House File 2536 - Introduced
HOUSE FILE
BY STRUYK, HUSER, BELL,
CARROLL, and WISE
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing for the establishment by certain cities of sales
2 tax increment financing districts.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 5497YH 81
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PAG LIN
1 1 Section 1. Section 423B.1, subsection 6, Code 2005, is
1 2 amended by adding the following new paragraph:
1 3 NEW PARAGRAPH. c. Notwithstanding any other provision in
1 4 this section, a change in use of the increased local sales and
1 5 services tax revenues for purposes of a sales tax increment
1 6 financing district pursuant to section 423B.10 does not
1 7 require an election.
1 8 Sec. 2. Section 423B.9, subsection 2, Code 2005, is
1 9 amended to read as follows:
1 10 2. An issuer of public bonds which is a recipient of
1 11 revenues from a local option sales and services tax imposed
1 12 pursuant to this chapter may issue bonds in anticipation of
1 13 the collection of one or more designated portions of the local
1 14 option sales and services tax and may pledge irrevocably an
1 15 amount of the revenue derived from the designated portions for
1 16 each of the years the bonds remain outstanding to the payment
1 17 of the bonds. Bonds may be issued only for one or more of the
1 18 purposes set forth on the ballot proposition concerning the
1 19 imposition of the local option sales and services tax or for
1 20 purposes of a sales tax increment financing district pursuant
1 21 to section 423B.10, except bonds shall not be issued which are
1 22 payable from that portion of tax revenues designated for
1 23 property tax relief. The bonds may be issued in accordance
1 24 with the procedures set forth in either subsection 3 or 4.
1 25 Sec. 3. NEW SECTION. 423B.10 SALES TAX INCREMENT
1 26 FINANCING DISTRICTS.
1 27 1. For purposes of this section, unless the context
1 28 otherwise requires:
1 29 a. "Base year" means the fiscal year during which the
1 30 designation by ordinance of a sales tax increment financing
1 31 district is made.
1 32 b. "District" means a sales tax increment financing
1 33 district established pursuant to subsection 2.
1 34 c. "Eligible city" means a city in which a local sales and
1 35 services tax imposed by the county applies or a city described
2 1 in section 423B.1, subsection 2, paragraph "a".
2 2 d. "Project" means an athletic, cultural, or entertainment
2 3 facility or complex in which the owners or operators make an
2 4 actual investment of at least five million dollars. "Project"
2 5 does not include any gaming establishment or facility and does
2 6 not include a retail mall or complex. However, this does not
2 7 preclude a retail specialty shop or business from being
2 8 included as part of a project.
2 9 e. "Retail establishment" means a business operated by a
2 10 retailer as defined in section 423.1.
2 11 2. An eligible city may by ordinance of the city council
2 12 establish a sales tax increment financing district for the
2 13 purpose of using the increased local sales and services tax
2 14 revenues received by it under this chapter which are
2 15 attributable to retail establishments in the district to repay
2 16 any loans, advances, indebtedness, or bonds used to assist in
2 17 the development, redevelopment, improvement, or rehabilitation
2 18 of a project located within such district. The increased
2 19 revenues to be used for the project shall be deposited into a
2 20 special fund to be established for the purpose of repaying the
2 21 loans, advances, indebtedness, or bonds.
2 22 3. a. To determine the revenue increase for purposes of
2 23 subsection 2, a base year revenue amount shall be calculated
2 24 by the department of revenue as follows:
2 25 (1) Determine the amount of local sales and services tax
2 26 revenue collected from retail establishments located in the
2 27 area comprising the district during the base year.
2 28 (2) Determine the dollar amount of the tax revenues
2 29 collected, as described in subparagraph (1), which is
2 30 distributed to the city during the base year. This is the
2 31 base year revenue amount.
2 32 b. A current year revenue amount is determined for each
2 33 fiscal year following the base year in the manner specified in
2 34 paragraph "a".
2 35 c. The excess of the amount determined in paragraph "b"
3 1 over the amount determined in paragraph "a" is the increase in
3 2 the eligible city's revenues that are to be deposited in the
3 3 special fund. However, if any portion of these increased
3 4 revenues has been previously, irrevocably pledged to pay bonds
3 5 issued pursuant to section 423B.9 for any purpose other than
3 6 the purpose of the district, such portion shall not be
3 7 deposited into the special fund.
3 8 4. An eligible city that has designated a sales tax
3 9 increment financing district as provided in subsection 2 may
3 10 apply to the department of economic development to receive a
3 11 portion of the amount of the state sales tax revenues
3 12 collected pursuant to chapter 423, subchapter II, during a
3 13 fiscal year from retail establishments located in such
3 14 district which is in excess of the amount of such revenues
3 15 collected by the state during the base year. The department
3 16 of economic development shall establish by rule criteria for
3 17 determining if it will enter into an agreement with an
3 18 eligible city. These criteria shall include, but not be
3 19 limited to, all of the following:
3 20 a. The project is not replacing an athletic, cultural, or
3 21 entertainment facility or complex located in another part of
3 22 the city.
