1998 Summary of Legislation Published by the Iowa General Assembly -- Legislative Service Bureau

ECONOMIC DEVELOPMENT

ECONOMIC DEVELOPMENT LEGISLATION

SENATE FILE 2415 - Iowa Agricultural Industry Finance Act and Related Provisions (full text of act)

BY COMMITTEE ON APPROPRIATIONS. This Act relates to agricultural finance.

The Act provides that the General Assembly finds that the economic structure of agricultural production is undergoing a period of rapid transformation; there is a need for additional sources of financing for local agricultural producer-led ventures to expand production, processing and marketing of high value agricultural products; and it is necessary for the state to authorize the formation of private corporations in order to provide sources of investment capital to encourage agricultural producer-led ventures. The Act also provides that there is a need to support the production of agricultural commodities and the processing and marketing of agricultural products that are produced by using biological techniques for the development of specialized plant or animal characteristics.

The Act establishes a new Code division within Code Chapter 15E which authorizes the establishment of Iowa agricultural industry finance corporations. This Act provides that the Code division shall be known and may be cited as the "Iowa Agricultural Industry Finance Act."

Generally, the words and phrases used in the Code division are defined to have the same meaning as used in Code Chapter 490, the Iowa Business Corporation Act.

The Act provides for findings, intent and purposes of the Code division, generally mirroring the findings of the General Assembly.

The Act provides for the powers of Iowa agricultural industry finance corporations, and provides that an Iowa agricultural industry finance corporation is a private business corporation and not a public corporation or instrumentality of the state.

As provided in the Act, an entity incorporated under Code Chapter 490 is an Iowa agricultural industry finance corporation if the corporation complies with certain requirements. At least 51 percent of the corporation's common stock must be held by agricultural producers and at least 51 percent of the corporation's voting stock must be held by agricultural producers. An agricultural producer includes a range of persons, including a person who is an individual actively engaged in agricultural production or a person other than an individual, if the person is a general partnership in which all the partners are natural persons, and one of the partners is actively engaged in agricultural production; a family farm entity (such as a family farm corporation) organized under Code Chapter 9H; or a networking farmers entity organized under H.F. 2335 (see Agriculture).

The Act provides for the formation of model Iowa agricultural industry finance corporations. The Act provides for incorporating the corporation and for the election of an initial board of directors, appointed by an appointment committee whose members are selected by the Economic Development Board. In carrying out its duties and exercising its powers, an Iowa agricultural industry finance corporation must exercise diligence and care in the selection of persons and projects to receive financing, and with limited exceptions, it cannot hold an interest in real or depreciable property.

The Department of Economic Development may award an Iowa agricultural industry finance loan to an Iowa agricultural industry finance corporation under the Act. The loan is repayable upon terms and conditions negotiated by the parties. However, the loan's repayment schedule shall not exceed 25 years from the date that the loan is issued. The corporation must provide for public oversight and its articles of incorporation must comply with requirements established by the department relating to the capacity and integrity of the corporation to carry out the purposes of this division of Code Chapter 15E. A corporation is prohibited from providing financing to support a person who is an agricultural producer if the producer is involved in a case involving a violation of environmental standards or is classified as a habitual violator of environmental regulations under Code Chapter 455B. A corporation is prohibited from providing financing to support a person who is an agricultural products processor if the processor has demonstrated a continuous and flagrant disregard for the health and safety of its employees or the quality of the environment. A corporation is also prohibited from providing assistance to a member of the Economic Development Board, an employee of the Department of Economic Development, an elected state official, or any director or other officer or an employee of the corporation. Not more than 75 percent of moneys originating from the state, including moneys loaned to the corporation, may be used to finance any one Iowa agricultural industry venture. The Act also requires a default of a loan if a corporation fails to comply with requirements contained in the Code division or by the department, or is involved in winding up its affairs pursuant to merger or sale.

