House File 555
HOUSE FILE
BY COMMITTEE ON ECONOMIC GROWTH
(SUCCESSOR TO HSB 189)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to the enterprise zone program, including the
2 provision of tax incentives and other assistance.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. NEW SECTION. 15E.193D OTHER ELIGIBLE
1 2 BUSINESSES.
1 3 1. A business which is not located in an enterprise zone
1 4 is eligible to receive incentives and assistance only as
1 5 provided in this section. Sections 15E.193 and 15E.196 do not
1 6 apply to a business qualifying under this section. A business
1 7 is eligible under this section if the business meets all of
1 8 the following criteria:
1 9 a. Is not a retail business or a business where entrance
1 10 is limited by a cover charge or membership requirement.
1 11 b. Provides all full=time employees with the option of
1 12 choosing one of the following:
1 13 (1) The business pays eighty percent of both of the
1 14 following:
1 15 (a) The cost of a standard medical insurance plan.
1 16 (b) The cost of a standard dental insurance plan or an
1 17 equivalent plan.
1 18 (2) The business provides the employee with a plan that is
1 19 monetarily equivalent to the plan provided for in subparagraph
1 20 (1).
1 21 c. Pays an average wage that is at or greater than the
1 22 greater of the average county wage or average regional wage,
1 23 as determined by the department.
1 24 d. Creates at least twenty=five full=time positions and
1 25 maintains them for at least ten years.
1 26 e. Makes a capital investment of at least two million
1 27 dollars. If the business will be occupying a vacant building
1 28 suitable for industrial use, the fair market value of the
1 29 building and land, not to exceed one million dollars, shall be
1 30 counted toward the capital investment requirement.
1 31 2. a. For purposes of receiving incentives and assistance
1 32 under this section, a business located outside all enterprise
1 33 zones in a city or county meeting the distress criteria
1 34 provided in section 15E.194 shall use the application process
1 35 provided in section 15E.195. If an enterprise zone commission
2 1 has not been established in the city or county, the city or
2 2 county shall establish a commission pursuant to section
2 3 15E.195.
2 4 b. After approval of a project by ordinance or resolution,
2 5 a city or county that does not meet the distress criteria
2 6 provided in section 15E.194 shall submit an application for
2 7 incentives and assistance to the department of economic
2 8 development. As part of the application, the city or county
2 9 shall submit information relating to the requirements listed
2 10 in subsection 1. The department may approve, defer, or deny
2 11 the application.
2 12 3. If a business has received incentives or assistance
2 13 under this section and fails to maintain the requirements of
2 14 subsection 1 to be an eligible business, the business is
2 15 subject to repayment of all or a portion of the incentives and
2 16 assistance that it has received. The department of revenue
2 17 and finance shall have the authority to recover the value of
2 18 state taxes or other incentives provided under this section.
2 19 The value of state incentives provided under this section
2 20 includes applicable interest and penalties. The department of
2 21 economic development and the city or county shall enter into
2 22 agreements with the business specifying the method for
2 23 determining the amount of incentives or assistance paid which
2 24 will be repaid in the event of failure to maintain the
2 25 requirements of subsection 1. In addition, a business that
2 26 fails to maintain the requirements of subsection 1 shall not
2 27 receive incentives or assistance for each year during which
2 28 the business is not in compliance.
2 29 4. In making its decision regarding an application, the
2 30 department of economic development shall consider the impact
2 31 of the eligible business on other businesses in competition
2 32 with it. The department shall make a good=faith effort to
2 33 identify existing Iowa businesses within an industry in
2 34 competition with the business being considered for incentives
2 35 or assistance. The department shall also make a good=faith
3 1 effort to determine the probability that the proposed
3 2 incentives or assistance will displace employees of existing
3 3 businesses. In determining the impact on businesses in
3 4 competition with the business seeking incentives or
3 5 assistance, jobs created as a result of other jobs being
3 6 displaced elsewhere in the state shall not be considered
3 7 direct jobs created.
3 8 However, if the department finds that an eligible business
3 9 has a record of violations of the law, including but not
3 10 limited to environmental and worker safety statutes, rules,
3 11 and regulations, over a period of time that tends to show a
3 12 consistent pattern, the eligible business shall not qualify
3 13 for incentives or assistance under this section, unless the
3 14 department finds that the violations did not seriously affect
3 15 public health or safety or the environment, or if they did,
3 16 that there were mitigating circumstances. In making the
3 17 findings and determinations regarding violations, mitigating
3 18 circumstances, and whether an eligible business is eligible
3 19 for incentives or assistance under this section, the
3 20 department is exempt from chapter 17A. If requested by the
3 21 department, the business shall provide copies of materials
3 22 documenting the types of violations, any fees or penalties
3 23 assessed, court filings, final disposition of any findings,
3 24 and any other information which would assist the department in
3 25 assessing the nature of any violations.
