House File 584 - Introduced HOUSE FILE 584 BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO HSB 132) A BILL FOR An Act relating to the economic development financial 1 assistance duties and powers of the economic development 2 authority by authorizing and creating fees, affecting the 3 aggregate tax credit limit for certain economic development 4 programs and the tax credit for the endow Iowa tax credit, 5 authorizing the diversion of withholding tax payments for 6 certain programs, making an appropriation, and including 7 effective date and retroactive applicability provisions. 8 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 9 TLSB 1207HV (3) 85 mm/rj

H.F. 584 DIVISION I 1 COLLECTION OF FEES 2 Section 1. Section 12.10, Code 2013, is amended to read as 3 follows: 4 12.10 Deposits by state officers. 5 Except as otherwise provided, all elective and appointive 6 state officers, boards, commissions, and departments shall, 7 within ten days succeeding the collection, deposit with the 8 treasurer of state, or to the credit of the treasurer of state 9 in any depository designated by the treasurer of state, ninety 10 percent of all fees, commissions, and moneys collected or 11 received. The balance actually collected in cash, remaining 12 in the hands of any officer, board, or department shall not 13 exceed the sum of five thousand dollars and money collected 14 shall not be held more than thirty days. This section does not 15 apply to the state fair board, the state board of regents, the 16 utilities board of the department of commerce, the director of 17 the department of human services, the Iowa finance authority , 18 the economic development authority, or to the funds received 19 by the state racing and gaming commission under sections 99D.7 20 and 99D.14 . 21 Sec. 2. Section 15.106B, Code 2013, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 5. a. The authority may charge fees to 24 businesses or individuals who receive financial assistance 25 under chapter 15 or 15E. The amount of such fees shall be 26 determined based on the costs of the authority associated with 27 its performance of contract administration and compliance 28 duties relating to economic development programs. 29 b. The authority may charge businesses and individuals a fee 30 for the use of the authority’s federal EB-5 immigrant investor 31 regional center. 32 Sec. 3. Section 15.330, Code 2013, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 12. a. The imposition of a one-time 35 -1- LSB 1207HV (3) 85 mm/rj 1/ 9

H.F. 584 compliance cost fee of five hundred dollars to be collected 1 by the authority prior to the issuance of a tax incentive 2 certificate or the disbursement of financial assistance. 3 b. The imposition of a compliance cost fee equal to one-half 4 of one percent of the value of tax incentives claimed pursuant 5 to an agreement that has an aggregate tax incentive value of 6 one hundred thousand dollars or greater. The authority shall 7 collect the fee from the business after the tax incentive is 8 claimed by the business from the department of revenue. 9 Sec. 4. NEW SECTION . 15E.198 Compliance cost fees. 10 The compliance cost fees imposed in 15.330, subsection 12, 11 shall apply to all agreements entered into under this division 12 and shall be collected by the authority in the same manner and 13 to the same extent as described in that subsection. 14 Sec. 5. EFFECTIVE UPON ENACTMENT. This division of this 15 Act, being deemed of immediate importance, takes effect upon 16 enactment. 17 Sec. 6. APPLICABILITY. This division of this Act applies to 18 agreements entered into on or after the effective date of this 19 division of this Act. 20 DIVISION II 21 AGGREGATE TAX CREDIT LIMITATION 22 Sec. 7. Section 15.119, subsection 1, Code 2013, is amended 23 to read as follows: 24 1. a. Notwithstanding any provision to the contrary in 25 any of the programs listed in subsection 2 , the authority, 26 except as provided in paragraph “b” , shall not authorize for 27 any one fiscal year an amount of tax credits for the programs 28 specified in subsection 2 that is in excess of one hundred 29 twenty eighty-five million dollars. 30 b. (1) The authority may authorize an amount of tax credits 31 during a fiscal year that is in excess of the amount specified 32 in paragraph “a” , but the amount of such excess shall be counted 33 against the total amount of tax credits that may be authorized 34 for the next fiscal year. 35 -2- LSB 1207HV (3) 85 mm/rj 2/ 9

