Text: HF00619 Text: HF00621 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. NEW SECTION. 15.381 SHORT TITLE. 1 2 This part shall be known as and may be cited as the "New 1 3 Capital Investment Program". 1 4 Sec. 2. NEW SECTION. 15.382 PURPOSE. 1 5 It is the purpose of this part to promote new economic 1 6 development through new capital investments that upgrade and 1 7 expand the capabilities of Iowa businesses by allowing the 1 8 businesses to be more competitive in the world economy. 1 9 Sec. 3. NEW SECTION. 15.383 DEFINITIONS. 1 10 As used in this part, unless the context otherwise 1 11 requires: 1 12 1. "Community" means a city, county, or other entity 1 13 established pursuant to chapter 28E. 1 14 2. "Eligible business" means a business which has been 1 15 approved to receive incentives by the department pursuant to 1 16 section 15.384, subsection 3. 1 17 Sec. 4. NEW SECTION. 15.384 ELIGIBLE BUSINESS. 1 18 1. To be eligible to receive incentives under this part, a 1 19 business shall meet all of the following requirements: 1 20 a. The business has not closed or reduced its operation in 1 21 one area of the state and relocated substantially the same 1 22 operation in the community. 1 23 b. The business is not a retail business or a business 1 24 where entrance is limited by a cover charge or membership 1 25 requirement. 1 26 c. The business makes a capital investment of at least 1 27 five hundred thousand dollars. 1 28 d. The business creates high-quality jobs due to the 1 29 capital investment. In determining whether high-quality jobs 1 30 are created, the department shall place greater emphasis on 1 31 jobs that have all the following characteristics: 1 32 (1) Have a wage equal to at least the average county wage. 1 33 (2) Are full-time or career-type positions. 1 34 (3) Provide comprehensive health benefits. 1 35 (4) Have other related characteristics which could be 2 1 considered to be higher in quality than do other jobs. 2 2 e. The start-up, location, or expansion of the business 2 3 occurs within a specified period which will be negotiated with 2 4 the department and the community, but which shall be at least 2 5 a period of three years. 2 6 f. The business provides the community and the department 2 7 with an affidavit stating that the business has not, within 2 8 the five years prior to the application date, violated state 2 9 or federal environmental or worker safety statutes, rules, or 2 10 regulations or, if such violation has occurred, that there 2 11 were mitigating circumstances or such violations did not 2 12 seriously affect public health or safety or the environment. 2 13 2. The community and the department may also consider a 2 14 variety of factors, including the following, in determining 2 15 the eligibility of a business to participate in the program: 2 16 a. The impact of the proposed project on the community and 2 17 the state. 2 18 b. The impact the business will have on other businesses 2 19 in competition with it. 2 20 c. The potential for future growth in the industry 2 21 represented by the business. 2 22 d. The impact the proposed new capital investment will 2 23 have on the ability of the business to expand, upgrade, or 2 24 modernize its capabilities, and the extent to which the new 2 25 capital investment will result in a more productive and 2 26 competitive business enterprise and workforce. 2 27 e. The proportion of the local funding match to be 2 28 provided. 2 29 3. If the community determines that a business is 2 30 eligible, the community shall approve by resolution the 2 31 application for incentives. Once a business is found to be 2 32 eligible, the community shall submit the application to the 2 33 department. The department may approve, defer, or deny the 2 34 application. 2 35 Sec. 5. NEW SECTION. 15.385 INCENTIVES. 3 1 For tax years beginning on or after January 1, 2003, an 3 2 eligible business shall be entitled to receive all of the 3 3 following incentives: 3 4 1. Sales, services, and use tax refund, as provided in 3 5 section 15.331A. 3 6 2. Research activities credit, as provided in section 3 7 15.335. 3 8 3. a. An eligible business may claim a tax credit equal 3 9 to a percentage of the new investment directly related to new 3 10 jobs created by the location or expansion of an eligible 3 11 business under the program. The tax credit shall be allowed 3 12 against taxes imposed under chapter 422, division II, III, or 3 13 V. If the business is a partnership, S corporation, limited 3 14 liability company, cooperative organized under chapter 501 and 3 15 filing as a partnership for federal tax purposes, or estate or 3 16 trust electing to have the income taxed directly to the 3 17 individual, an individual may claim the tax credit allowed. 