House File 641 S-3247 Amend House File 641, as amended, passed, and 1 reprinted by the House, as follows: 2 1. By striking everything after the enacting clause 3 and inserting: 4 < Section 1. NEW SECTION . 15J.1 Short title. 5 This chapter shall be known and may be cited as the 6 “Iowa Reinvestment Act” . 7 Sec. 2. NEW SECTION . 15J.2 Definitions. 8 As used in this chapter, unless the context 9 otherwise requires: 10 1. “Board” means the same as defined in section 11 15.102. 12 2. “Commencement date” means the date established 13 for each district by the board under section 15J.4, 14 subsection 3, upon which the calculation of new state 15 sales tax and new state hotel and motel tax revenue 16 shall begin under section 15J.5 for deposit in the 17 fund. 18 3. “Department” means the department of revenue. 19 4. “District” means the area within a municipality 20 that is designated a reinvestment district pursuant to 21 section 15J.4. 22 5. “Fund” means the state reinvestment district 23 fund created in section 15J.6. 24 6. “Governing body” means the county board of 25 supervisors, city council, or other body in which the 26 legislative powers of the municipality are vested. 27 7. “Municipality” means a county or an incorporated 28 city. 29 8. “New lessor” means a lessor, as defined in 30 section 423A.2, operating a business in the district 31 that was not in operation in the area of the district 32 before the effective date of the ordinance establishing 33 the district, regardless of ownership. “New lessor” 34 also includes any lessor, defined in section 423A.2, 35 operating a business in the district if the place of 36 business for that business is the subject of a project 37 that was approved by the board. 38 9. “New retail establishment” means a business 39 operated in the district by a retailer, as defined in 40 section 423.1, that was not in operation in the area of 41 the district before the effective date of the ordinance 42 establishing the district, regardless of ownership. 43 “New retail establishment” also includes any business 44 operated in the district by a retailer, as defined in 45 section 423.1, if the place of business for that retail 46 establishment is the subject of a project that was 47 approved by the board. 48 10. “Project” means a vertical improvement 49 constructed or substantially improved within a district 50 -1- HF641.2264 (2) 85 md/sc 1/ 10 #1.

using sales tax revenues and hotel and motel tax 1 revenues received by a municipality pursuant to this 2 chapter. 3 11. “State hotel and motel tax” means the 4 state-imposed tax under section 423A.3. 5 12. “State sales tax” means the sales and services 6 tax imposed pursuant to section 423.2. 7 13. “Substantially improved” means that the cost of 8 the improvements are equal to or exceed fifty percent 9 of the assessed value of the property, excluding the 10 land, prior to such improvements. 11 14. “Vertical improvement” means a building that is 12 wholly or partially above grade and all appurtenant 13 structures to the building. 14 Sec. 3. NEW SECTION . 15J.3 Preapplication process. 15 The board may establish by rule a preapplication 16 process to provide information related to the 17 requirements of this chapter, to determine the interest 18 of municipalities in establishing districts under this 19 chapter, and to assist municipalities in preparing a 20 proposed district plan. 21 Sec. 4. NEW SECTION . 15J.4 District establishment 22 —— approval. 23 1. A municipality that has an area suitable for 24 development within the boundaries of the municipality 25 is eligible to seek approval from the board to 26 establish a reinvestment district under this section 27 consisting of the area suitable for development. To be 28 designated a reinvestment district, an area shall meet 29 the following requirements: 30 a. The area consists only of parcels of real 31 property that the governing body of the municipality 32 determines will be directly and substantially benefited 33 by development in the proposed district. 34 b. The area is in whole or in part either an 35 economic development enterprise zone designated under 36 chapter 15E, division XVIII, or an urban renewal area 37 established pursuant to chapter 403. 38 c. The area consists of contiguous parcels and does 39 not exceed twenty-five acres in total. 40 d. For a municipality that is a city, the area does 41 not include the entire incorporated area of the city. 42 e. The area is not located in whole or in part 43 within another district established under this chapter. 44 2. Prior to submission to the board for approval 45 under subsection 3, a proposed district plan shall be 46 developed and approved by resolution of the governing 47 body of the municipality. The proposed district plan 48 shall state the governing body’s intent to establish 49 a district. The proposed district plan shall also 50 -2- HF641.2264 (2) 85 md/sc 2/ 10

