Senate Amendment to House File 2453 H-8287 Amend House File 2453, as passed by the House, as 1 follows: 2 1. By striking everything after the enacting clause 3 and inserting: 4 < Section 1. Section 16.188, subsection 3, paragraph 5 b, subparagraph (1), Code 2014, is amended to read as 6 follows: 7 (1) Projects that are eligible for historic 8 preservation and cultural and entertainment district 9 tax credits under section 404A.1 404A.2 . 10 Sec. 2. Section 404A.1, Code 2014, is amended by 11 striking the section and inserting in lieu thereof the 12 following: 13 404A.1 Definitions. 14 For purposes of this chapter, unless the context 15 otherwise requires: 16 1. “Completion date” means the date on which 17 property that is the subject of a qualified 18 rehabilitation project is placed in service, as that 19 term is used in section 47 of the Internal Revenue 20 Code. 21 2. “Department” means the department of cultural 22 affairs. 23 3. “Eligible taxpayer” means the owner of 24 the property that is the subject of a qualified 25 rehabilitation project, or another person who will 26 qualify for the federal rehabilitation credit allowed 27 under section 47 of the Internal Revenue Code with 28 respect to the property that is the subject of a 29 qualified rehabilitation project. 30 4. “Nonprofit organization” means an organization 31 described in section 501 of the Internal Revenue Code 32 unless the exemption is denied under section 501, 502, 33 503, or 504 of the Internal Revenue Code. “Nonprofit 34 organization” does not include a governmental body, as 35 that term is defined in section 362.2. 36 5. “Program” shall mean the historic preservation 37 and cultural and entertainment district tax credit 38 program set forth in this chapter. 39 6. a. “Qualified rehabilitation expenditures” means 40 the same as defined in section 47 of the Internal 41 Revenue Code. Notwithstanding the foregoing sentence, 42 expenditures incurred by an eligible taxpayer that is 43 a nonprofit organization shall be considered “qualified 44 rehabilitation expenditures ” if they are any of the 45 following: 46 (1) Expenditures made for structural components, as 47 that term is defined in 26 C.F.R. §1.48-1(e)(2). 48 (2) Expenditures made for architectural and 49 engineering fees, site survey fees, legal expenses, 50 -1- HF2453.4150.S (1) 85 jh 1/ 12 #1.

insurance premiums, and development fees. 1 b. “Qualified rehabilitation expenditures” does not 2 include those expenditures financed by federal, state, 3 or local government grants or forgivable loans unless 4 otherwise allowed under section 47 of the Internal 5 Revenue Code. 6 c. “Qualified rehabilitation expenditures” may 7 include expenditures incurred prior to the date 8 an agreement is entered into under section 404A.3, 9 subsection 3. 10 7. “Qualified rehabilitation project” means a 11 project for the rehabilitation of property in this 12 state that meets all of the following criteria: 13 a. The property is at least one of the following: 14 (1) Property listed on the national register of 15 historic places or eligible for such listing. 16 (2) Property designated as of historic significance 17 to a district listed in the national register of 18 historic places or eligible for such designation. 19 (3) Property or district designated a local 20 landmark by a city or county ordinance. 21 (4) A barn constructed prior to 1937. 22 b. The property meets the physical criteria and 23 standards for rehabilitation established by the 24 department by rule. To the extent applicable, the 25 physical standards and criteria shall be consistent 26 with the United States secretary of the interior’s 27 standards for rehabilitation. 28 c. The project has qualified rehabilitation 29 expenditures that meet or exceed the following: 30 (1) In the case of commercial property, 31 expenditures totaling at least fifty thousand dollars 32 or fifty percent of the assessed value of the property, 33 excluding the land, prior to rehabilitation, whichever 34 is less. 35 (2) In the case of property other than commercial 36 property, including but not limited to barns 37 constructed prior to 1937, expenditures totaling at 38 least twenty-five thousand dollars or twenty-five 39 percent of the assessed value, excluding the land, 40 prior to rehabilitation, whichever is less. 41 Sec. 3. Section 404A.2, Code 2014, is amended by 42 striking the section and inserting in lieu thereof the 43 following: 44 404A.2 Historic preservation and cultural and 45 entertainment district tax credit. 46 1. An eligible taxpayer who has entered into 47 an agreement under section 404A.3, subsection 3, 48 is eligible to receive a historic preservation and 49 cultural and entertainment district tax credit 50 -2- HF2453.4150.S (1) 85 jh 2/ 12

