Senate Study Bill 1116 - Introduced SENATE/HOUSE FILE _____ BY DEPARTMENT OF ECONOMIC DEVELOPMENT A BILL FOR An Act relating to the administration of the enterprise zones 1 program by the department of economic development. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1333DP (20) 84 tw/sc

S.F. _____ H.F. _____ Section 1. Section 15.119, subsection 2, paragraph d, Code 1 2011, is amended to read as follows: 2 d. The enterprise zones program administered pursuant 3 to sections 15E.191 through 15E.197 , but excluding section 4 15E.193B . The aggregate tax credit limit provided in this 5 section shall not apply to the incentives provided to eligible 6 housing businesses under section 15E.193B. 7 Sec. 2. Section 15A.1, subsection 5, paragraph c, Code 2011, 8 is amended to read as follows: 9 c. The area is located in a city or county that meets the 10 distress criteria provided under the enterprise zone program in 11 section 15E.194, subsection 1 or 2 county or city portion that 12 is included on the list of enterprise zones certified pursuant 13 to section 15E.193 . 14 Sec. 3. Section 15E.192, Code 2011, is amended by striking 15 the section and inserting in lieu thereof the following: 16 15E.192 Definitions. 17 For purposes of this division, unless the context otherwise 18 requires: 19 1. “Board” means the Iowa economic development board created 20 in section 15.103. 21 2. “City portion” means a qualified census tract and all 22 census tracts adjacent to the qualified census tract. 23 3. “Commission” means an enterprise zone housing commission 24 established pursuant to section 15E.195. 25 4. “Created job” means the same as defined in section 26 15G.101. 27 5. “Department” means the Iowa department of economic 28 development created in section 15.105. 29 6. “Eligible business” means a business meeting the 30 requirements of section 15E.193A. 31 7. “Full-time equivalent position” means the same as defined 32 in section 15G.101. 33 8. “Infilling” means the demolition of a vacant, blighted, 34 obsolete, or otherwise underutilized structure in a developed 35 -1- LSB 1333DP (20) 84 tw/sc 1/ 23

S.F. _____ H.F. _____ area in order to build a new structure on the same site. 1 9. “Maintenance period completion date” means the same as 2 defined in section 15G.101. 3 10. “Qualified census tract” means a census tract 4 designated as a qualified census tract by the United States 5 secretary of housing and urban development pursuant to section 6 42(d)(5)(B)(ii) of the federal Internal Revenue Code. 7 11. “Qualifying wage threshold” means the same as defined 8 in section 15G.101. 9 12. “Retained job” means the same as defined in section 10 15G.101. 11 Sec. 4. Section 15E.193, Code 2011, is amended by striking 12 the section and inserting in lieu thereof the following: 13 15E.193 Enterprise zones. 14 1. a. Each year prior to July 1, the department shall 15 certify a list of enterprise zones. The list shall include all 16 of the following: 17 (1) Counties that qualify pursuant to subsection 2. 18 (2) City portions that qualify pursuant to subsection 3. 19 (3) Counties that qualify for the special enterprise zone 20 certification described in subsection 4. 21 (4) Expiring enterprise zones, as described in paragraph 22 “c” . 23 b. The list of enterprise zones certified pursuant to 24 paragraph “a” shall be in effect from the July 1 following 25 certification to the next June 30 after which time the next 26 certified list shall be considered in effect. 27 c. (1) If a county or city portion that qualified under 28 subsection 2, 3, or 4 at the prior annual certification fails 29 to qualify under subsection 2, 3, or 4 at the subsequent annual 30 certification, the county or city portion shall be considered 31 an expiring enterprise zone. An enterprise zone shall be 32 considered expiring until the end of the effective period for 33 the annual certification at which the enterprise zone failed 34 to qualify. 35 -2- LSB 1333DP (20) 84 tw/sc 2/ 23

