CHAPTER 65
BROWNFIELD AND GRAYFIELD REDEVELOPMENT
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. The redevelopment tax credit program for brownfields and grayfields is designed to provide financial assistance for the acquisition, remediation, or redevelopment of brownfield and grayfield sites.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
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 or grayfield property.
“Advisory council” means the brownfield redevelopment advisory council as established in Iowa Code section 15.294 consisting of five members.
“Affiliate” or “affiliated entity” means any entity to which one or more of the following applies:
	1.	The entity directly, indirectly, or constructively controls another entity.
	2.	The entity is directly, indirectly or constructively controlled by another entity.
	3.	The entity is subject to the control of a common entity. A common entity is one which owns directly or individually more than 10 percent of the voting securities of the entity.
“Authority” means the economic development authority.
“Board” means the economic development authority board pursuant to 2011 Iowa Code Supplement section 15.102.
“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.
“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.
“Previously remediated or redeveloped” means any prior remediation or redevelopment at a brownfield or grayfield site, including development for which an application for or an award of brownfield or grayfield tax credits has been made.
“Qualifying investment” means costs that are directly related to a qualifying redevelopment project and that are incurred after the project has been registered and approved by the board. “Qualifying investment” only includes the purchase price, the cleanup costs, and the redevelopment costs.
“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 or grayfield 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; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12; ARC 0944C, IAB 8/7/13, effective 9/11/13]
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. The brownfield redevelopment program requires that an applicant has secured a sponsor prior to applying for program assistance. Sponsorship is encouraged but not required for the redevelopment tax credit program for brownfields and grayfields.
	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. The brownfield redevelopment program requires that an applicant has secured a sponsor prior to applying for program assistance. Prior to applying for financial assistance under the brownfield redevelopment program, an applicant who is not an owner of a site 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:
	a. 	The total cost for remediating the site.
	b. 	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.
	c. 	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.
	65.3(3) Phased projects ineligible for tax credits. Tax credits for brownfield and grayfield redevelopment are only available for qualifying redevelopment projects. Because a qualifying redevelopment project does not include a previously remediated or redeveloped site, a project for subsequent redevelopment at the same site for which tax credits have already been awarded is not eligible for additional tax credits on redevelopment at that site. The authority and the council will determine whether a project constitutes subsequent redevelopment at the same site by considering the following factors:
	a. 	Whether the redevelopment described in multiple proposed projects is planned for a single parcel.
	b. 	Whether the redevelopment described in multiple proposed projects is planned for adjacent or contiguous parcels or parcels in very close physical proximity.
	c. 	Whether all involved parcels are owned by the same entity, different entities, or affiliated entities.
	d. 	Whether a proposed project is the result of the same planning process as another project.
	e. 	Whether the proposed projects are being developed by the same entity, different entities, or affiliated entities.
	f. 	Whether the development of one proposed project reflects a temporal connection to another proposed project.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 0007C, IAB 2/8/12, effective 3/14/12; ARC 0944C, IAB 8/7/13, effective 9/11/13]
261—65.4(15) Eligible forms of assistance and limitations.
	65.4(1) Financial assistance. Eligible forms of financial assistance include grants, interest-bearing loans, forgivable loans, loan guarantees, tax credits, and other forms of assistance under the brownfield redevelopment program and the redevelopment tax credit program for brownfields and grayfields established in 2011 Iowa Code Supplement sections 15.292 and 15.293A.
	65.4(2) Other forms of assistance. The authority may provide information on alternative forms of assistance.
	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. This limitation does not apply to assistance provided in the form of tax credits pursuant to subrule 65.11(4).
	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; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
261—65.5(15) Repayment to economic development authority. Under the brownfield redevelopment program only, upon the subsequent sale of the property by an applicant to a person other than the original owner, the applicant shall repay the authority 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 actually disbursed to the applicant by the authority.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
261—65.6(15) Application and award procedures.
	65.6(1) Subject to availability of funds, applications to the brownfield redevelopment program will be reviewed and rated by economic development authority staff and by the advisory council on an annual basis. Brownfield redevelopment funds will be awarded on a competitive basis.
	65.6(2) Subject to availability of funds, applications to the redevelopment tax credit program for brownfields and grayfields will be reviewed by economic development authority staff and the advisory council on a monthly basis.
	65.6(3) 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; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
261—65.7(15) Application.
	65.7(1) Every application for assistance shall include evidence of sponsorship and any other information the authority deems necessary in order to process and review the application. An application shall be considered received by the authority only when the authority deems it to be complete. Applications for assistance shall also 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 authority shall accept and review applications in conjunction with the council and the board. The council shall consider applications in the order complete applications are received and make application recommendations to the board. The board shall approve or deny applications.
