Senate File 2223 - Introduced SENATE FILE BY COMMITTEE ON NATURAL RESOURCES AND ENVIRONMENT (SUCCESSOR TO SF 2077) Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to renewable energy, providing for state bank 2 acquisition of equity interests in wind energy production 3 facilities, and providing for qualification for specified tax 4 credits and refunds by state banks and by owners or 5 manufacturing facilities generating wind energy for on=site 6 consumption rather than sale, and providing effective and 7 applicability dates. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 5589SV 82 10 rn/rj/24 PAG LIN 1 1 DIVISION I 1 2 BANK WIND ENERGY INVESTMENT 1 3 Section 1. Section 524.802, Code 2007, is amended by 1 4 adding the following new subsection: 1 5 NEW SUBSECTION. 13A. Provide customer financing for wind 1 6 energy production facilities eligible for production tax 1 7 credits pursuant to chapter 476B in a manner that maximizes 1 8 the availability of production tax credits to the state bank, 1 9 including structuring such financing as a membership 1 10 investment whereby the state bank as equity investor may take 1 11 a majority financial position, but not a management position, 1 12 in each such facility, subject to the following: 1 13 a. Prior to providing financing, a creditworthiness review 1 14 shall be conducted pursuant to the state bank's standard loan 1 15 underwriting criteria. 1 16 b. The state bank shall not participate in the operation 1 17 of the facility, the production of wind energy, or the sale of 1 18 wind energy if such sale is contemplated by the customer. 1 19 c. If the facility does not perform as projected in the 1 20 equity investment agreement, the state bank may either sell 1 21 its interest in the facility or pursue liquidation. 1 22 d. The state bank shall not share in any appreciation in 1 23 value of its interest in the facility or in any of the 1 24 customer's real or personal assets. 1 25 e. At the end of any applicable holding period, the state 1 26 bank shall sell at book value its ownership interest in the 1 27 facility. 1 28 DIVISION II 1 29 WIND ENERGY PRODUCTION TAX CREDITS AND REFUNDS 1 30 Sec. 2. Section 423.4, subsection 4, Code Supplement 2007, 1 31 is amended to read as follows: 1 32 4. A person in possession of a wind energy production tax 1 33 credit certificate pursuant to chapter 476B or a renewable 1 34 energy tax credit certificate issued pursuant to chapter 476C 1 35 may apply to the director for refund of the amount of sales or 2 1 use tax imposed and paid upon purchases made by the applicant. 2 2 a. The refunds may be obtained only in the following 2 3 manner and under the following conditions: 2 4 (1) On forms furnished by the department and filed by 2 5 January 31 after the end of the calendar year in which the tax 2 6 credit certificate is to be applied, the applicant shall 2 7 report to the department the total amount of sales and use tax 2 8 paid during the reporting period on purchases made by the 2 9 applicant. 2 10 (2) The applicant shall separately list the amounts of 2 11 sales and use tax paid during the reporting period. 2 12 (3) If required by the department, the applicant shall 2 13 prove that the person making the sales has included the amount 2 14 thereof in the computation of the sales price of such person 2 15 and that such person has paid the tax levied by this 2 16 subchapter or subchapter III, based upon such computation of 2 17 the sales price. 2 18 (4) The applicant shall provide the tax credit 2 19 certificates issued pursuant to chapter 476B or 476C to the 2 20 department with the forms required by this paragraph "a". 2 21 b. If satisfied that the foregoing conditions and 2 22 requirements have been complied with, the director shall 2 23 refund the amount claimed by the applicant for an amount not 2 24 greater than the amount of tax credits issued in tax credit 2 25 certificates pursuant to chapter 476B or 476C. 2 26 Sec. 3. Section 437A.17B, Code 2007, is amended to read as 2 27 follows: 2 28 437A.17B REIMBURSEMENT FOR RENEWABLE ENERGY. 2 29 A person in possession of a wind energy tax credit 2 30 certificate issued pursuant to chapter 476B or a renewable 2 31 energy tax credit certificate issued pursuant to chapter 476C 2 32 may apply to the director for a reimbursement of the amount of 2 33 taxes imposed and paid by the person pursuant to this chapter 2 34 in an amount not more than the person received in wind energy 2 35 tax credit certificates pursuant to chapter 476B or renewable 3 1 energy tax credit certificates pursuant to chapter 476C. To 3 2 obtain the reimbursement, the person shall attach to the 3 3 return required under section 437A.8 the wind energy tax 3 4 credit certificates issued to the person pursuant to chapter 3 5 476B, or the renewable energy tax credit certificates issued 3 6 to the person pursuant to chapter 476C, and provide any other 3 7 information the director may require. The director shall 3 8 direct a warrant to be issued to the person for an amount 3 9 equal to the tax imposed and paid by the person pursuant to 3 10 this chapter but for not more than the amount of the wind 3 11 energy tax credit certificates or renewable energy tax credit 3 12 certificates attached to the return. 