include all of the following: 1 a. A finding by the governing body that the area 2 in the proposed district is an area suitable for 3 development. 4 b. A legal description of the real estate forming 5 the boundaries of the area to be included in the 6 proposed district along with a map depicting the 7 existing parcels of real estate located in the proposed 8 district. 9 c. A list of the names and addresses of the owners 10 of record of the parcels to be included in the proposed 11 district. 12 d. A list of all projects proposed to be undertaken 13 within the district, a detailed description of those 14 projects, and a project plan for each proposed project. 15 Each project plan shall clearly state the estimated 16 cost of the proposed project, the anticipated funding 17 sources for the proposed project, the amount of 18 anticipated funding from each such source, and the 19 amount and type of debt, if any, to be incurred by the 20 municipality to fund the proposed project, and shall 21 include a proposed project feasibility study conducted 22 by an independent professional with expertise in 23 economic development and public finance. The project 24 plan for the project that proposes the largest amount 25 of capital investment among all proposed projects 26 within the district shall include an estimate of 27 the date that construction of the project will be 28 completed and of the date that operations will begin 29 at the project. The feasibility study shall include 30 projections and analysis of all of the following: 31 (1) The amount of gross revenues expected to 32 be collected in the district as a result of the 33 proposed project for each year that the district is in 34 existence. 35 (2) A detailed explanation of the manner and extent 36 to which the proposed project will contribute to the 37 economic development of the state and the municipality, 38 including an analysis of the proposed project’s 39 economic impact. The analysis shall include the same 40 components and be conducted in the same manner as the 41 economic impact study required under paragraph “e” . 42 (3) An estimate of the number of visitors or 43 customers the proposed project will generate during 44 each year that the district exists. 45 (4) A description of the unique characteristics of 46 the proposed project. 47 e. An economic impact study for the proposed 48 district conducted by an independent economist retained 49 by the municipality. The economic impact study shall, 50 -3- HF641.2264 (2) 85 md/sc 3/ 10

at a minimum, do all of the following: 1 (1) Contain a detailed analysis of the financial 2 benefit of the proposed district to the economy of the 3 state and the municipality. 4 (2) Identify one or more projected market areas in 5 which the district can reasonably be expected to have a 6 substantial economic impact. 7 (3) Assess the fiscal and financial impact of the 8 proposed district on businesses or on other economic 9 development projects within the projected market area. 10 3. a. The municipality shall submit a copy of 11 the resolution, the proposed district plan, and all 12 accompanying materials adopted pursuant to this section 13 to the board for evaluation. The board shall not 14 approve a proposed district plan if the application is 15 submitted after July 1, 2018. 16 b. The board shall evaluate each municipality’s 17 proposed district plan and accompanying materials and 18 shall approve the district plan and establishment of 19 the district if the board determines that, in addition 20 to other criteria established by the board by rule, all 21 of the following conditions are met: 22 (1) The area of the municipality proposed to be 23 included in the district meets the requirements of 24 subsection 1. 25 (2) The projects proposed to be undertaken in 26 the district are of a unique nature and will have a 27 substantial beneficial impact on the economy of the 28 state and the economy of the municipality. 29 (3) The proposed funding sources for each proposed 30 project are feasible. 31 (4) At least one of the projects proposed to 32 be undertaken in the district includes a capital 33 investment of at least ten million dollars. 34 (5) The total amount of proposed funding from 35 state sales tax revenues and state hotel and motel tax 36 revenue to be remitted to the municipality from the 37 state reinvestment district fund under section 15J.6 38 for all proposed projects in the proposed district plan 39 does not exceed thirty-five percent of the total cost 40 of all proposed projects in the proposed district plan. 41 (6) The amount of proposed capital investment 42 within the proposed district related to retail 43 businesses in the proposed district does not exceed 44 fifty percent of the total capital investment for all 45 proposed projects in the proposed district plan. For 46 the purposes of this subparagraph, “retail business” 47 means any business engaged in the business of selling 48 tangible personal property or taxable services at 49 retail in this state that is obligated to collect state 50 -4- HF641.2264 (2) 85 md/sc 4/ 10