3 26 5. A business that is approved to receive incentives or
3 27 assistance under this section shall, for the length of its
3 28 designation as an enterprise zone business, certify annually
3 29 to the department of economic development its compliance with
3 30 the requirements of this section.
3 31 6. a. For tax years beginning on or after January 1,
3 32 2003, a business that is approved to receive incentives and
3 33 assistance under this section may claim a tax credit up to a
3 34 maximum of five percent of the new investment directly related
3 35 to new jobs created by the location or expansion of an
4 1 eligible business under this section. For purposes of this
4 2 section, "new investment directly related to new jobs created
4 3 by the location or expansion of an eligible business under
4 4 this section" means the cost of machinery and equipment, as
4 5 defined in section 427A.1, subsection 1, paragraphs "e" and
4 6 "j", purchased for use in the operation of the eligible
4 7 business, the purchase price of which has been depreciated in
4 8 accordance with generally accepted accounting principles, and
4 9 the cost of improvements made to real property which is used
4 10 in the operation of the eligible business.
4 11 b. A tax credit under this subsection shall be allowed
4 12 against the tax imposed in chapter 422, divisions II, III, and
4 13 V, and in chapter 432, and against the moneys and credits tax
4 14 imposed in section 533.24. An individual may claim a tax
4 15 credit of a partnership, limited liability company, S
4 16 corporation, estate, or trust electing to have income taxed
4 17 directly to the individual. The amount claimed by the
4 18 individual shall be based upon the pro rata share of the
4 19 individual's earnings from the partnership, limited liability
4 20 company, S corporation, estate, or trust. Any credit in
4 21 excess of the tax liability for the tax year may be credited
4 22 to the tax liability for the following seven years or until
4 23 depleted, whichever occurs earlier.
4 24 c. For purposes of this subsection, the purchase price of
4 25 real property and any buildings and structures located on the
4 26 real property is considered a new investment in the location
4 27 or expansion of an eligible business. However, if within five
4 28 years of purchase, the eligible business sells, disposes of,
4 29 razes, or otherwise renders unusable all or a part of the
4 30 land, buildings, or other existing structures for which a tax
4 31 credit was claimed under this subsection, the tax liability of
4 32 the eligible business for the year in which all or part of the
4 33 property is sold, disposed of, razed, or otherwise rendered
4 34 unusable shall be increased by one of the following amounts:
4 35 (1) One hundred percent of the tax credit claimed under
5 1 this subsection if the property ceases to be eligible for the
5 2 tax credit within one year after being placed in service.
5 3 (2) Eighty percent of the tax credit claimed under this
5 4 subsection if the property ceases to be eligible for the tax
5 5 credit within two years after being placed in service.
5 6 (3) Sixty percent of the tax credit claimed under this
5 7 subsection if the property ceases to be eligible for the tax
5 8 credit within three years after being placed in service.
5 9 (4) Forty percent of the tax credit claimed under this
5 10 subsection if the property ceases to be eligible for the tax
5 11 credit within four years after being placed in service.
5 12 (5) Twenty percent of the tax credit claimed under this
5 13 subsection if the property ceases to be eligible for the tax
5 14 credit within five years after being placed in service.
5 15 Sec. 2. Section 15E.194, Code 2003, is amended by adding
5 16 the following new subsection:
5 17 NEW SUBSECTION. 5. a. As used in this subsection, unless
5 18 the context otherwise requires:
5 19 (1) "Blighted area" means an area of a municipality within
5 20 which the local governing body of the municipality determines
5 21 that the presence of a substantial number of slum,
5 22 deteriorated, or deteriorating structures, insanitary or
5 23 unsafe conditions, diversity of ownership, tax or special
5 24 assessment delinquency exceeding the fair value of the land,
5 25 defective or unusual conditions of title, or the existence of
5 26 conditions which endanger life or property by fire or other
5 27 causes, or any combination of these factors, substantially
5 28 impairs or arrests the sound growth of the municipality,
5 29 retards the provision of housing accommodations, or
5 30 constitutes an economic or social liability and is a menace to
5 31 the public health, safety, or welfare in the area's present
5 32 condition and use. A disaster area referred to in section
5 33 403.5, subsection 7, constitutes a "blighted area". "Blighted
5 34 area" does not include real property assessed as agricultural
5 35 property for purposes of property taxation.