in an amount equal to twenty-five percent of the 1 qualified rehabilitation expenditures of a qualified 2 rehabilitation project that are specified in the 3 agreement. Notwithstanding any other provision of 4 this chapter or any provision in the agreement to the 5 contrary, the amount of the tax credits shall not 6 exceed twenty-five percent of the final qualified 7 rehabilitation expenditures verified by the department 8 pursuant to section 404A.3, subsection 5, paragraph 9 “c” . 10 2. The tax credit shall be allowed against the 11 taxes imposed in chapter 422, divisions II, III, 12 and V, and in chapter 432. An individual may claim 13 a tax credit under this section of a partnership, 14 limited liability company, S corporation, estate, 15 or trust electing to have income taxed directly to 16 the individual. For an individual claiming a tax 17 credit of an estate or trust, the amount claimed 18 by the individual shall be based upon the pro rata 19 share of the individual’s earnings from the estate 20 or trust. For an individual claiming a tax credit 21 of a partnership, limited liability company, or S 22 corporation, the amount claimed by the partner, member, 23 or shareholder, respectively, shall be based upon 24 the amounts designated by the eligible partnership, 25 S corporation, or limited liability company, as 26 applicable. 27 3. Any credit in excess of the taxpayer’s tax 28 liability for the tax year shall be refunded with 29 interest computed under section 422.25. In lieu of 30 claiming a refund, a taxpayer may elect to have the 31 overpayment shown on the taxpayer’s final, completed 32 return credited to the tax liability for the following 33 year. 34 4. a. To claim a tax credit under this section, 35 a taxpayer shall include one or more tax credit 36 certificates with the taxpayer’s tax return. 37 b. The tax credit certificate shall contain the 38 taxpayer’s name, address, tax identification number, 39 the amount of the credit, the name of the eligible 40 taxpayer, any other information required by the 41 department of revenue, and a place for the name and tax 42 identification number of a transferee and the amount of 43 the tax credit being transferred. 44 c. The tax credit certificate, unless rescinded by 45 the department, shall be accepted by the department 46 of revenue as payment for taxes imposed in chapter 47 422, divisions II, III, and V, and in chapter 432, 48 subject to any conditions or restrictions placed by 49 the department or the department of revenue upon the 50 -3- HF2453.4150.S (1) 85 jh 3/ 12

face of the tax credit certificate and subject to the 1 limitations of this program. 2 5. a. Tax credit certificates issued under 3 section 404A.3 may be transferred to any person. 4 Within ninety days of transfer, the transferee shall 5 submit the transferred tax credit certificate to the 6 department of revenue along with a statement containing 7 the transferee’s name, tax identification number, 8 and address, the denomination that each replacement 9 tax credit certificate is to carry, and any other 10 information required by the department of revenue. 11 However, tax credit certificate amounts of less 12 than the minimum amount established by rule of the 13 department of revenue shall not be transferable. 14 b. Within thirty days of receiving the transferred 15 tax credit certificate and the transferee’s statement, 16 the department of revenue shall issue one or more 17 replacement tax credit certificates to the transferee. 18 Each replacement tax credit certificate must contain 19 the information required for the original tax credit 20 certificate and must have the same expiration date that 21 appeared on the transferred tax credit certificate. 22 c. A tax credit shall not be claimed by a 23 transferee under this section until a replacement tax 24 credit certificate identifying the transferee as the 25 proper holder has been issued. The transferee may use 26 the amount of the tax credit transferred against the 27 taxes imposed in chapter 422, divisions II, III, and 28 V, and in chapter 432, for any tax year the original 29 transferor could have claimed the tax credit. Any 30 consideration received for the transfer of the tax 31 credit shall not be included as income under chapter 32 422, divisions II, III, and V. Any consideration 33 paid for the transfer of the tax credit shall not be 34 deducted from income under chapter 422, divisions II, 35 III, and V. 36 6. For purposes of the individual and corporate 37 income taxes and the franchise tax, the increase in 38 the basis of the rehabilitated property that would 39 otherwise result from the qualified rehabilitation 40 expenditures shall be reduced by the amount of the 41 credit computed under this section. 42 Sec. 4. Section 404A.3, Code 2014, is amended by 43 striking the section and inserting in lieu thereof the 44 following: 45 404A.3 Application and registration —— agreement —— 46 compliance and examination. 47 1. Application and fees. 48 a. An eligible taxpayer seeking historic 49 preservation and cultural and entertainment district 50 -4- HF2453.4150.S (1) 85 jh 4/ 12

