S.F. 387 DIVISION I 1 MANUFACTURING JOBS PROGRAM 2 Section 1. NEW SECTION . 15.321 Short title. 3 This part shall be known and may be cited as the 4 “Manufacturing Jobs Program” . 5 Sec. 2. NEW SECTION . 15.322 Definitions. 6 1. “Capital investment” means expenditures that are made by 7 an eligible manufacturer to retool or reconfigure a facility 8 and that are directly related to the manufacturing of a new 9 product or to the expansion of production capacity for an 10 existing product. 11 2. “Department” means the department of economic 12 development. 13 3. “Eligible manufacturer” means a manufacturer meeting the 14 requirements of section 15.323. 15 4. “Facility” means a building or other structure at which 16 an eligible manufacturer manufactures a product. 17 5. “Program” means the manufacturing jobs program 18 established pursuant to this part. 19 Sec. 3. NEW SECTION . 15.323 Eligible manufacturer. 20 1. To be eligible to receive incentives under the program 21 described in this part, a manufacturer shall meet all of the 22 following conditions: 23 a. Be an Iowa-based business manufacturing goods at a 24 facility in Iowa. 25 b. Have a North American industry classification system code 26 within the manufacturing sector range 31-33. 27 c. Increase manufacturing activities in the state either by 28 manufacturing a new product or by expanding production capacity 29 for an existing product. 30 d. Make a minimum capital investment. For purposes of this 31 paragraph, the amount of the minimum capital investment shall 32 be: 33 (1) Twenty-five thousand dollars per job, in the case of a 34 new product. 35 -1- LSB 1059SV (1) 84 tw/sc 1/ 6

S.F. 387 (2) Fifteen thousand dollars per job, in the case of 1 expanded capacity for an existing product. 2 e. Meet all of the requirements of an eligible business 3 under section 15.329 except the qualifying investment amount in 4 section 15.329, subsection 1, paragraph “a” . 5 2. A manufacturer receiving assistance under this part 6 shall not be eligible for assistance under the high quality 7 jobs program described in part 13 of this subchapter. 8 Sec. 4. NEW SECTION . 15.324 Agreement. 9 1. An eligible manufacturer receiving financial assistance 10 under the program shall enter into an agreement with the 11 department specifying the requirements that must be met to 12 confirm eligibility pursuant to this part. 13 2. An agreement entered into under the program shall conform 14 to the minimum requirements specified in section 15.330. 15 Sec. 5. NEW SECTION . 15.325 Manufacturing activities tax 16 credit. 17 1. a. An eligible manufacturer may claim a tax credit 18 against the taxes imposed in chapter 422, division II or 19 III equal to one hundred percent of the amount of capital 20 investment directly related to increasing manufacturing 21 activities in the state. 22 b. An individual may claim the tax credit under this 23 subsection of a partnership, limited liability company, 24 S corporation, estate, or trust electing to have income 25 taxed directly to the individual. The amount claimed by the 26 individual shall be based upon the pro rata share of the 27 individual’s earnings from the partnership, limited liability 28 company, S corporation, estate, or trust. 29 c. Any tax credit in excess of the tax liability for the tax 30 year may be credited to the tax liability for the following ten 31 years or until depleted, whichever occurs first. 32 d. (1) Subject to prior approval by the department, in 33 consultation with the department of revenue, an eligible 34 manufacturer may elect to receive a refund of all or a portion 35 -2- LSB 1059SV (1) 84 tw/sc 2/ 6

S.F. 387 of any unused tax credit in excess of the tax liability. 1 (2) If the eligible manufacturer is a partnership, S 2 corporation, limited liability company, or estate or trust 3 electing to have the income taxed directly to the individual, 4 an individual may claim the refund allowed under subparagraph 5 (1). The amount claimed by the individual shall be based 6 upon the pro rata share of the individual’s earnings of the 7 partnership, S corporation, limited liability company, estate, 8 or trust. 9 2. a. An eligible manufacturer shall apply to the 10 department of economic development for a tax credit 11 certificate. After reviewing the application and verifying the 12 eligibility of a taxpayer for a tax credit pursuant to this 13 section, the department shall forward the application to the 14 board with a recommendation on whether or not to issue a tax 15 credit certificate to the taxpayer. If the board approves 16 the application, the department shall issue a tax credit 17 certificate to the taxpayer. The tax credit certificate shall 18 contain the taxpayer’s name, address, tax identification 19 number, the amount of the credit, the certificate expiration 20 date, and any other information required by the department of 21 revenue. 22 b. To claim a tax credit under this section, a taxpayer must 23 attach one or more tax credit certificates to the taxpayer’s 24 tax return. The tax credit certificate or certificates 25 attached to the taxpayer’s tax return shall be issued in the 26 taxpayer’s name, and the expiration date on the certificate 27 shall be a date that falls on or after the last day of the 28 taxable year for which the taxpayer is claiming the tax credit. 29 c. The tax credit certificate, unless otherwise void, shall 30 be accepted by the department of revenue as payment for taxes 31 imposed pursuant to chapter 422, division II or III, subject 32 to any conditions or restrictions placed by the department 33 of economic development upon the face of the tax credit 34 certificate and subject to the limitations of this section. 35 -3- LSB 1059SV (1) 84 tw/sc 3/ 6

