ECONOMIC DEVELOPMENT

SENATE FILE 443 - Investments in Community-Based Seed Capital Funds or Qualifying Businesses
SENATE FILE 2290 - Economic Development Incentives - New Jobs and Income, New Capital Investment, and Enterprise Zone Programs
HOUSE FILE 2383 - Rural Improvement Zones - VETOED BY THE GOVERNOR
HOUSE FILE 2431 - Educational Institutions Under University-Based Research Utilization Program
HOUSE FILE 2561 - Job Corps Center New Jobs Tax Credit - VETOED BY THE GOVERNOR
HOUSE FILE 2581 - Miscellaneous Economic Development, Taxation, Regulatory, and Employment-Related Changes EXTRAORDINARY SESSION

RELATED LEGISLATION

SENATE FILE 2210 - Iowa Corn Promotion Board - Miscellaneous Provisions

SEE AGRICULTURE. This Act affects the ex officio membership of the Iowa Corn Promotion Board and expands the board's authority to expend checkoff moneys to support education and economic development programs.

SENATE FILE 2288 - Federal Block Grant Appropriations

SEE APPROPRIATIONS. This Act appropriates federal block grant and other nonstate moneys to state agencies for the federal fiscal year beginning October 1, 2004, and ending September 30, 2005. The Act includes funding for various economic development programs, including the Community Development Block Grant.

SENATE FILE 2298 - Government Funding, Administration, and Regulation - Appropriations and Miscellaneous Changes

SEE APPROPRIATIONS. Division III of this Act appropriates moneys from the General Fund of the State to the Iowa Department of Economic Development (IDED).

Division X adds the Director of IDED as a voting member of the Iowa Empowerment Board.

Division XV authorizes IDED to enter into an agreement with a person, including for-profit and nonprofit entities, in order to directly or indirectly apply for, receive, administer, and use federal funds, including federal tax credits, grants, or other economic benefits provided by the federal government.

Division XVI directs IDED to delay payment of principal and interest on a loan granted to an Iowa agricultural industry finance corporation.

Division XVIII amends the Community Attraction and Tourism Program and Fund.

SENATE FILE 2311 - Workforce and Economic Development Appropriations and Related Changes — EXTRAORDINARY SESSION

SEE APPROPRIATIONS. Division I of this Act validates contracts entered into by the Department of Economic Development and the Grow Iowa Values Board in reliance on the validity of the Grow Iowa Values Fund, which was subsequently declared invalid by the Iowa Supreme Court. Federal moneys that were to be used to fund the Grow Iowa Values Fund are appropriated for FY 2004-2005 to the department for the following purposes: marketing strategies, financial assistance and incentives to businesses, financial assistance for institutions under the control of the State Board of Regents and accredited private institutions, workforce training and economic development funds of the community colleges, Endow Iowa Grants and tax credits, for targeted state parks and destination parks, and for deposit in the Loan and Credit Guarantee Fund. The division is retroactively applicable to July 1, 2003. The Act takes effect September 7, 2004.

HOUSE FILE 2207 - Substantive Code Corrections

SEE STATE GOVERNMENT. This Act contains statutory corrections that adjust language to reflect current practices, insert earlier omissions, delete redundancies and inaccuracies, delete temporary language, resolve inconsistencies and conflicts, update ongoing provisions, or remove ambiguities. Changes made include changes to a definition of agricultural products under the Life Science Products Code chapter; deletion of obsolete references concerning the Microenterprise Development Revolving Fund, the Iowa Technology Center, and a job training program study; and corrections in future repeals of certain economic development initiatives established in 2003. The corrections to the future repeals of the economic development initiatives take effect April 26, 2004.

ECONOMIC DEVELOPMENT

SENATE FILE 443 - Investments in Community-Based Seed Capital Funds or Qualifying Businesses (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This Act relates to investments in qualifying businesses and community-based seed capital funds.

The Act amends the definition of "investor" to mean a person making a cash investment in a qualifying business or in a community-based seed capital fund. An "investor" does not include a person that holds at least 70 percent ownership interest as an owner, member or shareholder in a qualifying business. The Act allows a tax credit for a portion of a taxpayer's equity investment in a qualifying business to be claimed against corporate income tax liabilities, franchise tax liabilities for financial institutions, insurance premium tax liabilities, and moneys and credits tax liabilities. Previously, such tax credits were only allowed to be claimed against individual income tax liabilities. These provisions apply retroactively to January 1, 2004, for tax years beginning on or after that date.