sales or use tax under chapter 423. However, for the 1 purposes of this subparagraph, “retail business” does 2 not include a new lessor. 3 c. If the board denies a proposed district plan, 4 the board shall state the reasons for the denial and 5 the municipality may resubmit the application. 6 d. As part of its approval of a proposed district 7 plan, the board shall establish a commencement date 8 for the district. The commencement date established 9 by the board shall be the first day of the first 10 calendar quarter beginning after the later of the two 11 dates identified for the project that proposed the 12 largest amount of capital investment among all proposed 13 projects in the district pursuant to subsection 2, 14 paragraph “d” . 15 e. As part of its approval of a proposed district 16 plan, the board shall, subject to the authorized 17 amounts under section 15J.5, establish maximum amounts 18 of state sales tax revenues or state hotel and motel 19 tax revenues, or both, that may be remitted to a 20 municipality’s reinvestment project fund. Such maximum 21 amounts shall be determined based on the financing 22 needs of the proposed project, the economic impact 23 to the state, and the remittance limitations under 24 paragraph “f” . 25 f. The total aggregate amount of state sales tax 26 revenues and state hotel and motel tax revenues that 27 may be approved by the board for remittance to all 28 municipalities and that may be transferred to the 29 state reinvestment district fund under section 423.2, 30 subsection 11, or section 423A.6, and remitted to all 31 municipalities having a reinvestment district under 32 this chapter shall not exceed one hundred million 33 dollars. 34 g. If a district plan is approved by the board, the 35 district plan, along with the municipality’s resolution 36 and all accompanying materials shall be posted on the 37 economic development authority’s internet site for 38 public viewing within ten days of approval by the 39 board. 40 4. Upon receiving the approval of the board, the 41 municipality may adopt an ordinance establishing the 42 district and shall notify the director of revenue of 43 the district’s commencement date established by the 44 board no later than thirty days after adoption of the 45 ordinance. The ordinance adopted by the municipality 46 shall include the district’s commencement date and a 47 detailed statement of the manner in which the approved 48 projects to be undertaken in the district will be 49 financed, including but not limited to the financial 50 -5- HF641.2264 (2) 85 md/sc 5/ 10

information included in the project plan under 1 subsection 2, paragraph “d” . Following establishment 2 of the district, a municipality may use the moneys 3 deposited in the municipality’s reinvestment project 4 fund created pursuant to section 15J.7 to fund the 5 development of those projects included within the 6 district plan. 7 5. A municipality may amend the district plan 8 to add or modify projects. However, a proposed 9 modification to a project and each project proposed 10 to be added shall first be approved by the board in 11 the same manner as provided for the original plan. In 12 no case, however, shall an amendment to the district 13 plan result in the extension of the commencement date 14 established by the board. If a district plan is 15 amended to add or modify a project, the municipality 16 shall amend the ordinance, if necessary, to reflect any 17 changes to the financial information required to be 18 included under subsection 4. 19 6. Following establishment of a district, the 20 municipality shall on or before October 1 of each year 21 submit a report to the board detailing all of the 22 following: 23 a. The status of each project undertaken within the 24 district in the previous twelve months. 25 b. An itemized list of expenditures from the 26 municipality’s reinvestment project fund in the 27 previous twelve months that have been made related to 28 each project being undertaken within the district. 29 c. The amount of the total project cost remaining 30 for each project being undertaken within the district 31 as of the date the report is submitted. 32 d. The amounts, types, and sources of funding used 33 for each project described in paragraph “a” . 34 e. The amount of bonds issued or other indebtedness 35 incurred for each project described in paragraph “a” , 36 including information related to the rate of interest, 37 length of term, costs of issuance, and net proceeds. 38 The report shall also include the amounts and types 39 of moneys to be used for payment of such bonds or 40 indebtedness. 41 7. All reports received by the board under 42 subsection 6 shall be posted on the economic 43 development authority’s internet site as soon as 44 practicable following receipt of the report. The board 45 shall submit a written report to the governor and the 46 general assembly on or before January 15 of each year. 47 The report shall summarize and analyze the information 48 submitted by municipalities under subsection 6. 49 Sec. 5. NEW SECTION . 15J.5 New state tax revenue 50 -6- HF641.2264 (2) 85 md/sc 6/ 10