tax credits provided in section 404A.2 shall make 1 application to the department in the manner prescribed 2 by the department. 3 b. The department may accept applications on a 4 continuous basis or may accept applications, or one or 5 more components of an application, during one or more 6 application periods. 7 c. The application shall include any information 8 deemed necessary by the department to evaluate 9 the eligibility under the program of the applicant 10 and the rehabilitation project, the amount of 11 projected qualified rehabilitation expenditures of a 12 rehabilitation project, and the amount and source of 13 all funding for a rehabilitation project. An applicant 14 shall have the burden of proof to demonstrate to the 15 department that the applicant is an eligible taxpayer 16 and the project is a qualified rehabilitation project 17 under the program. 18 d. The department may establish criteria for the 19 use of electronic or other alternative filing or 20 submission methods for any application, document, or 21 payment requested or required under this program. Such 22 criteria may provide for the acceptance of a signature 23 in a form other than the handwriting of a person. 24 e. (1) The department may charge application 25 and other fees to eligible taxpayers who apply to 26 participate in the program. The amount of such 27 fees shall be determined based on the costs of the 28 department associated with administering the program. 29 (2) Fees collected by the department pursuant to 30 this paragraph shall be deposited with the department 31 pursuant to section 303.9, subsection 1. 32 2. Registration. 33 a. Upon review of the application, the department 34 may register a qualified rehabilitation project under 35 the program. If the department registers the project, 36 the department shall make a preliminary determination 37 as to the amount of tax credits for which the project 38 qualifies. 39 b. After registering the qualified rehabilitation 40 project, the department shall notify the eligible 41 taxpayer of successful registration under the program. 42 The notification shall include the amount of tax 43 credits under section 404A.2 for which the qualified 44 rehabilitation project has received a tentative award 45 and a statement that the amount is a preliminary 46 determination only. 47 3. Agreement. 48 a. Upon successful registration of a qualified 49 rehabilitation project, the eligible taxpayer shall 50 -5- HF2453.4150.S (1) 85 jh 5/ 12

enter into an agreement with the department for the 1 successful completion of all requirements of the 2 program. 3 b. The agreement shall contain mutually agreeable 4 terms and conditions which, at a minimum, provide for 5 the following: 6 (1) The amount of the tax credit award. An 7 eligible taxpayer has no right to receive a tax 8 credit certificate or claim a tax credit until all 9 requirements of the agreement and subsections 4 and 5 10 have been satisfied. The amount of tax credit included 11 on a tax credit certificate issued under this section 12 shall be contingent upon verification by the department 13 of the amount of final qualified rehabilitation 14 expenditures. 15 (2) The rehabilitation work to be performed. 16 (3) The budget of the qualified rehabilitation 17 project, including the projected qualified 18 rehabilitation expenditures, allowable cost overruns, 19 and the source and amount of all funding received or 20 anticipated to be received. The amount of allowable 21 cost overruns provided for in the agreement shall not 22 exceed the following amount: 23 (a) For a qualified rehabilitation project with 24 final qualified rehabilitation expenditures of not more 25 than seven hundred fifty thousand dollars, fifteen 26 percent of the projected qualified rehabilitation 27 expenditures provided for in the agreement. 28 (b) For a qualified rehabilitation project with 29 final qualified rehabilitation expenditures of more 30 than seven hundred fifty thousand dollars but not more 31 than six million dollars, ten percent of the projected 32 qualified rehabilitation expenditures provided for in 33 the agreement. 34 (c) For a qualified rehabilitation project with 35 final qualified rehabilitation expenditures of more 36 than six million dollars, five percent of the projected 37 qualified rehabilitation expenditures provided for in 38 the agreement. 39 (4) The commencement date of the qualified 40 rehabilitation project, which shall not be later than 41 the end of the fiscal year in which the agreement is 42 entered into. 43 (5) The completion date of the qualified 44 rehabilitation project, which shall be within 45 thirty-six months of the commencement date. 46 (6) The date on which the agreement terminates, 47 which date shall not be earlier than five years from 48 the date on which the tax credit certificate is issued. 49 4. Compliance. 50 -6- HF2453.4150.S (1) 85 jh 6/ 12