3 13 Sec. 4. Section 476B.1, subsection 4, paragraph c, Code 3 14 2007, is amended to read as follows: 3 15 c. Was originally placed in service on or after July 1, 3 16 2005, but before July 1,20092012. 3 17 Sec. 5. Section 476B.1, subsection 4, Code 2007, is 3 18 amended by adding the following new paragraph: 3 19 NEW PARAGRAPH. d. Consists of one or more wind turbines 3 20 connected to a common gathering line which have a combined 3 21 nameplate capacity of less than thirty=five megawatts. 3 22 Sec. 6. Section 476B.2, Code 2007, is amended to read as 3 23 follows: 3 24 476B.2 GENERAL RULE. 3 25 The owner of a qualified facility shall, for each 3 26 kilowatt=hour of qualified electricity that the owner sells or 3 27 uses for on=site consumption during the ten=year period 3 28 beginning on the date the qualified facility was originally 3 29 placed in service, be allowed a wind energy production tax 3 30 credit to the extent provided in this chapter against the tax 3 31 imposed in chapter 422, divisions II, III, and V, and chapter 3 32 432, and may claim a refund of tax imposed by chapter 423 or 3 33 437A for any tax year within the time period set forth in 3 34 section 423.47 or 437A.14. 3 35 Sec. 7. Section 476B.3, Code 2007, is amended to read as 4 1 follows: 4 2 476B.3 CREDIT AMOUNT. 4 3 The wind energy production tax credit allowed under this 4 4 chapter equals the product of one cent multiplied by the 4 5 number of kilowatt=hours of qualified electricity sold or used 4 6 for on=site consumption by the owner during the taxable year. 4 7 Sec. 8. Section 476B.5, subsection 1, paragraph e, Code 4 8 2007, is amended to read as follows: 4 9 e.AExcept when electricity is used for on=site 4 10 consumption, a copy of an executed power purchase agreement or 4 11 other agreement to purchase electricity upon completion of the 4 12 project. An executed interconnection agreement or 4 13 transmission service agreement shall be accepted by the board 4 14 under this paragraph if the owner of the facility has agreed 4 15 to sell electricity from the facility directly or indirectly 4 16 to a wholesale power pool market. 4 17 Sec. 9. Section 476B.6, subsection 2, Code 2007, is 4 18 amended by adding the following new paragraph: 4 19 NEW PARAGRAPH. f. For a facility in which electricity is 4 20 used for on=site consumption, the requirements of paragraphs 4 21 "c" and "d" shall not be applicable. 4 22 Sec. 10. Section 476B.6, subsection 3, Code 2007, is 4 23 amended to read as follows: 4 24 3. The board shall notify the department of the amount of 4 25 kilowatt=hours generated and purchased from a qualified 4 26 facility or generated and used on=site by a qualified 4 27 facility. The department shall calculate the amount of the 4 28 tax credit for which the applicant is eligible and shall issue 4 29 the tax credit certificate for that amount or notify the 4 30 applicant in writing of its refusal to do so. An applicant 4 31 whose application is denied may file an appeal with the 4 32 department within sixty days from the date of the denial 4 33 pursuant to the provisions of chapter 17A. 4 34 Sec. 11. Section 476B.6, subsection 5, paragraph d, Code 4 35 2007, is amended to read as follows: 5 1 d. If the tax credit application is filed by a 5 2 partnership, limited liability company, S corporation, estate, 5 3 trust, or other reporting entity, all of whose income is taxed 5 4 directly to its equity holders or beneficiaries for the taxes 5 5 imposed under chapter 422, division V, or under chapter 423, 5 6 432, or 437A, the tax credit certificate shall be issued 5 7 directly to the partnership, limited liability company, S 5 8 corporation, estate, trust, or other reporting entity. 5 9 Sec. 12. Section 476B.7, unnumbered paragraph 1, Code 5 10 2007, is amended to read as follows: 5 11 Wind energy production tax credit certificates issued under 5 12 this chapter may be transferred to any person or entity. 5 13 Within thirty days of transfer, the transferee must submit the 5 14 transferred tax credit certificate to the department along 5 15 with a statement containing the transferee's name, tax 5 16 identification number, and address, and the denomination that 5 17 each replacement tax credit certificate is to carry and any 5 18 other information required by the department. Within thirty 5 19 days of receiving the transferred tax credit certificate and 5 20 the transferee's statement, the department shall issue one or 5 21 more replacement tax credit certificates to the transferee. 5 22 Each replacement certificate must contain the information 5 23 required under section 476B.6 and must have the same effective 5 24 taxable year and the same expiration date that appeared in the 5 25 transferred tax credit certificate. Tax credit certificate 5 26 amounts of less than the minimum amount established by rule of 5 27 the board shall not be transferable. A tax credit shall not 5 28 be claimed by a transferee under this chapter until a 5 29 replacement tax credit certificate identifying the transferee 5 30 as the proper holder has been issued. A replacement tax 5 31 credit certificate may reflect a different type of tax than 5 32 the type of tax noted on the original tax credit certificate. 