S.F. 387 d. A tax credit certificate issued under this section is not 1 transferable to any person or entity. 2 3. The maximum amount of tax credit that may be claimed 3 under this section by an eligible manufacturer is five million 4 dollars. 5 4. The total amount of tax credits that may be approved by 6 the board under this section is fifteen million dollars. 7 Sec. 6. NEW SECTION . 15.325A Repeal. 8 This part is repealed on December 31, 2020. 9 Sec. 7. NEW SECTION . 422.11Y Manufacturing activities tax 10 credit. 11 The taxes imposed under this division shall be reduced by 12 a manufacturing activities tax credit in the same manner, for 13 the same amount, and under the same conditions as provided in 14 chapter 15, subchapter II, part 12. 15 Sec. 8. Section 422.33, Code 2011, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 29. The taxes imposed under this division 18 shall be reduced by a manufacturing activities tax credit 19 in the same manner, for the same amount, and under the same 20 conditions as provided in chapter 15, subchapter II, part 12. 21 Sec. 9. RETROACTIVE APPLICABILITY. This division of this 22 Act applies retroactively to January 1, 2011, for tax years 23 beginning on or after that date. 24 DIVISION II 25 CONFORMING CHANGES 26 Sec. 10. Section 2.48, subsection 3, paragraph e, Code 2011, 27 is amended by adding the following new subparagraph: 28 NEW SUBPARAGRAPH . (10) The manufacturing activities tax 29 credits available under the manufacturing jobs program in 30 chapter 15, subchapter II, part 12. 31 Sec. 11. Section 15.104, subsection 8, Code 2011, is amended 32 by adding the following new paragraph: 33 NEW PARAGRAPH . n. Manufacturing jobs. Data on all 34 assistance provided to eligible manufacturers under the 35 -4- LSB 1059SV (1) 84 tw/sc 4/ 6

S.F. 387 manufacturing jobs program described in sections 15.321 through 1 15.325A. 2 EXPLANATION 3 This bill creates a manufacturing jobs program within the 4 department of economic development. 5 Division I of the bill creates the program. The program 6 provides corporate and individual income tax credits to 7 eligible manufacturers for 100 percent of their capital 8 investment directly related to increasing manufacturing 9 activities in the state. To be eligible, a manufacturer must 10 be an Iowa-based business manufacturing goods at a facility 11 in Iowa, have a North American Industry Classification System 12 code within the manufacturing sector range 31-33, increase 13 manufacturing activities either by manufacturing a new 14 product or by expanding production capacity for an existing 15 product, make a minimum capital investment, and meet all the 16 requirements of an eligible business under the high quality 17 jobs program specified in Code section 15.329. Meeting the 18 requirements of the high quality jobs program, by operation of 19 law, requires a manufacturer to meet certain job creation and 20 wage threshold requirements also required in that program and 21 in the grow Iowa values fund and financial assistance program. 22 A manufacturer receiving assistance under the manufacturing 23 jobs program is not eligible for assistance under the high 24 quality jobs program. 25 The division provides that the tax credits are available 26 against the individual and corporate income taxes. The 27 tax credits are refundable subject to the approval of the 28 department of economic development or, at the taxpayer’s 29 election, may be carried forward against future tax liability 30 for up to 10 years or until depleted, whichever occurs first. 31 The tax credits are not transferable. The maximum amount 32 of tax credit that an eligible manufacturer may claim is $5 33 million. The total amount of tax credits that may be approved 34 under the program is $15 million. 35 -5- LSB 1059SV (1) 84 tw/sc 5/ 6

S.F. 387 The division applies retroactively to January 1, 2011, for 1 tax years beginning on or after that date. 2 The program is repealed on December 31, 2020. 3 Division II of the bill adds the program to the list of 4 tax credit programs to be reviewed in 2015 by the general 5 assembly’s tax expenditure committee. 6 The division also requires the economic development board 7 to report annually on the assistance provided to eligible 8 manufacturers under the program. 9 -6- LSB 1059SV (1) 84 tw/sc 6/ 6