The Act provides requirements for a corporation extending financing to agricultural producers. The agricultural producer must participate in an Iowa agricultural industry venture. The corporation may also provide financing to an agricultural products processor as part of an Iowa agricultural industry venture involving the construction, expansion or acquisition of an agricultural products processing facility. More than 50 percent of the ownership interest in the facility must be held by qualified investors or more than 50 percent of the commodities processed by the facility must be produced in this state. A qualified investor includes an agricultural producer, a cooperative organized under Code Chapter 501, or a networking farmers entity organized under H.F. 2335 (see Agriculture). The Act also provides that the corporation may finance an agricultural biotechnology enterprise which qualifies as an Iowa agricultural industry venture. The financing may be in the form of a loan, loan guarantee, sale and purchase of mortgage instruments for eligible recipients, or other similar form of financing.

The Act provides that the obligations of the corporation are not obligations of this state or any political subdivision of this state.

The Act also authorizes the Department of Economic Development to adopt rules under Code Chapter 17A necessary to administer the division.

The Act amends Code Section 423.24, which allocates use tax moneys to the Iowa Comprehensive Petroleum Underground Storage Tank Marketability Fund through December 31, 2002. This Act provides that $4.25 million per quarter from the use tax shall be credited to the department for purposes of supporting the Act until June 30, 1999, to a maximum of $25 million.

The Act also provides that moneys deposited in the Iowa Comprehensive Petroleum Underground Storage Tank Marketability Fund from January 1, 1998, until July 1, 1998, must be transferred to the department. The provision takes effect May 20, 1998, and is retroactively applicable to January 1, 1998.

The Act rewrites Code Section 423.24 to provide that all revenues derived from the use tax must be allocated to the Road Use Tax Fund except as otherwise provided in the section.

HOUSE FILE 721 - New Jobs and Income Program -- Insurance Premium Tax Credit (full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act authorizes an eligible business under the New Jobs and Income Program to claim an insurance premium tax credit of up to a maximum of 10 percent of the new investment directly related to new jobs created by the location or expansion of an eligible business under the program. If the credit is in excess of the insurance premium tax liability for the tax year, the excess may be credited toward the insurance premium tax liability of the business for the following seven years or until the credit is depleted, whichever occurs earlier.

The Act also provides that an eligible business under the New Jobs and Income Program which has entered into an agreement under Code Chapter 260E for training of employees for new jobs and which has met employment level requirements within the time set in the agreement is entitled to a new jobs insurance premium tax credit for the tax year selected by the business. The credit equals 6 percent of the taxable wages for which the employer is required to contribute to the state Unemployment Compensation Fund, times the number of new jobs. If the credit is in excess of the insurance premium tax liability for the tax year, then the excess may be credited toward the insurance premium tax liability for the following seven years or until the credit is depleted, whichever occurs earlier.

HOUSE FILE 2135 - Mid-America Port Commission Agreement (full text of act)

BY WISE, HEATON, COHOON, AND LARKIN. This Act provides that the Mid-America Port Commission Agreement is entered into with the State of Illinois and the State of Missouri, and enacted into law, if those states join the agreement in substantially the same form. The agreement provides that the Mid-America Port Commission shall be governed by a nine-member port commission and provides a list of certain powers and duties the port commission shall have related to the operation of the port commission.

The Act provides for the Mid-America Port Commission Act, which enables the state to participate in the Mid-America Port Commission Agreement. The Act provides that the Iowa counties of Lee, Henry and Des Moines shall be included in the jurisdiction of the port commission agreement. The Act allows public agencies of the state to jointly exercise and enjoy the power or powers, privileges or authority of that public agency with the port commission. A public agency may enter into a Code Chapter 28E agreement with the port commission to advance the purposes of the port commission.

The Act takes effect April 14, 1998.

HOUSE FILE 2164 - Local Community and Economic Development -- Community Builder Program and Enterprise Zones (full text of act)

BY COMMITTEE ON ECONOMIC DEVELOPMENT. This Act amends Code Section 15.108 to require the Department of Economic Development to encourage cities, counties, local and regional government organizations, and local and regional economic development organizations to develop and implement comprehensive community and economic development plans. The Act requires the department to award supplementary credit to financial assistance applications submitted by cities, counties, local and regional government organizations, and local and regional economic development organizations that have developed comprehensive community and economic development plans.

The Act repeals the Community Builder Program in Code Section 15.308, a program intended to encourage cities, counties, and unincorporated communities to implement planning efforts for community, business and economic development. The Act makes conforming amendments related to the removal of the Community Builder Program from the Code.