The Act amends the criteria for community-based seed capital funds, lowering the minimum amount of capital commitments from $500,000 to $125,000. The capital commitment maximum amount may be waived if the fund is a rural business investment company under the Rural Business Investment Program of the federal Farm Security and Rural Investment Act of 2002. The requirement that a fund have no fewer than 10 investors who are not affiliates is lowered to five such investors. These provisions apply retroactively to January 1, 2002, for tax years beginning on or after that date.

The Act amends one of the criteria for a community-based seed capital fund that triggers a recision of certain tax credit certificates. Previously, if the fund had not invested at least 33 percent of its invested capital in two or more separate qualifying businesses measured at a certain time, a recision would occur. The Act lowers the criteria to investing at least 33 percent of the invested capital in one or more separate qualifying businesses. This provision applies retroactively to January 1, 2002, for tax years beginning on or after that date.

SENATE FILE 2290 - Economic Development Incentives - New Jobs and Income, New Capital Investment, and Enterprise Zone Programs (full text of bill)

BY IVERSON. This Act relates to economic development incentives under the New Jobs and Income Program, the New Capital Investment Program, and the Enterprise Zone Program.

The Act requires agreements under the New Jobs and Income Program to include payback provisions for all incentives received under the program if job creation requirements are not met.

The Act amends the sales, services and use tax refund under the New Jobs and Income Program to provide that an eligible business under the program shall be entitled to a refund for taxes attributable to the purchase of racks, shelving, and conveyor equipment to be used in a warehouse or distribution center.

The Act creates a corporate tax credit for an eligible business or a supporting business under the New Jobs and Income Program or under the New Capital Investment Program. The tax credit amount is equal to the sales, services and use taxes paid by a third-party developer in the construction or equipping of a facility. The Act requires a third-party developer to state under oath, on forms provided by the Department of Economic Development, the amount of sales, services and use taxes paid. The forms must be submitted to the department and the taxes paid must be itemized to allow identification of taxes attributable to racks, shelving, and conveyor equipment to be used in a warehouse or distribution center. After receiving the forms, the department shall issue a tax credit certificate to the eligible business or supporting business equal to the taxes paid by the third-party developer. The department shall also issue a tax credit certificate to the eligible business or supporting business equal to the taxes paid and attributable to racks, shelving, and conveyor equipment to be used in a warehouse or distribution center. The Act limits the aggregate combined total amount of tax refunds and tax credit certificates for taxes attributable to racks, shelving, and conveyor equipment to be used in a warehouse or distribution center to $500,000 in a fiscal year.

The Act amends the investment tax credit and the insurance premium tax credit under the New Jobs and Income Program and under the New Capital Investment Program. The Act provides that, in addition to the current meaning under the programs for "new investment directly related to new jobs created by the location or expansion of an eligible business under the program," the term also means the annual base rent paid to a third-party developer by an eligible business for a period not to exceed 10 years, provided the cumulative cost of the base rent payments for that period does not exceed the cost of the land and the third-party developer's costs to build or renovate the building for the eligible business. The eligible business shall enter into a lease agreement with the third-party developer for a minimum of 10 years under the New Jobs and Income Program and a minimum of five years under the New Capital Investment Program.

The Act repeals a portion of the Enterprise Zone Program which allows an eligible development business to receive incentives and assistance under the program. The Act makes conforming amendments.

The Act takes effect March 17, 2004.

HOUSE FILE 2383 - Rural Improvement Zones - VETOED BY THE GOVERNOR (full text of bill)

BY COMMITTEE ON ECONOMIC GROWTH. This bill would have eliminated language that limits rural improvement zones to counties with less than 18,500 population. These zones are used as a funding mechanism to finance improvements to real property surrounding a private lake development.

HOUSE FILE 2431 - Educational Institutions Under University-Based Research Utilization Program (full text of bill)

BY COMMITTEE ON ECONOMIC GROWTH. This Act relates to educational institutions under the University-Based Research Utilization Program.