H.F. 584 (2) Any amount of tax credits authorized and awarded during 1 a fiscal year for a program specified in subsection 2 which are 2 irrevocably declined by the awarded business on or before June 3 30 of the next fiscal year may be reallocated, authorized, and 4 awarded during the fiscal year in which the declination occurs. 5 Tax credits authorized pursuant to this subparagraph shall not 6 be considered for purposes of subparagraph (1). 7 Sec. 8. Section 15.119, subsection 2, paragraphs d and e, 8 Code 2013, are amended to read as follows: 9 d. The tax credits for investments in qualifying businesses 10 and community-based seed capital funds issued pursuant to 11 section 15E.43 . In allocating tax credits pursuant to this 12 subsection , the authority shall allocate two million dollars 13 for purposes of this paragraph , unless the authority determines 14 that the tax credits awarded will be less than that amount . 15 e. The tax credits for investments in an innovation fund 16 pursuant to section 15E.52 . In allocating tax credits pursuant 17 to this subsection , the authority shall allocate eight million 18 dollars for purposes of this paragraph , unless the authority 19 determines that the tax credits awarded will be less than that 20 amount . 21 Sec. 9. EFFECTIVE UPON ENACTMENT. This division of this 22 Act, being deemed of immediate importance, takes effect upon 23 enactment. 24 Sec. 10. RETROACTIVE APPLICABILITY. This division of this 25 Act applies retroactively to July 1, 2012. 26 DIVISION III 27 ENDOW IOWA TAX CREDIT LIMIT 28 Sec. 11. Section 15E.305, subsection 2, Code 2013, is 29 amended to read as follows: 30 2. The aggregate amount of tax credits authorized pursuant 31 to this section shall not exceed a total of three six million 32 five hundred thousand dollars plus such additional credit 33 amount as provided by this section annually. 34 a. The maximum amount of tax credits granted to a taxpayer 35 -3- LSB 1207HV (3) 85 mm/rj 3/ 9

H.F. 584 shall not exceed five percent of the aggregate amount of tax 1 credits authorized. 2 a. b. Ten percent of the aggregate amount of tax credits 3 authorized in a calendar year shall be reserved for those 4 endowment gifts in amounts of thirty thousand dollars or less. 5 If by September 1 of a calendar year the entire ten percent of 6 the reserved tax credits is not distributed, the remaining tax 7 credits shall be available to any other eligible applicants. 8 b. For purposes of this subsection , the additional credit 9 amount shall be an amount for each applicable calendar year 10 determined by the department of revenue equal to the amount of 11 money credited as provided by section 99F.11, subsection 3 , 12 paragraph “d” , subparagraph (3), for the prior fiscal year. 13 Sec. 12. Section 99F.11, subsection 3, paragraph d, 14 subparagraph (3), Code 2013, is amended by striking the 15 subparagraph. 16 Sec. 13. EFFECTIVE UPON ENACTMENT. This division of this 17 Act, being deemed of immediate importance, takes effect upon 18 enactment. 19 Sec. 14. RETROACTIVE APPLICABILITY. This division of this 20 Act applies retroactively to January 1, 2012, for endow Iowa 21 tax credits authorized on or after that date and for endow Iowa 22 tax credit applications received on or after that date. 23 DIVISION IV 24 WITHHOLDING TAX DIVERSION 25 Sec. 15. NEW SECTION . 15.331 Withholding tax payment 26 diversion. 27 1. If the authority enters into an agreement pursuant to 28 this part, or pursuant to chapter 15E, division XVIII, for 29 any of the incentives or assistance provided under this part, 30 the authority and the eligible business may agree to credit 31 a portion of the withholding payments required under section 32 422.16 to the authority as provided in this section. 33 2. a. An eligible business entering into a withholding 34 agreement with the authority pursuant to this section shall 35 -4- LSB 1207HV (3) 85 mm/rj 4/ 9