3 18 The amount claimed by the individual shall be based upon the 3 19 pro rata share of the individual's earnings of the 3 20 partnership, S corporation, limited liability company, 3 21 cooperative organized under chapter 501 and filing as a 3 22 partnership for federal tax purposes, or estate or trust. The 3 23 percentage shall be equal to the amount provided in paragraph 3 24 "d". Any tax credit in excess of the tax liability for the 3 25 tax year may be credited to the tax liability for the 3 26 following seven years or until depleted, whichever occurs 3 27 first. 3 28 Subject to prior approval by the department of economic 3 29 development, in consultation with the department of revenue 3 30 and finance, an eligible business whose project primarily 3 31 involves the production of value-added agricultural products 3 32 or uses biotechnology-related processes may elect to receive a 3 33 refund of all or a portion of an unused tax credit. For 3 34 purposes of this subsection, such an eligible business 3 35 includes a cooperative described in section 521 of the 4 1 Internal Revenue Code which is not required to file an Iowa 4 2 corporate income tax return, and whose project primarily 4 3 involves the production of ethanol. The refund may be applied 4 4 against a tax liability imposed under chapter 422, division 4 5 II, III, or V. If the business is a partnership, subchapter S 4 6 corporation, limited liability company, cooperative organized 4 7 under chapter 501 and filing as a partnership for federal tax 4 8 purposes, or estate or trust electing to have the income taxed 4 9 directly to the individual, an individual may claim the tax 4 10 credit allowed. The amount claimed by the individual shall be 4 11 based upon the pro rata share of the individual's earnings of 4 12 the partnership, subchapter S corporation, limited liability 4 13 company, cooperative organized under chapter 501 and filing as 4 14 a partnership for federal tax purposes, or estate or trust. 4 15 b. For purposes of this subsection, "new investment 4 16 directly related to new jobs created by the location or 4 17 expansion of an eligible business under the program" means the 4 18 cost of machinery and equipment, as defined in section 427A.1, 4 19 subsection 1, paragraphs "e" and "j", purchased for use in the 4 20 operation of the eligible business, the purchase price of 4 21 which has been depreciated in accordance with generally 4 22 accepted accounting principles, the purchase price of real 4 23 property and any buildings and structures located on the real 4 24 property, and the cost of improvements made to real property 4 25 which is used in the operation of the eligible business. If, 4 26 however, within five years of purchase, the eligible business 4 27 sells, disposes of, razes, or otherwise renders unusable all 4 28 or a part of the land, buildings, or other existing structures 4 29 for which tax credit was claimed under this section, the 4 30 income tax liability of the eligible business for the year in 4 31 which all or part of the property is sold, disposed of, razed, 4 32 or otherwise rendered unusable shall be increased by one of 4 33 the following amounts: 4 34 (1) One hundred percent of the tax credit claimed under 4 35 this subsection if the property ceases to be eligible for the 5 1 tax credit within one full year after being placed in service. 5 2 (2) Eighty percent of the tax credit claimed under this 5 3 subsection if the property ceases to be eligible for the tax 5 4 credit within two full years after being placed in service. 5 5 (3) Sixty percent of the tax credit claimed under this 5 6 subsection if the property ceases to be eligible for the tax 5 7 credit within three full years after being placed in service. 5 8 (4) Forty percent of the tax credit claimed under this 5 9 subsection if the property ceases to be eligible for the tax 5 10 credit within four full years after being placed in service. 5 11 (5) Twenty percent of the tax credit claimed under this 5 12 subsection if the property ceases to be eligible for the tax 5 13 credit within five full years after being placed in service. 5 14 c. (1) An eligible business whose project primarily 5 15 involves the production of value-added agricultural products 5 16 or uses biotechnology-related processes, which elects to 5 17 receive a refund of all or a portion of an unused tax credit, 5 18 shall apply to the department of economic development for tax 5 19 credit certificates. Such an eligible business shall not 5 20 claim a tax credit refund under this subsection unless a tax 5 21 credit certificate issued by the department of economic 5 22 development is attached to the taxpayer's tax return for the 5 23 tax year for which the tax credit refund is claimed. For 5 24 purposes of this subsection, an eligible business includes a 5 25 cooperative described in section 521 of the Internal Revenue 5 26 Code which is not required to file an Iowa corporate income 5 27 tax return, and whose project primarily involves the 5 28 production of ethanol. For purposes of this subsection, an 5 29 eligible business also includes a cooperative described in 5 30 section 521 of the Internal Revenue Code which is required to 5 31 file an Iowa corporate income tax return and whose project 5 32 primarily involves the production of ethanol. Such 5 33 cooperative may elect to transfer all or a portion of its tax 5 34 credit to its members. The amount of tax credit transferred 5 35 and claimed by a member shall be based upon the pro rata share 6 1 of the member's earnings of the cooperative. 