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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. a. "Child care" means the same as defined in section
1 11 237A.1.
1 12 b. "Child care center" means a facility licensed pursuant
1 13 to section 237A.2 to provide child care.
1 14 3. "Community services" means, but is not limited to,
1 15 individual, group, and family counseling; mental health
1 16 services; primary care and community medical health centers;
1 17 child and adult care services; senior citizen service centers;
1 18 recreation programs; nutrition programs; emergency shelters
1 19 for persons suffering from physical abuse or rape; services
1 20 for the handicapped; sheltered workshops, vocational
1 21 counseling; substance abuse counseling; and referral services.
1 22 4. "Contribution" includes cash, material or supplies,
1 23 real estate, labor, professional services, technical
1 24 assistance, or equipment. "Contribution" does not include
1 25 investments made by a financial institution or insurance
1 26 company in the normal course of its business.
1 27 5. "Crime prevention" means activities which include but
1 28 are not limited to services to ex-offenders, local civilian
1 29 organizations that help prevent crime or provide aid to
1 30 victims of crime, mediation services aimed at resolving
1 31 disputes and conflicts before they become criminal incidents,
1 32 or services to juveniles who have had contact with the court
1 33 or police.
1 34 6. "Distressed or blighted area" means an area designated
1 35 or that qualifies under section 15E.194 to be designated an
2 1 enterprise zone pursuant to chapter 15E, division XVIII,
2 2 designated as a slum or blighted area pursuant to chapter 403,
2 3 or designated as a revitalization area pursuant to chapter
2 4 404.
2 5 7. "Economic development" means the acquisition,
2 6 renovation, improvement, or the furnishing or equipping of
2 7 existing buildings and real estate in distressed or blighted
2 8 areas of the state when this acquisition, renovation,
2 9 improvement, or the furnishing or equipping of the existing
2 10 buildings and real estate will result in the creation or
2 11 retention of jobs within the state.
2 12 8. "Education" includes literacy programs, adult basic
2 13 education and general educational development certificate
2 14 programs, training for the physically or mentally challenged,
2 15 and education for a person disenfranchised by public primary
2 16 or secondary school systems.
2 17 9. "Job training" means those activities which provide
2 18 specific vocational skills including special apprenticeship or
2 19 on-the-job training programs not otherwise available.
2 20 10. "Neighborhood area" means a specific geographic area
2 21 certified by the department as having a readily identifiable
2 22 residential population and which may include, but is not
2 23 limited to, any of the following factors:
2 24 a. A sense of belonging or identity that ties residents to
2 25 a given area.
2 26 b. Social, cultural, political, or economic activities
2 27 around which people organize themselves.
2 28 c. The existence of cohesive organizations formed by
2 29 residents.
2 30 d. A city with a population of less than ten thousand or a
2 31 region within a rural area may be certified as a neighborhood
2 32 area.
2 33 e. A history of acting or being treated as a distinct or
2 34 cohesive unit.
2 35 11. "Physical revitalization" means activities designed
3 1 for the physical improvement of any part or all of a
3 2 neighborhood area. These activities may include, but are not
3 3 limited to, such programs as commercial area revitalization;
3 4 housing construction or rehabilitation; improvements to or
3 5 acquisition or construction of facilities used by nonprofit
3 6 organizations for community purposes or related planning and
3 7 promotional activities designed to aid in those programs.
3 8 12. a. "Qualifying organization" means an organization
3 9 performing community services or economic development
3 10 activities in the state and is any of the following:
3 11 (1) A person or organization that is exempt from federal
3 12 income taxation under the Internal Revenue Code as defined in
3 13 section 422.3.
3 14 (2) A nonprofit corporation organized under the laws of
3 15 this state.
3 16 (3) Designated as a community development corporation by
3 17 the federal government pursuant to, Title VII of the Economic
3 18 Opportunity Act of 1964, Pub. L. No. 88-452.
