S.F. _____ H.F. _____ Section 1. Section 404A.1, subsection 1, Code 2011, is 1 amended to read as follows: 2 1. A historic preservation and cultural and entertainment 3 district tax credit, subject to the availability of the 4 credit, is granted against the tax imposed under chapter 422, 5 division II , III , or V , or chapter 432 , for the substantial 6 rehabilitation of eligible property located in this state 7 as provided in this chapter . Tax credits in excess of tax 8 liabilities shall be refunded or credited as provided in 9 section 404A.4, subsection 3 . 10 Sec. 2. Section 404A.1, Code 2011, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 3. For purposes of this chapter, unless the 13 context otherwise requires: 14 a. “Eligible property” means property meeting the 15 requirements of subsection 2. 16 b. “Measuring period” means any period of twenty-four 17 consecutive months during the rehabilitation period, as 18 designated by the taxpayer, during which the qualified 19 rehabilitation costs meet the requirements of a substantial 20 rehabilitation. 21 c. “Placed in service” means the same as used in section 47 22 of the Internal Revenue Code. 23 d. “Qualified rehabilitation costs” means expenditures made 24 for the rehabilitation of eligible property that meet the 25 requirements of section 404A.2, subsections 2 and 2A. 26 e. “Rehabilitation period” means the period of time during 27 which an eligible property is rehabilitated, commencing from 28 the date the rehabilitation project is approved pursuant to 29 section 404A.3 and ending with the end of the taxable year in 30 which the property is placed in service. 31 f. “Substantial rehabilitation” means qualified 32 rehabilitation costs that meet or exceed the following: 33 (1) In the case of commercial property, costs totaling at 34 least fifty percent of the assessed value of the property, 35 -1- LSB 1335DP (9) 84 tw/sc 1/ 7

S.F. _____ H.F. _____ excluding the land, prior to the rehabilitation. 1 (2) In the case of residential property or barns, costs 2 totaling at least twenty-five thousand dollars or twenty-five 3 percent of the assessed value, excluding the land, prior to 4 rehabilitation, whichever is less. 5 Sec. 3. Section 404A.2, subsection 1, paragraphs a through 6 d, Code 2011, are amended by striking the paragraphs. 7 Sec. 4. Section 404A.2, Code 2011, is amended by adding the 8 following new subsection: 9 NEW SUBSECTION . 2A. For purposes of this chapter, qualified 10 rehabilitation costs include all costs incurred during the 11 rehabilitation period and are not limited to costs incurred 12 during the measuring period. 13 Sec. 5. Section 404A.3, subsections 1 and 2, Code 2011, are 14 amended to read as follows: 15 1. a. In order for costs of a rehabilitation project to 16 qualify for a tax credit, the rehabilitation project must 17 receive approval from the state historic preservation office of 18 the department of cultural affairs. 19 b. Applications for approvals from the state historic 20 preservation office of the department of cultural affairs shall 21 be on forms approved by the state historic preservation office 22 department and shall contain information as required by the 23 state historic preservation office department . The information 24 shall at least include the approximate date of the start of 25 rehabilitation, the approximate date of completion, as well as 26 the cost. 27 c. The approval process shall not exceed ninety days 28 beginning from the date on which a completed application is 29 received by the state historic preservation office department . 30 After the ninety-day limit, the rehabilitation project is 31 deemed to be approved unless the state historic preservation 32 office department has denied the application or contacted the 33 applicant for further information regarding the application. 34 2. The state historic preservation office department shall 35 -2- LSB 1335DP (9) 84 tw/sc 2/ 7

