Facsimile copies will not be considered
8 13 completed applications.
8 14 (6) Every transmittal of tax credit applications to the
8 15 department must be accompanied by a project report prepared by
8 16 the qualifying organization.
8 17 (7) The department shall examine all submitted
8 18 applications and determine which donations meet the
8 19 eligibility criteria.
8 20 c. The department shall establish by rule the methods to
8 21 be used in determining the value of contributions of a
8 22 business.
8 23 Sec. 4. NEW SECTION. 15.383 TAX CREDITS –
8 24 DOCUMENTATION.
8 25 1. For a tax credit application approved pursuant to
8 26 section 15.382, the community development tax credit available
8 27 under this part may be used to reduce the tax liability
8 28 imposed under chapter 422, division II, III, or V, or chapter
8 29 432.
8 30 2. Subject to subsections 3 and 5, the amount of the
8 31 community development tax credit shall be a percentage of the
8 32 contribution made by the business during the tax year as
8 33 follows:
8 34 a. Fifty percent of the total amount contributed, except
8 35 as provided in paragraph "b".
9 1 b. Seventy-five percent of the contributions made to
9 2 programs in any city which has a population of fifteen
9 3 thousand or less as of the last decennial census and is
9 4 located in a county which is located in one of the following:
9 5 (1) An area that is not part of a metropolitan statistical
9 6 area as defined by the United States department of commerce.
9 7 (2) A metropolitan statistical area but the county has
9 8 only one city which has more than fifteen thousand
9 9 inhabitants.
9 10 (3) A metropolitan statistical area and a substantial
9 11 number of persons in the county derive their income from
9 12 agriculture.
9 13 3. a. The tax credit shall not exceed one hundred
9 14 thousand dollars annually.
9 15 b. Any tax credit in excess of the business' tax liability
9 16 for a tax year may be credited to the tax liability for the
9 17 following five tax years or until depleted, whichever is the
9 18 earlier.
9 19 c. A financial institution or insurance company shall not
9 20 receive a tax credit for activities that are part of its
9 21 normal course of business.
9 22 d. To be eligible to receive the tax credit, a business
9 23 shall provide documentation of the contributions on which the
9 24 credit is based. The documentation shall be as specified by
9 25 rules of the department.
9 26 4. The total amount of tax credits that may be approved
9 27 pursuant to this part shall not exceed three million dollars
9 28 in any fiscal year. Not more than seven hundred fifty
9 29 thousand dollars in tax credits in a fiscal year shall be
9 30 approved for the seventy-five percent of contributions credits
9 31 under subsection 2, paragraph "b". When this maximum dollar
9 32 amount in tax credits is approved, subsequent requests for tax
9 33 credits pursuant to subsection 2, paragraph "b", may only be
9 34 approved for fifty percent of the amount of the contributions.
9 35 Sec. 5. NEW SECTION. 422.11C COMMUNITY DEVELOPMENT TAX
10 1 CREDIT.
10 2 The taxes imposed under this division, less the credits
10 3 allowed under sections 422.12 and 422.12B, shall be reduced by
10 4 a community development tax credit received pursuant to
10 5 sections 15.380 through 15.383.
10 6 An individual may claim the community development tax
10 7 credit allowed a partnership, limited liability company, S
10 8 corporation, or estate or trust electing to have the income
10 9 taxed directly to the individual. The amount claimed by the
10 10 individual shall be based upon the pro rata share of the
10 11 individual's earnings of the partnership, limited liability
10 12 company, S corporation, or estate or trust.
10 13 Any credit in excess of the tax liability for the tax year
10 14 may be credited to the tax liability for the following five
10 15 tax years or until depleted, whichever is earlier.
10 16 Sec. 6. Section 422.33, Code Supplement 1999, is amended
10 17 by adding the following new subsection:
10 18 NEW SUBSECTION. 9. The taxes imposed under this division
10 19 shall be reduced by a community development tax credit
10 20 received pursuant to sections 15.380 through 15.383.
10 21 Any credit in excess of the tax liability for the tax year
10 22 may be credited to the tax liability for following five tax
10 23 years or until depleted, whichever is earlier.
10 24 Sec. 7. Section 422.60, Code 1999, is amended by adding
10 25 the following new subsection:
10 26 NEW SUBSECTION. 4. The taxes imposed under this division
10 27 shall be reduced by a community development tax credit
10 28 received pursuant to sections 15.380 through 15.383.
10 29 Any credit in excess of the tax liability for the tax year
10 30 may be credited to the tax liability for the following five
10 31 tax years or until depleted, whichever is earlier.
10 32 Sec. 8. NEW SECTION. 432.12A COMMUNITY DEVELOPMENT TAX
10 33 CREDIT.
10 34 The tax imposed under this chapter shall be reduced by a
10 35 community development tax credit received pursuant to sections
11 1 15.380 through 15.383.
11 2 Any credit in excess of the tax liability for the calendar
11 3 year may be credited to the tax liability for the following
11 4 five calendar years or until depleted, whichever is earlier.
11 5 Sec. 9. EFFECTIVE AND APPLICABILITY DATE. This Act, being
11 6 deemed of immediate importance, takes effect upon enactment.
11 7 Sections 5 through 8 of this Act apply to tax years beginning
11 8 on or after January 1, 2001.
11 9 EXPLANATION
11 10 This bill establishes a community development program
11 11 administered by the department of economic development. The
11 12 program is to provide tax incentives to businesses which make
11 13 contributions to projects in communities or neighborhoods that
11 14 would benefit by these projects. The projects involve the
11 15 providing of physical revitalization, economic development,
11 16 job training or education for individuals, community services,
11 17 and crime prevention. Community services projects include
11 18 projects providing for group and family counseling, mental
11 19 health services and centers, child and adult care, senior
11 20 citizen centers, recreation programs, sheltered workshops, and
11 21 substance abuse counseling.
11 22 The tax incentives are provided in the form of tax credits
11 23 which may be used to offset the tax liability under the
11 24 individual and corporate taxes, financial institution
11 25 franchise tax, and the insurance premiums tax. The amount of
11 26 the credit, subject to limitation, equals 50 percent, or 75
11 27 percent in cities of 15,000 or less in population, of the
11 28 contributions made by the business to the project. Not more
11 29 than $150,000 in tax credits may be allowed for any one
11 30 project. The maximum amount of credit a business may receive
11 31 for a project is $100,000. Projects and tax credits
11 32 associated with the projects must be approved by the
11 33 department of economic development. The total amount of tax
11 34 credits that may be approved in a fiscal year shall not exceed
11 35 $3 million.
12 1 The bill takes effect upon enactment and the tax credit
12 2 provisions are effective January 1, 2001, for tax years
12 3 beginning on or after that date.
12 4 LSB 5914HV 78
12 5 mg/cf/24
Text: HF02563 Text: HF02565 Text: HF02500 - HF02599 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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