6 1 (2) "High poverty and crime area" means an area of a
6 2 municipality within which the local governing body of the
6 3 municipality determines that the presence of a high poverty
6 4 and unemployment rate, a higher than average number of
6 5 incidences of crime, a higher than average number of drug=
6 6 related incidences of crime, extremely deteriorated physical
6 7 and structural conditions of property, at least fifty percent
6 8 of the structures below local building code requirements, or a
6 9 higher than average number of municipal violations or nuisance
6 10 violations, or any combination of these factors, substantially
6 11 impairs or arrests the sound growth of the municipality,
6 12 retards the provision of housing accommodations, or
6 13 constitutes an economic or social liability, and is a menace
6 14 to the public health, safety, or welfare in the area's present
6 15 condition and use.
6 16 (3) "Slum area" means an area of a municipality within
6 17 which the local governing body of the municipality determines
6 18 that there is a predominance of buildings or improvements,
6 19 whether residential or nonresidential, which by reason of
6 20 dilapidation, deterioration, age, or obsolescence, by reason
6 21 of inadequate provision for ventilation, light, air,
6 22 sanitation, or open spaces, by reason of high density of
6 23 population and overcrowding, by reason of the existence of
6 24 conditions that endanger life or property by fire or other
6 25 causes, or that by any combination of such factors, is
6 26 conducive to ill health, transmission of disease, infant
6 27 mortality, juvenile delinquency, or crime, and which is
6 28 detrimental to the public health, safety, morals, or welfare.
6 29 "Slum area" does not include real property assessed as
6 30 agricultural property for purposes of property taxation.
6 31 b. A city or county may designate all or a portion of a
6 32 certified enterprise zone to be eligible for incentives and
6 33 assistance under section 15E.196, subsection 3, subject to
6 34 certification by the department, when the designated area
6 35 qualifies as a blighted area, a high poverty and crime area,
7 1 or a slum area. A certified enterprise zone shall not contain
7 2 more than one such designated area.
7 3 Sec. 3. Section 15E.195, Code 2003, is amended to read as
7 4 follows:
7 5 15E.195 ENTERPRISE ZONE COMMISSION.
7 6 1. A county which designates an enterprise zone pursuant
7 7 to section 15E.194, subsection 1, and in which an eligible
7 8 enterprise zone is certified shall establish an enterprise
7 9 zone commission to review applications from qualified
7 10 businesses located within or requesting to locate within an
7 11 enterprise zone designated pursuant to section 15E.194,
7 12 subsection 1, to receive incentives or assistance as provided
7 13 in section 15E.196. An enterprise zone commission shall also
7 14 be established, if one does not already exist, for purposes of
7 15 reviewing applications from qualifying businesses under
7 16 section 15E.193D. The enterprise zone commission shall also
7 17 review applications from qualified housing businesses
7 18 requesting to receive incentives or assistance as provided in
7 19 section 15E.193B. The enterprise zone commission shall also
7 20 review applications from qualified development businesses
7 21 requesting to receive incentives or assistance as provided in
7 22 section 15E.193C. The enterprise zone commission shall review
7 23 applications from qualifying businesses requesting to receive
7 24 incentives or assistance as provided in section 15E.193D. The
7 25 commission shall consist of nine members. Five of these
7 26 members shall consist of one representative of the board of
7 27 supervisors, one member with economic development expertise
7 28 chosen by the department of economic development, one
7 29 representative of the county zoning board, one member of the
7 30 local community college board of directors, and one
7 31 representative of the local workforce development center.
7 32 These five members shall select the remaining four members.
7 33 If the enterprise zone consists of an area meeting the
7 34 requirements for eligibility for an urban or rural enterprise
7 35 community under Title XIII of the federal Omnibus Budget
8 1 Reconciliation Act of 1993, one of the remaining four members
8 2 shall be a representative of that community. A county shall
8 3 have only one enterprise zone commission to review
8 4 applications for incentives and assistance for businesses
8 5 located within or requesting to locate within a certified
8 6 enterprise zone designated pursuant to section 15E.194,
8 7 subsection 1.
