H-1440

   Amend Senate File 512, as amended, passed, and reprinted by the Senate, as follows:
   1.  By striking everything after the enacting clause and inserting: 
   Section 1.  NEW SECTION.  8.57B  Water quality infrastructure fund —— creation —— appropriations.
   1.  A water quality infrastructure fund is created within the division of soil conservation and water quality of the department of agriculture and land stewardship. The fund shall consist of all of the following:
   a.  (1)  Moneys transferred to the fund pursuant to section 423G.6. 
   (2)  This paragraph “a” is repealed upon the date on which chapter 423G is repealed pursuant to section 423G.7.
   b.  Appropriations made to the fund and transfers of interest, earnings, and moneys from other funds as provided by law.
   2.  The fund shall be separate from the general fund of the state and the balance in the fund shall not be considered part of the balance of the general fund of the state. However, the fund shall be considered a special account for the purposes of section 8.53, relating to generally accepted accounting principles.
   3.  Moneys in the fund are appropriated to the division of soil conservation and water quality of the department of agriculture and land stewardship for the exclusive purpose of supporting water quality agriculture infrastructure programs created in section 466B.43.
   4.  Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of a fiscal year shall not revert but shall remain available for expenditure for the purposes designated. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund.
   Sec. 2.  NEW SECTION.  16.140  Water quality protection and wastewater treatment grant program —— fund.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Clean Water Act” means the same as defined in section 16.131A. 
   b.  “Eligible entity” means either of the following:
   (1)  An entity engaged in an industry identified in the Iowa nutrient reduction strategy, as determined by the authority, which industry is or will be required pursuant to the Iowa nutrient reduction strategy to collect data on the source, concentration, and mass of total nitrogen or total phosphorus in its effluent, and to evaluate alternatives for reducing the amount of nutrients in its discharge. 
   (2)  An entity implementing technology or operational improvements to reduce nutrients in its discharge.
   c.  “Iowa nutrient reduction strategy” means a water quality initiative developed and updated by the department of agriculture and land stewardship, the department of natural resources, and the college of agriculture and life sciences at Iowa state university of science and technology in order to assess and reduce nutrients in this state’s watersheds that utilizes a pragmatic, strategic, and coordinated approach with the goal of accomplishing reductions over time.
   d.  “Municipality” means a city or a rural water district or association empowered by law to provide sewage collection and treatment services or drinking water, or a public utility as defined in section 476.1.
   e.  “Program” means the water quality protection and wastewater treatment grant program created in this section. 
   f.  “Safe Drinking Water Act” means the same as defined in section 16.131A. 
   g.  “Source water protection project” means a project or activity designed to prevent pollutants from entering public drinking water sources.
   h.  “Wastewater infrastructure improvement” includes the acquisition, construction, reconstruction, extension, equipping, improvement, or rehabilitation of any works or facilities useful for the collection, treatment, and disposal of sewage or industrial waste in a sanitary manner, including treatment works as defined in section 212 of the Clean Water Act, and including the implementation and development of sponsor projects under section 455B.199.
   i.  “Water infrastructure improvement” includes the acquisition, construction, reconstruction, extending, remodeling, improving, repairing, or equipping of waterworks, water mains, extensions, or treatment facilities useful for providing potable water to residents served by a water system, including the acquisition of real property needed for such purposes, and such other purposes and programs as may be authorized under the Safe Drinking Water Act. “Water infrastructure improvement” does not include the acquisition of real property through the use of eminent domain.
   2.  The Iowa finance authority shall establish and administer a water quality protection and wastewater treatment grant program for the purpose of providing financial assistance in the form of grants to enhance water quality, upgrade water and wastewater infrastructure, and to implement the Iowa nutrient reduction strategy. The program shall be administered in accordance with rules adopted by the authority pursuant to chapter 17A.
   3.  a.  A water quality protection and wastewater treatment grant fund is created in the state treasury and shall consist of appropriations made to the fund, transfers of interest, earnings, moneys from other funds as provided by law, and moneys accepted by the authority for deposit in the fund from other public or private sources. Moneys credited or transferred to the fund pursuant to section 16.198 are appropriated to the authority for purposes of the program. Moneys in the fund shall be used exclusively for purposes of the program. 
   b.  Notwithstanding section 8.33, moneys in the fund that remain unencumbered or unobligated at the close of a fiscal year shall not revert but shall remain available for expenditure for the purposes designated. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund. 
   4.  Grants may be awarded under the program for any of the following:
   a.  To a municipality or an eligible entity participating in a nutrient reduction exchange, for the purpose of purchasing nutrient reduction credits or for implementing water quality practices as described in the Iowa nutrient reduction strategy. For purposes of this paragraph, “nutrient reduction credit” and “nutrient reduction exchange” both mean the same as defined in section 16.206, section 1, paragraph “d”.
   b.  To a municipality or an eligible entity for up to fifty percent of the costs associated with conducting economic and technical feasibility studies or developing implementation plans and reports required by the Iowa nutrient reduction strategy. 
   c.  To a municipality for a source water protection project. 
   d.  To a municipality or an eligible entity for water infrastructure improvements or for wastewater infrastructure improvements.
   5.  Priority for grants shall be given to projects or activities that will provide improvement to water quality in the relevant watershed.
   6.  Priority for grants shall be given to projects or activities that also have private financing, or financing pursuant to section 16.131 under the water pollution control works and drinking water facilities financing program created pursuant to section 455B.294, or other federal or state financing. 
   7.  Priority for grants shall be given to projects or activities that are part of a project receiving financing under the water quality project financial assistance program under sections 16.201 through 16.206.
   8.  Grants awarded under the program shall not exceed five hundred thousand dollars per recipient.
   9.  By October 1 of each year, the authority shall submit a report to the governor and the general assembly itemizing expenditures under the program during the previous fiscal year, if any.