3 19 b. "Qualifying organization" does not include any of the
3 20 following:
3 21 (1) A unit or agency of the state, local government, or
3 22 educational institution.
3 23 (2) A foundation or trust of a postsecondary educational
3 24 institution.
3 25 (3) A church-affiliated religious organization unless the
3 26 organization is without religious discrimination or is not
3 27 controlled by a single denomination.
3 28 Sec. 3. NEW SECTION. 15.382 COMMUNITY DEVELOPMENT AND
3 29 CHILD CARE CENTER TAX CREDITS – APPROVAL OF PROJECTS AND
3 30 PROPOSALS.
3 31 1. TAX CREDITS.
3 32 a. A business which engages in the activities of providing
3 33 physical revitalization, economic development, job training or
3 34 education for individuals, community services, or crime
3 35 prevention in the state shall receive a community development
4 1 tax credit as provided in section 15.383 if the director
4 2 annually approves the proposal of the business. However, a
4 3 proposal for a community development tax credit shall not be
4 4 approved which does not have the endorsement of the agency of
4 5 local government for the area in which the business is
4 6 engaging in such activities that the proposal is consistent
4 7 with the overall community or neighborhood development plan
4 8 adopted by that local government.
4 9 b. A business which for the benefit of its employees
4 10 builds, contributes to, or operates a new or existing child
4 11 care center in the state or subsidizes access to a child care
4 12 center in the state shall receive a child care center tax
4 13 credit as provided in section 15.383 if the director annually
4 14 approves the proposal of the business.
4 15 2. ECONOMIC DEVELOPMENT PROJECTS. For economic
4 16 development projects in distressed or blighted areas for which
4 17 community development tax credits under this part may be
4 18 approved, the following guidelines apply:
4 19 a. Applications shall be accepted from any locally based
4 20 qualifying organization wishing to conduct an economic
4 21 development project in a distressed or blighted area.
4 22 b. Applicants may not administer more than one economic
4 23 development project at a time. A project may include more
4 24 than one building, provided that the proposal meets all other
4 25 eligibility requirements as set forth in this subsection and
4 26 rules of the department.
4 27 c. Applications will be accepted by the department at any
4 28 time of the year and will be approved on a case-by-case basis
4 29 as all the necessary requirements are met and as credits
4 30 become available.
4 31 d. A maximum authorization of one hundred fifty thousand
4 32 dollars in community development tax credits will be permitted
4 33 per project and no more than five percent of the credits
4 34 authorized for the project shall normally be allowed for
4 35 administrative and operating expenses. In unusual
5 1 circumstances, a higher percentage may be allowed at the
5 2 discretion of the department.
5 3 e. Applicants must obtain a nonbinding commitment from a
5 4 prospective business or businesses willing to locate to the
5 5 facility and demonstrate that at least one job will be created
5 6 or retained for every ten thousand dollars in credits
5 7 requested. Eligible types of businesses include retail,
5 8 commercial, service, and manufacturing.
5 9 f. Applicants must agree to retain ownership of all
5 10 properties acquired under this part for a minimum of five
5 11 years and agree to contractual conditions with the department
5 12 governing the use or eventual disposition, or both, of those
5 13 properties. Contract conditions shall include, but are not
5 14 limited to, lease terms and arrangements for the first five
5 15 years, and a clause stipulating that the eventual purchase
5 16 price will be no less than seventy-five percent of the fair
5 17 market value of the facility, excluding the value of leasehold
5 18 improvements.
5 19 3. COMMUNITY DEVELOPMENT PROJECTS. For community
5 20 development projects, other than economic development
5 21 projects, for which community development tax credits under
5 22 this part may be approved, the following procedures, criteria,
5 23 and priorities apply:
5 24 a. A proposal for a proposed program shall be submitted by
5 25 a qualifying organization for carrying out a specific project
5 26 consistent with the purposes of this part.