8 8 2. A city with a population of twenty=four thousand or
8 9 more which designates an enterprise zone pursuant to section
8 10 15E.194, subsection 2, and in which an eligible enterprise
8 11 zone is certified shall establish an enterprise zone
8 12 commission to review applications from qualified businesses
8 13 located within or requesting to locate within an enterprise
8 14 zone to receive incentives or assistance as provided in
8 15 section 15E.196. An enterprise zone commission shall also be
8 16 established, if one does not already exist, for purposes of
8 17 reviewing applications from qualifying businesses under
8 18 section 15E.193D. The enterprise zone commission shall review
8 19 applications from qualified housing businesses requesting to
8 20 receive incentives or assistance as provided in section
8 21 15E.193B. The enterprise zone commission shall also review
8 22 applications from qualified development businesses requesting
8 23 to receive incentives or assistance as provided in section
8 24 15E.193C. The enterprise zone commission shall review
8 25 applications from qualifying businesses requesting to receive
8 26 incentives or assistance as provided in section 15E.193D. The
8 27 commission shall consist of nine members. Six of these
8 28 members shall consist of one representative of an
8 29 international labor organization, one member with economic
8 30 development expertise chosen by the department of economic
8 31 development, one representative of the city council, one
8 32 member of the local community college board of directors, one
8 33 member of the city planning and zoning commission, and one
8 34 representative of the local workforce development center.
8 35 These six members shall select the remaining three members.
9 1 If the enterprise zone consists of an area meeting the
9 2 requirements for eligibility for an urban enterprise community
9 3 under Title XIII of the federal Omnibus Budget Reconciliation
9 4 Act of 1993, one of the remaining three members shall be a
9 5 representative of that community. If a city contiguous to the
9 6 city designating the enterprise zone is included in an
9 7 enterprise zone, a representative of the contiguous city,
9 8 chosen by the city council, shall be a member of the
9 9 commission. A city in which an eligible enterprise zone is
9 10 certified shall have only one enterprise zone commission. If
9 11 a city has established an enterprise zone commission prior to
9 12 July 1, 1998, the city may petition to the department of
9 13 economic development to change the structure of the existing
9 14 commission.
9 15 3. The commission may adopt more stringent requirements,
9 16 including requirements related to compensation and benefits,
9 17 for a business to be eligible for incentives or assistance
9 18 than provided in sections 15E.193, 15E.193B, and 15E.193C, and
9 19 15E.193D. The commission may develop as an additional
9 20 requirement that preference in hiring be given to individuals
9 21 who live within the enterprise zone. The commission shall
9 22 work with the local workforce development center to determine
9 23 the labor availability in the area. The commission shall
9 24 examine and evaluate building codes and zoning in the
9 25 enterprise zone and make recommendations to the appropriate
9 26 governing body in an effort to promote more affordable housing
9 27 development.
9 28 4. If the enterprise zone commission determines that a
9 29 business qualifies and is eligible to receive incentives or
9 30 assistance as provided in section 15E.193B, 15E.193C,
9 31 15E.193D, or 15E.196, the commission shall submit an
9 32 application for incentives or assistance to the department of
9 33 economic development. The department may approve, defer, or
9 34 deny the application.
9 35 5. In making its decision, the commission or department
10 1 shall consider the impact of the eligible business on other
10 2 businesses in competition with it and compare the compensation
10 3 package of businesses in competition with the business being
10 4 considered for incentives or assistance. The commission or
10 5 department shall make a good faith effort to identify existing
10 6 Iowa businesses within an industry in competition with the
10 7 business being considered for incentives or assistance. The
10 8 commission or department shall also make a good faith effort
10 9 to determine the probability that the proposed incentives or
10 10 assistance will displace employees of existing businesses. In
10 11 determining the impact on businesses in competition with the
10 12 business seeking incentives or assistance, jobs created as a
10 13 result of other jobs being displaced elsewhere in the state
10 14 shall not be considered direct jobs created.
10 15 However, if the commission or department finds that an
10 16 eligible business has a record of violations of the law,
10 17 including but not limited to environmental and worker safety
10 18 statutes, rules, and regulations, over a period of time that
10 19 tends to show a consistent pattern, the eligible business
10 20 shall not qualify for incentives or assistance under section
10 21 15E.193B, 15E.193C, 15E.193D, or 15E.196, unless the
10 22 commission or department finds that the violations did not
10 23 seriously affect public health or safety or the environment,
10 24 or if it did that there were mitigating circumstances. In
10 25 making the findings and determinations regarding violations,
10 26 mitigating circumstances, and whether an eligible business is
10 27 eligible for incentives or assistance under section 15E.193B,
10 28 15E.193C, 15E.193D, or 15E.196, the commission or department
10 29 shall be exempt from chapter 17A. If requested by the
10 30 commission or department, the business shall provide copies of
10 31 materials documenting the type of violation, any fees or
10 32 penalties assessed, court filings, final disposition of any
10 33 findings, and any other information which would assist the
10 34 commission or department in assessing the nature of any
10 35 violation.