   10.  a.  Beginning September 1, 2027, and every ten years thereafter, a program review committee is established for purposes of reviewing the program. By December 1 of the same year, the review committee shall file a report with the governor and the general assembly that reviews the effectiveness of the program during the previous ten fiscal years.
   b.  The program review committee shall consist of the following members:
   (1)  The governor or the governor’s designee.
   (2)  The secretary of agriculture or the secretary’s designee.
   (3)  The executive director of the authority or the executive director’s designee.
   (4)  The director of the department of natural resources or the director’s designee.
   (5)  Four members of the general assembly, with two from the senate and two from the house of representatives and not more than one member from each chamber being from the same political party. The two senators shall be designated one member each by the president of the senate, after consultation with the majority leader of the senate, and by the minority leader of the senate. The two representatives shall be designated one member each by the speaker of the house of representatives, after consultation with the majority leader of the house of representatives, and by the minority leader of the house of representatives.
   c.  Staffing services shall be provided by the authority.
   Sec. 3.  NEW SECTION.  16.198  Water quality financial assistance fund.
   1.  A water quality financial assistance fund is created in the state treasury.
   2.  The fund shall consist of all of the following:
   a.  (1)  Moneys transferred to the fund pursuant to section 423G.6.
   (2)  This paragraph “a” is repealed upon the date on which chapter 423G is repealed pursuant to section 423G.7.
   b.  Appropriations made to the fund and transfers of interest, earnings, and moneys from other funds as provided by law.
   3.  For each fiscal year in the period beginning July 1, 2018, and ending when chapter 423G is repealed pursuant to section 423G.7, there is appropriated the following amounts of the balance of the fund for the following purposes:
   a.  One-sixth of the balance of the fund to the Iowa finance authority to be credited to the water quality protection and wastewater treatment grant fund created pursuant to section 16.140, subsection 3.
   b.  Five-sixths of the balance of the fund to the Iowa finance authority to be credited to the water quality project financial assistance fund created pursuant to section 16.204.
   4.  Moneys in the fund are not subject to section 8.33. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund.
   Sec. 4.  NEW SECTION.  16.201  Definitions.
   As used in this part, unless the context otherwise requires:
   1.  “Committee” means the water quality project financing committee created in section 16.205, subsection 4.
   2.  “Eligible entity” means a financing entity meeting the requirements of section 16.206, as determined by the committee.
   3.  “Financing entity” means two or more persons that have entered into an agreement for purposes of joint financing of a project under the program. A financing entity may include but is not limited to a governmental body such as a state agency or a political subdivision of the state, a city or a city utility, a public utility as defined in section 476.1 that furnishes drinking water, sanitary sewage, or storm water services to the public for compensation, a county, a rural water district or association, a soil and water conservation district, a sanitary district, a subdistrict of any of the foregoing districts, a governmental body or corporation empowered to provide sewage collection and treatment services or drinking water, an entity jointly exercising governmental powers pursuant to chapter 28E or 28F, or any other combination of two or more public agencies or private agencies as defined in section 28E.2, acting jointly under Iowa law in connection with a project.
   4.  “Iowa nutrient reduction strategy” means a water quality initiative developed and updated by the department of agriculture and land stewardship, the department of natural resources, and the college of agriculture and life sciences at Iowa state university of science and technology in order to assess and reduce nutrients in this state’s watersheds that utilizes a pragmatic, strategic, and coordinated approach with the goal of accomplishing reductions over time.
   5.  “Loan recipient” means an eligible entity that has received a loan under the program.
   6.  “Program” means the water quality project financial assistance program created in this part.
   7.  “Project” means any combination of works, facilities, improvements, structures, developments, tasks, activities, constructions, modifications, operations, or practices designed to improve water quality or water resource management that are proposed by an eligible entity and approved by the committee. “Project” includes but is not limited to the following:
   a.  A project meeting the requirements of part 2 of this subchapter.
   b.  A project, operation, or practice undertaken or carried out pursuant to chapter 161A, 161C, 161E, or 161F.
   c.  A project meeting the requirements of a sponsor project under section 455B.199.
   d.  Other water resource restoration projects as defined in section 384.80, including ones financed pursuant to section 28F.1.
   e.  An agricultural nonpoint source project eligible for a water quality agriculture infrastructure program under section 466B.43.
   8.  “Revolving fund” means the fund created in section 16.204. 
   Sec. 5.  NEW SECTION.  16.202  Water quality project financial assistance program —— funding —— bonds and notes.
   1.  The authority shall cooperate with the department of natural resources and the department of agriculture and land stewardship in the creation, administration, and financing of the program established in this part.
   2.  The authority may issue its bonds and notes until June 30, 2042, for the purposes of this part, including for the purposes of funding the program established under section 16.205 and of funding any fund or account created under section 16.204.
   3.  The authority may enter into one or more loan agreements or purchase agreements with one or more bondholders or noteholders containing the terms and conditions of the repayment of and the security for the bonds or notes. The authority and the bondholders or noteholders or a trustee agent designated by the authority may enter into agreements to provide for any of the following:
   a.  That the proceeds of the bonds and notes and the investments of the proceeds may be received, held, and disbursed by the authority or by a trustee or agent designated by the authority.
   b.  That the bondholders or noteholders or a trustee or agent designated by the authority may collect, invest, and apply the amount payable under the loan agreements or any other instruments securing the debt obligations under the loan agreements.
   c.  That the bondholders or noteholders may enforce the remedies provided in the loan agreements or other instruments on their own behalf without the appointment or designation of a trustee. If there is a default in the principal of or interest on the bonds or notes or in the performance of any agreement contained in the loan agreements or other instruments, the payment or performance may be enforced in accordance with the loan agreement or other instrument.
   d.  Other terms and conditions as deemed necessary or appropriate by the authority.