5 27 b. All proposals shall be made on the forms supplied by
5 28 the department. Each proposal shall contain a project budget
5 29 and shall identify, if possible, the items and amounts of the
5 30 budget which will be provided for from contributions from any
5 31 business. A project budget shall be approved by the
5 32 department. The department may request any additional
5 33 information it determines necessary to evaluate a proposal or
5 34 plan.
5 35 c. Community development projects and the budgets for them
6 1 may be approved for a period of up to three years at the
6 2 discretion of the director.
6 3 d. An annual application deadline shall be determined by
6 4 the department and application materials shall be distributed
6 5 upon request no less than sixty days prior to the actual
6 6 application deadline.
6 7 e. All proposals must address at least one of the
6 8 following priorities in order to qualify for approval:
6 9 (1) The project substantially contributes to self-help
6 10 efforts by residents of the neighborhood area to be served in
6 11 addressing locally defined objectives.
6 12 (2) The project will result in the provision of essential
6 13 services to low-income and moderate-income persons which would
6 14 not otherwise be provided in the affected neighborhood area
6 15 and for which there are not other resources.
6 16 (3) The project tangibly contributes to the development of
6 17 lasting cooperation and partnership efforts of neighborhood
6 18 organizations and businesses.
6 19 f. Approval or disapproval of proposals shall be based on
6 20 the following criteria:
6 21 (1) The director must certify an area as experiencing
6 22 problems endangering the area's existence as a viable and
6 23 stable neighborhood to be eligible for assistance.
6 24 (2) The qualifying organization submitting the proposal
6 25 must demonstrate its capacity to adequately administer the
6 26 project.
6 27 (3) There must be a demonstrated need for the program in
6 28 the neighborhood area within which the project is to be
6 29 carried out.
6 30 (4) The proposal must demonstrate that residents of the
6 31 affected neighborhood area have been involved in the planning
6 32 of the proposed project and describe the extent to which they
6 33 will be involved in its implementation.
6 34 (5) The proposal must be consistent with all locally
6 35 approved community or neighborhood development plans for the
7 1 area.
7 2 (6) Proposals submitted subsequent to the first year will
7 3 be evaluated on performance of the first-year project, other
7 4 resources developed, continued need, and potential for
7 5 eventual self-sufficiency.
7 6 g. In no case shall a project be approved that does not
7 7 have a written endorsement of the appropriate local public
7 8 authority.
7 9 h. The maximum amount of community development tax credits
7 10 allowed per project is one hundred fifty thousand dollars.
7 11 i. For purposes of the criterion in paragraph "f",
7 12 subparagraph (1), an area is experiencing problems endangering
7 13 its existence as a viable and stable neighborhood if some of
7 14 the following factors are present: declining population, high
7 15 percentage of people dependent on public assistance,
7 16 persistent or substantial unemployment or underemployment,
7 17 lower than average family incomes, financial disinvestment,
7 18 insurance and financial redlining, general weakened market
7 19 conditions on the neighborhood commercial strip as indicated
7 20 by declining rents or vacant stores, excessive abandonment of
7 21 properties, a significant percentage of neighborhood residents
7 22 on fixed incomes, unsanitary or inadequate housing,
7 23 overcrowding, property speculation, high rates of crime and
7 24 delinquency, high degree of drug or alcohol abuse, increasing
7 25 cases of mental health problems, significant numbers of
7 26 single-parent households, high degree of infant mortality and
7 27 disease, disabilities, general unsanitary conditions in the
7 28 area, or poor city and public utility services.
7 29 4. CHILD CARE EMPLOYEE BENEFITS. For child care employee
7 30 benefits for which a child care center tax credit under this
7 31 part may be approved, the following apply:
7 32 a. A proposal for a project shall be submitted by a
7 33 business located in or doing business in the state.
