CHAPTER 65
BROWNFIELD REDEVELOPMENT PROGRAM
261—65.1(15) Purpose. The brownfield redevelopment program is designed to provide financial and technical assistance for the acquisition, remediation, or redevelopment of brownfield sites.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.2(15) Definitions. As used in these rules, unless the context otherwise requires, the definitions in Iowa Code section 15.292 shall apply to this chapter. The following definitions shall also apply:
“Acquisition” means the purchase of brownfield property.
“Advisory council” means the brownfield redevelopment advisory council as established in Iowa Code section 15.294 consisting of five members.
“Board” means the Iowa economic development board pursuant to Iowa Code section 15.103.
“Brownfield site” means an abandoned, idled, or underutilized industrial or commercial facility where expansion or redevelopment is complicated by real or perceived environmental contamination. A brownfield site includes property contiguous with the property on which the individual or commercial facility is located. A brownfield site shall not include property which has been placed, or is proposed for placement, on the national priorities list established pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601 et seq.
“CERCLA” means Comprehensive Environmental Response, Compensation, and Liability Act as defined at 42 U.S.C. 9601 et seq.
“Characterization” means determination of both the nature and extent of contamination in the various media of the environment.
“Community” means a city or county, or an entity established pursuant to Iowa Code chapter 28E.
“Contaminant” means any hazardous substance found in the various media of the environment.
“Council” means the brownfield redevelopment advisory council, as established in Iowa Code section 15.294.
“Department” or “IDED” means the Iowa department of economic development.
“Fund” means the brownfield redevelopment fund established pursuant to Iowa Code section 15.293.
“Grant” means the donation or contribution of funds with no expectation or requirement that the funds be repaid.
“Grayfield site” means an industrial or commercial property meeting all of the following requirements:
	1.	Infrastructure on the property is outdated or prevents an efficient use of the property, including vacant, blighted, obsolete, or otherwise underutilized property.
	2.	Property improvements and infrastructure are at least 25 years old and one or more of the following conditions exist:
	●	Thirty percent or more of a building located on the property is available for occupancy and has been vacated or unoccupied for at least 12 months;
	●	Assessed value of improvements on the property has decreased by 25 percent or more;
	●	The property is used as a parking lot;
	●	Improvements on the property no longer exist.
“Green development” means development which meets or exceeds the sustainable design standards as established by the state building code commissioner pursuant to Iowa Code section 103A.8B.
“Hazardous substance” means “hazardous substance” as defined in 567—Chapter 137 and includes petroleum substances not addressed in 567—Chapter 135.
“Loan” means an award of assistance with the requirement that the award be repaid, and with term, interest rate, and any other conditions specified as part of the award. A deferred loan is one for which the payment of principal or interest, or both, is not required for some specified period. A forgivable loan is one for which repayment is eliminated in part or entirely if the borrower satisfies specified conditions. A loan guarantee is a third-party commitment to repay all or a portion of the loan in the event that the borrower defaults on the loan.
“Qualifying investment” means the purchase price, cleanup cost(s), and redevelopment cost(s) directly related to a qualifying redevelopment project.
“Qualifying investor” means an applicant who has been accepted by the department to receive a redevelopment tax credit.
“Qualifying redevelopment project” means a brownfield or grayfield site being redeveloped or improved by the property owner. “Qualifying redevelopment project” does not include a previously remediated or redeveloped brownfield site.
“Redevelopment” means projects that result in the elimination of blighting characteristics as defined by Iowa Code section 403.2.
“Remediation” includes characterization, risk assessment, removal and cleanup of environmental contaminants located on and adjacent to a brownfield site. Funding awards used for remediation must comply with appropriate Iowa department of natural resources requirements and guidelines.
“Risk evaluation” means assessment of risks to human health and environment by way of guidelines established in 567—Chapter 137.
“Sponsorship” means an agreement between a city or county and an applicant for assistance under the brownfield redevelopment program in which the city or county agrees to offer assistance or guidance to the applicant. Sponsorship is not required if the applicant is a city or county.
“Sustainable design” means construction design intended to minimize negative environmental impacts and to promote the health and comfort of building occupants including, but not limited to, measures to reduce consumption of nonrenewable resources, minimize waste, and create healthy, productive environments. Sustainable design standards are also known as green building standards pursuant to Iowa Code section 103A.8B.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.3(15) Eligible applicants. To be eligible to apply for program assistance, an applicant must meet the following eligibility requirements:
	65.3(1) Site owner. A person owning a site is an eligible applicant if the site for which assistance is sought meets the definition of a brownfield or grayfield site and the applicant has secured a sponsor prior to applying for program assistance.