S.F. _____ H.F. _____ (2) If, at the end of the effective period, an expiring 1 enterprise zone fails for a second consecutive annual 2 certification to qualify for the certified list under 3 subsection 2, 3, or 4, then the enterprise zone shall expire 4 and shall not be included on the certified list of enterprise 5 zones. 6 (3) Expiration of an enterprise zone does not preclude a 7 county or city portion from requalifying as an enterprise zone 8 under this subsection 1 if, at any point after expiration, the 9 county or city portion is found to meet the requirements of 10 subsection 2 or 3. 11 (4) For purposes of this paragraph “c” , “effective period” 12 means the period described in paragraph “b” . 13 d. (1) As long as an enterprise zone remains on the list 14 certified pursuant to subsection 1 or has not expired pursuant 15 to paragraph “c” , subparagraph (2), the county or city may 16 confer the incentives and assistance available under sections 17 15E.196 and 15E.197 to eligible businesses located within the 18 enterprise zone. 19 (2) A county or city shall not confer new incentives and 20 assistance or extend the time period of existing incentives and 21 assistance once an enterprise zone has expired. However, this 22 paragraph “d” shall not be construed to abrogate the terms of 23 agreements providing incentives and assistance beyond the date 24 of expiration of the enterprise zone as long as the benefits in 25 such agreements were conferred prior to the expiration of the 26 enterprise zone, and are otherwise valid. 27 2. a. A county shall be included on the certified list 28 if it is ranked among the twenty-five poorest performing Iowa 29 counties as measured by two or more of the following criteria: 30 (1) The most recent five-year average of the annual 31 unemployment rate, as determined by the department of workforce 32 development. 33 (2) The most recent five-year average of the county’s 34 annual average weekly wage, as determined by the department of 35 -3- LSB 1333DP (20) 84 tw/sc 3/ 23

S.F. _____ H.F. _____ workforce development. 1 (3) The most recent five-year average of the annual 2 population growth rate, as estimated by the United States 3 census bureau. 4 (4) The most recent five-year average of the annual poverty 5 rate, as estimated by the United States census bureau. 6 b. If a county qualifies as an enterprise zone, then each 7 city, or part thereof, located in the county shall be included 8 in the enterprise zone. 9 3. a. A city portion shall be included on the certified 10 list if it contains a census tract that has been designated as 11 a qualified census tract. 12 b. A city may contain more than one city portion certified 13 as an enterprise zone pursuant to this section. 14 4. a. Notwithstanding the annual certification process 15 described in subsection 1 and the county qualification 16 requirements in subsection 2, the department may grant a 17 special enterprise zone certification to any county that 18 experiences a significant permanent reduction in employment. 19 b. A special enterprise zone certification granted pursuant 20 to this subsection may be granted at a time other than the 21 annual certification under subsection 1. 22 c. A special enterprise zone certification granted pursuant 23 to this subsection shall be in effect for five years and shall 24 commence from the date of the significant permanent reduction 25 in employment. The department shall determine the date of 26 commencement according to criteria adopted by rule pursuant to 27 chapter 17A. 28 d. A business precipitating a significant permanent 29 reduction in employment, or its successors in interest, shall 30 not be eligible to receive the incentives and assistance 31 otherwise available to businesses located in an enterprise 32 zone. 33 e. For purposes of this subsection, “significant permanent 34 reduction in employment” means the closing of, or a permanent 35 -4- LSB 1333DP (20) 84 tw/sc 4/ 23