7 34 b. The proposal shall be on forms supplied by the
7 35 department. The proposal shall identify the location of the
8 1 child care center which must be in the state. The proposal
8 2 shall contain a statement on whether the business is also
8 3 seeking a community development tax credit for providing child
8 4 care for its employees.
8 5 c. To be eligible for a child care center tax credit, the
8 6 business must provide child care employee benefits for its
8 7 employees through any of the following:
8 8 (1) Build a new structure or rehabilitate an existing
8 9 structure to be used as a child care center. A business may
8 10 do the building or rehabilitating in conjunction with another
8 11 business or entity but only the business's actual costs shall
8 12 be considered in determining the amount of credit. At least
8 13 five children of its employees are provided child care at the
8 14 center.
8 15 (2) Operate or lease a child care center where at least
8 16 five children of its employees are provided child care at the
8 17 center.
8 18 (3) Donate money, supplies, or other tangible personal
8 19 property to a child care center where at least five of its
8 20 employees are provided child care.
8 21 (4) Pay the cost for the equivalent of five children of
8 22 its employees to attend a child care center.
8 23 d. A business is ineligible for a child care center tax
8 24 credit if any of the following applies:
8 25 (1) It derives income from the operation, lease, or
8 26 management of more than one child care center.
8 27 (2) The business has received a community development tax
8 28 credit for activities related to the child care center for
8 29 which it is seeking a tax credit.
8 30 e. An annual application deadline shall be determine by
8 31 the department and application material shall be distributed
8 32 upon request no less than sixty days prior to the actual
8 33 application deadline.
8 34 5. TAX CREDIT APPLICATION.
8 35 a. The department shall approve or disapprove applications
9 1 for community development tax credits to businesses which have
9 2 invested in approved economic development projects or other
9 3 community development projects or for child care center tax
9 4 credits for businesses that have provided child care for the
9 5 benefit of their employees. The director, upon approval of an
9 6 application, shall notify the director of revenue and finance
9 7 and the governor of those businesses entitled to a tax credit.
9 8 b. The procedures and requirements for filing a tax credit
9 9 application are as follows:
9 10 (1) Businesses wanting to donate to a particular community
9 11 development project or wanting to provide child care employee
9 12 benefits, but first wishing to verify the eligibility of the
9 13 donation or provision of child care employee benefits for a
9 14 tax credit, may submit a tax credit eligibility confirmation
9 15 form to the department. The department will confirm in
9 16 writing whether or not the donation or the provision of child
9 17 care employee benefits qualifies for credit and how the value
9 18 of the credit will be determined. This confirmation will not
9 19 constitute credit approval. However, in the case of community
9 20 development tax credit, the qualifying organization for the
9 21 project may reserve credits for specific donors.
9 22 (2) In order to qualify for credit, donations or providing
9 23 of child care employee benefits must occur during the approved
9 24 project period with the exception of donated audit services,
9 25 which may occur anytime during the six-month period following
9 26 the project period, and must be directly related to the
9 27 approved project.
9 28 (3) Businesses wishing to apply for credit must complete a
9 29 community development tax credit application or child care
9 30 center tax credit application. A business providing child
9 31 care for the benefit of its employees may complete and file
9 32 both applications, but only one credit shall be approved.
9 33 (4) Tax credit applications are to be signed by the
9 34 qualifying organization or the managing entity of the child
9 35 care center, as applicable, and submitted directly to the
10 1 department not later than one year following the date of
10 2 donation or providing of child care employee benefits.
10 3 (5) The order in which completed credit applications are
10 4 received by the department will determine the order in which
10 5 credits are approved. Facsimile copies will not be considered
10 6 completed applications.
10 7 (6) Every transmittal of community development tax credit
10 8 applications to the department must be accompanied by a
10 9 project report prepared by the qualifying organization.
10 10 (7) The department shall examine all submitted
10 11 applications and determine which donations or child care
10 12 employee benefits meet the eligibility criteria.
10 13 c. The department shall establish by rule the methods to
10 14 be used in determining the value of contributions or child
10 15 care employee benefits of a business.