11 1 6. A business that is approved to receive incentives or
11 2 assistance shall, for the length of its designation as an
11 3 enterprise zone business, certify annually to the county or
11 4 city, as applicable, and the department of economic
11 5 development its compliance with the requirements of section
11 6 15E.193, 15E.193B, or 15E.193C, or 15E.193D.
11 7 Sec. 4. Section 15E.196, Code 2003, is amended to read as
11 8 follows:
11 9 15E.196 INCENTIVES == ASSISTANCE.
11 10 1. For purposes of determining the incentives or
11 11 assistance provided in this section, "eligible business" means
11 12 a business which has been approved to receive incentives and
11 13 assistance by the department of economic development pursuant
11 14 to application as provided in section 15E.195.
11 15 2. The incentives and assistance provided under this
11 16 division subsection for businesses located in enterprise zones
11 17 shall be for a period not to exceed ten years, shall be in
11 18 addition to any incentives and assistance provided in
11 19 subsection 3, and shall include all of the following:
11 20 1. a. (1) New jobs credit from withholding, as provided
11 21 in section 15.331.
11 22 b. (1) (2) (a) As an alternative to paragraph "a"
11 23 subparagraph (1), a business may provide a housing assistance
11 24 program in the form of down payment assistance or rental
11 25 assistance for employees in new jobs, as defined in section
11 26 260E.2, who buy or rent housing located within any certified
11 27 enterprise zone. A business establishing a housing assistance
11 28 program shall fund this program through a credit from
11 29 withholding based on the wages paid to the employees
11 30 participating in the housing assistance program. An amount
11 31 equal to one and one=half percent of the gross wages paid by
11 32 the employer to each employee participating in the housing
11 33 assistance program shall be credited from the payment made by
11 34 an employer pursuant to section 422.16. If the amount of the
11 35 withholding by the employer is less than one and one=half
12 1 percent of the gross wages paid to the employees, then the
12 2 employer shall receive a credit against other withholding
12 3 taxes due by the employer. The employer shall deposit the
12 4 amount of the credit quarterly into a housing assistance fund
12 5 created by the business out of which the business shall
12 6 provide employees enrolled in the housing assistance program
12 7 with down payment assistance or rental assistance.
12 8 (2) (b) A business may enter into an agreement with the
12 9 county or city designating the enterprise zone pursuant to
12 10 section 15E.194 to borrow initial moneys to fund a housing
12 11 assistance program. The county or city may appropriate from
12 12 the general fund of the county or city for the assistance
12 13 program an amount not to exceed an amount estimated by the
12 14 department of revenue and finance to be equal to the total
12 15 amount of credit from withholding for employees determined by
12 16 the business to be enrolled in the program during the first
12 17 two years. The business shall pay the principal and interest
12 18 on the loan out of moneys received from the credit from
12 19 withholding provided for in subparagraph (1) subdivision (a).
12 20 The terms of the loan agreement shall include the principal
12 21 amount, the interest rate, the terms of repayment, and the
12 22 term of the loan. The terms of the loan agreement shall not
12 23 extend beyond the period during which the enterprise zone is
12 24 certified.
12 25 (3) (c) The employer shall certify to the department of
12 26 revenue and finance that the credit from withholding is in
12 27 accordance with an agreement and shall provide other
12 28 information the department may require.
12 29 (4) (d) An employee participating in the housing
12 30 assistance program will receive full credit for the amount
12 31 withheld as provided in section 422.16.
12 32 2. b. Sales, services, and use tax refund, as provided in
12 33 section 15.331A.
12 34 3. c. Investment tax credit, as provided in section
12 35 15.333.
13 1 4. d. Research activities credit, as provided in section
13 2 15.335.
13 3 5. e. The county or city for which an eligible enterprise
13 4 zone is certified may exempt from all property taxation all or
13 5 a portion of the value added to the property upon which an
13 6 eligible business locates or expands in an enterprise zone and
13 7 which is used in the operation of the eligible business. The
13 8 amount of value added for purposes of this subsection
13 9 paragraph shall be the amount of the increase in assessed
13 10 valuation of the property following the location or expansion
13 11 of the business in the enterprise zone. If an exemption
13 12 provided pursuant to this subsection paragraph is made
13 13 applicable to only a portion of the property within an
13 14 enterprise zone, the definition of that subset of eligible
13 15 property must be by uniform criteria which further some
13 16 planning objective established by the city or county
13 17 enterprise zone commission and approved by the eligible city
13 18 or county. The exemption may be allowed for a period not to
13 19 exceed ten years beginning the year the eligible business
13 20 enters into an agreement with the county or city to locate or
13 21 expand operations in an enterprise zone.
