House File 2610 - Introduced
HOUSE FILE
BY COMMITTEE ON ECONOMIC GROWTH
(SUCCESSOR TO HF 2131)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to historic preservation and cultural and
2 entertainment district tax credits.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 404A.1, subsection 1, Code Supplement
1 2 2005, is amended to read as follows:
1 3 1. A historic preservation and cultural and entertainment
1 4 district tax credit, subject to the availability of the
1 5 credit, is granted against the tax imposed under chapter 422,
1 6 division II, III, or V, or chapter 432, for the rehabilitation
1 7 of eligible property located in this state as provided in this
1 8 chapter. Tax credits in excess of tax liabilities shall be
1 9 refunded or credited as provided in section 404A.4, subsection
1 10 3.
1 11 Sec. 2. Section 404A.1, Code Supplement 2005, is amended
1 12 by adding the following new subsection:
1 13 NEW SUBSECTION. 3. A historic preservation and cultural
1 14 and entertainment district tax credit shall be limited to
1 15 rehabilitation of depreciable structures used in a trade or
1 16 business or held for the production of income, such as
1 17 commercial or residential rental properties.
1 18 Sec. 3. Section 404A.4, subsection 3, Code Supplement
1 19 2005, is amended to read as follows:
1 20 3. A person receiving a historic preservation and cultural
1 21 and entertainment district tax credit under this chapter which
1 22 is in excess of the person's tax liability for the tax year is
1 23 entitled to a refund of the excess at a discounted value. The
1 24 discounted value of the tax credit refund, as calculated by
1 25 the department of economic development, in consultation with
1 26 the department of revenue, shall be determined based on the
1 27 discounted value of the tax credit five years after the tax
1 28 year of the project completion at an interest rate equivalent
1 29 to the prime rate plus two percent. The refunded tax credit
1 30 shall not exceed seventy=five percent of the allowable tax
1 31 credit. In lieu of claiming a refund, a taxpayer may elect to
1 32 have the excess refund, not to exceed seventy=five percent of
1 33 the allowable tax credit, credited to the tax liability for
1 34 the following seven tax years or until depleted, whichever
1 35 occurs first. A tax credit shall not be carried back to a tax
2 1 year prior to the tax year in which the taxpayer claims the
2 2 tax credit.
2 3 Sec. 4. Section 404A.4, subsection 4, Code Supplement
2 4 2005, is amended to read as follows:
2 5 4. The total amount of tax credits that may be approved
2 6 for a fiscal year under this chapter shall not exceed two
2 7 twenty million four hundred thousand dollars. For the fiscal
2 8 period beginning July 1, 2005, and ending June 30, 2015, an
2 9 additional four million dollars of tax credits may be approved
2 10 each fiscal year for purposes of projects located in cultural
2 11 and entertainment districts certified pursuant to section
2 12 303.3B. Of the tax credits approved for a fiscal year under
2 13 this chapter, not more than four million dollars shall be
2 14 allocated for purposes of projects with a cost of five hundred
2 15 thousand dollars or less located in cities with a population
2 16 of less than twenty=four thousand, and not more than ten
2 17 million dollars shall be allocated for purposes of projects
2 18 located in cultural and entertainment districts certified
2 19 pursuant to section 303B.3B. Any of the additional tax
2 20 credits allocated for projects located in certified cultural
2 21 and entertainment districts and for projects with a cost of
2 22 five hundred thousand dollars or less located in cities with a
2 23 population of less than twenty=four thousand that are not
2 24 approved reserved during a fiscal year shall be applied to
2 25 reserved tax credits issued in accordance with section 404A.3
2 26 in order of original reservation. The department of cultural
2 27 affairs shall establish by rule the procedures for the
2 28 application, review, selection, and awarding of certifications
2 29 of completion. The department of cultural affairs shall
2 30 establish by rule a method for the equitable distribution of
2 31 tax credits throughout the state. The departments of economic
2 32 development, cultural affairs, and revenue shall each adopt
2 33 rules to jointly administer this subsection and shall provide
2 34 by rule for the method to be used to determine for which
2 35 fiscal year the tax credits are available. With the exception
3 1 of tax credits issued pursuant to contracts entered into prior
3 2 to July 1, 2005, tax credits shall not be reserved for more
3 3 than five years.