6 2 (2) A tax credit certificate shall not be valid until the 6 3 tax year following the date of the capital investment project 6 4 completion. A tax credit certificate shall contain the 6 5 taxpayer's name, address, tax identification number, the date 6 6 of project completion, the amount of the tax credit, and other 6 7 information required by the department of revenue and finance. 6 8 The department of economic development shall not issue tax 6 9 credit certificates under this subsection and section 15.333, 6 10 subsection 2, which total more than four million dollars 6 11 during a fiscal year. If the department receives applications 6 12 for tax credit certificates under this subsection and section 6 13 15.333, subsection 2, in excess of four million dollars, the 6 14 applicants shall receive certificates for a prorated amount. 6 15 The tax credit certificates shall not be transferred except as 6 16 provided in this subsection for a cooperative described in 6 17 section 521 of the Internal Revenue Code which is required to 6 18 file an Iowa corporate income tax return and whose project 6 19 primarily involves the production of ethanol. For a 6 20 cooperative described in section 521 of the Internal Revenue 6 21 Code, the department of economic development shall require 6 22 that the cooperative submit a list of its members and the 6 23 share of each member's interest in the cooperative. The 6 24 department shall issue a tax credit certificate to each member 6 25 contained on the submitted list. 6 26 d. The amount of a tax credit claimed under this 6 27 subsection shall be determined as follows: 6 28 (1) If the department determines, based on the application 6 29 of the eligible business, that high-quality jobs are not 6 30 created but economic activity within the state is advanced, 6 31 the eligible business may claim a corporate tax credit of up 6 32 to one percent of the new investment. 6 33 (2) If the department determines, based on the application 6 34 of the eligible business, that one to five high-quality jobs 6 35 are created, the eligible business may claim a corporate tax 7 1 credit of up to two percent of the new investment. 7 2 (3) If the department determines, based on the application 7 3 of the eligible business, that six to ten high-quality jobs 7 4 are created, the eligible business may claim a corporate tax 7 5 credit of up to three percent of the new investment. 7 6 (4) If the department determines, based on the application 7 7 of the eligible business, that eleven to fifteen high-quality 7 8 jobs are created, the eligible business may claim a corporate 7 9 tax credit of up to four percent of the new investment. 7 10 (5) If the department determines, based on the application 7 11 of the eligible business, that more than fifteen high-quality 7 12 jobs are created, the eligible business may claim a corporate 7 13 tax credit of up to five percent of the new investment. 7 14 4. a. An eligible business may claim an insurance premium 7 15 tax credit equal to a percentage of the new investment 7 16 directly related to new jobs created by the location or 7 17 expansion of an eligible business under the program. The tax 7 18 credit shall be allowed against taxes imposed in chapter 432. 7 19 A tax credit in excess of the tax liability for the tax year 7 20 may be credited to the tax liability for the following seven 7 21 years or until depleted, whichever occurs first. The 7 22 percentage shall be equal to the amount provided in paragraph 7 23 "c". 7 24 b. For purposes of this subsection, "new investment 7 25 directly related to new jobs created by the location or 7 26 expansion of an eligible business under the program" means the 7 27 cost of machinery and equipment, as defined in section 427A.1, 7 28 subsection 1, paragraphs "e" and "j", purchased for use in the 7 29 operation of the eligible business, the purchase price of 7 30 which has been depreciated in accordance with generally 7 31 accepted accounting principles, the purchase price of real 7 32 property and any buildings and structures located on the real 7 33 property, and the cost of improvements made to real property 7 34 which is used in the operation of the eligible business. If, 7 35 however, within five years of purchase, the eligible business 8 1 sells, disposes of, razes, or otherwise renders unusable all 8 2 or a part of the land, buildings, or other existing structures 8 3 for which tax credit was claimed under this section, the 8 4 income tax liability of the eligible business for the year in 8 5 which all or part of the property is sold, disposed of, razed, 8 6 or otherwise rendered unusable shall be increased by one of 8 7 the following amounts: 8 8 (1) One hundred percent of the tax credit claimed under 8 9 this subsection if the property ceases to be eligible for the 8 10 tax credit within one full year after being placed in service. 