S.F. _____ H.F. _____ establish selection criteria and standards for rehabilitation 1 projects involving eligible property. The main emphasis of 2 the standards shall be to ensure that a rehabilitation project 3 maintains the integrity of the eligible property. To the 4 extent applicable, the standards shall be consistent with the 5 standards of the United States secretary of the interior for 6 rehabilitation of eligible property. 7 Sec. 6. Section 404A.3, subsection 3, paragraphs a and b, 8 Code 2011, are amended to read as follows: 9 a. A rehabilitation project for which the state historic 10 preservation office department has reserved tax credits 11 pursuant to section 404A.4 shall begin rehabilitation of the 12 property before the end of the fiscal year in which the project 13 application was approved and for which the tax credits were 14 reserved. 15 b. The Except as provided in subsection 5, eligible property 16 shall be placed in service within thirty-six months of the date 17 on which the project application was approved. For purposes of 18 this section , “placed in service” has the same meaning as used 19 for purposes of section 47 of the Internal Revenue Code. The 20 department may provide by rule for the allowance of additional 21 time to complete a project. 22 Sec. 7. Section 404A.3, subsection 4, Code 2011, is amended 23 to read as follows: 24 4. A rehabilitation project that does not meet the 25 requirements of subsection 3 or subsection 5, as applicable, is 26 subject to revocation, repayment, or recapture of tax credits 27 reserved or approved pursuant to this chapter . 28 Sec. 8. Section 404A.3, Code 2011, is amended by adding the 29 following new subsection: 30 NEW SUBSECTION . 5. a. The department of cultural affairs 31 may provide for the phasing of a rehabilitation project if the 32 project meets all of the following requirements: 33 (1) The project involves qualified rehabilitation costs of 34 five million dollars or more. 35 -3- LSB 1335DP (9) 84 tw/sc 3/ 7

S.F. _____ H.F. _____ (2) A written set of architectural plans and specifications 1 for all phases of the project is completed and submitted to the 2 department before the physical work on the project begins. 3 (3) The written plans and specifications submitted pursuant 4 to subparagraph (2) contemplate realistic phasing of the 5 project and can reasonably be expected to be completed during 6 the rehabilitation period. 7 b. A rehabilitation project approved for phasing pursuant to 8 this subsection shall be completed and placed in service within 9 sixty months of the date on which the project application was 10 approved. 11 c. The department of cultural affairs shall adopt rules 12 for the implementation of this subsection that provide for the 13 administration of phasing as nearly as possible in conjunction 14 with the phasing of projects under the federal historic 15 preservation tax incentives program. 16 Sec. 9. Section 404A.4, subsection 1, Code 2011, is amended 17 to read as follows: 18 1. Upon completion of the rehabilitation project, a 19 certification of completion must be obtained from the state 20 historic preservation office of the department of cultural 21 affairs. A completion certificate shall identify the person 22 claiming the tax credit under this chapter and the qualified 23 rehabilitation costs incurred up to the two years preceding the 24 completion date. 25 Sec. 10. Section 404A.4, subsection 2, Code 2011, is amended 26 to read as follows: 27 2. After verifying the eligibility for the tax credit, 28 the state historic preservation office department shall 29 issue a historic preservation and cultural and entertainment 30 district tax credit certificate to be attached to the person’s 31 tax return. The tax credit certificate shall contain the 32 taxpayer’s name, address, tax identification number, the date 33 of project completion, the amount of credit, other information 34 required by the department of revenue, and a place for the name 35 -4- LSB 1335DP (9) 84 tw/sc 4/ 7