The Act defines "education institution" to mean a university under the control of the State Board of Regents, a community college, or an accredited private university located in the state. A new or existing business that utilizes a technology developed by an employee at the educational institution may apply to the Department of Economic Development for approval to participate in the program. A business approved under the program and the employee of an educational institution responsible for the development of the technology utilized by the approved business are eligible for a tax credit under the program.

HOUSE FILE 2561 - Job Corps Center New Jobs Tax Credit - VETOED BY THE GOVERNOR (full text of bill)

BY COMMITTEE ON WAYS AND MEANS. This bill would have created a Job Corps Center New Jobs Tax Credit to be used against personal or corporate income tax liability. The bill would have provided that an employer who hires a graduate of a job corps center on a full-time basis within six months of the employee's graduation from the job corps center, or within three years of the employee's graduation from the job corps center if the job corps center graduate elects to attend a community college in Iowa within six months of the employee's graduation from the job corps center, is entitled to a tax credit.

HOUSE FILE 2581 - Miscellaneous Economic Development, Taxation, Regulatory, and Employment-Related Changes EXTRAORDINARY SESSION (full text of bill)

BY RANTS.

Division I - Legislative Findings

Division I of this Act states legislative findings regarding the invalidity of provisions originally contained in 2003 Iowa Acts, Chapter 1, H.F. 692, due to the Iowa Supreme Court decision of Rants and Iverson v. Vilsack. Legislative intent is stated to reaffirm and reenact certain invalidated provisions. The provisions affected were published in the 2003 Iowa Code Supplement or amended in the 2004 Regular Legislative Session.

Division II - Endow Iowa Grants

Division II reaffirms and reenacts provisions relating to Endow Iowa Grants. The division is retroactively applicable to January 1, 2003, for tax years beginning on or after that date.

Division III - Civil Action Appeal Bonds

Division III reaffirms and reenacts provisions pertaining to supersedeas bonds, including provisions contained in 2004 Iowa Acts, S.F. 2306 (see Civil Law, Procedure and Court Administration), that were invalidated by the Iowa Supreme Court decision. Senate File 2306 is repealed. The provisions reenacted apply retroactively to cases pending and filed on or after April 20, 2004, and through June 15, 2004, and to cases pending or filed on or after June 16, 2004.

Division IV - Workers’ Compensation

Division IV relates to certain benefits and procedures related to workers’ compensation and contains an expression of legislative intent concerning the changes made.

Code Section 85.27, subsection 4, is amended to provide that if an employer chooses medical care, the employer is responsible for the cost of care until the employer notifies the employee otherwise and of the reason for the change. An employer is not liable for the cost of care that the employer arranges in response to a sudden emergency if the employee’s condition, for which care was arranged, is not related to the employment.

Code Section 85.34, subsection 2, paragraph “u,” is amended to provide that compensation for unscheduled disability is based on the change in earning capacity from what the employee possessed when the injury occurred.

Code Section 85.34 is amended by adding a new subsection concerning compensation for successive disabilities. The new subsection provides that an employer is fully liable for compensating all of an employee’s disability caused by employment with the employer and is not liable for compensating an employee’s preexisting disability caused by employment with a different employer or from causes unrelated to employment. If an injured employee has a preexisting disability that was caused by a prior injury with the same employer, the employer is liable for the combined disability that is caused by the injuries, measured in relation to the employee’s condition immediately prior to the first injury. In the case of scheduled injuries to the same body part, the employer’s liability for the combined disability of the employee is considered to be already partially satisfied to the extent of the percentage of disability for which the employee was previously paid by the employer. In the case of successive nonscheduled injuries to the body as a whole, if the employee has a preexisting disability that causes the employee’s earnings to be less at the time of the present injury than if the prior injury had not occurred, the employer’s liability for the combined disability is considered to be already partially satisfied to the extent of the percentage of disability for which the employee was previously compensated by the employer minus the percentage that the employee’s earning capacity is less at the time of the present injury than if the prior injury had not occurred.

A successor employer is considered to be the same employer if the employee became part of the successor employer’s workforce through a merger, purchase, or other transaction that assumes the employee into the successor employer’s workforce without substantially changing the nature of the employee’s employment.

Code Section 85.36, subsection 9, paragraph “c,” which deals with apportionment of liability for successive disabilities, is stricken.