   4.  The powers granted the authority under this section are in addition to other powers contained in this chapter. All other provisions of this chapter, except section 16.28, subsection 4, apply to bonds or notes issued and powers granted to the authority under this section except to the extent they are inconsistent with this section.
   5.  All bonds or notes issued by the authority in connection with the program are exempt from taxation by this state and the interest on the bonds or notes is exempt from state income tax.
   Sec. 6.  NEW SECTION.  16.203  Security —— reserve funds —— pledges —— nonliability —— irrevocable contracts.
   1.  The authority may provide in the resolution, trust agreement, or other instrument authorizing the issuance of its bonds or notes pursuant to section 16.202 that the principal of, premium, and interest on the bonds or notes are payable from any of the following and may pledge the same to its bonds and notes:
   a.  The income and receipts or other moneys derived from the projects financed with the proceeds of the bonds or notes.
   b.  The income and receipts or other moneys derived from designated projects whether or not the projects are financed in whole or in part with the proceeds of the bonds or notes.
   c.  The amounts on deposit in the revolving fund.
   d.  The amounts payable to the authority by eligible entities pursuant to loan agreements with eligible entities.
   e.  Any other funds or accounts established by the authority in connection with the program or the sale and issuance of its bonds or notes.
   2.  The authority may establish reserve funds to secure one or more issues of its bonds or notes. The authority may deposit in a reserve fund established under this subsection the proceeds of the sale of its bonds or notes and other moneys that are made available from any other source.
   3.  It is the intention of the general assembly that a pledge made in respect of bonds or notes issued under this part shall be valid and binding from the time the pledge is made, that the moneys or property so pledged and received after the pledge by the authority shall immediately be subject to the lien of the pledge without physical delivery or further act, and that the lien of the pledge shall be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the authority whether or not the parties have notice of the lien. Neither the resolution, trust agreement, nor any other instrument by which a pledge is created needs to be recorded or filed under the Iowa uniform commercial code, chapter 554, to be valid, binding, or effective against the parties.
   4.  Neither the members of the authority nor persons executing the bonds or notes are liable personally on the bonds or notes or are subject to personal liability or accountability by reason of the issuance of the bonds or notes.
   5.  The bonds or notes issued by the authority are not an indebtedness or other liability of the state or of a political subdivision of the state within the meaning of any constitutional or statutory debt limitations but are special obligations of the authority, and are payable solely from the income and receipts or other funds or property of the authority, and the amounts on deposit in the revolving fund, and the amounts payable to the authority under its loan agreements with eligible entities to the extent that the amounts are designated in the resolution, trust agreement, or other instrument of the authority authorizing the issuance of the bonds or notes as being available as security for such bonds or notes. The authority shall not pledge the faith or credit of the state or of a political subdivision of the state to the payment of any bonds or notes. The issuance of any bonds or notes by the authority does not directly, indirectly, or contingently obligate the state or a political subdivision of the state to apply moneys from, or levy or pledge any form of taxation whatever to, the payment of the bonds or notes.
   6.  It is the intent of the general assembly, and the state hereby pledges to the holders of bonds or notes issued under this part, that the state will not limit or alter the rights and powers vested in the authority to fulfill the terms of a contract made by the authority with respect to the bonds or notes, or in any way impair the rights and remedies of the holders until the bonds or notes, together with the interest on the bonds or notes, including interest on unpaid installments of interest, and all costs and expenses in connection with an action or proceeding by or on behalf of the holders, are fully met and discharged. The authority is authorized to include this pledge and agreement of the state, as it refers to holders of bonds or notes of the authority, in a contract with the holders.
   Sec. 7.  NEW SECTION.  16.204  Water quality project financial assistance fund —— other funds and accounts.
   1.  a.  A water quality project financial assistance fund is created in the state treasury and shall consist of appropriations made to the fund, moneys credited or transferred to the fund pursuant to section 16.198, and transfers of interest, earnings, and moneys from other funds as provided by law. The fund shall be administered by the authority as a revolving fund.
   b.  Moneys in the fund are not subject to section 8.33. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys in the fund shall be credited to the fund. 
   c.  The authority shall use the moneys in the fund to provide financial assistance to eligible entities under the program pursuant to section 16.205. 
   d.  The authority may use an amount of not more than one percent of the moneys in the fund for administrative purposes.
   2.  The authority may establish and maintain other funds and accounts determined to be necessary to carry out the purposes of the program and shall provide for the funding, administration, investment, restrictions, and disposition of the funds and accounts. 
   3.  Moneys appropriated to and used by the authority for purposes of paying the costs and expenses associated with the administration of the program shall be administered as determined by the authority.
   4.  The funds or accounts held by the authority, or a trustee acting on behalf of the authority pursuant to a trust agreement related to the program, shall not be considered part of the general fund of the state, are not subject to appropriation for any other purpose by the general assembly, and in determining a general fund balance shall not be included in the general fund of the state, but shall remain in the funds and accounts maintained by the authority or trustee pursuant to a trust agreement. Funds and accounts held by the authority, or a trustee acting on behalf of the authority pursuant to a trust agreement related to the program, are separate dedicated funds and accounts under the administration and control of the authority and subject to section 16.31.
   Sec. 8.  NEW SECTION.  16.205  Water quality project financial assistance program —— committee created —— rules —— use of funds.
   1.  The authority, in cooperation with the department of natural resources and the department of agriculture and land stewardship, shall establish and administer a water quality project financial assistance program. The purpose of the program shall be to provide financial assistance to enhance the quality of surface water and groundwater, particularly by providing financial assistance for projects designed to improve water quality through collaboration between point and nonpoint sources. The authority may provide financial assistance in the form deemed most convenient for the efficient financing of projects, including loans, forgivable loans, and grants. However, the authority shall administer the fund and the program in such a manner as to provide a permanent source of water quality project financial assistance to eligible entities.