calculations. 1 1. a. The department shall calculate quarterly 2 the amount of new state sales tax revenues for each 3 district established in the state to be deposited 4 in the state reinvestment district fund created in 5 section 15J.6, pursuant to section 423.2, subsection 6 11, paragraph “b” , subject to remittance limitations 7 established by the board pursuant to section 15J.4, 8 subsection 3. 9 b. The amount of new state sales tax revenue for 10 purposes of paragraph “a” shall be the product of 11 the amount of sales subject to the state sales tax 12 in the district during the quarter from new retail 13 establishments times four percent. 14 2. a. The department shall calculate quarterly the 15 amount of new state hotel and motel tax revenues for 16 each district established in the state to be deposited 17 in the state reinvestment district fund created in 18 section 15J.6, pursuant to section 423A.6, subject 19 to remittance limitations established by the board 20 pursuant to section 15J.4, subsection 3. 21 b. The amount of new state hotel and motel tax 22 revenue for purposes of paragraph “a” shall be the 23 product of the amount of sales subject to the state 24 hotel and motel tax in the district during the quarter 25 from new lessors times the state hotel and motel tax 26 rate imposed under section 423A.3. 27 3. Each municipality that has established a 28 district under this chapter shall assist the department 29 in identifying new retail establishments in the 30 district that are collecting state sales tax and new 31 lessors in the district that are collecting state hotel 32 and motel tax. This process shall be ongoing until the 33 municipality ceases to utilize state sales tax revenue 34 or state hotel and motel tax revenue under this chapter 35 or the district is dissolved. 36 Sec. 6. NEW SECTION . 15J.6 State reinvestment 37 district fund. 38 1. A state reinvestment district fund is 39 established in the state treasury under the control 40 of the department consisting of the new state sales 41 tax revenues collected within each district and 42 deposited in the fund pursuant to section 423.2, 43 subsection 11, paragraph “b” , and the new state hotel 44 and motel tax revenues collected within each district 45 and deposited in the fund pursuant to section 423A.6. 46 Moneys deposited in the fund are appropriated to the 47 department for the purposes of this section. Moneys in 48 the fund shall only be used for the purposes of this 49 section. 50 -7- HF641.2264 (2) 85 md/sc 7/ 10

2. A district account is created within the fund 1 for each district created by a municipality under this 2 chapter. 3 3. The department shall deposit the moneys 4 described in subsection 1 that were collected in 5 a quarter beginning on or after the district’s 6 commencement date into the appropriate district account 7 in the fund. 8 4. All moneys in each district account within the 9 fund shall be remitted quarterly by the department to 10 the municipality that established the district for 11 deposit in the municipality’s reinvestment project fund 12 established pursuant to section 15J.7. 13 5. The department shall adopt rules for the 14 administration of the department’s duties under 15 this chapter, including the remittance of moneys to 16 municipalities. 17 Sec. 7. NEW SECTION . 15J.7 Reinvestment project 18 fund. 19 1. State sales tax revenue and state hotel and 20 motel tax revenue remitted by the department to 21 a municipality pursuant to section 15J.6 shall be 22 deposited in a reinvestment project fund of the 23 municipality and shall be used to fund projects within 24 the district from which the revenues were collected. 25 If the municipality determines that the revenue 26 accruing to the reinvestment project fund exceeds the 27 amount necessary for these purposes, the excess moneys 28 that are remittances received under section 15J.6 and 29 all interest in the fund attributable to such excess 30 amounts shall be remitted by the municipality to the 31 department for deposit in the general fund of the 32 state. 33 2. In addition to the moneys received pursuant 34 to section 15J.6, a municipality may deposit in the 35 reinvestment project fund any other moneys lawfully at 36 the municipality’s disposal, including but not limited 37 to local sales and services tax receipts collected 38 under chapter 423B if such use is a purpose authorized 39 for the municipality under chapter 423B. 40 3. The records of the municipality related to the 41 district and the reinvestment project fund are subject 42 to audit pursuant to section 11.6. 43 4. a. Moneys from any source deposited into 44 the reinvestment project fund shall not be expended 45 for or otherwise used in connection with a project 46 that includes the relocation of a commercial or 47 industrial enterprise not presently located within the 48 municipality. 49 b. For the purposes of this subsection, 50 -8- HF641.2264 (2) 85 md/sc 8/ 10