Code Section 85.70 is amended to provide that an injured employee with a permanent disability who actively participates in a vocational rehabilitation program shall be paid $100 instead of $20 each week.

Code Section 86.12 is reaffirmed and reenacted, after being held invalid by the Iowa Supreme Court. This provision allows the Workers’ Compensation Commissioner to subject employers to assessments for failure to report certain information to the commissioner.

Code Section 86.13A is reaffirmed and reenacted, after being held invalid by the Iowa Supreme Court. This provision requires the Workers’ Compensation Commissioner to monitor the rate of compliance of employers and insurers in timely commencing benefit payments to injured employees and after June 30, 2006, allows the commissioner to impose assessments against employers and insurers for certain delays in commencing benefit payments.

Code Section 85.55, allowing an employee with a physical defect that increases the risk of injury to waive workers’ compensation for injuries occurring because of such defect, is repealed.

With the exception of the provisions concerning Code Sections 86.12 and 86.13A, the division is applicable to injuries occurring on or after September 7, 2004. The provisions concerning Code Sections 86.12 and 86.13A are retroactively applicable to injuries occurring on or after July 1, 2003.

Division V - Financial Services

Division V reaffirms and reenacts requirements involving the delinquency charges collectible relative to certain consumer credit transactions and authority to contract for debt payment under credit transactions other than consumer credit transactions. The division is retroactively applicable to July 1, 2003.

Division VI - Loan and Credit Guarantee Program

Division VI reaffirms and reenacts provisions relating to the Loan and Credit Guarantee Program directed to relatively small businesses and industries targeted to particular areas of commerce. The division does not reenact the Loan and Credit Guarantee Advisory Board and makes conforming amendments. The division is retroactively applicable to July 1, 2003.

Division VII - Administrative Contribution Surcharge

Division VII acknowledges the Iowa Code Editor’s removal of references from the Iowa Code to the Administrative Contribution Surcharge and Fund due to their repeal effective July 1, 2003. This repeal results from the Iowa Supreme Court decision making H.F. 692 invalid, which also made the extension of the surcharge and fund beyond July 1, 2003, invalid. The division applies retroactively to July 1, 2003.

Division VIII - Marketing

Division VIII reaffirms and reenacts the Economic Development Marketing Board and its approval process for marketing strategies. However, the division amends the reaffirmed and reenacted provisions by providing that the Department of Economic Development, rather than the marketing board, which is not continued after September 7, 2004, shall accept proposals for marketing strategies for purposes of selecting a strategy for the department to administer. The division provides that the department shall select and approve a proposal that meets certain criteria and that the department shall implement and administer the approved marketing strategy. The provision reenacting and reaffirming Code Section 15G.109 is retroactively applicable to July 1, 2003. The provisions amending the Economic Development Marketing Board do not apply retroactively.

Division IX - Income Taxation Bonus Depreciation and Expensing Allowance

Division IX includes in the references to the Internal Revenue Code the federal income tax revisions enacted by Congress in regard to expensing certain depreciable assets and making these changes applicable for Iowa income tax purposes.

The division amends Code Sections 422.7 and 422.35 to couple with the changes to the bonus depreciation deduction enacted in the federal Jobs and Growth Tax Relief Reconciliation Act of 2003 (Pub. L. No. 108-27). The bonus depreciation of 50 percent allowed in that law is allowed for state income tax purposes for qualified property acquired after May 5, 2003, and before January 1, 2005.

The provisions of the division coupling with federal expensing changes are retroactively applicable to January 1, 2003, for tax years beginning on or after that date. The provisions of the division coupling with the changes to the federal bonus depreciation apply retroactively to tax years ending after May 5, 2003.

Division X - Advisory Capacity of Boards

Division X provides that, for only FY 2004-2005, the Grow Iowa Values Board, the establishment and existence of the Economic Development Marketing Board, and the Loan and Credit Guarantee Advisory Board, as provided for in 2003 Iowa Acts, First Extraordinary Session, Chapter 1 (H.F. 692), are validated. However, the boards shall serve only in an advisory capacity to the Department of Economic Development. The composition of the boards shall consist of the membership in existence on June 15, 2004.

The Act takes effect September 7, 2004.