House File 2727 - Introduced



                                       HOUSE FILE       
                                       BY  COMMITTEE ON ECONOMIC
                                           GROWTH

                                       (SUCCESSOR TO HSB 642)


    Passed House, Date                Passed Senate,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act authorizing the rebate of state sales tax revenues to the
  2    owner or operator of a significant destination project.
  3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  4 TLSB 5805HV 81
  5 mg/sh/8

PAG LIN



  1  1    Section 1.  LEGISLATIVE FINDINGS.  The general assembly
  1  2 finds that significant destination projects in Iowa would
  1  3 result in a substantial economic benefit to the state and
  1  4 would offer thousands of patrons the opportunity to experience
  1  5 and discover Iowa.
  1  6    The general assembly finds that the development of
  1  7 significant destination projects and related amenities in Iowa
  1  8 would enhance the economic development of the area through an
  1  9 increase in tourism.
  1 10    The general assembly further finds that the rebate of state
  1 11 sales tax collected at significant destination projects in
  1 12 Iowa and related amenities would further tourism and is a
  1 13 public purpose for which state funds may be used.
  1 14    Sec. 2.  Section 423.4, Code Supplement 2005, is amended by
  1 15 adding the following new subsection:
  1 16    NEW SUBSECTION.  6.  a.  For purposes of this subsection:
  1 17    (1)  "Actual investment" does not include rebates,
  1 18 abatements, tax credits, or assistance received from a city,
  1 19 county, or state or its agencies.
  1 20    (2)  "Change of control" means any of the following:
  1 21    (a)  Any change in the ownership of the original or any
  1 22 subsequent legal entity that is the owner or operator of the
  1 23 significant destination project, such that at least sixty
  1 24 percent of the equity interests in the legal entity cease to
  1 25 be owned by individuals who are residents of Iowa, an Iowa
  1 26 corporation, or a combination of both.
  1 27    (b)  The original owners of the legal entity that is the
  1 28 owner or operator of the significant destination project shall
  1 29 collectively cease to own more than fifty percent of the
  1 30 voting equity interests of such legal entity or shall
  1 31 otherwise cease to have effective control of such legal
  1 32 entity.
  1 33    (3)  "Iowa corporation" means a corporation incorporated
  1 34 under the laws of Iowa where at least sixty percent of the
  1 35 corporation's equity interests are owned by individuals who
  2  1 are residents of Iowa.
  2  2    (4)  "Owner or operator" means a for=profit legal entity of
  2  3 which at least sixty percent of the entity's equity interests
  2  4 are owned by individuals who are residents of Iowa, an Iowa
  2  5 corporation, or a combination of both, and that is the owner
  2  6 or operator of a significant destination project.
  2  7    (5)  "Significant destination project" means a project
  2  8 planned to provide an attraction or attractions designed as an
  2  9 entertainment, recreational, or tourist attraction costing at
  2 10 least twenty million dollars, of which the original owners of
  2 11 the project made an actual investment of at least five million
  2 12 dollars, and which will provide benefits to persons living
  2 13 outside the county in which the project is primarily located.
  2 14 The project may be divided into component parts.  "Significant
  2 15 destination project" does not include any gaming establishment
  2 16 or facility, hotel, or convention center, and does not include
  2 17 a retail mall or complex.  However, this does not preclude a
  2 18 retail specialty shop or business from being included as a
  2 19 component part of a project.  "Significant destination
  2 20 project" includes entertainment venues attached to hotels or
  2 21 convention centers.  The project shall increase the diversity
  2 22 of activities available to citizens, workers, families, and
  2 23 tourists, and have as a purpose the recruitment and retention
  2 24 of young people as residents.  The project shall be primarily
  2 25 a vertical infrastructure project with reasonably anticipated
  2 26 significant economic and quality of life impact.  As used in
  2 27 this subparagraph, "vertical infrastructure" means land
  2 28 acquisition and construction, major renovation, and major
  2 29 repair of buildings, all appurtenant structures, utilities,
  2 30 site development, and recreational trails.  "Vertical
  2 31 infrastructure" does not include routine, recurring
  2 32 maintenance or operational expenses or leasing of a building
  2 33 or appurtenant structure without a lease=purchase agreement.
  2 34    b.  The owner or operator of a significant destination