   2.  The program shall be administered by the authority in accordance with rules adopted by the authority pursuant to chapter 17A. In adopting such rules, the authority shall consult with the department of natural resources and the department of agriculture and land stewardship.
   3.  The authority shall process and review financial assistance applications and make recommendations to the committee. 
   4.  a.  A water quality project financing committee is created to consider applications for financial assistance from eligible entities and approve awards of financial assistance under the program. The committee shall consist of three members, one appointed by the executive director of the authority, one appointed by the director of the department of natural resources, and one appointed by the secretary of agriculture.
   b.  The committee shall review project plans submitted pursuant to section 16.206, negotiate project details with eligible entities, and make financial assistance awards. The provision of financial assistance under the program shall take into account the number of persons comprising an eligible entity and the eligible entity’s financing capacity as well as the extent to which the proposed projects will improve water quality. 
   c.  The committee shall score applications for financial assistance according to rules adopted pursuant to this part. The committee shall only provide financial assistance to eligible entities that have sufficient financing capacity and that propose a plan likely to make progress toward achieving the goals for agricultural and nonpoint sources described in the Iowa nutrient reduction strategy.
   5.  The authority shall determine the interest rate and repayment terms for loans made under the program, in cooperation with the department of natural resources and the department of agriculture and land stewardship, and the authority shall enter into loan agreements with eligible entities in compliance with and subject to the terms and conditions of the program.
   6.  The authority shall adopt rules relating to the proportional liability, if any, of members of an eligible entity when such eligible entity enters into a loan agreement under the program.
   7.  The authority may charge loan recipients fees and assess costs against such recipients necessary for the continued operation of the program. Such fees and costs shall not exceed the costs directly associated with the administration of the program. Fees and costs collected pursuant to this subsection shall be deposited in the appropriate fund or account created in section 16.204.
   8.  Financial assistance under the program shall be used by eligible entities to fund projects designed to improve water quality.
   9.  Notwithstanding any other provision in this part to the contrary, beginning on July 1, 2018, the authority may use any amount available to support the water quality project financial assistance program to instead extend and support the three-year data collection of in-field agricultural practices project as enacted in 2015 Iowa Acts, ch. 132, §18.
   Sec. 9.  NEW SECTION.  16.206  Eligible entities —— project plans —— agreements required.
   1.  A financing entity may apply to the authority for financial assistance under the program. To be eligible, a financing entity shall meet the following requirements:
   a.  The financing entity shall include two or more entities acting jointly to propose a project plan designed to improve water quality in a local area or watershed.
   b.  The plan shall include one or more projects that substantially improve water quality in the local area or watershed. Preference shall be given to projects that will have the greatest impact on achieving the goals of the Iowa nutrient reduction strategy, and plans designed to achieve those goals shall be presumed to substantially improve water quality in the local area or watershed.
   c.  The plan shall describe in detail the manner in which the projects will be financed and undertaken, including the sources of financing for the projects as well as the public or private entities that will be receiving the revenues and how such revenues will be spent on the projects. In describing the projects and financing, the plan should attempt to quantify the amount of nutrient reduction to be achieved under the plan and should provide a reasonable means for verification of the amount of nutrient reduction after the projects have been financed and completed. Preference shall be given to a financing entity that has had its plan evaluated by the Iowa nutrient research center established in section 466B.47. Preference shall also be given to a financing entity that has contracted with the Iowa nutrient research center to verify the amount of nutrient reduction achieved by the project upon project completion. 
   d.  (1)  The plan may include a nutrient reduction exchange between two or more members of the financing entity. A plan that includes a nutrient reduction exchange shall be presumed to substantially improve water quality in the local area or watershed.
   (2)  For purposes of this paragraph: 
   (a)  “Nutrient reduction” means a reduction in nitrogen or phosphorus as measured against standards or goals established or adopted by the committee. 
   (b)  “Nutrient reduction credit” means an amount of nutrient reduction expressed as a unit of measurement that is calculated using research-based modeling or other methods established or adopted by the committee. 
   (c)  “Nutrient reduction exchange” means an agreement between one or more point source or nonpoint source contributors and one or more other parties whereby nutrient reduction credits are purchased, sold, traded, or exchanged for legal consideration through a trading system approved by the department of natural resources and approved in an Act of the general assembly.
   2.  Any eligible entity receiving financial assistance under the program shall enter into an agreement with the authority. The agreement shall include standard terms for the receipt of program funds and any other terms the authority deems necessary and convenient for the efficient administration of the program.
   Sec. 10.  Section 28F.1, subsection 1, Code 2017, is amended to read as follows:
   1.  This chapter provides a means for the joint financing by public agencies of works or facilities useful and necessary for the collection, treatment, purification, and disposal in a sanitary manner of liquid and solid waste, sewage, and industrial waste, facilities used for the conversion of solid waste to energy, facilities, improvements, or projects in a watershed useful for flood control, erosion control, or water quality restoration by a water utility, wastewater utility, or storm water utility, whether located within or without the corporate boundaries of a municipal corporation, and also electric power facilities constructed within the state of Iowa, except that hydroelectric power facilities may also be located in the waters and on the dams of or on land adjacent to either side of the Mississippi or Missouri river bordering the state of Iowa, water supply systems, swimming pools or golf courses. This chapter applies to the acquisition, construction, reconstruction, ownership, operation, repair, extension, or improvement of such works or facilities, by a separate administrative or legal entity created pursuant to chapter 28E or chapter 389. When the legal entity created under this chapter is comprised solely of cities, counties, and sanitary districts established under chapter 358, or any combination thereof or any combination of the foregoing with other public agencies, the entity shall be both a corporation and a political subdivision with the name under which it was organized. The legal entity may sue and be sued, contract, acquire and hold real and personal property necessary for corporate purposes, adopt a corporate seal and alter the seal at pleasure, and execute all the powers conferred in this chapter.  This section shall not be construed or interpreted to create or expand the authority to acquire real property through the use of eminent domain.