10 16 Sec. 4. NEW SECTION. 15.383 TAX CREDITS –
10 17 DOCUMENTATION.
10 18 1. For a tax credit application approved pursuant to
10 19 section 15.382, the community development tax credit or child
10 20 care center tax credit available under this part may be used
10 21 to reduce the tax liability imposed under chapter 422,
10 22 division II, III, or V, or chapter 432.
10 23 2. Subject to subsections 4 and 5, the amount of the
10 24 community development tax credit shall be a percentage of the
10 25 contribution made by the business during the tax year as
10 26 follows:
10 27 a. Fifty percent of the total amount contributed, except
10 28 as provided in paragraph "b".
10 29 b. Seventy-five percent of the contributions made to
10 30 programs in any city which has a population of fifteen
10 31 thousand or less as of the last decennial census and is
10 32 located in a county which is located in one of the following:
10 33 (1) An area that is not part of a metropolitan statistical
10 34 area as defined by the United States department of commerce.
10 35 (2) A metropolitan statistical area but the county has
11 1 only one city which has more than fifteen thousand
11 2 inhabitants.
11 3 (3) A metropolitan statistical area and a substantial
11 4 number of persons in the county derive their income from
11 5 agriculture.
11 6 3. Subject to subsections 4 and 6, the amount of the child
11 7 care center tax credit shall be twenty-five percent of the
11 8 cost to provide the child care employee benefits.
11 9 4. a. The tax credit shall not exceed one hundred
11 10 thousand dollars annually.
11 11 b. Any tax credit in excess of the business's tax
11 12 liability for a tax year may be credited to the tax liability
11 13 for the following five tax years or until depleted, whichever
11 14 is the earlier.
11 15 c. A financial institution or insurance company shall not
11 16 receive a tax credit for activities that are part of its
11 17 normal course of business.
11 18 d. To be eligible to receive the tax credit, a business
11 19 shall provide documentation of the contributions or costs on
11 20 which the credit is based. The documentation shall be as
11 21 specified by rules of the department.
11 22 5. The total amount of community development tax credits
11 23 that may be approved pursuant to this part shall not exceed
11 24 two million dollars in any fiscal year. Not more than seven
11 25 hundred fifty thousand dollars in tax credits in a fiscal year
11 26 shall be approved for the seventy-five percent of
11 27 contributions credits under subsection 2, paragraph "b". When
11 28 this maximum dollar amount in tax credits is approved,
11 29 subsequent requests for tax credits pursuant to subsection 2,
11 30 paragraph "b", may only be approved for fifty percent of the
11 31 amount of the contributions.
11 32 6. The total amount of child care center tax credits that
11 33 may be approved pursuant to this part shall not exceed two
11 34 million dollars in any fiscal year.
11 35 Sec. 5. NEW SECTION. 422.11C COMMUNITY DEVELOPMENT OR
12 1 CHILD CARE CENTER TAX CREDIT.
12 2 The taxes imposed under this division, less the credits
12 3 allowed under sections 422.12 and 422.12B, shall be reduced by
12 4 a community development tax credit or child care center tax
12 5 credit received pursuant to sections 15.380 through 15.383.
12 6 An individual may claim the tax credit allowed a
12 7 partnership, limited liability company, S corporation, or
12 8 estate or trust electing to have the income taxed directly to
12 9 the individual. The amount claimed by the individual shall be
12 10 based upon the pro rata share of the individual's earnings of
12 11 the partnership, limited liability company, S corporation, or
12 12 estate or trust.
12 13 Any credit in excess of the tax liability for the tax year
12 14 may be credited to the tax liability for the following five
12 15 tax years or until depleted, whichever is earlier.
