Senate File 2193 - Introduced
SENATE FILE
BY WARNSTADT and WIECK
(COMPANION TO LSB 5706HH
BY RANTS)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to qualified historic property located in
2 designated enterprise zones and other historic property,
3 taxation of such property and its owners, developers, and
4 investors, and including effective and applicability date
5 provisions.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
7 TLSB 5706SS 81
8 mg/cf/24
PAG LIN
1 1 Section 1. Section 15E.192, Code Supplement 2005, is
1 2 amended by adding the following new subsection:
1 3 NEW SUBSECTION. 0A. For the purposes of this division,
1 4 "qualified historic property" means property that is at least
1 5 fifty years old and is listed on the national register of
1 6 historic places or eligible for such listing and has been
1 7 rehabilitated without significant changes to the original
1 8 exterior of the property and without affecting its status with
1 9 regard to the national register of historic places.
1 10 Sec. 2. Section 15E.193B, subsection 2, Code Supplement
1 11 2005, is amended to read as follows:
1 12 2. An eligible housing business under this section
1 13 includes a either of the following:
1 14 a. A housing developer, housing contractor, or nonprofit
1 15 organization that builds or rehabilitates a minimum of four
1 16 single=family homes located in that part of a city or county
1 17 in which there is a designated enterprise zone or one multiple
1 18 dwelling unit building containing three or more individual
1 19 dwelling units located in that part of a city or county in
1 20 which there is a designated enterprise zone.
1 21 b. An owner or developer that rehabilitates a qualified
1 22 historic property to be used for dwelling purposes which is
1 23 located in that part of a city or county in which there is a
1 24 designated enterprise zone.
1 25 Sec. 3. Section 15E.193B, subsection 6, paragraph a, Code
1 26 Supplement 2005, is amended to read as follows:
1 27 a. An eligible housing business may claim a tax credit up
1 28 to a maximum of ten percent of the new investment which is
1 29 directly related to the building or rehabilitating of a
1 30 minimum of four single=family homes located in that part of a
1 31 city or county in which there is a designated enterprise zone,
1 32 or one multiple dwelling unit building containing three or
1 33 more individual dwelling units located in that part of a city
1 34 or county in which there is a designated enterprise zone, or
1 35 qualified historic property located in that part of a city or
2 1 county in which there is a designated enterprise zone. The
2 2 new investment that may be used to compute the tax credit
2 3 shall not exceed the new investment used for the first one
2 4 hundred forty thousand dollars of value for each single=family
2 5 home, or for each unit of a multiple dwelling unit building
2 6 containing three or more units, or for each dwelling unit
2 7 located in the qualified historic property. The tax credit
2 8 may be used to reduce the tax liability imposed under chapter
2 9 422, division II, III, or V, or chapter 432. Any credit in
2 10 excess of the tax liability for the tax year may be credited
2 11 to the tax liability for the following seven years or until
2 12 depleted, whichever occurs earlier. If the business is a
2 13 partnership, S corporation, limited liability company, or
2 14 estate or trust electing to have the income taxed directly to
2 15 the individual, an individual may claim the tax credit
2 16 allowed. The amount claimed by the individual shall be based
2 17 upon the pro rata share of the individual's earnings of the
2 18 partnership, S corporation, limited liability company, or
2 19 estate or trust except as allowed for under subsection 8 when
2 20 low=income housing tax credits authorized under section 42 of
2 21 the Internal Revenue Code are used to assist in the financing
2 22 of the housing development.