S.F. _____ H.F. _____ and tax identification number of a transferee and the amount of 1 the tax credit being transferred. Of the amount of tax credits 2 that may be approved in a fiscal year pursuant to subsection 3 4 , paragraph “a” : 4 a. For the fiscal year beginning July 1, 2009, the office 5 department shall reserve not more than twenty million dollars 6 worth of tax credits for a taxable year beginning on or after 7 January 1, 2009, and not more than thirty million dollars worth 8 of tax credits for a taxable year beginning on or after January 9 1, 2010. 10 b. For the fiscal year beginning July 1, 2010, the office 11 department shall reserve not more than twenty million dollars 12 worth of tax credits for a taxable year beginning on or after 13 January 1, 2010, and not more than thirty million dollars worth 14 of tax credits for a taxable year beginning on or after January 15 1, 2011. 16 c. For the fiscal year beginning July 1, 2011, the office 17 department shall reserve not more than twenty million dollars 18 worth of tax credits for a taxable year beginning on or after 19 January 1, 2011, and not more than thirty million dollars worth 20 of tax credits for a taxable year beginning on or after January 21 1, 2012. 22 d. For the fiscal year beginning July 1, 2012, and for each 23 fiscal year thereafter, the department shall reserve not more 24 than forty-five million dollars worth of tax credits for any 25 one taxable year. 26 Sec. 11. Section 404A.4, subsection 4, paragraph b, 27 subparagraph (4), Code 2011, is amended to read as follows: 28 (4) Twenty percent of the dollar amount of the tax 29 credits shall be allocated for projects that involve the 30 creation of more than five hundred new permanent jobs. A 31 taxpayer receiving a tax credit certificate for a project 32 under this allocation shall provide information documenting 33 the creation of the jobs to the state historic preservation 34 office department of cultural affairs and to the department of 35 -5- LSB 1335DP (9) 84 tw/sc 5/ 7

S.F. _____ H.F. _____ economic development. The jobs shall be created within two 1 years of the date a tax credit certificate is issued. The 2 department of economic development shall verify the creation 3 of the jobs. The amount of any tax credits received is subject 4 to recapture by the department of revenue if the jobs are not 5 created within two years. The state historic preservation 6 office and the department of economic development may adopt 7 rules for the implementation of this subparagraph. The rules 8 shall provide for a method or form that allows a city or 9 county to track the number of jobs created in the construction 10 industry by the project. 11 Sec. 12. RETROACTIVE APPLICABILITY. The following 12 provision or provisions of this Act apply retroactively to July 13 1, 2009, for projects approved and tax credits reserved on or 14 after that date: 15 1. The sections of this Act amending section 404A.1. 16 2. The sections of this Act amending section 404A.2. 17 EXPLANATION 18 This bill relates to the administration of the historic 19 preservation property rehabilitation tax credit program 20 administered by the department of cultural affairs. 21 The bill makes the following changes to the administration 22 of the program: 23 (1) Currently, property classified as residential or as 24 commercial with multifamily residential units may not exceed 25 $100,000 per residential unit. The bill eliminates this 26 requirement. 27 (2) Currently, the program uses the same 24-month period to 28 both gauge the size of a project and determine the costs that 29 qualify for purposes of computing the amount of the tax credit. 30 The bill provides for a rehabilitation period and a measuring 31 period. The rehabilitation period is the period of time 32 beginning with the project’s approval and ending with the end 33 of the taxable year in which the project is placed in service. 34 The rehabilitation period is the period of time used for 35 -6- LSB 1335DP (9) 84 tw/sc 6/ 7

S.F. _____ H.F. _____ purposes of determining the amount of qualified rehabilitation 1 costs. The measuring period is a period of 24 months during 2 the rehabilitation period, designated by the taxpayer, and 3 is used to determine whether a project is a substantial 4 rehabilitation for purposes of eligibility for the tax credits. 5 (3) Currently, all rehabilitation projects must be 6 completed and placed in service within 36 months of the 7 project’s approval. The bill provides for the phasing of 8 certain projects. A project approved for phasing has 60 months 9 in which to complete the project and place it in service. 10 (4) References to the state historic preservation office 11 are changed to the department of cultural affairs. 12 In general, the changes numbered (2) and (3) align the 13 program more closely with the federal historic preservation tax 14 incentives program. 15 The changes described in numbers (1) and (2) apply 16 retroactively to July 1, 2009, for projects approved and tax 17 credits reserved on or after that date. 18 -7- LSB 1335DP (9) 84 tw/sc 7/ 7