5 33 Sec. 13. Section 476B.7, unnumbered paragraph 2, Code 5 34 2007, is amended to read as follows: 5 35 The tax credit shallonly be transferred oncebe freely 6 1 transferable. The transferee may use the amount of the tax 6 2 credit transferred against the taxes imposed under chapter 6 3 422, divisions II, III, and V, and chapter 432 for any tax 6 4 year the original transferor could have claimed the tax 6 5 credit. The transferee may claim a refund under chapter 423 6 6 or 437A for any tax year within the time period set forth in 6 7 section 423.47 or 437A.14 for which the original transferor 6 8 could have claimed a refund. Any consideration received for 6 9 the transfer of the tax credit shall not be included as income 6 10 under chapter 422, divisions II, III, and V. Any 6 11 consideration paid for the transfer of the tax credit shall 6 12 not be deducted from income under chapter 422, divisions II, 6 13 III, and V. 6 14 Sec. 14. Section 476B.8, Code 2007, is amended to read as 6 15 follows: 6 16 476B.8 USE OF TAX CREDIT CERTIFICATES. 6 17 To claim a wind energy production tax credit under this 6 18 chapter, a taxpayer must attach one or more tax credit 6 19 certificates to the taxpayer's tax return, or if used against 6 20 taxes imposed under chapter 423, the taxpayer shall comply 6 21 with section 423.4, subsection 4, or if used against taxes 6 22 imposed under chapter 437A, the taxpayer shall comply with 6 23 section 437A.17B. A tax credit certificate shall not be used 6 24 or attached to a return filed for a taxable year beginning 6 25 prior to July 1, 2006. The tax credit certificate or 6 26 certificates attached to the taxpayer's tax return shall be 6 27 issued in the taxpayer's name, expire on or after the last day 6 28 of the taxable year for which the taxpayer is claiming the tax 6 29 credit, and show a tax credit amount equal to or greater than 6 30 the tax credit claimed on the taxpayer's tax return. Any tax 6 31 credit in excess of the taxpayer's tax liability for the 6 32 taxable year may be credited to the taxpayer's tax liability 6 33 for the following seven taxable years or until depleted, 6 34 whichever is the earlier. If the tax credit is applied 6 35 against the taxes imposed under chapter 423 or 437A, any 7 1 credit in excess of the taxpayer's tax liability is carried 7 2 over and can be filed with the refund claim for the following 7 3 seven tax years or until depleted, whichever is earlier. 7 4 However, the certificate shall not be used to reduce tax 7 5 liability for a tax period ending after the expiration date of 7 6 the certificate. 7 7 Sec. 15. EFFECTIVE AND APPLICABILITY DATES. This Act, 7 8 being deemed of immediate importance, takes effect upon 7 9 enactment and is retroactively applicable to taxable years 7 10 beginning on or after January 1, 2008, for tax credits issued 7 11 pursuant to this Act. 7 12 EXPLANATION 7 13 This bill provides for acquisition of equity interests in 7 14 wind energy production facilities by state banks financing 7 15 such facilities for customers, and relates to qualification 7 16 for specified wind energy tax credits. 7 17 The bill specifies procedures and requirements applicable 7 18 to a state bank structuring the financing of wind energy 7 19 production facilities as a membership investment with the 7 20 state bank as an equity investor acquiring ownership in the 7 21 facility. 7 22 The bill modifies provisions applicable to qualification 7 23 for the wind energy production tax credit pursuant to Code 7 24 chapter 476B consistent with state bank ownership, adds that a 7 25 person in possession of a wind energy tax credit certificate 7 26 can qualify for a refund of sales or use taxes and of 7 27 generation, transmission, or delivery taxes, and provides that 7 28 projects can qualify for the tax credit whether the 7 29 electricity is sold, as is currently the case, or utilized for 7 30 on=site consumption. The time period during which projects 7 31 placed in service may qualify for tax credits is extended from 7 32 July 1, 2009, to July 1, 2012. The bill adds to the 7 33 definition of a qualified wind energy production facility that 7 34 the facility consists of one or more wind turbines connected 7 35 to a common gathering line which have a combined nameplate 8 1 generating capacity of less than 35 megawatts. 8 2 The bill changes a current restriction on transferability 8 3 of credit certificates on a one=time basis to an unlimited 8 4 number of transfers, and provides that a replacement tax 8 5 credit certificate may reflect a different type of tax than 8 6 noted on the original certificate. 8 7 The bill takes effect upon enactment and applies 8 8 retroactively to taxable years beginning on or after January 8 9 1, 2008, with respect to tax credits issued pursuant to the 8 10 bill. 8 11 LSB 5589SV 82 8 12 rn/rj/24