2 23 Sec. 4. Section 15E.195, subsections 1, 2, and 4, Code
2 24 2005, are amended to read as follows:
2 25 1. A county which designates an enterprise zone pursuant
2 26 to section 15E.194, subsection 1, and in which an eligible
2 27 enterprise zone is certified shall establish an enterprise
2 28 zone commission to review applications from qualified
2 29 businesses located within or requesting to locate within an
2 30 enterprise zone designated pursuant to section 15E.194,
2 31 subsection 1, to receive incentives or assistance as provided
2 32 in section 15E.196. The enterprise zone commission shall also
2 33 review applications from qualified housing businesses
2 34 requesting to receive incentives or assistance as provided in
2 35 section 15E.193B. The enterprise zone commission shall review
3 1 applications from owners or developers of qualified historic
3 2 properties to receive incentives or assistance as provided in
3 3 section 15E.193B or 15E.196, as applicable. The commission
3 4 shall consist of nine members. Five of these members shall
3 5 consist of one representative of the board of supervisors, one
3 6 member with economic development expertise chosen by the
3 7 department of economic development, one representative of the
3 8 county zoning board, one member of the local community college
3 9 board of directors, and one representative of the local
3 10 workforce development center. These five members shall select
3 11 the remaining four members. If the enterprise zone consists
3 12 of an area meeting the requirements for eligibility for an
3 13 urban or rural enterprise community under Title XIII of the
3 14 federal Omnibus Budget Reconciliation Act of 1993, one of the
3 15 remaining four members shall be a representative of that
3 16 community. A county shall have only one enterprise zone
3 17 commission to review applications for incentives and
3 18 assistance for businesses located within or requesting to
3 19 locate within a certified enterprise zone designated pursuant
3 20 to section 15E.194, subsection 1.
3 21 2. A city with a population of twenty=four thousand or
3 22 more which designates an enterprise zone pursuant to section
3 23 15E.194, subsection 2, and in which an eligible enterprise
3 24 zone is certified shall establish an enterprise zone
3 25 commission to review applications from qualified businesses
3 26 located within or requesting to locate within an enterprise
3 27 zone to receive incentives or assistance as provided in
3 28 section 15E.196. The enterprise zone commission shall review
3 29 applications from qualified housing businesses requesting to
3 30 receive incentives or assistance as provided in section
3 31 15E.193B. The enterprise zone commission shall review
3 32 applications from owners or developers of qualified historic
3 33 properties to receive incentives or assistance as provided in
3 34 section 15E.193B or 15E.196, as applicable. The commission
3 35 shall consist of nine members. Six of these members shall
4 1 consist of one representative of an international labor
4 2 organization, one member with economic development expertise
4 3 chosen by the department of economic development, one
4 4 representative of the city council, one member of the local
4 5 community college board of directors, one member of the city
4 6 planning and zoning commission, and one representative of the
4 7 local workforce development center. These six members shall
4 8 select the remaining three members. If the enterprise zone
4 9 consists of an area meeting the requirements for eligibility
4 10 for an urban enterprise community under Title XIII of the
4 11 federal Omnibus Budget Reconciliation Act of 1993, one of the
4 12 remaining three members shall be a representative of that
4 13 community. If a city contiguous to the city designating the
4 14 enterprise zone is included in an enterprise zone, a
4 15 representative of the contiguous city, chosen by the city
4 16 council, shall be a member of the commission. A city in which
4 17 an eligible enterprise zone is certified shall have only one
4 18 enterprise zone commission. If a city has established an
4 19 enterprise zone commission prior to July 1, 1998, the city may
4 20 petition to the department of economic development to change
4 21 the structure of the existing commission.
4 22 4. If the enterprise zone commission determines that a
4 23 business or an owner or developer of a qualified historic
4 24 property qualifies and is eligible to receive incentives or
4 25 assistance as provided in section 15E.193B or 15E.196, the
4 26 commission shall submit an application for incentives or
4 27 assistance to the department of economic development. The
4 28 department may approve, defer, or deny the application.
4 29 Sec. 5. Section 15E.196, unnumbered paragraph 1, Code
4 30 Supplement 2005, is amended to read as follows:
4 31 For purposes of determining the incentives or assistance
4 32 provided in this section, "eligible business" means a business
4 33 or owner or developer of a qualified historic property which
4 34 has been approved to receive incentives and assistance by the
4 35 department of economic development pursuant to application as
5 1 provided in section 15E.195. The incentives and assistance
5 2 provided under this division for businesses or for
5 3 rehabilitating qualified historic property located in
5 4 enterprise zones shall be for a period not to exceed ten years
5 5 and shall include all of the following:
5 6 Sec. 6. Section 15E.196, subsections 3 and 6, Code
5 7 Supplement 2005, are amended to read as follows:
5 8 3. Investment tax credit of up to ten percent, as provided
5 9 in section 15.333. In the case of an owner or developer of
5 10 qualified historic property, the tax credit shall be based
5 11 upon the rehabilitation costs related to the new jobs created
5 12 by the occupant business.
5 13 6. Insurance premium tax credit of up to ten percent, as
5 14 provided in section 15.333A. In the case of an owner or
5 15 developer of qualified historic property, the tax credit shall
5 16 be based upon the rehabilitation costs related to the new jobs
5 17 created by the occupant business.