	65.7(3) Upon review of the application for the redevelopment tax credit program for brownfields and grayfields, the authority may register the project under the program. If the authority registers the project, it shall, in conjunction with the council and the board, make a preliminary determination as to the maximum amount of the tax credit for which the investor qualifies. After registering the project, the authority shall issue a letter notifying the investor of successful registration under the program. The letter shall include the maximum amount of tax credit for which the investor has received preliminary approval and shall state that the amount is a preliminary determination only. The preliminary determination is not a contract, contract term, promise, guarantee, assurance, or representation of the actual tax credit the investor will receive or should expect to receive. The preliminary determination is a nonbinding figure, provided purely for the investor’s and the authority’s information and convenience, based on the authority’s existing understanding and estimates related to the project. The amount of tax credit included on a certificate issued pursuant to this subrule shall be contingent upon completion of the requirements of subrules 65.7(4) to 65.7(6) and shall be based solely on completion and compliance with all terms and conditions of the contract pursuant to this rule, rule 261—65.10(15), and 2011 Iowa Code Supplement sections 15.293A and 15.293B.
	65.7(4) Approved applicants shall enter into an agreement with the authority. The agreement for the redevelopment tax credit program for brownfields and grayfields shall specify the requirements necessary in order to receive tax credit and the maximum amount of tax credit available. The agreement for the brownfield redevelopment program shall specify the requirements necessary in order to receive benefits under the program.
	65.7(5) Upon completion of a registered project under the redevelopment tax credit program for brownfields and grayfields, an audit of the project’s qualifying expenses shall be completed by an independent certified public accountant licensed in the state of Iowa and shall be submitted to the authority.
	65.7(6) Upon written notification of project completion from the investor, the authority will review the independent audit, verify the amount of the qualifying investment and issue a redevelopment tax credit certificate to the investor in the amount of the tax credit for which the investor is entitled under its contract with the authority.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
261—65.8(15) Application forms. Application forms for the brownfield redevelopment program and the redevelopment tax credit program for brownfields and grayfields shall be available upon request from Economic Development Authority, 200 East Grand Avenue, Des Moines, Iowa 50309. The authority may provide technical assistance as necessary to applicants. Authority staff may conduct on-site evaluations of proposed activities.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
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 the authority. 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 the authority within 45 days of transmittal of the final contract from the authority. 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 the authority’s receipt and approval of an implementation plan for the funded activity.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
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 authority 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 authority 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 authority shall not exceed $1 million. For the fiscal year beginning July 1, 2011, and for each subsequent fiscal year, the maximum amount of tax credits issued by the authority shall be an amount determined by the board but not in excess of $5 million.
	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 533.329shall be reduced by a redevelopment tax credit allowed under Iowa Code sections 15.291to 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, shall not qualify for a tax credit under this rule.
	b. 	A registered project shall be completed within 30 months of the project’s approval unless the authority, with the approval of the board, provides additional time to complete the project. A project shall not be provided more than 12 months of additional time. If the registered project is not completed within the time required, the project is not eligible to claim a tax credit.
	c. 	Failure to comply. If a taxpayer receives a tax credit pursuant to 2011 Iowa Code Supplement 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 authority may prorate the remaining credit amount among other eligible applicants.
	65.11(9) Authority registration and authorization. The authority shall develop a system for registration and authorization of tax credits. The authority 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 authority, the board, or any other agency of state government for additional financial assistance, the authority, 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; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
261—65.12(15) Review, approval, and repayment requirements of redevelopment tax credit.
	65.12(1) A qualified investor seeking to claim a tax credit pursuant to 2011 Iowa Code Supplement sections 15.293A and 15.293B shall apply to the authority, and applications shall be reviewed by the council as established in 2011 Iowa Code Supplement 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 to the authority, the council and the board all of 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 2011 Iowa Code Supplement section 15.293A.
[ARC 7844B, IAB 6/17/09, effective 7/22/09; ARC 9746B, IAB 9/7/11, effective 8/19/11; ARC 0007C, IAB 2/8/12, effective 3/14/12]
These rules are intended to implement 2011 Iowa Code Supplement 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]
[Filed Emergency ARC 9746B, IAB 9/7/11, effective 8/19/11]
[Filed ARC 0007C (Notice ARC 9747B, IAB 9/7/11), IAB 2/8/12, effective 3/14/12]
[Filed ARC 0944C (Notice ARC 0686C, IAB 4/17/13), IAB 8/7/13, effective 9/11/13]