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:
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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.
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