S.F. _____ H.F. _____ reduction in force by, a single nonretail business in which all 1 of the following conditions exist: 2 (1) The closing or reduction in force involves the loss of 3 nonseasonal full-time equivalent positions. 4 (2) The closing or reduction in force is due to the 5 relocation of jobs to another state or a foreign country, the 6 cessation of manufacturing activities in the state, the removal 7 of industrial plant capacity, or any similar cause identified 8 by the department as a primary contributing factor in the 9 closing or reduction in force. 10 (3) The closing or reduction in force takes place on or 11 after February 1, 2007. 12 (4) The closing or reduction in force amounts to the lesser 13 of the following: 14 (a) One thousand full-time equivalent positions. 15 (b) Four percent or more of the county’s labor force, 16 as determined according to the most recent annual resident 17 labor force statistics compiled by the department of workforce 18 development. 19 Sec. 5. NEW SECTION . 15E.193A Eligible business. 20 1. A business that is or will be located in an enterprise 21 zone certified pursuant to section 15E.193 is eligible to 22 receive incentives and assistance pursuant to this division if 23 the business meets all of the following requirements: 24 a. Has not closed or reduced operations in one area of the 25 state and relocated substantially the same operations into the 26 enterprise zone. This paragraph “a” shall not be construed 27 to prohibit a business from expanding its operation in an 28 enterprise zone if existing operations of a similar nature in 29 this state are not closed or substantially reduced. 30 b. Is not a retail business or a business where entrance is 31 limited by a cover charge or membership requirement. 32 c. Provides a sufficient package of benefits to each 33 employee holding a created or retained job. The board, at the 34 recommendation of the department, shall adopt rules determining 35 -5- LSB 1333DP (20) 84 tw/sc 5/ 23

S.F. _____ H.F. _____ what constitutes a sufficient package of benefits. 1 d. Pays to each employee holding a created or retained job 2 a wage that is at least ninety percent of the qualifying wage 3 threshold. 4 e. Creates or retains at least ten full-time equivalent 5 positions and maintains them until the maintenance period 6 completion date. 7 2. A business meeting the requirements of subsection 1 shall 8 submit to the department with its application for financial 9 assistance a report describing all violations of environmental 10 law or worker safety law within the last five years. If, upon 11 review of the application, the board finds that the business 12 has a record of violations of the law, statutes, rules, or 13 regulations and such violations show a consistent pattern, the 14 board shall not make an award of financial assistance to the 15 business unless the board finds either that the violations 16 did not seriously affect public health, public safety, or the 17 environment, or, if such violations did seriously affect public 18 health, public safety, or the environment, that mitigating 19 circumstances were present. 20 3. An eligible business receiving incentives or assistance 21 under this division shall enter into an agreement with the 22 department and the city or county containing the certified 23 enterprise zone. The agreement shall provide for the method 24 of determining the amount of incentives and assistance to be 25 provided under this division and shall stipulate the penalties 26 for failure to comply with the requirements of subsection 1. 27 4. a. A business receiving financial assistance under this 28 division shall comply with all applicable requirements for as 29 long as the assistance is provided. 30 b. A business failing to comply with all applicable 31 requirements shall not receive the incentives and assistance 32 provided for in this division during the period of time the 33 business is not in compliance. 34 c. At the department’s discretion, a business failing 35 -6- LSB 1333DP (20) 84 tw/sc 6/ 23

S.F. _____ H.F. _____ to comply with subsection 1 may be held liable for all or a 1 portion of the incentives or assistance received under this 2 division. The department of revenue may recover from such a 3 business the value of the incentives and assistance provided 4 by the state under section 15E.196, as well as any penalties 5 and interest. 6 d. A city or county may recover from a business that fails 7 to comply with the requirements of subsection 1 the value of 8 all tax revenues foregone or not collected because of the 9 provision of assistance under section 15E.196. 10 5. If a business that is approved to receive incentives 11 or assistance under this division experiences a layoff within 12 the state or closes any of its facilities within the state 13 prior to receiving the incentives or assistance, the department 14 may reduce or eliminate some or all of the incentives and 15 assistance. If a business that has received incentives or 16 assistance under this division experiences a layoff within the 17 state or closes any of its facilities within the state, the 18 business may be subject to recapture of all or a portion of the 19 incentives that it has received. 20 6. An eligible business receiving incentives or assistance 21 under this division shall only employ individuals legally 22 authorized to work in this state. In addition to any other 23 applicable penalties, the incentives and assistance, or a 24 portion thereof, received by a business that is found to 25 knowingly employ individuals not legally authorized to work in 26 this state are subject to recapture by the department. 27 Sec. 6. Section 15E.193B, subsections 1 through 3, Code 28 2011, are amended to read as follows: 29 1. A housing business qualifying under this section is 30 eligible to receive incentives and assistance only as provided 31 in this section . An eligible housing business shall not 32 receive incentives or assistance for a home or multiple 33 dwelling unit built or rehabilitated in an enterprise zone 34 designated pursuant to section 15E.194, subsection 3 or 5. 35 -7- LSB 1333DP (20) 84 tw/sc 7/ 23