	65.3(2) Nonowner of site. A person who is not an owner of a site is an eligible applicant if the site meets the definition of a brownfield or grayfield site and the applicant has secured a sponsor prior to applying for program assistance.
	65.3(3) Agreement executed. Prior to applying for financial assistance under this program, an applicant shall enter into an agreement with the owner of the brownfield site for which financial assistance is sought. The agreement shall at a minimum include:
	1.	The total cost for remediating the site.
	2.	Agreement that the owner shall transfer title of the property to the applicant upon completion of the remediation of the property. Title transfer is not required when the applicant is the owner of the property and no title transfer occurs.
	3.	Agreement that upon the subsequent sale of the property by the applicant to a person other than the original owner, the original owner shall receive not more than 75 percent of the estimated total cost of the remediation, acquisition or redevelopment.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.4(15) Eligible forms of assistance and limitations.
	65.4(1) Financial assistance. Eligible forms of financial assistance under this program include grants, interest-bearing loans, forgivable loans, loan guarantees, tax credits, and other forms of assistance under the brownfield redevelopment program established in Iowa Code section 15.292.
	65.4(2) Technical assistance. Technical assistance under this program is available in the form of providing an applicant with assistance in identifying alternative forms of assistance for which the applicant may be eligible.
	65.4(3) Limitation on amount. An applicant shall not receive financial assistance of more than 25 percent of the agreed-upon estimated total cost of remediation, acquisition or redevelopment.
	65.4(4) Exclusions. Program funds shall not be used for the remediation of contaminants being addressed under Iowa’s leaking underground storage tank (UST) program. However, a site’s being addressed under the UST program does not necessarily exclude that site from being addressed under the Iowa brownfield redevelopment Act if other nonpetroleum contaminants or petroleum substances not addressed under 567—Chapter 135 are present.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.5(15) Repayment to IDED. Upon the subsequent sale of the property by an applicant to a person other than the original owner, the applicant shall repay the department for financial assistance received by the applicant. The repayment shall be in an amount equal to the sales price less the amount paid to the original owner pursuant to the agreement between the applicant and the original owner. The repayment amount shall not exceed the amount of financial assistance received by the applicant.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.6(15) Application and award procedures. Subject to availability of funds, applications will be reviewed and rated by IDED staff on an ongoing basis and reviewed quarterly by the advisory council. Brownfield redevelopment funds will be awarded on a competitive basis. Applications will be reviewed by staff for completeness and eligibility. If additional information is required, the applicant shall be provided with notice, in writing, to submit additional information. Recommendations from the advisory council will be submitted to the board. The board may approve, deny or defer an application.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.7(15) Application.
	65.7(1) Every application for assistance shall include, but not be limited to, evidence of sponsorship. In addition, applications for assistance other than tax credits shall include the following information:
	a. 	A business plan. The business plan should, at a minimum, include a remediation plan, a project contact/applying agency, a project overview (which would include the background of the project area, goals and objectives of the project, and implementation strategy), and a project/remediation budget.
	b. 	A statement of purpose describing the intended use of and proposed repayment schedule for any financial assistance received by the applicant.
	65.7(2) The department shall accept applications and determine application eligibility. The council shall make application recommendations to the board. The board shall approve or deny applications.
	65.7(3) Approved applicants shall enter into an agreement with the department. The agreement shall specify the maximum amount of tax credit available.
	65.7(4) The department shall issue a tax credit certificate upon written notification of project completion.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.8(15) Application forms. Application forms for the brownfield redevelopment program shall be available upon request from IDED, 200 East Grand Avenue, Des Moines, Iowa 50309. IDED may provide technical assistance as necessary to applicants. IDED staff may conduct on-site evaluations of proposed activities.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.9(15) Application review criteria. Brownfield redevelopment funds will be awarded on a competitive basis. Applications will be reviewed and prioritized based on the following criteria:
	1.	Whether the project meets the definition of a brownfield site.
	2.	Whether alternative forms of assistance have been explored and used by the applicant.
	3.	The level of distress or extent of the problem on the site has been identified.
	4.	Whether the site is on or proposed to be added to the U.S. Environmental Protection Agency’s list of CERCLA sites.
	5.	The degree to which awards secured from other sources are committed to the subject site.
	6.	The leveraging of other public and private resources beyond the 75 percent minimum required.
	7.	Type and terms of assistance requested.
	8.	Rationale that the project serves a public purpose.
	9.	The level of economic and physical distress within the project area.
	10.	Past efforts of the community/owner to resolve the problem.
	11.	Ability of the applicant to outline the goals and objectives of the project and describe the overall strategy for achieving the goals and objectives.