8 11 (2) Eighty percent of the tax credit claimed under this 8 12 subsection if the property ceases to be eligible for the tax 8 13 credit within two full years after being placed in service. 8 14 (3) Sixty percent of the tax credit claimed under this 8 15 subsection if the property ceases to be eligible for the tax 8 16 credit within three full years after being placed in service. 8 17 (4) Forty percent of the tax credit claimed under this 8 18 subsection if the property ceases to be eligible for the tax 8 19 credit within four full years after being placed in service. 8 20 (5) Twenty percent of the tax credit claimed under this 8 21 subsection if the property ceases to be eligible for the tax 8 22 credit within five full years after being placed in service. 8 23 c. The amount of the tax credit claimed under this 8 24 subsection shall be determined as follows: 8 25 (1) If the department determines, based on the application 8 26 of the eligible business, that high-quality jobs are not 8 27 created but economic activity within the state is advanced, 8 28 the eligible business may claim an insurance premium tax 8 29 credit of up to one percent of the new investment. 8 30 (2) If the department determines, based on the application 8 31 of the eligible business, that one to five high-quality jobs 8 32 are created, the eligible business may claim an insurance 8 33 premium tax credit of up to two percent of the new investment. 8 34 (3) If the department determines, based on the application 8 35 of the eligible business, that six to ten high-quality jobs 9 1 are created, the eligible business may claim an insurance 9 2 premium tax credit of up to three percent of the new 9 3 investment. 9 4 (4) If the department determines, based on the application 9 5 of the eligible business, that eleven to fifteen high-quality 9 6 jobs are created, the eligible business may claim an insurance 9 7 premium tax credit of up to four percent of the new 9 8 investment. 9 9 (5) If the department determines, based on the application 9 10 of the eligible business, that more than fifteen high-quality 9 11 jobs are created, the eligible business may claim an insurance 9 12 premium tax credit of up to five percent of the new 9 13 investment. 9 14 Sec. 6. NEW SECTION. 15.386 AGREEMENT. 9 15 A business shall enter into an agreement with the 9 16 department specifying the requirements that must be met to 9 17 confirm eligibility pursuant to section 15.384. The 9 18 department shall consult with the community during 9 19 negotiations relating to the agreement. The agreement shall 9 20 contain, at a minimum, the following provisions: 9 21 1. A business that is approved to receive incentives 9 22 shall, for the length of the agreement, certify annually to 9 23 the community and the department the compliance of the 9 24 business with the requirements of the agreement. 9 25 2. The repayment of incentives by the business if the 9 26 business or group of businesses has not met any of the 9 27 requirements of this part or the resulting agreement. 9 28 3. If a business that is approved to receive incentives 9 29 under this part experiences a layoff within the state or 9 30 closes any of its facilities within the state, the department 9 31 shall have the discretion to reduce or eliminate some or all 9 32 of the incentives. If a business has received incentives 9 33 under this part and experiences a layoff within the state or 9 34 closes any of its facilities within the state, the business 9 35 may be subject to repayment of all or a portion of the 10 1 incentives that it has received. 10 2 Sec. 7. NEW SECTION. 15.387 OTHER INCENTIVES. 10 3 An eligible business may receive other applicable federal, 10 4 state, and local incentives and tax credits in addition to 10 5 those provided in this part. However, a business which 10 6 participates in the program under this part shall not receive 10 7 any funds, tax credits, or incentives under chapter 15, 10 8 subchapter II, part 13, or chapter 15E, division XVIII. 