S.F. _____ H.F. _____ Sections 15E.193 15E.193A and 15E.196 do not apply to an 1 eligible housing business qualifying under this section . 2 2. An eligible housing business under this section 3 includes a housing developer, housing contractor, or nonprofit 4 organization that builds or rehabilitates a minimum one or more 5 of four the following: 6 a. Four single-family homes located in that part of a city 7 or county in which there is a designated an enterprise zone or 8 one . 9 b. One multiple dwelling unit building containing three or 10 more individual dwelling units located in that part of a city 11 or county in which there is a designated an enterprise zone. 12 c. One multiple dwelling unit building containing two 13 or more individual units in the upper floors of a mixed use 14 commercial building that is fifty years of age or older and 15 located in an enterprise zone. 16 3. The single-family homes and dwelling units which are 17 rehabilitated or constructed by the eligible housing business 18 shall include the necessary amenities. When completed and made 19 available for occupancy, the single-family homes and dwelling 20 units shall meet the United States department of housing and 21 urban development’s housing quality standards and local all 22 applicable building code requirements and safety standards. 23 Sec. 7. Section 15E.193B, subsection 5, unnumbered 24 paragraph 1, Code 2011, is amended to read as follows: 25 An eligible housing business shall provide the enterprise 26 zone housing commission with all of the following information: 27 Sec. 8. Section 15E.193B, subsections 6, 8, and 9, Code 28 2011, are amended to read as follows: 29 6. An eligible housing business which that has been approved 30 by the department to receive incentives and assistance by the 31 department of economic development pursuant to application as 32 provided in section 15E.195 shall receive all of the following 33 incentives and assistance for a period not to exceed ten five 34 years: 35 -8- LSB 1333DP (20) 84 tw/sc 8/ 23

S.F. _____ H.F. _____ a. (1) An eligible housing business may claim a tax credit 1 up to a maximum of ten percent of the new investment which 2 is directly related to the building or , rehabilitating , or 3 infilling of a minimum of four any of the following: 4 (a) Four or more single-family homes located in that part of 5 a city or county in which there is a designated an enterprise 6 zone or one . 7 (b) One multiple dwelling unit building containing three or 8 more individual dwelling units located in that part of a city 9 or county in which there is a designated an enterprise zone. 10 (c) One multiple dwelling unit building containing two 11 or more individual units in the upper floors of a mixed use 12 commercial building that is fifty years of age or older and 13 located in an enterprise zone. 14 (2) (a) The new investment that may be used to compute 15 the tax credit shall not exceed the new investment used for 16 the first one hundred forty thousand dollars of value for each 17 single-family home or for each unit of a multiple dwelling unit 18 building containing three or more units. 19 (b) If an eligible housing business is investing in a 20 project involving infilling, the amount of the new investment 21 that may be used to compute the tax credit shall not exceed the 22 new investment used for the first one hundred fifty thousand 23 dollars of value for each single-family home or for each unit 24 of a multiple dwelling unit building that contains three or 25 more units. 26 (3) The tax credit may be used to reduce the tax liability 27 imposed under chapter 422, division II , III , or V , or chapter 28 432 . Any credit in excess of the tax liability for the tax 29 year may be credited to the tax liability for the following 30 seven years or until depleted, whichever occurs earlier. If 31 the business is a partnership, S corporation, limited liability 32 company, or estate or trust electing to have the income taxed 33 directly to the individual, an individual may claim the tax 34 credit allowed. The amount claimed by the individual shall be 35 -9- LSB 1333DP (20) 84 tw/sc 9/ 23