	12.	Ancillary off-site development as a result of site remediation.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.10(15) Administration of awards.
	65.10(1) A contract shall be executed between the recipient and IDED. These rules and applicable state laws and regulations shall be part of the contract.
	65.10(2) The recipient must execute and return the contract to IDED within 45 days of transmittal of the final contract from IDED. Failure to do so may be cause for the board to terminate the award.
	65.10(3) Certain activities may require that permits or clearances be obtained from other state or local agencies before the activity may proceed. Awards may be conditioned upon the timely completion of these requirements.
	65.10(4) Awards may be conditioned upon commitment of other sources of funds necessary to complete the activity.
	65.10(5) Awards may be conditioned upon IDED’s receipt and approval of an implementation plan for the funded activity.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.11(15) Redevelopment tax credit.
	65.11(1) Purpose. The purpose of the redevelopment tax credit program is to make tax credits available for a redevelopment project investment. The department may cooperate with the department of natural resources and local governments in an effort to disseminate information regarding the redevelopment tax credit.
	65.11(2) Eligible applicant. An individual, partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual may claim a redevelopment tax credit. Once an applicant is deemed eligible, the applicant shall be considered a qualifying investor for a redevelopment tax credit. A city or county may not apply for a redevelopment tax credit.
	65.11(3) Tax credit certificate.
	a. 	Issuance. The department shall issue a redevelopment tax credit certificate upon completion of the project and submittal of proof of completion by the qualified investor. The tax credit certificate shall contain the qualified investor’s name, address, tax identification number, the amount of the credit, the name of the qualifying investor, any other information required by the department of revenue, and a place for the name and tax identification number of a transferee and the amount of the tax credit being transferred.
	b. 	Acceptance. The tax credit certificate, unless rescinded by the board, shall be accepted by the Iowa department of revenue as payment for taxes imposed pursuant to Iowa Code chapter 422, divisions II, III, and V, and to Iowa Code chapter 432, and for the moneys and credits tax imposed in Iowa Code section 533.329, subject to any conditions or restrictions placed by the board upon the face of the tax credit certificate and subject to the limitations of this rule, for a portion of a taxpayer's equity investment in a qualifying redevelopment project.
	c. 	Transfer. Tax credit certificates issued under this rule may be transferred to any person or entity. Within 90 days of transfer, the transferee shall submit the transferred tax credit certificate to the Iowa department of revenue, including a statement with the transferee's name, tax identification number, address, the denomination that each replacement tax credit certificate is to carry, and any other information required by the Iowa department of revenue.
	d. 	Replacement certificate. Within 30 days of receiving the transferred tax credit certificate and the transferee's statement, the Iowa department of revenue shall issue one or more replacement tax credit certificates to the transferee. Each replacement tax credit certificate must contain the information required for the original tax credit certificate and must have the same expiration date that appeared in the transferred tax credit certificate.
	e. 	Claiming a transferred tax credit. A tax credit shall not be claimed by a transferee until a replacement tax credit certificate identifying the transferee as the proper holder has been issued. The transferee may use the amount of the tax credit transferred against the taxes imposed in Iowa Code chapter 422, divisions II, III, and V, and in Iowa Code chapter 432, and against the moneys and credits tax imposed in Iowa Code section 533.329, for any tax year the original transferor could have claimed the tax credit. Any consideration paid or received for the transfer of the tax credit shall not be included or deducted as income under Iowa Code chapter 422, divisions II, III, and V, under Iowa Code chapter 432, or against the moneys and credits tax imposed in Iowa Code section 533.329.
	65.11(4) Amount of tax credit.
	a. 	Pro rata share. The qualified investor may claim the amount based upon the pro rata share of the qualified investor’s earnings from the partnership, limited liability company, S corporation, estate, or trust. Any tax credit in excess of the qualified investor’s liability for the tax year is not refundable but may be credited to the tax liability for the following five years or until depleted, whichever is earlier. A tax credit shall not be carried back to a tax year prior to the tax year in which the qualified investor receives the tax credit.
	b. 	Percentage. The amount of the tax credit shall equal one of the following:
	(1)	Twelve percent of the taxpayer's qualifying investment in a grayfield site.
	(2)	Fifteen percent of the taxpayer's qualifying investment in a grayfield site if the qualifying redevelopment project meets the requirements of green development as defined in 261—65.2(15).