5 18 Sec. 7. Section 404A.1, subsection 2, Code Supplement
5 19 2005, is amended by adding the following new paragraph:
5 20 NEW PARAGRAPH. e. Property that is at least fifty years
5 21 old and is listed on the national register of historic places
5 22 or eligible for such listing and is located in a designated
5 23 enterprise zone pursuant to chapter 15E, division XVIII.
5 24 Sec. 8. Section 404A.4, subsection 4, Code Supplement
5 25 2005, is amended to read as follows:
5 26 4. a. The total amount of tax credits that may be
5 27 approved for a fiscal year under this chapter shall not exceed
5 28 two million four hundred thousand dollars. For the fiscal
5 29 period beginning July 1, 2005, and ending June 30, 2015, an
5 30 additional four million dollars of tax credits may be approved
5 31 each fiscal year for purposes of projects located in cultural
5 32 and entertainment districts certified pursuant to section
5 33 303.3B. Any of the additional tax credits allocated for
5 34 projects located in certified cultural and entertainment
5 35 districts that are not approved during a fiscal year shall be
6 1 applied to reserved tax credits issued in accordance with
6 2 section 404A.3 in order of original reservation.
6 3 b. For fiscal years beginning on or after July 1, 2006,
6 4 there is not a limit on the amount of tax credits that may be
6 5 approved for a fiscal year for the rehabilitation of eligible
6 6 property as defined in section 404A.1, subsection 2, paragraph
6 7 "e". Such tax credits shall not be counted as part of the
6 8 limitation on the amount of tax credits that may be approved
6 9 under paragraph "a".
6 10 c. The department of cultural affairs shall establish by
6 11 rule the procedures for the application, review, selection,
6 12 and awarding of certifications of completion. The departments
6 13 of economic development, cultural affairs, and revenue shall
6 14 each adopt rules to jointly administer this subsection and
6 15 shall provide by rule for the method to be used to determine
6 16 for which fiscal year the tax credits are available. With the
6 17 exception of tax credits issued pursuant to contracts entered
6 18 into prior to July 1, 2005, tax credits shall not be reserved
6 19 for more than five years.
6 20 Sec. 9. Section 422.7, Code Supplement 2005, is amended by
6 21 adding the following new subsection:
6 22 NEW SUBSECTION. 45. Subtract two thousand dollars for
6 23 each of the first five tax years the taxpayer owns and resides
6 24 in a condominium unit in a qualified historic property located
6 25 in a designated enterprise zone that was redeveloped into a
6 26 multiunit condominium building. This deduction is only
6 27 available for the first five calendar years following the
6 28 calendar year in which the redevelopment of the qualified
6 29 historic property was completed. If the original taxpayer
6 30 sells the condominium unit during the first five calendar
6 31 years, the subsequent owner who resides in that unit is
6 32 eligible for the deduction under this subsection for the
6 33 remainder of the first five calendar years.
6 34 If the taxpayer does not own and reside in the condominium
6 35 unit during the entire tax year, the amount subtracted shall
7 1 be a pro rata amount with any portion of a month considered a
7 2 whole month. The amount subtracted shall be rounded to the
7 3 nearest multiple of fifty dollars.
7 4 For purposes of this subsection, "qualified historic
7 5 property" means the same as defined in section 15E.192,
7 6 subsection 0A.
7 7 Sec. 10. Section 441.21, subsection 2, Code Supplement
7 8 2005, is amended to read as follows:
7 9 2. In the event market value of the property being
7 10 assessed cannot be readily established in the foregoing
7 11 manner, then the assessor may determine the value of the
7 12 property using the other uniform and recognized appraisal
7 13 methods including its productive and earning capacity, if any,
7 14 industrial conditions, its cost, physical and functional
7 15 depreciation and obsolescence and replacement cost, and all
7 16 other factors which would assist in determining the fair and
7 17 reasonable market value of the property but the actual value
7 18 shall not be determined by use of only one such factor. The
7 19 following shall not be taken into consideration: Special
7 20 value or use value of the property to its present owner, and
7 21 the goodwill or value of a business which uses the property as
7 22 distinguished from the value of the property as property.