S.F. _____ H.F. _____ based upon the pro rata share of the individual’s earnings of 1 the partnership, S corporation, limited liability company, or 2 estate or trust except as allowed for under subsection 8 when 3 low-income housing tax credits authorized under section 42 of 4 the Internal Revenue Code are used to assist in the financing 5 of the housing development. 6 b. Sales, services, and use tax refund for taxes paid by an 7 eligible business including an eligible business acting as a 8 contractor or subcontractor, as provided in section 15.331A . 9 8. a. The amount of the tax credits determined pursuant to 10 subsection 6 , paragraph “a” , for each project shall be approved 11 by the department of economic development . The department 12 shall utilize the financial information required to be provided 13 under subsection 5 , paragraph “e” , to determine the tax credits 14 allowed for each project. In determining the amount of tax 15 credits to be allowed for a project, the department shall 16 not include the portion of the project cost financed through 17 federal, state, and local government tax credits, grants, and 18 forgivable loans. 19 b. Upon approving the amount of the tax credit, the 20 department of economic development shall issue a tax credit 21 certificate to the eligible housing business except when 22 low-income housing tax credits authorized under section 42 of 23 the Internal Revenue Code are used to assist in the financing 24 of the housing development in which case the tax credit 25 certificate may be issued to a partner if the business is a 26 partnership, a shareholder if the business is an S corporation, 27 or a member if the business is a limited liability company 28 in the amounts designated by the eligible partnership, S 29 corporation, or limited liability company. 30 c. An eligible housing business or the designated partner 31 if the business is a partnership, designated shareholder if 32 the business is an S corporation, or designated member if the 33 business is a limited liability company, or transferee shall 34 not claim the tax credit unless a tax credit certificate is 35 -10- LSB 1333DP (20) 84 tw/sc 10/ 23

S.F. _____ H.F. _____ attached to the taxpayer’s return for the tax year for which 1 the tax credit is claimed. The tax credit certificate shall 2 contain the taxpayer’s name, address, tax identification 3 number, the amount of the tax credit, and other information 4 required by the department of revenue. The tax credit 5 certificate shall be transferable if the housing development 6 is located in a brownfield site as defined in section 15.291 , 7 if the housing development is located in a blighted area as 8 defined in section 403.17 , or if low-income housing tax credits 9 authorized under section 42 of the Internal Revenue Code are 10 used to assist in the financing of the housing development. 11 d. Not more than three million dollars worth of tax credits 12 for housing developments that are located in a brownfield 13 site as defined in section 15.291 or housing developments 14 located in a blighted area as defined in section 403.17 15 shall be transferred in one calendar year. The three million 16 dollar annual limit does not apply to tax credits awarded to 17 an eligible housing business having low-income housing tax 18 credits authorized under section 42 of the Internal Revenue 19 Code to assist in the financing of the housing development. 20 The department may approve an application for tax credit 21 certificates for transfer from an eligible housing business 22 located in a brownfield site as defined in section 15.291 or 23 in a blighted area as defined in section 403.17 that would 24 result in the issuance of more than three million dollars of 25 tax credit certificates for transfer, provided the department, 26 through negotiation with the eligible business, allocates 27 those tax credit certificates for transfer over more than one 28 calendar year. 29 e. The department shall not approve more than one million 30 five hundred thousand dollars in tax credit certificates for 31 transfer to any one eligible housing business located in a 32 brownfield site as defined in section 15.291 or in a blighted 33 area as defined in section 403.17 in a calendar year. If three 34 million dollars in tax credit certificates for transfer have 35 -11- LSB 1333DP (20) 84 tw/sc 11/ 23