	(3)	Twenty-four percent of the taxpayer's qualifying investment in a brownfield site.
	(4)	Thirty percent of the taxpayer's qualifying investment in a brownfield site if the qualifying redevelopment project meets the requirements of green development as defined in 261—65.2(15).
	c. 	Maximum credit per project. The maximum amount of a tax credit for a qualifying investment in any one qualifying redevelopment project shall not exceed 10 percent of the maximum amount of tax credits available in any one fiscal year pursuant to paragraph 65.11(4)“d.”
	d. 	Maximum credit total. For the fiscal year beginning July 1, 2009, the maximum amount of tax credits issued by the department shall not exceed $1 million. The department shall not issue tax credits pursuant to this rule in subsequent fiscal years unless authorized pursuant to this subrule.
	65.11(5) Claiming a tax credit. The qualified investor must attach one or more tax credit certificate(s) to the qualified investor’s tax return. A tax credit certificate shall not be used or attached to a return filed for a taxable year beginning prior to July 1, 2009. The tax credit certificate or certificates attached to the qualified investor’s tax return shall be issued in the qualified investor’s name, expire on or after the last day of the taxable year for which the qualified investor is claiming the tax credit, and show a tax credit amount equal to or greater than the tax credit claimed on the qualified investor’s tax return.
	65.11(6) Reduction of tax credit.
	a. 	Taxes imposed under Iowa Code section 422.11V, less the credits allowed under Iowa Code sections 422.12, 422.33, 422.60, 432.12L, and moneys and credits imposed under Iowa Code section 533.329 shall be reduced by a redevelopment tax credit allowed under Iowa Code sections 15.291 to 15.294.
	b. 	For purposes of individual and corporate income taxes and the franchise tax, the increase in the basis of the redeveloped property that would otherwise result from the qualified redevelopment costs shall be reduced by the amount of the credit computed under this rule.
	65.11(7) Project completion.
	a. 	An investment shall be deemed to have been made on the date the qualifying redevelopment project is completed. An investment made prior to January 1, 2009, or after June 30, 2010, shall not qualify for a tax credit under this rule.
	b. 	A qualifying redevelopment project not completed within 30 months after board approval shall not be eligible for a tax credit pursuant to this rule. The board has the discretion to allow an additional 12-month extension period to complete a project.
	c. 	Failure to comply. If a taxpayer receives a tax credit pursuant to Iowa Code section 15.293A but fails to comply with any of the requirements, the taxpayer loses any right to the tax credit. The Iowa department of revenue shall seek recovery of the value of the credit the qualified investor received.
	65.11(8) Tax credit carryover. If the maximum amount of tax credits available has not been issued at the end of the fiscal year, the remaining tax credit amount may be carried over to a subsequent fiscal year or the department may prorate the remaining credit amount among other eligible applicants.
	65.11(9) Department registration and authorization. The department shall develop a system for registration and authorization of tax credits. The department shall control distribution of all tax credits distributed to investors, including developing and maintaining a list of tax credit applicants from year to year to ensure that if the maximum aggregate amount of tax credits is reached in one year, an applicant can be given priority consideration for a tax credit in an ensuing year.
	65.11(10) Other financial assistance considerations. If a qualified investor has also applied to the department, the board, or any other agency of state government for additional financial assistance, the department, the board, or the agency of state government shall not consider the receipt of a tax credit issued pursuant to this rule when considering the application for additional financial assistance.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
261—65.12(15) Council approval and repayment requirements of redevelopment tax credit.
	65.12(1) A qualified investor seeking to claim a tax credit pursuant to Iowa Code sections 15.293A and 15.293B shall apply to the council, as established in Iowa Code section 15.294. The council shall recommend to the board the tax credit amount available for each qualifying redevelopment project.
	65.12(2) A qualified investor shall provide the council with the following:
	a. 	Information showing the total costs of the qualifying redevelopment project, including the costs of land acquisition, cleanup, and redevelopment.
	b. 	Information about the financing sources of the investment which is directly related to the qualifying redevelopment project for which the taxpayer is seeking approval for a tax credit, as provided in Iowa Code section 15.293A.
[ARC 7844B, IAB 6/17/09, effective 7/22/09]
These rules are intended to implement Iowa Code sections 15.291 to 15.295.
[Filed emergency 8/18/00—published 9/6/00, effective 8/18/00]
[Filed 10/23/00, Notice 9/6/00—published 11/15/00, effective 12/20/00]
[Filed ARC 7844B (Notice ARC 7706B, IAB 4/8/09), IAB 6/17/09, effective 7/22/09]