HOUSE FILE 2168 - Sale of Interest in Corporation Under Iowa Business Development Finance Act (full text of act)

BY COMMITTEE ON ECONOMIC DEVELOPMENT. This Act provides the Business Development Finance Corporation with the power and authority to sell any stock or ownership interest of any corporation formed under Code Chapter 15E, "Development Activities," Division 13, "Business Development Finance." Any proceeds of the sale of stock or ownership interest shall be deposited in the Strategic Investment Fund to be allocated by the Iowa Economic Development Board to programs for which the assets of the fund may be used.

HOUSE FILE 2435 - Entrepreneurs With Disabilities Technical Assistance Program (full text of act)

BY COMMITTEE ON ECONOMIC DEVELOPMENT. This Act requires the Department of Economic Development to implement an Entrepreneurs With Disabilities Technical Assistance Program designed to provide technical assistance to qualified businesses. A business qualifying for assistance is a business which is 51 percent owned, operated and actively managed by one or more persons with a disability, and is located in the state, operated for profit, and has a gross income of less than $3 million. A qualified business does not need to be a client of the Division of Vocational Rehabilitation Services or the Department for the Blind.

HOUSE FILE 2538 - Enterprise Zones -- Eligible Housing Businesses and Related Matters (full text of act)

BY COMMITTEE ON WAYS AND MEANS. This Act amends the Enterprise Zone Program legislation enacted during the 1997 legislative session by creating housing-related incentives and assistance for eligible businesses.

The Act creates a new type of eligible business. A housing business that builds or rehabilitates a minimum of four single-family homes or a multiple dwelling unit building containing three or more individual dwelling units located in a designated enterprise zone shall be considered an eligible housing business. The homes or units shall be completed within two years from the time construction begins. In order to receive incentives and assistance under the program, an eligible housing business must apply to the applicable enterprise zone commission for consideration and must have an application approved by the Department of Economic Development. An approved eligible housing business shall receive a sales, services and use tax refund and a 10 percent new investment income tax credit. The Act requires the business to repay all or a portion of the incentives and assistance received if the business fails to maintain the requirements. The Act requires all enterprise zone commissions to examine and evaluate building codes and zoning in the enterprise zone in an effort to promote more affordable housing development.

The Act amends one of the incentives provided to eligible businesses that are not housing businesses under the Enterprise Zone Program. As an alternative to using a new jobs credit from withholding, a business may establish a housing assistance program in the form of down payment assistance and rental assistance for employees in new jobs who buy or rent housing located within the enterprise zone. The program shall be funded through a credit from withholding based on the wages paid to the employees participating in the housing program. The amount of the credit shall equal 1.5 percent of the gross wages paid by the employer to each employee participating in a program. A business may enter into a loan agreement with the county or city designating the enterprise zone for initial moneys to fund a housing assistance program. The business shall pay the principal and interest on the loan out of moneys received from the credit from withholding. An employee participating in a housing assistance program shall receive full credit for the amount withheld.

RELATED LEGISLATION

SENATE FILE 2296 -- Appropriations -- Economic Development (Complete summary under APPROPRIATIONS.)

This Act makes a number of appropriations from the General Fund of the State to the Department of Economic Development for the administration of the department and for specific programs.

HOUSE FILE 2218 -- Federal Block Grant Appropriations (Complete summary under APPROPRIATIONS.)

This Act appropriates federal block grant and other nonstate moneys to various state agencies for the federal fiscal year beginning October 1, 1998, and ending September 30, 1999, and for the state fiscal year beginning July 1, 1998, and ending June 30, 1999. The Act includes more than $30 million in funding for community development programs administered by the Department of Economic Development.

HOUSE FILE 2353 -- Motor Vehicles Exempt From Registration Fees -- Distinguishing Registration Plates Exemption (Complete summary under TRANSPORTATION.)

This Act relates to the ability of the Department of General Services or the state Department of Transportation to order the issuance of regular registration plates for certain exempted government vehicles. The Act adds vehicles used by persons in the Department of Economic Development who regularly are assigned duties relating to existing industry expansion or business attraction to the list of exempted vehicles. If a vehicle is not exempt, the registration plate bears the word "official."

© 1998 Cornell College and League of Women Voters of Iowa

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Last update: THU July 30 1998
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