13 22 6. f. Insurance premium tax credit, as provided in section
13 23 15.333A.
13 24 7. g. A business eligible to receive incentives and
13 25 assistance described in this section subsection and located in
13 26 a building for which incentives and assistance are or have
13 27 been claimed by an approved development business under section
13 28 15E.193C is not eligible to receive the following incentives
13 29 and assistance:
13 30 a. (1) An investment tax credit under subsection 3
13 31 paragraph "c" for the portion of the investment tax credit
13 32 that is claimed on the purchase price of land or improvements
13 33 to real property by an approved development business pursuant
13 34 to section 15E.193C, subsection 7, paragraph "a".
13 35 b. (2) Sales, services, and use tax refund under
14 1 subsection 2 paragraph "b" that is made pursuant to section
14 2 15E.193C, subsection 7, paragraph "b".
14 3 c. (3) A property tax exemption under subsection 5
14 4 paragraph "e" for improvements to real property that are
14 5 exempted from property taxation pursuant to section 15E.193C,
14 6 subsection 7, paragraph "c".
14 7 3. The incentives and assistance provided under this
14 8 subsection for businesses and taxpayers located in designated
14 9 areas of enterprise zones designated pursuant to section
14 10 15E.194, subsection 5, shall be for a period not to exceed ten
14 11 years, shall be in addition to incentives and assistance
14 12 provided in subsection 2, and shall include all of the
14 13 following:
14 14 a. A taxpayer with a business located in the designated
14 15 area of an enterprise zone shall be exempt from corporate
14 16 income tax under chapter 422, division III, on the portion of
14 17 net income reasonably attributable to the trade or business or
14 18 sources within the designated area of the enterprise zone.
14 19 The method of attributing net income received from within the
14 20 enterprise zone and net income received from outside the
14 21 enterprise zone shall be calculated in a manner similar to
14 22 that used in section 422.33, subsection 2.
14 23 A taxpayer with an office of a financial institution
14 24 located in the designated area of an enterprise zone shall
14 25 also be exempt from the franchise tax in chapter 422, division
14 26 V, on the portion of the net income received through the
14 27 business activity in offices located in the designated area of
14 28 the enterprise zone as determined by rules adopted by the
14 29 department of revenue and finance pursuant to section 422.65
14 30 regarding allocation of the franchise tax.
14 31 b. A business owning property within the designated area
14 32 of an enterprise zone shall be exempt from paying local
14 33 property taxes on the property located solely in the
14 34 designated area of the enterprise zone as provided in section
14 35 427.1, subsection 34. This incentive shall not be available
15 1 to owners of residential rental property located in the
15 2 designated area of an enterprise zone in tax years in which
15 3 the property is not in substantial compliance with all
15 4 applicable state and local zoning, building, housing, and
15 5 health laws, ordinances, or codes.
15 6 c. A business located in the designated area of an
15 7 enterprise zone shall be eligible to receive the new jobs
15 8 credit from withholding, as provided in section 15.331, and
15 9 the sales, services, and use tax refund, as provided in
15 10 section 15.331A.
15 11 4. During the last three years that a taxpayer is eligible
15 12 for an exemption, refund, or credit described in subsection 3,
15 13 the exemption, refund, or credit shall be reduced by the
15 14 following percentages:
15 15 a. For the tax year that is two years before the final
15 16 year of designation as an enterprise zone, the reduction shall
15 17 be twenty=five percent.
15 18 b. For the tax year immediately preceding the final year
15 19 of designation as an enterprise zone, the reduction shall be
15 20 fifty percent.
15 21 c. For the tax year that is the final year of designation
15 22 as an enterprise zone, the reduction shall be seventy=five
15 23 percent.
15 24 5. The following exceptions shall apply to the incentives
15 25 and assistance allowed under subsection 3:
15 26 a. A taxpayer shall not be eligible during any tax year in
15 27 which the taxpayer is delinquent in paying any federal, state,
15 28 or local taxes.
15 29 b. A taxpayer shall not be eligible during any tax year in
15 30 which the taxpayer owns residential rental property within the
15 31 enterprise zone that is not in substantial compliance with all
15 32 applicable state and local zoning, building, and housing laws,
15 33 ordinances, or codes.