7 23 However, in assessing property that is rented or leased to
7 24 low=income individuals and families as authorized by section
7 25 42 of the Internal Revenue Code, as amended, and which section
7 26 limits the amount that the individual or family pays for the
7 27 rental or lease of units in the property, the assessor shall
7 28 use the productive and earning capacity from the actual rents
7 29 received as a method of appraisal and shall take into account
7 30 the extent to which that use and limitation reduces the market
7 31 value of the property. The assessor shall not consider any
7 32 tax credit equity or other subsidized financing as income
7 33 provided to the property in determining the assessed value.
7 34 The property owner shall notify the assessor when property is
7 35 withdrawn from section 42 eligibility under the Internal
8 1 Revenue Code. The property shall not be subject to section 42
8 2 assessment procedures for the assessment year for which
8 3 section 42 eligibility is withdrawn. This notification must
8 4 be provided to the assessor no later than March 1 of the
8 5 assessment year or the owner will be subject to a penalty of
8 6 five hundred dollars for that assessment year. The penalty
8 7 shall be collected at the same time and in the same manner as
8 8 regular property taxes. However, in assessing property that
8 9 is qualified historic property, as defined in section 15E.192,
8 10 subsection 0A, which is located in a designated enterprise
8 11 zone, the assessor shall use the productive and earning
8 12 capacity of the property as the method of appraisal. Upon
8 13 adoption of uniform rules by the department of revenue or
8 14 succeeding authority covering assessments and valuations of
8 15 such properties, the valuation on such properties shall be
8 16 determined in accordance with such rules and in accordance
8 17 with forms and guidelines contained in the real property
8 18 appraisal manual prepared by the department as updated from
8 19 time to time for assessment purposes to assure uniformity, but
8 20 such rules, forms, and guidelines shall not be inconsistent
8 21 with or change the foregoing means of determining the actual,
8 22 market, taxable and assessed values.
8 23 Sec. 11. EFFECTIVE AND APPLICABILITY DATES. This Act,
8 24 being deemed of immediate importance, takes effect upon
8 25 enactment and applies as follows:
8 26 1. The sections of this Act amending sections 15E.192,
8 27 15E.193B, 15E.195, and 15E.196 apply to qualified historic
8 28 property where completion of rehabilitation occurs on or after
8 29 the effective date of this Act.
8 30 2. The sections of this Act amending sections 404A.1 and
8 31 404A.4 apply to fiscal years beginning on or after July 1,
8 32 2006.
8 33 3. The section of this Act amending section 422.7 applies
8 34 to tax years beginning on or after January 1, 2007.
8 35 4. The section of this Act amending section 441.21 applies
9 1 to assessment years beginning on or after January 1, 2007.
9 2 EXPLANATION
9 3 This bill relates to qualified historic property that is 50
9 4 years old, is either on the national register of historic
9 5 places or is eligible for such listing, and is located in a
9 6 designated enterprise zone.
9 7 The bill provides that upon approval by the local
9 8 enterprise zone commission and the department of economic
9 9 development, the owner or developer of the qualified historic
9 10 property that is used for business purposes is eligible to
9 11 receive an investment tax credit of up to 10 percent of the
9 12 rehabilitation costs related to the new jobs created by the
9 13 occupant business and a refund of state sales and use taxes
9 14 paid on materials and services used in the rehabilitation. If
9 15 the qualified historic property is used for residential
9 16 purposes, the owner or developer of the property is eligible
9 17 for an investment tax credit of up to 10 percent of the
9 18 rehabilitation costs related to the development of the
9 19 residential units and a refund of state sales and use taxes
9 20 paid on materials and services used in the rehabilitation.
9 21 The bill provides that for property tax purposes, qualified
9 22 historic property located in a designated enterprise zone is
9 23 to be assessed based on its productive and earning capacity.
9 24 The bill provides that under Code chapter 404A, the
9 25 limitations placed on the amount of historic preservation and
9 26 cultural and entertainment district tax credits do not apply
9 27 to the tax credits granted for qualified historic property
9 28 located in a designated enterprise zone.
9 29 The bill also provides an individual income tax deduction
9 30 of up to $2,000 for each of the first five tax years that a
9 31 taxpayer resides in a condominium located in a qualified
9 32 historic property located in a designated enterprise zone.
9 33 The bill takes effect upon enactment and has various
9 34 applicability date provisions.
9 35 LSB 5706SS 81
10 1 mg:rj/cf/24