  2 35 project may apply to the department for a rebate of sales tax
  3  1 imposed and collected by retailers upon sales of any goods,
  3  2 wares, merchandise, or services furnished to purchasers at the
  3  3 significant destination project.
  3  4    c.  The rebate may be obtained only in the following
  3  5 amounts and manner and only under the following conditions:
  3  6    (1)  On forms furnished by the department within the time
  3  7 period provided by the department by rule, which time period
  3  8 shall not be longer than quarterly.
  3  9    (2)  The owner or operator shall provide information as
  3 10 deemed necessary by the department.
  3 11    (3)  The transactions for which sales tax was collected and
  3 12 the rebate is sought occurred during the first ten years of
  3 13 operation.  However, the total rebates provided pursuant to
  3 14 this subsection shall not exceed one=third of the original
  3 15 owners' actual investment.
  3 16    (4)  Notwithstanding subparagraph (3), the rebate of sales
  3 17 tax shall cease for transactions occurring on or after the
  3 18 date of the sale or other transfer, whether voluntarily or
  3 19 involuntarily, of the significant destination project to a
  3 20 party other than the original owner of the project or upon a
  3 21 change of control of the project.
  3 22    d.  To assist the department in determining the amount of
  3 23 the rebate, the owner or operator shall identify to the
  3 24 department retailers located at the significant destination
  3 25 project who will be collecting sales tax.  The department
  3 26 shall verify such identity and ensure that all proper permits
  3 27 have been issued.  For purposes of this subsection, advance
  3 28 ticket and admissions sales shall be considered occurring at
  3 29 the significant destination project regardless of where the
  3 30 transactions actually occur.
  3 31    e.  Upon determining that the conditions and requirements
  3 32 of this subsection and the department are met, the department
  3 33 shall issue a warrant to the owner or operator in the amount
  3 34 equal to the amount claimed and verified by the department.
  3 35    f.  Only the state sales tax is subject to rebate.  Any
  4  1 local option sales and services taxes paid and collected shall
  4  2 not be subject to rebate under this subsection.
  4  3    g.  The rebate authorized under this subsection for any
  4  4 particular significant destination project ceases at the end
  4  5 of the ten=year period beginning with the start of operations
  4  6 at the project, or thirty days following the date on which
  4  7 twelve million five hundred thousand dollars in total rebates
  4  8 have been provided, or thirty days following the date on which
  4  9 rebates cease as provided in paragraph "c", subparagraph (4),
  4 10 whichever is the earliest.
  4 11                           EXPLANATION
  4 12    This bill authorizes the department of revenue to rebate
  4 13 state sales tax collected by retailers on purchases made at a
  4 14 significant destination project.  The person eligible to
  4 15 receive the rebate is the owner or operator of the project.
  4 16    A significant destination project is a project planned to
  4 17 provide an attraction designed as an entertainment,
  4 18 recreational, or tourist attraction costing at least $20
  4 19 million, of which at least $5 million is the actual investment
  4 20 by the original owner, which will provide benefits to persons
  4 21 living outside the county where the project is located.  The
  4 22 purpose of the project is to increase the diversity of
  4 23 activities available and be a magnet for the recruitment and
  4 24 retention of young people as residents.  A project does not
  4 25 include any gambling establishment or facility, hotel, or
  4 26 convention center, and does not include a retail mall or
  4 27 complex.  However, a project may include a retail speciality
  4 28 shop or business or an entertainment venue attached to a hotel
  4 29 or convention center.
  4 30    The rebate of sales tax is only of the sales tax collected
  4 31 on transactions occurring during the first 10 years of
  4 32 operation of a project.
  4 33    The rebate only applies to the state sales tax collected
  4 34 and not to any local option sales and services tax and is
  4 35 limited to a total of one=third of the amount of the owners'
  5  1 actual investment.
  5  2    The rebate ceases upon the transfer of the project to a
  5  3 party other than the original owners of the project or upon a
  5  4 change of control of the project.  A change in control occurs
  5  5 if at least 60 percent of the equity interest ceases to be
  5  6 owned by Iowa residents or an Iowa corporation or the original
  5  7 owners cease to own more than 50 percent of the voting
  5  8 interests of the project owner.
  5  9 LSB 5805HV 81
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