   Sec. 11.  Section 161A.7, subsection 1, paragraph d, Code 2017, is amended to read as follows:
   d.  To cooperate, or enter into agreements with, and within the limits of appropriations duly made available to it by law, to furnish financial or other aid to any agency, governmental or otherwise, or any owner or occupier of lands within the district, in the carrying on of erosion-control and watershed protection and flood prevention operations, or in the carrying out of projects pursuant to paragraph “q”, within the district, subject to such conditions as the commissioners may deem necessary to advance the purposes of this chapter.
   Sec. 12.  Section 161A.7, subsection 1, Code 2017, is amended by adding the following new paragraphs:
   NEW PARAGRAPH.  p.  To apply for financial assistance under the water quality project financial assistance program under sections 16.201 through 16.206.
   NEW PARAGRAPH.  q.  To carry out soil erosion control, watershed protection or improvement, flood prevention, and water quality protection projects and operations within the district, including but not limited to projects and operations to support water protection practices, to protect this state’s groundwater and surface water from point and nonpoint sources of pollution, including but not limited to pollution by agricultural drainage wells, sinkholes, sedimentation, or chemical pollutants, to reduce or remove nutrients and pollution in or from surface water and groundwater, to reduce or eliminate nutrient loads to surface water and groundwater from both point and nonpoint sources, to maintain, protect, and improve the quality of surface water and groundwater, and to achieve or further any of the goals and targets described in the Iowa nutrient reduction strategy as defined in section 16.201.
   Sec. 13.  Section 161C.1, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  4A.  “Financing entity” means the same as defined in section 16.201.
   Sec. 14.  Section 161C.2, subsection 1, paragraph a, Code 2017, is amended to read as follows:
   a.  Each soil and water conservation district, alone and whenever practical in conjunction with other districts, shall financing entities, or political subdivisions of the state, or other local agencies, may carry out district-wide and multiple-district projects to support soil erosion control, water resource restoration projects, watershed protection, flood prevention, and water quality protection practices, projects, and operations in the district or districts, including but not limited to projects carried out in order to protect this state’s groundwater and surface water from point and nonpoint sources of contamination pollution, including but not limited to contamination pollution by agricultural drainage wells, sinkholes, sedimentation, or chemical pollutants, as described in the Iowa nutrient reduction strategy as defined in section 16.201.
   Sec. 15.  Section 161C.3, Code 2017, is amended to read as follows:
   161C.3  Cooperation with other agencies.
   Soil and water conservation districts may enter into agreements with the United States, as provided by state law, or with the state of Iowa or any agency of the state, any other soil and water conservation district, or other political subdivision of this state, or any financing entity, or other local agency, for cooperation in preventing, controlling, or attempting to prevent or control contamination pollution of groundwater or surface water by point and nonpoint sources of pollution. Soil and water conservation districts may accept, as provided by state law, any money disbursed for water quality preservation purposes by the federal government or any agency of the federal government, and expend the money for the purposes for which it was received.
   Sec. 16.  Section 161E.1, Code 2017, is amended to read as follows:
   161E.1  Authority of board.
   1.  If a county, soil and water conservation district, subdistrict of a soil and water conservation district, financing entity, or political subdivision of the state, or other local agency engages or participates in or carries out a project for flood or soil erosion control, a water resource restoration project, watershed protection or improvement project, flood prevention, water quality protection project or operation, including but not limited to a project or operation described in the Iowa nutrient reduction strategy as defined in section 16.201, within a county, or engages or participates in the conservation, development, utilization, and disposal of water, in cooperation with the federal government, or a department or agency of the federal government, in cooperation with other districts, subdistricts, financing entities, political subdivisions, or other local agencies, the counties in which the project is carried on may, through the board of supervisors or through an intergovernmental agreement under chapter 28E or chapter 28F, construct, operate, and maintain the project on lands under the control or jurisdiction of the county dedicated to county use, or furnish financial and other assistance in connection with the projects or operations. Flood control, soil erosion control, watershed protection projects, flood prevention, water quality improvement projects, water resource restoration projects, and watershed improvement projects and operations, including but not limited to projects or operations described in the Iowa nutrient reduction strategy as defined in section 16.201, are presumed to be for the protection of the tax base of the county, for the protection of public roads and lands, and for the protection of the public health, sanitation, safety, and general welfare.
   2.  For purposes of this chapter, “financing entity” means the same as defined in section 16.201.
   Sec. 17.  Section 161E.2, Code 2017, is amended to read as follows:
   161E.2  Federal aid.
   A county may, in accordance with this chapter, accept federal funds for aid in a project for flood or soil erosion control, flood prevention, or the conservation, development, utilization, and disposal of water, and may cooperate with the federal government or a department or agency of the federal government, a soil and water conservation district, subdistrict of a soil and water conservation district, political subdivision of the state, or other local agency, or a financing entity, and the county may assume a proportion of the cost of the project as deemed appropriate, and may assume the maintenance cost of the project on lands under the control or jurisdiction of the county which will not be discharged by federal aid or grant.
   Sec. 18.  Section 161E.3, Code 2017, is amended to read as follows:
   161E.3  Cooperation.
   The counties, soil and water conservation districts, and subdistricts of soil and water conservation districts concerned, shall advise and consult with each other, upon the request of any of them or any affected landowners, and may cooperate with each other or with other state subdivisions or instrumentalities, and affected landowners, as well as with the federal government or a department or agency of the federal government, or a financing entity or other local agency, to construct, operate, and maintain suitable projects for flood or soil erosion control, water resource restoration projects, watershed protection or improvement projects, flood prevention, water quality protection or improvement projects, or the conservation, development, utilization, and disposal of water on public roads or other public lands or other land granted county use.