“relocation” means the closure or substantial reduction 1 of an enterprise’s existing operations in one area of 2 the state and the initiation of substantially the same 3 operation in the same county or a contiguous county in 4 the state. “Relocation” does not include an enterprise 5 expanding its operations in another area of the state 6 provided that existing operations of a similar nature 7 are not closed or substantially reduced. 8 5. Upon dissolution of a district pursuant to 9 section 15J.8, if moneys remitted to the municipality 10 pursuant to section 15J.6 remain in the municipality’s 11 reinvestment project fund and those moneys are not 12 necessary to support completion of a project in the 13 dissolved district, such amounts and all interest 14 remaining in the fund that was earned on such amounts 15 shall be remitted by the municipality to the department 16 for deposit in the general fund of the state. 17 6. Upon dissolution of a district pursuant to 18 section 15J.8, moneys remaining in the reinvestment 19 project fund that were deposited pursuant to subsection 20 2 and all interest remaining in the fund that was 21 earned on such amounts shall be deposited in the 22 general fund of the municipality. 23 Sec. 8. NEW SECTION . 15J.8 End of deposits —— 24 district dissolution. 25 1. As of the date twenty years after the district’s 26 commencement date, the department shall cease to 27 deposit state sales tax revenues and state hotel 28 and motel tax revenues into the district’s account 29 within the fund, unless the municipality dissolves the 30 district by ordinance prior to that date. Following 31 the expiration of the twenty-year period, the district 32 shall be dissolved by ordinance of the municipality 33 adopted within twelve months of the conclusion of the 34 twenty-year period. 35 2. If the municipality dissolves the district by 36 ordinance prior to the expiration of the twenty-year 37 period specified in subsection 1, the municipality 38 shall notify the director of revenue of the dissolution 39 as soon as practicable after adoption of the ordinance, 40 and the department shall, as of the effective date 41 of dissolution, cease to deposit state sales tax 42 revenues and state hotel and motel tax revenues into 43 the district’s account within the fund. 44 Sec. 9. Section 423.2, subsection 11, paragraph 45 b, Code 2013, is amended by adding the following new 46 subparagraph: 47 NEW SUBPARAGRAPH . (6) Beginning the first day 48 of the calendar quarter beginning on the reinvestment 49 district’s commencement date, subject to remittance 50 -9- HF641.2264 (2) 85 md/sc 9/ 10

limitations established by the economic development 1 authority board pursuant to section 15J.4, subsection 2 3, transfer to a district account created in the state 3 reinvestment district fund for each reinvestment 4 district established under chapter 15J, the amount of 5 new state sales tax revenue, determined in section 6 15J.5, subsection 1, paragraph “b” , in the district, 7 that remains after the prior transfers required 8 under this paragraph “b” . Such transfers shall cease 9 pursuant to section 15J.8. 10 Sec. 10. Section 423A.6, unnumbered paragraph 1, 11 Code 2013, is amended to read as follows: 12 The director of revenue shall administer the 13 state and local hotel and motel tax as nearly as 14 possible in conjunction with the administration of the 15 state sales tax law, except that portion of the law 16 which implements the streamlined sales and use tax 17 agreement. The director shall provide appropriate 18 forms, or provide on the regular state tax forms, 19 for reporting state and local hotel and motel tax 20 liability. All moneys received or refunded one hundred 21 eighty days after the date on which a city or county 22 terminates its local hotel and motel tax and all moneys 23 received from the state hotel and motel tax shall be 24 deposited in or withdrawn from the general fund of 25 the state. Beginning the first day of the calendar 26 quarter beginning on the reinvestment district’s 27 commencement date, the director of revenue shall, 28 subject to remittance limitations established by 29 the economic development authority board pursuant to 30 section 15J.4, subsection 3, transfer from the general 31 fund of the state to a district account created in the 32 state reinvestment district fund for each reinvestment 33 district established under chapter 15J, the new state 34 hotel and motel tax revenue, determined in section 35 15J.5, subsection 2, paragraph “b” , in the district. 36 Such transfers shall cease pursuant to section 15J.8. > 37 2. By renumbering, redesignating, and correcting 38 internal references as necessary. 39 ______________________________ COMMITTEE ON WAYS AND MEANS JOE BOLKCOM, CHAIRPERSON -10- HF641.2264 (2) 85 md/sc 10/ 10 #2.