15 34 c. A business located outside a designated area of an
15 35 enterprise zone designated pursuant to section 15E.194,
16 1 subsection 5, that relocates into such an area of an
16 2 enterprise zone shall not receive the incentives and
16 3 assistance granted under subsection 3 of this section unless
16 4 the governing body of the political subdivision in which the
16 5 business is located approves the relocation of the business.
16 6 d. If a business relocates more than twenty=five full=time
16 7 equivalent jobs from one or more locations outside a
16 8 designated area of an enterprise zone designated pursuant to
16 9 section 15E.194, subsection 5, to a location within such a
16 10 designated area of an enterprise zone, the business shall
16 11 notify the department of economic development and the
16 12 political subdivision from which the jobs are being relocated
16 13 of the relocation. The business is not eligible for
16 14 incentives and assistance granted under subsection 3 of this
16 15 section if the political subdivision from which the jobs are
16 16 being relocated adopts a resolution objecting to the
16 17 relocation of the jobs within sixty days after the
16 18 notification by the business. The business becomes eligible
16 19 sixty days after the notification if such a resolution is not
16 20 adopted or if an objection is rescinded by a subsequent
16 21 resolution. A political subdivision that objects to the
16 22 relocation of jobs shall file a copy of all resolutions of
16 23 objections and recision with the department of revenue and
16 24 finance, the department of economic development, and the
16 25 political subdivision where the enterprise zone is located.
16 26 6. a. Incentives and assistance received from the state
16 27 under subsection 3, paragraphs "a" and "c", shall be limited
16 28 to two million dollars per enterprise zone, unless an
16 29 enterprise zone commission lowers the incentives and
16 30 assistance limit in paragraph "b" of this subsection. If a
16 31 commission lowers the incentives and assistance limit under
16 32 paragraph "b" of this subsection, the limit under this
16 33 paragraph shall equal the limit set by the commission.
16 34 b. Incentives and assistance received from the local
16 35 property tax exemption in subsection 3, paragraph "b", shall
17 1 be limited to two million dollars per enterprise zone, unless
17 2 an enterprise zone commission sets a limit of less than two
17 3 million dollars.
17 4 Sec. 5. NEW SECTION. 422.11H ENTERPRISE ZONE TAX CREDIT.
17 5 The tax imposed under this division, less the credits
17 6 allowed under sections 422.12 and 422.12B, shall be reduced by
17 7 an enterprise zone tax credit authorized pursuant to section
17 8 15E.193D, subsection 6.
17 9 Sec. 6. Section 422.33, Code 2003, is amended by adding
17 10 the following new subsection:
17 11 NEW SUBSECTION. 14. The taxes imposed under this division
17 12 shall be reduced by an enterprise zone tax credit authorized
17 13 pursuant to section 15E.193D, subsection 6.
17 14 Sec. 7. Section 422.60, Code 2003, is amended by adding
17 15 the following new subsection:
17 16 NEW SUBSECTION. 7. The taxes imposed under this division
17 17 shall be reduced by an enterprise zone tax credit authorized
17 18 pursuant to section 15E.193D, subsection 6.
17 19 Sec. 8. Section 427.1, Code 2003, is amended by adding the
17 20 following new subsection:
17 21 NEW SUBSECTION. 34. ENTERPRISE ZONES. The property
17 22 located solely in a designated area of an enterprise zone
17 23 designated pursuant to section 15E.194, subsection 5, for the
17 24 duration of the enterprise zone designation.
17 25 Sec. 9. NEW SECTION. 432.12D ENTERPRISE ZONE TAX
17 26 CREDITS.
17 27 The tax imposed under this chapter shall be reduced by an
17 28 enterprise zone tax credit authorized pursuant to section
17 29 15E.193D, subsection 6.
17 30 Sec. 10. Section 533.24, Code 2003, is amended by adding
17 31 the following new unnumbered paragraph after unnumbered
17 32 paragraph 4:
17 33 NEW UNNUMBERED PARAGRAPH. The moneys and credits tax
17 34 imposed under this section shall be reduced by an enterprise
17 35 zone tax credit authorized pursuant to section 15E.193D,
18 1 subsection 6.
18 2 EXPLANATION
18 3 This bill relates to the enterprise zone program
18 4 administered by the department of economic development.
18 5 The bill allows businesses that are not located in an
18 6 enterprise zone to claim a tax credit up to a maximum of 5
18 7 percent of the new investment directly related to new jobs
18 8 created by the location or expansion of an eligible business
18 9 under the program. The tax credit shall be allowed against
18 10 personal and corporate income tax, the franchise tax for
18 11 financial institutions, the insurance premium tax, and the
18 12 moneys and credits tax for credit unions. The bill provides
18 13 that the tax credit may be carried forward for seven years.
