House File 2696 - Introduced HOUSE FILE BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 2444) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to economic development by expanding the scope of 2 enterprise zones and targeted jobs withholding credit 3 agreements in certain pilot project cities located in border 4 counties, and providing an effective date. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5877HV 82 7 tw/sc/14 PAG LIN 1 1 Section 1. Section 15E.194, subsection 3, unnumbered 1 2 paragraph 1, Code Supplement 2007, is amended to read as 1 3 follows: 1 4 3. A city may designate an area of up to four square miles 1 5 to be an enterprise zone if the areaiseither meets the 1 6 definition of an economic development area pursuant to section 1 7 403.17 and qualifies as a targeted jobs withholding city 1 8 pursuant to section 403.19A with a commercial service airport 1 9 or if the area meets the definition of a blighted areaas 1 10 defined inpursuant to section 403.17 and the area includes or 1 11 is located within four miles of at least three of the 1 12 following: 1 13 Sec. 2. Section 403.19A, subsection 1, unnumbered 1 14 paragraph 1, Code Supplement 2007, is amended to read as 1 15 follows: 1 16 For purposes of thissectionsubchapter, unless the context 1 17 otherwise requires: 1 18 Sec. 3. Section 403.19A, subsection 1, paragraphs c and f, 1 19 Code Supplement 2007, are amended to read as follows: 1 20 c. "Employer" means a business creating targeted jobs in 1 21an urban renewal area ofa pilot project city pursuant to a 1 22 withholding agreement. 1 23 f. "Targeted job" means a job in a business which is or 1 24 will be located inan urban renewal area ofa pilot project 1 25 city that pays a wage at least equal to the countywide average 1 26 wage. "Targeted job" includes new jobs from Iowa business 1 27 expansions or retentions within the city limits of the pilot 1 28 project city and those jobs resulting from established 1 29 out=of=state businesses, as defined by the department of 1 30 economic development, moving to or expanding in Iowa. 1 31 Sec. 4. Section 403.19A, subsection 3, paragraphs a and b, 1 32 Code Supplement 2007, are amended to read as follows: 1 33 a. A pilot project city may provide by ordinance for the 1 34 depositinto a designated account in the special fund 1 35 described in section 403.19, subsection 2,of the targeted 2 1 jobs withholding credit described in thissectionsubchapter 2 2 into a fund established for that purpose. The targeted jobs 2 3 withholding credit shall be based upon the wages paid to 2 4 employees pursuant to a withholding agreement. 2 5 b. An amount equal to three percent of the gross wages 2 6 paid by an employer to each employee under a withholding 2 7 agreement shall be credited from the payment made by the 2 8 employer pursuant to section 422.16. If the amount of the 2 9 withholding by the employer is less than three percent of the 2 10 gross wages paid to the employees covered by the withholding 2 11 agreement, the employer shall receive a credit against other 2 12 withholding taxes due by the employer or may carry the credit 2 13 forward for up to ten years or until depleted, whichever is 2 14 the earlier. The employer shall remit the amount of the 2 15 credit quarterly, in the same manner as withholding payments 2 16 are reported to the department of revenue, to the pilot 2 17 project city to be allocated to and when collected paid intoa 2 18 designated account inthespecialfundfor the urban renewal 2 19 area in which the targeted jobs are locatedestablished in 2 20 paragraph "a". All amounts so deposited shall be used or 2 21 pledged by the pilot project city foran urban renewala 2 22 project related to the employer pursuant to the withholding 2 23 agreement. 2 24 Sec. 5. Section 403.19A, subsection 3, paragraph c, 2 25 subparagraph (1), Code Supplement 2007, is amended to read as 2 26 follows: 2 27 (1) The pilot project city shall enter into a withholding 2 28 agreement with each employer concerning the targeted jobs 2 29 withholding credit. However, an agreement shall not be 2 30 entered into by a pilot project city with a business currently 2 31 located in this state unless the business either creates ten 2 32 new jobs or makes a qualifying investment of at least five 2 33 hundred thousand dollarswithin the urban renewal areain the 2 34 pilot project city. The withholding agreement may have a term 2 35 of up to ten years. An employer shall not be obligated to 3 1 enter into a withholding agreement. 3 2 Sec. 6. Section 403.19A, subsection 3, paragraph j, Code 3 3 Supplement 2007, is amended to read as follows: 3 4 j. A pilot project city that enters into a withholding 3 5 agreement shall arrange for a match of at least one dollar for 3 6 each withholding credit dollar received by the city. The 3 7 local match may come from the pilot project city, a private 3 8 donor, or the business, or a combination of all three. The 3 9 local match may be in cash or in kind to be used for the 3 10 business project. If the business is located in an urban 3 11 renewal area, the pilot project city may use revenues from the 3 12 special fund created in section 403.19, subsection 2, if the 3 13 project related to the employer meets the definition of urban 3 14 renewal project in section 403.17, subsection 25. 3 15 Sec. 7. CODE EDITOR DIRECTIVE. The Code editor is 3 16 directed to transfer section 403.19A, as amended in this Act, 3 17 to become new section 403.25 and to correct any internal 3 18 references as necessary. 3 19 Sec. 8. EFFECTIVE DATE. The section of this Act amending 3 20 section 15E.194, being deemed of immediate importance, takes 3 21 effect upon enactment. 3 22 EXPLANATION 3 23 This bill relates to the designation of enterprise zones 3 24 located near modes of transportation and to withholding 3 25 agreement tax credits. 3 26 The bill provides that a city may designate an area as a 3 27 transportation enterprise zone if the area is either an 3 28 economic development area and a targeted jobs withholding city 3 29 that has a commercial service airport or if the area is a 3 30 blighted area. This section of the bill takes effect upon 3 31 enactment. 3 32 The bill provides that employers who have entered into a 3 33 withholding agreement no longer have to be located in an urban 3 34 renewal area. Instead they are only required to be in a pilot 3 35 project city. 4 1 The bill also provides that the amount of the withholding 4 2 credits is to be deposited in a fund of the city established 4 3 for that purpose rather than into the special fund created for 4 4 urban renewal purposes. 4 5 The bill provides that a pilot project city may use tax 4 6 increment financing funds from the special fund created in 4 7 Code section 403.19 as matching funds, provided the project 4 8 meets the definition of an urban renewal project. 4 9 The bill directs the Code editor to transfer Code section 4 10 403.19A, as amended in the bill, to new Code section 403.25. 4 11 LSB 5877HV 82 4 12 tw/sc/14