10 9 Sec. 8. Section 15.333, subsection 2, unnumbered paragraph 10 10 2, Code 2003, is amended to read as follows: 10 11 A tax credit certificate shall not be valid until the tax 10 12 year following the date of the project completion. A tax 10 13 credit certificate shall contain the taxpayer's name, address, 10 14 tax identification number, the date of project completion, the 10 15 amount of the tax credit, and other information required by 10 16 the department of revenue and finance. The department of 10 17 economic development shall not issue tax credit certificates 10 18 under this subsection and section 15.385, subsection 3, 10 19 paragraph "c", which total more than four million dollars 10 20 during a fiscal year. If the department receives applications 10 21 for tax credit certificates under this subsection and section 10 22 15.385, subsection 3, paragraph "c", in excess of four million 10 23 dollars, the applicants shall receive certificates for a 10 24 prorated amount. The tax credit certificates shall not be 10 25 transferred except as provided in this subsection for a 10 26 cooperative described in section 521 of the Internal Revenue 10 27 Code which is required to file an Iowa corporate income tax 10 28 return and whose project primarily involves the production of 10 29 ethanol. For a cooperative described in section 521 of the 10 30 Internal Revenue Code, the department of economic development 10 31 shall require that the cooperative submit a list of its 10 32 members and the share of each member's interest in the 10 33 cooperative. The department shall issue a tax credit 10 34 certificate to each member contained on the submitted list. 10 35 Sec. 9. Section 15.337, Code 2003, is amended to read as 11 1 follows: 11 2 15.337 WAIVER OF PROGRAM QUALIFICATION REQUIREMENTS. 11 3 A community may request the waiver ofthe capital11 4investment requirement orthe requirement for number of 11 5 positions created under section 15.329. However, in no event 11 6 shall the minimum number of jobs created be less than fifteen 11 7or the minimum capital investment be less than three million11 8dollarsper application under the program.The department11 9shall develop an appropriate formula of minimum jobs created11 10and capital investment required per program application which11 11can be authorized under the waiver.The department may grant 11 12 a waiver for good cause shown and approve the program 11 13 application. 11 14 As used in this section, "good cause shown" includesbut is11 15not limited to a demonstrated lack of growth in the community,11 16a significant percentage of persons in the community who have11 17incomes at or below the poverty level, communitya county 11 18 family poverty rate higher than the state average, a county 11 19 unemployment rate higher than the state average, a unique 11 20 opportunity to use existing unutilizedor underutilized11 21 facilities in the community, a significant downsizing or 11 22 closure by one of the community's major employers, or an 11 23 immediate threat posed to the community's workforce due to 11 24 business downsizing or closure. "Good cause shown" may also 11 25 include a proposed project by a business in one of the state's 11 26 targeted industry clusters which will make a higher than 11 27 average capital investment and which will pay an average 11 28 starting wage for all the new jobs created as the result of 11 29 the project that is significantly higher than the wage 11 30 requirement in section 15.329. For purposes of this section, 11 31 "targeted industry clusters" includes the industry clusters of 11 32 life sciences, information solutions, and advanced 11 33 manufacturing. 11 34 EXPLANATION 11 35 This bill creates a new capital investment program and 12 1 amends the new jobs and income program. 12 2 The bill provides that to be eligible to receive incentives 12 3 under the new capital investment program, a business is 12 4 required to meet all of the following requirements: 12 5 1. The business has not closed or reduced its operation in 12 6 one area of the state and relocated substantially the same 12 7 operation in the community. 12 8 2. The business is not a retail business where entrance is 12 9 limited by a cover charge or membership requirement. 12 10 3. The business makes a capital investment of at least 12 11 $500,000. 12 12 4. The business creates high-quality jobs due to the 12 13 capital investment. 12 14 5. The start-up, location, or expansion of the business 12 15 occurs within at least a period of three years. 12 16 6. The business provides the community and the department 12 17 with an affidavit stating that the business has not, within 12 18 the five years prior to the application date, violated state 12 19 or federal environmental or worker safety statutes, rules, or 12 20 regulations or, if such violation has occurred, that there 12 21 were mitigating circumstances or such violations did not 12 22 seriously affect public health or safety or the environment. 