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 5 10 mg:nh/sh/8