a. The eligible taxpayer shall, for the length 1 of the agreement, annually certify to the department 2 compliance with the requirements of the agreement. 3 The certification shall be made at such time as the 4 department shall determine in the agreement. 5 b. The eligible taxpayer shall have the burden 6 of proof to demonstrate to the department that all 7 requirements of the agreement are satisfied. The 8 taxpayer shall notify the department in a timely 9 manner of any changes in the qualification of the 10 rehabilitation project or in the eligibility of 11 the taxpayer to claim the tax credit provided under 12 this chapter, or of any other change that may have a 13 negative impact on the eligible taxpayer’s ability 14 to successfully complete any requirement under the 15 agreement. 16 c. (1) If after entering into the agreement but 17 before a tax credit certificate is issued, the eligible 18 taxpayer or the qualified rehabilitation project no 19 longer meets the requirements of the agreement, the 20 department may find the taxpayer in default under the 21 agreement and may revoke the tax credit award. 22 (2) If an eligible taxpayer obtains a tax credit 23 certificate from the department by way of a prohibited 24 activity, the eligible taxpayer and any transferee 25 shall be jointly and severally liable to the state for 26 the amount of the tax credits so issued, interest and 27 penalties allowed under chapter 422, and reasonable 28 attorney fees and litigation costs, except that the 29 liability of the transferee shall not exceed an amount 30 equal to the amount of the tax credits acquired by 31 the transferee. The department of revenue, upon 32 notification or discovery that a tax credit certificate 33 was issued to an eligible taxpayer by way of a 34 prohibited activity, shall revoke any outstanding 35 tax credit and seek repayment of the value of any tax 36 credit already claimed, and the failure to make such a 37 repayment may be treated by the department of revenue 38 in the same manner as a failure to pay the tax shown 39 due or required to be shown due with the filing of a 40 return or deposit form. A qualifying transferee is not 41 subject to the liability, revocation, and repayment 42 imposed under this subparagraph. 43 (3) For purposes of this paragraph: 44 (a) “Prohibited activity” means a breach or default 45 under the agreement with the department, the violation 46 of any warranty provided by the eligible taxpayer 47 to the department or the department of revenue, the 48 claiming of a tax credit issued under this chapter for 49 expenditures that are not qualified rehabilitation 50 -7- HF2453.4150.S (1) 85 jh 7/ 12

expenditures, the violation of any requirements of this 1 chapter or rules adopted pursuant to this chapter, 2 misrepresentation, fraud, or any other unlawful act or 3 omission. 4 (b) “Qualifying transferee” means a transferee who 5 acquires a tax credit certificate issued under this 6 chapter for value, in good faith, without actual or 7 constructive notice of a prohibited activity of the 8 eligible taxpayer who was originally issued the tax 9 credit, and without actual or constructive notice 10 of any other claim to or defense against the tax 11 credit, and which transferee is not associated with 12 the eligible taxpayer by being one or more of the 13 following: 14 (i) An owner, member, shareholder, or partner 15 of the eligible taxpayer who directly or indirectly 16 owns or controls, in whole or in part, the eligible 17 taxpayer. 18 (ii) A director, officer, or employee of the 19 eligible taxpayer. 20 (iii) A relative of the eligible taxpayer or a 21 person listed in subparagraph subdivision (i) or (ii) 22 or, if the eligible taxpayer or an owner, member, 23 shareholder, or partner of the eligible taxpayer is a 24 legal entity, the natural persons who ultimately own 25 such legal entity. 26 (iv) A person who is owned or controlled, in 27 whole or in part, by a person listed in subparagraph 28 subdivision (i) or (ii). 29 (c) “Relative” means an individual related by 30 consanguinity within the second degree as determined 31 by common law, a spouse, or an individual related to 32 a spouse within the second degree as so determined, 33 and includes an individual in an adoptive relationship 34 within the second degree. 35 5. Examination and audit of project. 36 a. An eligible taxpayer shall engage a certified 37 public accountant authorized to practice in this 38 state to conduct an examination of the project in 39 accordance with the American institute of certified 40 public accountants’ statements on standards for 41 attestation engagements. Upon completion of the 42 qualified rehabilitation project, the eligible taxpayer 43 shall submit the examination to the department, along 44 with a statement of the amount of final qualified 45 rehabilitation expenditures and any other information 46 deemed necessary by the department or the department of 47 revenue in order to verify that all requirements of the 48 agreement, this chapter, and all rules adopted pursuant 49 to this chapter have been satisfied. 50 -8- HF2453.4150.S (1) 85 jh 8/ 12