3 4 Sec. 5. Section 422.11D, subsection 1, Code Supplement
3 5 2005, is amended to read as follows:
3 6 1. The taxes imposed under this division, less the credits
3 7 allowed under sections 422.12 and 422.12B, shall be reduced by
3 8 a historic preservation and cultural and entertainment
3 9 district tax credit equal to the amount as computed under
3 10 chapter 404A for rehabilitating eligible property. Any credit
3 11 in excess of the tax liability shall be refunded or credited
3 12 to succeeding tax years as provided in section 404A.4,
3 13 subsection 3.
3 14 Sec. 6. Section 422.33, subsection 10, paragraph a, Code
3 15 Supplement 2005, is amended to read as follows:
3 16 a. The taxes imposed under this division shall be reduced
3 17 by a historic preservation and cultural and entertainment
3 18 district tax credit equal to the amount as computed under
3 19 chapter 404A for rehabilitating eligible property. Any credit
3 20 in excess of the tax liability shall be refunded or credited
3 21 to succeeding tax years as provided in section 404A.4,
3 22 subsection 3.
3 23 Sec. 7. Section 422.60, subsection 4, paragraph a, Code
3 24 Supplement 2005, is amended to read as follows:
3 25 a. The taxes imposed under this division shall be reduced
3 26 by a historic preservation and cultural and entertainment
3 27 district tax credit equal to the amount as computed under
3 28 chapter 404A for rehabilitating eligible property. Any credit
3 29 in excess of the tax liability shall be refunded or credited
3 30 to succeeding tax years as provided in section 404A.4,
3 31 subsection 3.
3 32 Sec. 8. Section 432.12A, subsection 1, Code Supplement
3 33 2005, is amended to read as follows:
3 34 1. The tax imposed under this chapter shall be reduced by
3 35 a historic preservation and cultural and entertainment
4 1 district tax credit equal to the amount as computed under
4 2 chapter 404A for rehabilitating eligible property. Any credit
4 3 in excess of the tax liability shall be refunded or credited
4 4 to succeeding tax years as provided in section 404A.4,
4 5 subsection 3.
4 6 EXPLANATION
4 7 This bill relates to historic preservation and cultural and
4 8 entertainment district tax credits.
4 9 The bill limits historic preservation and cultural and
4 10 entertainment district tax credits to rehabilitation of
4 11 depreciable structures used in a trade or business or held for
4 12 the production of income, such as commercial or residential
4 13 rental properties.
4 14 Currently, a person receiving a historic preservation and
4 15 cultural and entertainment district tax credit may receive a
4 16 tax credit refund at a discounted value for the amount in
4 17 excess of the taxpayer's tax liability in the year that the
4 18 tax credit is claimed. The bill allows a taxpayer, in lieu of
4 19 claiming a refund, to elect to have the excess refund, not to
4 20 exceed 75 percent of the allowable tax credit, credited to the
4 21 taxpayer's tax liability for the following seven tax years or
4 22 until depleted, whichever occurs first. The bill prohibits a
4 23 tax credit from being carried back to a tax year prior to the
4 24 tax year in which the taxpayer claims the tax credit.
4 25 Currently, $2.4 million of historic preservation and
4 26 cultural and entertainment district tax credits may be
4 27 approved in a fiscal year, and for the fiscal period beginning
4 28 July 1, 2005, and ending June 30, 2015, an additional $4
4 29 million of tax credits may be approved each fiscal year for
4 30 purposes of projects located in certified cultural and
4 31 entertainment districts. The bill eliminates the additional
4 32 $4 million of tax credits and increases the $2.4 million of
4 33 tax credits to $20 million of tax credits each fiscal year.
4 34 The bill provides that $4 million of the $20 million of tax
4 35 credits are allocated for projects with a cost of $500,000 or
5 1 less located in cities with a population of less than 24,000.
5 2 The bill provides that $10 million of the $20 million of tax
5 3 credits are allocated for projects located in cultural and
5 4 entertainment districts. The bill provides that any of the
5 5 allocated tax credits that are not reserved during a fiscal
5 6 year shall be applied to reserved tax credits in order of
5 7 original reservation. The bill provides that the department
5 8 of cultural affairs shall establish by rule a method of the
5 9 equitable distribution of tax credits throughout the state.
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