S.F. _____ H.F. _____ not been issued at the end of a calendar year, the remaining 1 tax credit certificates for transfer may be issued in advance 2 to an eligible housing business scheduled to receive a tax 3 credit certificate for transfer in a later calendar year. 4 f. Any time the department approves a tax credit certificate 5 for transfer which has not been allocated at the end of 6 a calendar year, the department may prorate the remaining 7 certificates to more than one eligible applicant. If the 8 entire three million dollars of tax credit certificates for 9 transfer is not issued in a given calendar year, the remaining 10 amount may be carried over to a succeeding calendar year. Tax 11 credit certificates issued under this chapter section may be 12 transferred to any person or entity. 13 g. The department of economic development shall notify the 14 department of revenue of the tax credit certificates which have 15 been approved for transfer. 16 h. Within ninety days of transfer, the transferee must 17 submit the transferred tax credit certificate to the department 18 of revenue along with a statement containing the transferee’s 19 name, tax identification number, and address, and the 20 denomination that each replacement tax credit certificate is 21 to carry and any other information required by the department 22 of revenue. 23 i. Within thirty days of receiving the transferred tax 24 credit certificate and the transferee’s statement, the 25 department of revenue shall issue one or more replacement 26 tax credit certificates to the transferee. Each replacement 27 certificate must contain the information required to receive 28 the original certificate and must have the same expiration date 29 that appeared in the transferred tax credit certificate. 30 j. Tax credit certificate amounts of less than the minimum 31 amount established by rule of the department of economic 32 development shall not be transferable. 33 k. A tax credit shall not be claimed by a transferee under 34 subsection 6 , paragraph “a” , until a replacement tax credit 35 -12- LSB 1333DP (20) 84 tw/sc 12/ 23

S.F. _____ H.F. _____ certificate identifying the transferee as the proper holder has 1 been issued. 2 l. The transferee may use the amount of the tax credit 3 transferred against the taxes imposed under chapter 422, 4 divisions II , III , and V , and chapter 432 for any tax year the 5 original transferor could have claimed the tax credit. Any 6 consideration received for the transfer of the tax credit shall 7 not be included as income under chapter 422, divisions II , III , 8 and V . Any consideration paid for the transfer of the tax 9 credit shall not be deducted from income under chapter 422, 10 divisions II , III , and V . 11 9. The department of economic development and the 12 department of revenue shall each adopt rules to jointly 13 administer for the joint administration of this section . 14 Sec. 9. Section 15E.195, Code 2011, is amended to read as 15 follows: 16 15E.195 Enterprise zone housing commission. 17 1. a. A county which designates certified as an enterprise 18 zone pursuant to section 15E.194, subsection 1 15E.193 , and in 19 which an eligible enterprise zone is certified shall establish 20 an enterprise zone housing commission to review applications 21 from qualified businesses located within or requesting to 22 locate within an enterprise zone designated pursuant to section 23 15E.194, subsection 1 , to receive incentives or assistance as 24 provided in section 15E.196 . The enterprise zone commission 25 shall also review applications from qualified eligible housing 26 businesses requesting to receive incentives or assistance as 27 provided in section 15E.193B . 28 b. A county shall not establish more than one commission. 29 c. The commission established pursuant to this subsection 30 shall not review applications from eligible housing businesses 31 locating in an enterprise zone within a city that has 32 established a commission pursuant to subsection 2. 33 d. The commission established pursuant to this 34 subsection shall consist of nine three or more members who 35 -13- LSB 1333DP (20) 84 tw/sc 13/ 23