b. Notwithstanding paragraph “a” , the department 1 may waive the examination requirement in this 2 subsection if all the following requirements are 3 satisfied: 4 (1) The final qualified rehabilitation expenditures 5 of the qualified rehabilitation project, as verified 6 by the department, do not exceed one hundred thousand 7 dollars. 8 (2) The qualified rehabilitation project is funded 9 exclusively by private funding sources. 10 c. Upon review of the examination, if applicable, 11 the department shall verify that all requirements of 12 the agreement, this chapter, and all rules adopted 13 pursuant to this chapter have been satisfied and shall 14 verify the amount of final qualified rehabilitation 15 expenditures. After consultation with the department 16 of revenue, the department may issue a tax credit 17 certificate to the eligible taxpayer stating the 18 amount of tax credit under section 404A.2 the eligible 19 taxpayer may claim. The department shall issue the tax 20 credit certificate not later than 60 days following the 21 completion of the examination review, if applicable, 22 and the verifications and consultation required under 23 this paragraph. 24 6. Notwithstanding any other provision of this 25 chapter to the contrary, the department may waive the 26 requirements of subsections 1 through 4, except the 27 requirements relating to allowable cost overruns in 28 subsection 3, paragraph “b” , subparagraph (3), and 29 the requirements in subsection 4, paragraphs “b” and 30 “c” , for qualified rehabilitation projects with final 31 qualified rehabilitation expenditures of seven hundred 32 fifty thousand dollars or less and may establish by 33 rule different application, registration, agreement, 34 compliance, or other requirements relating to such 35 projects. 36 7. The department may for good cause amend an 37 agreement. 38 Sec. 5. Section 404A.4, Code 2014, is amended by 39 striking the section and inserting in lieu thereof the 40 following: 41 404A.4 Aggregate tax credit award limit. 42 1. a. Except as provided in subsections 2 and 3, 43 the department shall not award in any one fiscal year 44 an amount of tax credits provided in section 404A.2 in 45 excess of forty-five million dollars. 46 b. Of the tax credits that may be awarded in 47 a fiscal year pursuant to paragraph “a” , at least 48 five percent of the dollar amount of the tax credits 49 shall be allocated for purposes of new qualified 50 -9- HF2453.4150.S (1) 85 jh 9/ 12

rehabilitation projects with final qualified 1 rehabilitation expenditures of seven hundred fifty 2 thousand dollars or less. 3 2. a. The amount of a tax credit that is awarded 4 during a fiscal year beginning on or after July 1, 5 2016, and that is irrevocably declined or revoked on or 6 before June 30 of the next fiscal year may be awarded 7 under section 404A.3 during the fiscal year in which 8 the declination or revocation occurs. 9 b. The amount of a tax credit that was reserved 10 prior to the effective date of this Act under section 11 404A.4, Code 2014, for use in a fiscal year beginning 12 before July 1, 2016, that is irrevocably declined or 13 revoked on or after the effective date of this Act, 14 but before July 1, 2016, may be awarded under section 15 404A.3 during the fiscal year in which such declination 16 or revocation occurs. Such tax credits awarded shall 17 not be claimed by a taxpayer in a fiscal year that is 18 earlier than the fiscal year for which the tax credits 19 were originally reserved. 20 c. The amount of a tax credit that was available 21 for approval by the state historical preservation 22 office of the department under section 404A.4, Code 23 2014, in a fiscal year beginning on or after July 1, 24 2010, but before July 1, 2014, that was required to 25 be allocated to new projects with final qualified 26 rehabilitation costs of five hundred thousand dollars 27 or less, or seven hundred fifty thousand dollars or 28 less, as the case may be, and that was not finally 29 approved by the state historical preservation office, 30 may be awarded under section 404A.3 during the fiscal 31 years beginning on or after July 1, 2014, but before 32 July 1, 2016. 33 d. Tax credits awarded pursuant to this subsection 34 shall not be considered for purposes of calculating the 35 aggregate tax credit award limit in subsection 1. 36 3. a. If during the fiscal year beginning July 1, 37 2016, or any fiscal year thereafter, the department 38 awards an amount of tax credits that is less than the 39 maximum aggregate tax credit award limit specified 40 in subsection 1, the difference between the amount 41 so awarded and the amount specified in subsection 1, 42 not to exceed ten percent of the amount specified in 43 subsection 1, may be carried forward to the succeeding 44 fiscal year and awarded during that fiscal year. 45 b. Tax credits awarded pursuant to this subsection 46 shall not be considered for purposes of calculating the 47 aggregate tax credit award limit in subsection 1. 48 Sec. 6. Section 404A.5, Code 2014, is amended to 49 read as follows: 50 -10- HF2453.4150.S (1) 85 jh 10/ 12