18 14 The bill provides criteria relating to the type of
18 15 business, employee wages and benefits, employment, and capital
18 16 investment that a business not located in an enterprise zone
18 17 must meet in order to receive assistance under the program.
18 18 For a business located in a city or county meeting the
18 19 distress criteria of the program, the bill requires the
18 20 business to apply for assistance and incentives under the
18 21 program through the enterprise zone for the city or county.
18 22 For a business not located in a city or county meeting the
18 23 distress criteria of the program, the bill requires the city
18 24 or county where the business is located, after approval of a
18 25 project by ordinance or resolution, to submit an application
18 26 for incentives and assistance to the department. The bill
18 27 includes continued compliance and reporting provisions for a
18 28 business receiving incentives and assistance. The bill
18 29 requires the department, in considering applications, to
18 30 consider the impact of the eligible business on other
18 31 businesses in competition with it.
18 32 The bill allows a city or county to designate all or a
18 33 portion of a certified enterprise zone to be eligible for
18 34 incentives and assistance in addition to the regular
18 35 incentives and assistance available under the enterprise zone
19 1 program. The designated area must qualify as a blighted area,
19 2 a high poverty and crime area, or a slum area, as defined in
19 3 the bill. The bill provides that a certified enterprise zone
19 4 shall not contain more than one such designated area.
19 5 The bill provides that incentives and assistance for
19 6 designated areas of enterprise zones include all of the
19 7 following:
19 8 1. Corporate income tax and franchise tax exemptions for
19 9 any taxpayer with a business located in the designated area of
19 10 the enterprise zone on the portion of the net income
19 11 reasonably attributable to the trade or business or sources
19 12 within the designated area of the enterprise zone.
19 13 2. A property tax exemption for a business owning property
19 14 within the designated area of the enterprise zone for property
19 15 located solely within the designated area of the enterprise
19 16 zone.
19 17 3. The new jobs credit from withholding and the sales,
19 18 services, and use tax refund for businesses located in the
19 19 designated area of the enterprise zone.
19 20 The bill provides that the incentives and assistance for
19 21 designated areas of the enterprise zones shall be reduced by
19 22 25 percent during the tax year two years before the final year
19 23 of the enterprise zone designation, by 50 percent during the
19 24 tax year immediately preceding the final year of the
19 25 enterprise zone designation, and by 75 percent during the
19 26 final year of the enterprise zone designation.
19 27 The bill provides a number of exceptions for incentives and
19 28 assistance for designated areas of enterprise zones. The
19 29 exceptions include the following:
19 30 1. A taxpayer shall not be eligible during any tax years
19 31 in which the taxpayer is delinquent in paying any federal,
19 32 state, or local taxes.
19 33 2. A taxpayer shall not be eligible during any tax years
19 34 in which the taxpayer owns residential rental property located
19 35 within a designated area of the enterprise zone that is not in
20 1 substantial compliance with all applicable state and local
20 2 zoning, building, and housing laws, ordinances, or codes.
20 3 3. A business located outside a designated area of an
20 4 enterprise zone that relocates into a designated area of an
20 5 enterprise zone shall not receive the incentives and
20 6 assistance unless the governing body of the political
20 7 subdivision in which the business is located approves the
20 8 relocation of the business.
20 9 4. If a business relocates more than 25 full=time
20 10 equivalent jobs from one or more locations outside a
20 11 designated area of an enterprise zone to a location within a
20 12 designated area of an enterprise zone, the business shall
20 13 notify the department of economic development and the
20 14 political subdivision from which the jobs are being relocated
20 15 of the relocation. The bill allows the political subdivision
20 16 to block the availability of designated area enterprise zone
20 17 incentives and assistance by objecting to the relocation of
20 18 jobs through a resolution.
20 19 The bill provides that incentives and assistance received
20 20 from the state through the corporate income tax and franchise
20 21 tax exemptions and the new jobs credit from withholding for
20 22 designated areas of enterprise zones shall be limited to $2
20 23 million per enterprise zone. The bill provides that
20 24 incentives and assistance received from the local property tax
20 25 exemption for designated areas of enterprise zones shall be
20 26 limited to $2 million per enterprise zone, unless the
20 27 enterprise zone commission sets a limit of less than $2
20 28 million. If the enterprise zone commission lowers the
20 29 incentives and assistance limit, the limit for incentives and
20 30 assistance from the state shall equal the limit set by the
20 31 commission.
20 32 LSB 2486HV 80
20 33 tm/pj/5