   Sec. 19.  Section 161E.5, Code 2017, is amended to read as follows:
   161E.5  Maintenance cost.
   If construction of projects has been completed by the soil and water conservation district, subdistricts of soil and water conservation districts, political subdivisions of the state, or other local agencies, or the federal government, or a department or agency of the federal government, or a financing entity on private lands under the easement granted to the county, only the cost of maintenance may be assumed by the county.
   Sec. 20.  Section 161E.9, Code 2017, is amended to read as follows:
   161E.9  Tax levy.
   The county board of supervisors may annually levy a tax not to exceed six and three-fourths cents per thousand dollars of assessed value of all agricultural lands in the county, to be used for flood and soil erosion control, water resource restoration projects, watershed protection or improvement projects, flood prevention and water quality protection projects and operations within a county, including but not limited to projects or operations described in the Iowa nutrient reduction strategy as defined in section 16.201, and including acquisition of land or interests in land, and repair, alteration, maintenance, and operation of works of improvement on lands under the control or jurisdiction of the county as provided in this chapter, or to furnish financial assistance in connection with such projects and operations.
   Sec. 21.  Section 161E.10, Code 2017, is amended to read as follows:
   161E.10  Assumption of obligations.
   This chapter contemplates that actual direction of the project, or projects, and the actual work done in connection with them the projects, will be assumed by the soil and water conservation district, a subdistrict of a soil and water conservation district, or the federal government, and that the county or other state subdivisions or instrumentalities or financing entities jointly will meet the obligation required for federal cooperation and may make proper commitment for the care and maintenance of the project after its completion for the general welfare of the public and residents of the respective counties.
   Sec. 22.  Section 161F.1, Code 2017, is amended to read as follows:
   161F.1  Presumption of benefit —— definitions.
   1.  The conservation of the soil resources of the state of Iowa, the improvement of water quality through projects, the proper control of water resources of the state and the prevention of damage to property and lands through the control of floods, the drainage of surface waters or the protection of lands from overflow shall be presumed to be a public benefit and conducive to the public health, convenience and welfare and essential to the economic well-being of the state.
   2.  For purposes of this chapter, “financing entity” and “project” both mean the same as defined in section 16.201.
   Sec. 23.  Section 161F.2, Code 2017, is amended to read as follows:
   161F.2  Board of supervisors to establish districts —— strip coal mining.
   1.  The board of supervisors of any county shall have jurisdiction, power and authority at any regular, special or adjourned session to establish, subject to the provisions of this chapter, districts having for their purpose soil conservation and the control of flood waters, or the improvement of water quality, and to cause to be constructed as hereinafter provided, such improvements, projects, and facilities as shall be deemed essential for the accomplishment of the purpose of soil conservation and flood control, or of water quality improvement.
   2.  Such The board of supervisors shall also have jurisdiction, power, and authority at any regular, special, or adjourned session to establish, in the same manner that the districts hereinabove referred to in subsection 1 are established, districts having for their purpose soil conservation in mining areas within the county, and provide that anyone engaged in removing the surface soil over any bed or strata of coal in such district for the purpose of obtaining such coal shall replace the surface soil as nearly as practicable to its original position, and provide that, upon abandonment of such removal operation, all surface soil shall be so replaced. This section subsection shall apply only to surface soil so removed after July 4, 1949, and then only if it is essential for the accomplishment of the purpose of soil conservation and flood control within the purview of this chapter.
   Sec. 24.  Section 161F.3, Code 2017, is amended to read as follows:
   161F.3  Combination of functions.
   Such districts shall have the power to combine in their functions activities affecting soil conservation, flood control and drainage, water quality improvement, or any of these objects, singly or in combination with another district or financing entity under the provisions of an intergovernmental agreement pursuant to chapter 28E or 28F.
   Sec. 25.  Section 161F.6, subsection 1, Code 2017, is amended to read as follows:
   1.  In the organization, operation, and financing of districts established under this chapter, the provisions of chapter 468 shall apply and any procedure provided under chapter 468 in connection with the organization, financing, and operation of any drainage district shall apply to the organization, financing, and operation of districts organized under this chapter.  However, a district established under this chapter shall not be considered a drainage district established pursuant to chapter 468.
   Sec. 26.  Section 384.80, subsection 15, Code 2017, is amended to read as follows:
   15.  “Water resource restoration project” means the acquisition of real property or improvements, a project as defined in section 16.201, or any other activity or undertaking that will assist in improving flood control, erosion control, or the quality of the water in the watershed where a city water, storm water, or wastewater utility is located.
   Sec. 27.  Section 384.84, subsection 2, Code 2017, is amended to read as follows:
   2.  The governing body of a city water or wastewater utility may enter into an agreement with a qualified entity to use proceeds from revenue bonds for a water resource restoration project if the rate imposed is no greater than if there was not a water resource restoration project agreement. For purposes of this subsection, “qualified entity” is an entity created pursuant to chapter 28E or chapter 28F or two entities that have entered into an agreement pursuant to chapter 28E or chapter 28F, whose purpose is to undertake a watershed project that has been approved for water quality improvements in the watershed.
   Sec. 28.  Section 422.7, subsection 2, Code 2017, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0h.  Iowa finance authority water quality project financial assistance program bonds or notes pursuant to section 16.202, subsection 5.
   Sec. 29.  Section 423.3, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  103.  a.  The sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users. 
   b.  For purposes of this subsection: 
   (1)  “Water service” means the delivery of water by piped distribution system.
   (2)  “Water utility” means a public utility as defined in section 476.1 that furnishes water by piped distribution system to the public for compensation.