404A.5 Economic impact —— recommendations. 1 1. The department of cultural affairs , in 2 consultation with the department of revenue, shall be 3 responsible for keeping the general assembly and the 4 legislative services agency informed on the overall 5 economic impact to the state of the rehabilitation of 6 eligible properties qualified rehabilitation projects . 7 2. An annual report shall be filed which shall 8 include but is not limited to data on the number and 9 potential value of qualified rehabilitation projects 10 begun during the latest twelve-month period, the total 11 historic preservation and cultural and entertainment 12 district tax credits originally granted awarded or 13 tax credit certificates originally issued during that 14 period, the potential reduction in state tax revenues 15 as a result of all awarded or issued tax credits still 16 unused unclaimed and eligible for refund, and the 17 potential increase in local property tax revenues as a 18 result of the rehabilitated qualified rehabilitation 19 projects. 20 3. The department of cultural affair s, to the 21 extent it is able, shall provide recommendations 22 on whether a the limit on tax credits should be 23 established changed , the need for a broader or more 24 restrictive definition of eligible property qualified 25 rehabilitation project , and other adjustments to the 26 tax credits under this chapter . 27 Sec. 7. NEW SECTION . 404A.6 Rules. 28 The department and the department of revenue shall 29 each adopt rules to jointly administer this chapter. 30 Sec. 8. Section 422.11D, Code 2014, is amended by 31 striking the section and inserting in lieu thereof the 32 following: 33 422.11D Historic preservation and cultural and 34 entertainment district tax credit. 35 The taxes imposed under this division, less 36 the credits allowed under section 422.12, shall be 37 reduced by a historic preservation and cultural and 38 entertainment district tax credit allowed under section 39 404A.2. 40 Sec. 9. Section 422.33, subsection 10, Code 2014, 41 is amended by striking the subsection and inserting in 42 lieu thereof the following: 43 10. The taxes imposed under this division shall be 44 reduced by a historic preservation and cultural and 45 entertainment district tax credit allowed under section 46 404A.2. 47 Sec. 10. Section 422.60, subsection 4, Code 2014, 48 is amended by striking the subsection and inserting in 49 lieu thereof the following: 50 -11- HF2453.4150.S (1) 85 jh 11/ 12

4. The taxes imposed under this division shall be 1 reduced by a historic preservation and cultural and 2 entertainment district tax credit allowed under section 3 404A.2. 4 Sec. 11. Section 432.12A, Code 2014, is amended by 5 striking the section and inserting in lieu thereof the 6 following: 7 432.12A Historic preservation and cultural and 8 entertainment district tax credit. 9 The taxes imposed under this chapter shall be 10 reduced by a historic preservation and cultural and 11 entertainment district tax credit allowed under section 12 404A.2. 13 Sec. 12. APPLICABILITY. Unless otherwise provided 14 in this Act, this Act applies to agreements entered 15 into by the department and an eligible taxpayer 16 on or after the effective date of this Act, and 17 rehabilitation projects for which a project application 18 was approved and tax credits reserved prior to the 19 effective date of this Act shall be governed by 20 sections 404A.1 through 404A.5, Code 2014. > 21 -12- HF2453.4150.S (1) 85 jh 12/ 12