3 23 b. The extent to which the project will bring out=of=state
3 24 residents to the city and the county.
3 25 c. The extent to which the project will have an adverse
3 26 effect on surrounding cities and counties.
3 27 d. The district is a well=defined compact area where the
3 28 majority of the commercial property contained in the district
3 29 is benefited by the project.
3 30 e. The total amount of investment to be made in the
3 31 project and the amounts to be provided by private investors,
3 32 the city, and the state.
3 33 f. The agreement shall be for a period not to exceed ten
3 34 fiscal years or for attainment of a specific dollar amount,
3 35 whichever occurs first.
4 1 5. The payment of any portion of the amount of state sales
4 2 tax revenues collected during a fiscal year under subsection 4
4 3 is contingent upon an appropriation by the general assembly
4 4 specifically for payment of such revenue increase, and any
4 5 agreement entered into between the department of economic
4 6 development and an eligible city shall contain a statement as
4 7 to this contingency.
4 8 6. All moneys received by an eligible city from state
4 9 sales tax revenue collections shall be deposited into the
4 10 special fund established pursuant to subsection 2.
4 11 7. For purposes of this section, the eligible city shall
4 12 assist the department of revenue in identifying retail
4 13 establishments in the district that are collecting the local
4 14 sales and services tax and state sales tax. This process
4 15 shall be ongoing until the district is dissolved.
4 16 Sec. 4. Section 423E.5, unnumbered paragraph 2, Code
4 17 Supplement 2005, is amended to read as follows:
4 18 A school district in which a local option sales tax for
4 19 school infrastructure purposes has been imposed shall be
4 20 authorized to enter into a chapter 28E agreement with one or
4 21 more cities or a county whose boundaries encompass all or a
4 22 part of the area of the school district. A city or cities
4 23 entering into a chapter 28E agreement shall be authorized to
4 24 expend its designated portion of the local option sales and
4 25 services tax revenues for any valid purpose permitted in this
4 26 chapter or authorized by the governing body of the city,
4 27 including the use of the revenues for purposes of a sales tax
4 28 increment financing district under section 423B.10. A county
4 29 entering into a chapter 28E agreement with a school district
4 30 in which a local option sales tax for school infrastructure
4 31 purposes has been imposed shall be authorized to expend its
4 32 designated portion of the local option sales and services tax
4 33 revenues to provide property tax relief within the boundaries
4 34 of the school district located in the county. A school
4 35 district where a local option sales and services tax is
5 1 imposed is also authorized to enter into a chapter 28E
5 2 agreement with another school district, a community college,
5 3 or an area education agency which is located partially or
5 4 entirely in or is contiguous to the county where the tax is
5 5 imposed. The school district or community college shall only
5 6 expend its designated portion of the local option sales and
5 7 services tax for infrastructure purposes. The area education
5 8 agency shall only expend its designated portion of the local
5 9 option school infrastructure sales tax for infrastructure and
5 10 maintenance purposes.
5 11 EXPLANATION
5 12 This bill authorizes a city with a local option sales and
5 13 services tax to establish by ordinance a sales tax increment
5 14 financing district for the purpose of dedicating and using the
5 15 increase in the local sales and services tax revenues to pay
5 16 the loans, advances, indebtedness, and bonds used to assist in
5 17 the development, redevelopment, improvement, or rehabilitation
5 18 of an athletic, cultural, or entertainment facility or complex
5 19 project located within such district. Dedicating such
5 20 increased revenues does not require an election. The owners
5 21 or operators of the project must make an actual investment of
5 22 at least $5 million and the project cannot include a gaming
5 23 establishment or facility or a retail mall or complex.
5 24 The bill also allows the city to enter into an agreement
5 25 with the department of economic development to receive
5 26 assistance for all or a portion of the increase in state sales
5 27 tax revenues collected by retail establishments in the
5 28 district. This state assistance is subject to appropriation
5 29 by the general assembly. The department would establish
5 30 criteria for entering into such an agreement, which criteria
5 31 would include the extent to which the project would bring in
5 32 nonresidents of the state and would affect surrounding
5 33 communities, the amount of private and public investment being
5 34 made, the compactness of the district, and the requirement
5 35 that the project is not replacing a similar facility or
6 1 complex in the city. The agreement would be for a period of
6 2 10 years or for a specified amount of state assistance,
6 3 whichever occurs first.
6 4 The bill provides that a city may use revenues that it may
6 5 receive from a local sales and services tax for school
6 6 infrastructure purposes for purposes of the city's sales tax
6 7 increment financing district.
6 8 The base year revenue amount for determining the increase
6 9 in tax revenues is the amount of tax revenues collected and
6 10 distributed to the city during the fiscal year ending after
6 11 the city has established the district. However, any portion
6 12 of that increase which has previously been pledged for another
6 13 purpose is not considered part of the increase that may be
6 14 used for the purposes of the district.
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