   Sec. 30.  NEW SECTION.  423G.1  Short title.
   This chapter may be cited as the “Water Service Tax Act”.
   Sec. 31.  NEW SECTION.  423G.2  Definitions.
   1.  All words and phrases used in this chapter and defined in section 423.1 have the same meaning given them by section 423.1 for purposes of this chapter. 
   2.  As used in this chapter, “water service” and “water utility” mean the same as defined in section 423.3, subsection 103. 
   Sec. 32.  NEW SECTION.  423G.3  Water service tax. 
   An excise tax at the rate of six percent is imposed on the sales price from the sale or furnishing by a water utility of a water service in the state to consumers or users.
   Sec. 33.  NEW SECTION.  423G.4  Exemptions.
   The sales price from transactions exempt from state sales tax under section 423.3, except section 423.3, subsection 103, is also exempt from the tax imposed by this chapter.
   Sec. 34.  NEW SECTION.  423G.5  Administration by director.
   1.  The director of revenue shall administer the state water service tax as nearly as possible in conjunction with the administration of the state sales and use tax law, except that portion of the law that implements the streamlined sales and use tax agreement. The director shall provide appropriate forms, or provide on the regular state tax forms, for reporting state water service tax liability.
   2.  The director may require all persons who are engaged in the business of deriving any sales price or purchase price subject to tax under this chapter to register with the department. The director may also require a tax permit applicable only to this chapter for any retailer not collecting, or any user not paying, taxes under chapter 423.
   3.  Section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 1, and sections 423.23, 423.24, 423.25, 423.31 through 423.35, 423.37 through 423.42, and 423.47, consistent with the provisions of this chapter, shall apply with respect to the tax authorized under this chapter in the same manner and with the same effect as if the excise taxes on the sale or furnishing of a water service were retail sales taxes within the meaning of those statutes. Notwithstanding this subsection, the director shall provide for quarterly filing of returns and for other than quarterly filing of returns both as prescribed in section 423.31. All taxes collected under this chapter by a retailer or any user are deemed to be held in trust for the state of Iowa.
   Sec. 35.  NEW SECTION.  423G.6  Deposit of revenues.
   1.  All moneys received and all refunds shall be deposited in or withdrawn from the general fund of the state.
   2.  Subsequent to the deposit in the general fund of the state, the department shall transfer the following amounts of revenues collected as follows:
   a.  For revenues collected on or after July 1, 2018, but before August 1, 2019, one-sixth of the revenues to the water quality infrastructure fund created in section 8.57B, and one-sixth of the revenues to the water quality financial assistance fund created in section 16.198.
   b.  For revenues collected on or after August 1, 2019, but before August 1, 2020, one-sixth of the revenues to the water quality infrastructure fund created in section 8.57B, and one-third of the revenues to the water quality financial assistance fund created in section 16.198.
   c.  For revenues collected on or after August 1, 2020, but before August 1, 2021, one-sixth of the revenues to the water quality infrastructure fund created in section 8.57B, and one-half of the revenues to the water quality financial assistance fund created in section 16.198.
   d.  For revenues collected on or after August 1, 2021, but before August 1, 2022, one-sixth of the revenues to the water quality infrastructure fund created in section 8.57B, and two-thirds of the revenues to the water quality financial assistance fund created in section 16.198.
   e.  For revenues collected on or after August 1, 2022, one-sixth of the revenues to the water quality infrastructure fund created in section 8.57B, and five-sixths of the revenues to the water quality financial assistance fund created in section 16.198.
   Sec. 36.  NEW SECTION.  423G.7  Future repeal.
   This chapter is repealed on the date on which all bonds, notes, or other debt instruments issued on or before June 30, 2042, pursuant to section 16.202, are fully paid. The executive director of the Iowa finance authority shall notify the Iowa Code editor upon the occurrence of this condition.
   Sec. 37.  Section 455B.171, subsection 19, Code 2017, is amended to read as follows:
   19.  “Point source” means any discernible, confined, and discrete conveyance, including but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation, or vessel or other floating craft, from which pollutants are or may be discharged.  “Point source” does not include agricultural storm water discharges and return flows from irrigated agriculture.
   Sec. 38.  Section 455B.176A, subsection 1, Code 2017, is amended by adding the following new paragraphs:
   NEW PARAGRAPH.  0d.  “Iowa nutrient reduction strategy” means the same as defined in section 16.201.
   NEW PARAGRAPH.  00d.  “Nutrient” means total nitrogen and total phosphorus. 
   Sec. 39.  Section 455B.176A, subsection 5, Code 2017, is amended to read as follows:
   5.  a.  The commission shall adopt rules designating water quality standards which shall be specific to each designated use adopted pursuant to subsection 4. The standards shall take into account the different characteristics of each designated use and shall provide for only the appropriate level of protection based upon that particular use. The standards shall not be identical for each designated use unless required for the appropriate level of protection. The appropriate level of protection and standards shall be determined on a scientific basis.
   b.  In the development process for the water quality standards, input shall be received from a water quality standards advisory committee convened by the department. The water quality standards advisory committee shall be comprised of experts in the scientific fields relating to water quality, such as environmental engineering, aquatic toxicology, fisheries biology, and other life sciences and experts in the development of the appropriate levels of aquatic life protection and standards. The water quality standards shall be reviewed and revised by the department as new scientific data becomes available to support revision.
   c.  The department shall provide support to the department of agriculture and land stewardship in their efforts to implement their responsibilities under the Iowa nutrient reduction strategy.
   Sec. 40.  Section 455B.177, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  3.  The general assembly further finds and declares that it is in the interest of the people of Iowa to assess and reduce nutrients in surface waters over time by implementing the Iowa nutrient reduction strategy, as defined in section 455B.176A. To evaluate the progress achieved over time toward the goals of the Iowa nutrient reduction strategy and the United States environmental protection agency gulf hypoxia action plan, the baseline condition shall be calculated for the time period from 1980 to 1996.