S.F. _____ H.F. _____ are knowledgeable about local housing conditions . Five of 1 these members shall consist of one representative of the 2 board of supervisors, one member with economic development 3 expertise chosen by the department of economic development, 4 one representative of the county zoning board, one member 5 of the local community college board of directors, and one 6 representative of the local workforce development center. 7 These five members shall select the remaining four members. 8 If the enterprise zone consists of an area meeting the 9 requirements for eligibility for an urban or rural enterprise 10 community under Tit. XIII of the federal Omnibus Budget 11 Reconciliation Act of 1993, one of the remaining four members 12 shall be a representative of that community. A county shall 13 have only one enterprise zone commission to review applications 14 for incentives and assistance for businesses located within 15 or requesting to locate within a certified enterprise zone 16 designated pursuant to section 15E.194, subsection 1 . 17 2. a. A city which includes at least three census tracts 18 with at least fifty percent of the population in each census 19 tract located in the city and which designates an enterprise 20 zone pursuant to section 15E.194, subsection 2 or 3, and in 21 which an eligible with a certified enterprise zone is certified 22 shall establish an enterprise zone housing commission to 23 review applications from qualified eligible housing businesses 24 located within or requesting to locate within an enterprise 25 zone to receive incentives or assistance as provided in 26 section 15E.196 . The enterprise zone commission shall review 27 applications from qualified housing businesses requesting 28 to receive incentives or assistance as provided in section 29 15E.193B . 30 b. The commission established pursuant to this subsection 31 shall consist of nine three or more members who are 32 knowledgeable about local housing conditions . Six of these 33 members shall consist of one representative of an international 34 labor organization, one member with economic development 35 -14- LSB 1333DP (20) 84 tw/sc 14/ 23

S.F. _____ H.F. _____ expertise chosen by the department of economic development, one 1 representative of the city council, one member of the local 2 community college board of directors, one member of the city 3 planning and zoning commission, and one representative of the 4 local workforce development center. These six members shall 5 select the remaining three members. If the enterprise zone 6 consists of an area meeting the requirements for eligibility 7 for an urban enterprise community under Tit. XIII of the 8 federal Omnibus Budget Reconciliation Act of 1993, one of the 9 remaining three members shall be a representative of that 10 community. 11 c. If a city contiguous to the city designating the 12 enterprise zone is included in an enterprise zone, a 13 representative of the contiguous city, chosen by the city 14 council, shall be a member of the commission. 15 d. A city in which an eligible with a certified enterprise 16 zone is certified shall have only one enterprise zone 17 commission. If a city has established an enterprise zone 18 commission prior to July 1, 1998, the city may petition to the 19 department of economic development to change the structure of 20 the existing commission. 21 3. a. The A commission established pursuant to this section 22 may adopt more stringent requirements , including requirements 23 related to compensation and benefits, for a business to be 24 eligible for incentives or assistance than provided in sections 25 15E.193 and section 15E.193B . The commission may develop as 26 an additional requirement that preference in hiring be given 27 to individuals who live within the enterprise zone. The 28 commission shall work with the local workforce development 29 center to determine the labor availability in the area. 30 b. The commission shall examine and evaluate building codes 31 and zoning in the enterprise zone and make recommendations to 32 the appropriate governing body in an effort to promote more 33 affordable housing development. 34 4. If the enterprise zone commission determines that 35 -15- LSB 1333DP (20) 84 tw/sc 15/ 23

S.F. _____ H.F. _____ a housing business qualifies and is eligible to receive 1 incentives or assistance as provided in section 15E.193B 2 or 15E.196 , the commission shall submit an application 3 for incentives or assistance to the department of economic 4 development . The department may approve, defer, or deny the 5 application. 6 5. a. In making its decision, the commission or department 7 shall consider the impact of the eligible business on other 8 businesses in competition with it and compare the compensation 9 package of businesses in competition with the business being 10 considered for incentives or assistance. The commission or 11 department shall make a good faith effort to identify existing 12 Iowa businesses within an industry in competition with the 13 business being considered for incentives or assistance. The 14 commission or department shall also make a good faith effort 15 to determine the probability that the proposed incentives or 16 assistance will displace employees of existing businesses. In 17 determining the impact on businesses in competition with the 18 business seeking incentives or assistance, jobs created as a 19 result of other jobs being displaced elsewhere in the state 20 shall not be considered direct jobs created. 21 b. However, if If the commission or department finds that 22 an eligible housing business has a record of violations of the 23 law, including but not limited to environmental and worker 24 safety statutes, rules, and regulations, over a period of time 25 that tends to show a consistent pattern, the eligible business 26 shall not qualify for incentives or assistance under section 27 15E.193B or 15E.196 , unless the commission or department 28 finds that the violations did not seriously affect public 29 health or safety or the environment, or if it did that there 30 were mitigating circumstances. In making the findings and 31 determinations regarding violations, mitigating circumstances, 32 and whether an eligible housing business is eligible qualifies 33 for incentives or assistance under section 15E.193B or 15E.196 , 34 the commission or department shall be exempt from chapter 17A . 35 -16- LSB 1333DP (20) 84 tw/sc 16/ 23