12 23 The bill also allows a community and the department to 12 24 consider a variety of factors in determining the eligibility 12 25 of a business to participate in the program. The factors 12 26 include the impact of the proposed project on the community 12 27 and the state; the impact the business will have on other 12 28 businesses in competition with it; the potential for future 12 29 growth in the industry represented by the business; the impact 12 30 the proposed new capital investment will have on the ability 12 31 of the business to expand, upgrade, or modernize its 12 32 capabilities, and the extent to which the new capital 12 33 investment will result in a more productive and competitive 12 34 business enterprise and workforce; and the proportion of the 12 35 local funding match to be provided. 13 1 The bill provides that if the community determines that a 13 2 business is eligible, the community shall approve by 13 3 resolution the application for incentives. The bill provides 13 4 that, once a business is found to be eligible, the community 13 5 shall submit the application to the department and the 13 6 department may approve, defer, or deny the application. 13 7 The bill requires a business to enter into an agreement 13 8 with the department specifying the requirements which must be 13 9 met to confirm eligibility under the program. The bill 13 10 requires the agreement to contain, at a minimum, provisions 13 11 relating to continued compliance, repayment of incentives due 13 12 to a failure to comply, and the reduction, elimination, or 13 13 repayment of incentives for reasons related to layoffs or the 13 14 closure of facilities. 13 15 The bill provides that, for tax years beginning on or after 13 16 January 1, 2003, an eligible business shall receive a number 13 17 of incentives: the sales, services, and use tax refund 13 18 available under the new jobs and income program and the 13 19 research activities credit available under the new jobs and 13 20 income program. The bill also allows an eligible business to 13 21 claim a tax credit equal to a percentage of the new investment 13 22 which is directly related to new jobs created by the location 13 23 or expansion of an eligible business under the program. The 13 24 percentage ranges from 1 percent to 5 percent based on the 13 25 number of high-quality jobs that are created, as determined by 13 26 the department. The tax credit is allowed against personal 13 27 and corporate income tax and against the franchise tax for 13 28 financial institutions. The tax credits may be carried 13 29 forward for a period of seven years or until depleted, 13 30 whichever occurs first. The bill provides that, subject to 13 31 prior approval by the department of economic development, in 13 32 consultation with the department of revenue and finance, an 13 33 eligible business whose project primarily involves the 13 34 production of value-added agricultural products or uses 13 35 biotechnology-related processes may elect to receive a refund 14 1 of all or a portion of an unused tax credit. The bill 14 2 provides a certification method for claiming tax credit 14 3 refunds. The bill provides that the tax credit refund 14 4 certificates are not valid until the tax year following the 14 5 date of the capital investment completion. The bill limits 14 6 the department of economic development to issuing certificates 14 7 under this program and the new jobs and income program which 14 8 total more than $4 million during a fiscal year. 14 9 The bill allows an eligible business to claim an insurance 14 10 premium tax credit equal to a percentage of the new investment 14 11 directly related to new jobs created by the location or 14 12 expansion of an eligible business under the program. The 14 13 percentage ranges from 1 percent to 5 percent based on the 14 14 number of high-quality jobs that are created, as determined by 14 15 the department. The tax credits may be carried forward for a 14 16 period of seven years or until depleted, whichever occurs 14 17 first. 14 18 The bill provides that an eligible business may receive 14 19 other applicable federal, state, and local incentives and tax 14 20 credits in addition to those provided under the new capital 14 21 investment program; however, an eligible business shall not 14 22 receive funds, tax credits, or incentives under the community 14 23 economic betterment program or the enterprise zone program. 14 24 Currently under the new jobs and income program, a 14 25 community may receive a waiver of the capital investment 14 26 requirement or the number of jobs created requirement if good 14 27 cause is shown. The bill eliminates the capital investment 14 28 requirement waiver and provides examples of demonstrations of 14 29 good cause. 14 30 LSB 2280HV 80 14 31 tm/sh/8
Text: HF00619 Text: HF00621 Text: HF00600 - HF00699 Text: HF Index Bills and Amendments: General Index Bill History: General Index
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