   Sec. 41.  Section 466B.3, subsection 3, paragraph c, Code 2017, is amended to read as follows:
   c.  Whether the funds, programs, and regulatory efforts coordinated by the council eventually result in a long-term improvement to the quality of surface water in Iowa.  To evaluate the progress achieved over time toward the goals of the Iowa nutrient reduction strategy, as defined in section 455B.176A, and the United States environmental protection agency gulf hypoxia action plan, the baseline condition shall be calculated for the time period from 1980 to 1996.
   Sec. 42.  Section 466B.42, Code 2017, is amended to read as follows:
   466B.42  Water quality initiative.
   The division shall establish a water quality initiative in order to assess and reduce nutrients in this state’s watersheds, including subwatersheds, and regional watersheds, and for implementing its responsibilities under the Iowa nutrient reduction strategy as defined in section 455B.176A.  The division shall establish and administer projects to reduce nutrients in surface waters from nonpoint sources in a scientific, reasonable, and cost-effective manner. The division shall utilize a pragmatic, strategic, and coordinated approach with the goal of accomplishing reductions over time.  To evaluate the progress achieved over time toward the goals of the Iowa nutrient reduction strategy and the United States environmental protection agency gulf hypoxia action plan, the baseline condition shall be calculated for the time period from 1980 to 1996.
   Sec. 43.  NEW SECTION.  466B.43  Water quality agriculture infrastructure programs.
   1.  As part of the water quality initiative established pursuant to section 466B.42, the division shall administer water quality agriculture infrastructure programs created in this section.
   2.  a.  The purpose of the programs is to support projects for the installation of infrastructure, including conservation structures, practices, or other measures that reduce contributing nutrient loads, associated sediment, or pollutants from point and nonpoint sources to surface waters. The programs shall be administered in a manner that is consistent with the Iowa nutrient reduction strategy, as defined in section 16.201.
   b.  In making awards of financial assistance under the programs, the division shall attempt to complement the purposes of the water quality project financial assistance program under sections 16.201 through 16.206 and the water quality protection and wastewater treatment grant program under section 16.140. Preference shall be given to landowners that are part of a financing entity participating in the water quality project financial assistance program and to landowners that are participating in the water quality protection and wastewater treatment grant program. The division, the Iowa finance authority, landowners, and financing entities shall, when possible, coordinate financing between the programs created in this section, the water quality project financial assistance program, and the water quality protection and wastewater treatment grant program, in order to promote the most effective use of resources. 
   3.  An edge-of-field infrastructure program is created. The program shall support projects located on agricultural land, which may include demonstration projects, that capture or filter nutrients entering into a surface water. The program’s projects shall be limited to infrastructure designed and installed for use over multiple years, including but not limited to wetlands, bioreactor systems, saturated buffers, edge-of-stream buffers, or land use changes. The program shall be financed on a cost-share basis.
   4.  An in-field infrastructure program is created. The program shall support projects located on agricultural land, which may include demonstration projects, that decrease erosion and precipitation-induced surface runoff, increase water infiltration rates, and increase soil sustainability. The program’s projects shall be limited to infrastructure designed and installed for use over multiple years, including but not limited to structures, terraces, and waterways located on cropland or pastureland, and including but not limited to soil conservation or erosion control structures, managed drainage systems, or edge-of-stream buffers. The program shall be financed on a cost-share basis.
   5.  Any state moneys used to finance a project under a water quality agriculture infrastructure program shall be administered according to an agreement entered into by the division and either the owner of the land where the infrastructure is to be installed or a financing entity participating in the water quality project financial assistance program under sections 16.201 through 16.206. The agreement shall include standard terms and conditions for the receipt of program moneys and any other terms and conditions the division deems necessary or convenient for the efficient administration of the project or program. The division may support multiple installations of infrastructure on a single parcel of land. The division may also combine programs if cost effective. The division may annually use an amount of not more than four percent of the moneys used to support each program for administrative purposes.
   6.  By October 1, 2018, and each October 1, thereafter, the division shall submit a report to the governor and the general assembly itemizing expenditures, by hydrologic unit code 8 watershed, under the programs during the previous fiscal year, if any.
   7.  Any information obtained by the division identifying a person holding a legal interest in agricultural land or specific agricultural land shall be a confidential record under section 22.7.
   Sec. 44.  LEGISLATIVE INTENT.  It is the intent of the general assembly that the amendment in this Act to the definition of “point source” in section 455B.171, subsection 19, is a conforming amendment consistent with current state and federal law, and that the amendment does not change the application of current law but instead reflects current law both before and after the enactment of this Act. 
   Sec. 45.  EFFECTIVE DATE.  The following provision or provisions of this Act take effect July 1, 2018:
   1.  The section of this Act enacting section 423.3, subsection 103.
   2.  The sections of this Act enacting sections 423G.1, 423G.2, 423G.3, 423G.4, 423G.5, 423G.6, and 423G.7.
   Sec. 46.  RETROACTIVE APPLICABILITY.  The following provision or provisions of this Act apply retroactively to January 1, 2017, for tax years beginning on or after that date:
   1.  The section of this Act enacting section 422.7, subsection 2, paragraph “0h”.>
   2.  Title page, by striking lines 1 through 9 and inserting <An Act relating to water quality by providing for appropriations from the rebuild Iowa infrastructure fund, creating a water quality infrastructure fund, establishing new water quality programs, providing for cost-share programs for infrastructure on agricultural land under the water quality initiative, creating a state water service excise tax and a related sales tax exemption, making appropriations and other changes properly related to water quality, and including retroactive applicability provisions.>

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BALTIMORE of Boone