S.F. _____ H.F. _____ If requested by the commission or department, the housing 1 business shall provide copies of materials documenting the type 2 of violation, any fees or penalties assessed, court filings, 3 final disposition of any findings, and any other information 4 which would assist the commission or department in assessing 5 the nature of any violation. 6 6. A housing business that is approved to receive incentives 7 or assistance shall, for the length of its designation as 8 an enterprise zone business duration of its agreement with 9 the department , certify annually to the county or city, as 10 applicable, and the department of economic development its 11 compliance with the requirements of this section 15E.193 or and 12 section 15E.193B . 13 Sec. 10. Section 15E.196, Code 2011, is amended to read as 14 follows: 15 15E.196 Incentives —— Eligible business —— incentives and 16 assistance. 17 For purposes of determining the incentives or assistance 18 provided in this section , “eligible business” means a business 19 which has been approved to receive incentives and assistance by 20 the department of economic development pursuant to application 21 as provided in section 15E.195 . The incentives and assistance 22 provided under this division for businesses located in 23 enterprise zones shall be for a period not to exceed ten years 24 and shall include all of the following: 25 1. An eligible business that has been approved by the board 26 pursuant to section 15E.193A, shall be eligible for all of the 27 following incentives and assistance: 28 1. a. New jobs credit from withholding, as provided in 29 section 15E.197 . 30 2. b. Sales, services, and use tax refund, as provided in 31 section 15.331A . 32 3. c. Investment tax credit of up to ten percent, as 33 provided in section 15.333 . 34 4. d. Research activities credit, as provided in section 35 -17- LSB 1333DP (20) 84 tw/sc 17/ 23

S.F. _____ H.F. _____ 15.335 . 1 5. e. The county or city for which an eligible enterprise 2 zone is certified may exempt from all property taxation A 3 property tax exemption from the county or city portion in which 4 the certified enterprise zone is located in an amount equal to 5 all or a portion of the value added to the property upon which 6 an eligible business locates or expands in an the enterprise 7 zone and which is used in the operation of the eligible 8 business. 9 (1) The amount of value added for purposes of this 10 subsection paragraph “e” shall be the amount of the increase in 11 assessed valuation of the property following the location or 12 expansion of the business in the enterprise zone. 13 (2) If an exemption provided pursuant to this subsection 14 paragraph “e” is made applicable to only a portion of the 15 property within an enterprise zone, the definition of that 16 subset of eligible property must be by uniform criteria which 17 further some planning objective established by the city or 18 county enterprise zone commission and approved by the eligible 19 city or county and approved by the department . 20 (3) The exemption may be allowed for a period not to exceed 21 ten five years beginning the year the eligible business enters 22 into an agreement with the county or city to locate or expand 23 operations in an enterprise zone. 24 6. f. Insurance premium tax credit of up to ten percent, 25 as provided in section 15.333A . 26 2. The amount of time an eligible business may receive 27 incentives or assistance pursuant to this section is limited 28 to five years. 29 Sec. 11. Section 15E.197, subsection 4, Code 2011, is 30 amended to read as follows: 31 4. For purposes of this section , “eligible business” means 32 a business which has been approved to receive incentives and 33 assistance by the department of economic development pursuant 34 to application as provided in section 15E.195 15E.193A . 35 -18- LSB 1333DP (20) 84 tw/sc 18/ 23