12 16 Sec. 6. Section 422.33, Code 2001, is amended by adding
12 17 the following new subsection:
12 18 NEW SUBSECTION. 11. The taxes imposed under this division
12 19 shall be reduced by a community development tax credit or
12 20 child care center tax credit received pursuant to sections
12 21 15.380 through 15.383.
12 22 Any credit in excess of the tax liability for the tax year
12 23 may be credited to the tax liability for following five tax
12 24 years or until depleted, whichever is earlier.
12 25 Sec. 7. Section 422.60, Code 2001, is amended by adding
12 26 the following new subsection:
12 27 NEW SUBSECTION. 4. The taxes imposed under this division
12 28 shall be reduced by a community development tax credit or
12 29 child care center tax credit received pursuant to sections
12 30 15.380 through 15.383.
12 31 Any credit in excess of the tax liability for the tax year
12 32 may be credited to the tax liability for the following five
12 33 tax years or until depleted, whichever is earlier.
12 34 Sec. 8. NEW SECTION. 432.12A COMMUNITY DEVELOPMENT OR
12 35 CHILD CARE CENTER TAX CREDIT.
13 1 The tax imposed under this chapter shall be reduced by a
13 2 community development tax credit or child care center tax
13 3 credit received pursuant to sections 15.380 through 15.383.
13 4 Any credit in excess of the tax liability for the calendar
13 5 year may be credited to the tax liability for the following
13 6 five calendar years or until depleted, whichever is earlier.
13 7 Sec. 9. EFFECTIVE AND APPLICABILITY DATE. This Act, being
13 8 deemed of immediate importance, takes effect upon enactment.
13 9 Sections 5 through 8 of this Act apply to tax years beginning
13 10 on or after January 1, 2002.
13 11 EXPLANATION
13 12 This bill establishes a community development program
13 13 administered by the department of economic development. The
13 14 program is to provide tax incentives to businesses which make
13 15 contributions to projects in communities or neighborhoods that
13 16 would benefit by these projects or make expenditures to
13 17 provide child care benefits to its employees. The projects
13 18 involve the providing of physical revitalization, economic
13 19 development, job training or education for individuals,
13 20 community services, and crime prevention. Community services
13 21 projects include projects providing for group and family
13 22 counseling, mental health services and centers, child and
13 23 adult care, senior citizen centers, recreation programs,
13 24 sheltered workshops, and substance abuse counseling. The
13 25 child care employee benefits involve the business building or
13 26 rehabilitating an existing structure as a child care center
13 27 for use of its employees, paying for children of employees to
13 28 attend a child care center, operating or leasing a center, or
13 29 donating money or tangible property to a center at which its
13 30 employees' children attend.
13 31 The tax incentives are provided in the form of tax credits
13 32 which may be used to offset the tax liability under the
13 33 individual and corporate income taxes, financial institution
13 34 franchise tax, and the insurance gross premiums tax. The
13 35 amount of the community development tax credit, subject to
14 1 limitation, equals 50 percent, or 75 percent in cities of
14 2 15,000 or less in population, of the contributions made by the
14 3 business to the project. Not more than $150,000 in tax
14 4 credits may be allowed for any one project. The maximum
14 5 amount of credit a business may receive for a project is
14 6 $100,000. Projects and tax credits associated with the
14 7 projects must be approved by the department of economic
14 8 development. The total amount of tax credits that may be
14 9 approved in a fiscal year shall not exceed $2 million.
14 10 The amount of the child care center tax credit equals 25
14 11 percent of the expenditures for providing child care employee
14 12 benefits with a maximum credit of $100,000. The tax credits
14 13 must be approved by the department of economic development.
14 14 Not more than $2 million in these credits may be approved in a
14 15 fiscal year.
14 16 The bill takes effect upon enactment and the tax credit
14 17 provisions are effective January 1, 2002, for tax years
14 18 beginning on or after that date.
14 19 LSB 3152SC 79
14 20 mg/cf/24.1
Text: SSB01254 Text: SSB01256 Text: SSB01200 - SSB01299 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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