H.F. 584 remit the total amount of withholding payments due pursuant to 1 section 422.16 to the department of revenue. 2 b. The department of revenue shall quarterly deposit in a 3 fund created pursuant to section 15.106A an amount equal to two 4 and one-half percent of the gross wages paid by the eligible 5 business to each employee holding a created or retained job 6 covered by an agreement entered into pursuant to this part or 7 chapter 15E, division XVIII. Moneys to be deposited pursuant 8 to this paragraph shall not be paid to the authority until 9 the correct amounts have been verified by the department of 10 revenue. 11 3. Withholding payments shall be deposited pursuant to this 12 section by the department of revenue for each employee holding 13 a created or retained job for the duration of the agreement 14 between the eligible business and the authority. 15 4. The authority and the eligible business shall provide 16 to the department of revenue any information necessary to 17 correctly process the diversion of withholding tax payments 18 pursuant to this section. 19 5. An employee holding a created or retained job shall 20 receive full credit for the amount withheld as provided in 21 section 422.16. 22 6. If a portion of the employee’s gross wages are subject 23 to a withholding credit diversion under chapter 260E, chapter 24 260G, or section 403.19A, or a supplemental withholding 25 credit diversion under section 15E.197, then the withholding 26 payments shall be credited in the following order of priority, 27 regardless of when the agreement was entered into under this 28 section: 29 a. First, the withholding payments to be credited pursuant 30 to chapters 260E and 260G and section 15E.197. 31 b. Second, the withholding payments to be credited pursuant 32 to this section. 33 c. Third, the withholding payments to be credited pursuant 34 to section 403.19A. 35 -5- LSB 1207HV (3) 85 mm/rj 5/ 9

H.F. 584 7. The authority, in conjunction with the department of 1 revenue, shall adopt rules for the administration of this 2 section. 3 Sec. 16. EFFECTIVE UPON ENACTMENT. This division of this 4 Act, being deemed of immediate importance, takes effect upon 5 enactment. 6 Sec. 17. RETROACTIVE APPLICABILITY. This division of 7 this Act applies retroactively to July 1, 2012, for high 8 quality jobs program agreements and enterprise zone program 9 agreements entered into on or after that date, and for awards 10 of incentives or assistance made under those programs on or 11 after that date. 12 DIVISION V 13 CITY DEVELOPMENT BOARD FEES 14 Sec. 18. Section 368.10, Code 2013, is amended to read as 15 follows: 16 368.10 Rules —— establishment of filing fees. 17 The board may establish rules for the performance of its 18 duties and the conduct of proceedings before it. The rules 19 may include establishing filing fees for applications and 20 petitions submitted to the board. The amounts collected 21 from the establishment of such fees are appropriated to the 22 board for the purpose of reimbursing the economic development 23 authority for the budgeted costs of covering the board’s 24 expenses as described in section 368.9, subsection 1. Any 25 amounts collected in a fiscal year by the board in excess of 26 such budgeted costs shall be deposited in the general fund of 27 the state. The board’s rules are subject to chapter 17A , as 28 applicable. 29 EXPLANATION 30 This bill relates to the financial management of the 31 economic development authority (EDA) by authorizing and 32 creating fees, affecting the aggregate tax credit limit for 33 certain economic development programs and the tax credit 34 for the endow Iowa tax credit, authorizing the diversion of 35 -6- LSB 1207HV (3) 85 mm/rj 6/ 9

H.F. 584 withholding tax payments for certain programs, and by making 1 an appropriation. 2 COLLECTION OF FEES. Division I amends Code section 3 15.106B, relating to the program powers of the EDA, to allow 4 for the imposition and collection of fees from businesses or 5 individuals who receive financial assistance from the EDA under 6 Code chapter 15 or 15E. The fee amounts are to be determined 7 based on the EDA’s costs of administering contracts under its 8 various economic development programs. The division also 9 allows the EDA to charge a fee for the use of its federal EB-5 10 immigrant investor regional center. Code section 12.10 is 11 amended to allow the EDA to retain the fees it collects by 12 adding the EDA to the list of departments exempted from the 13 requirement to deposit all collected fees with the treasurer of 14 state. 15 The division creates two compliance cost fees to be imposed 16 on all persons or entities that enter into an agreement with 17 the EDA under its high quality jobs program or enterprise zone 18 program. First, a one-time compliance cost fee of $500 due 19 prior to the issuance of a tax incentive certificate or the 20 disbursement of financial assistance. Second, a compliance 21 cost fee equal to 0.5 percent of the value of tax incentives 22 claimed under any agreement that has an aggregate tax incentive 23 value of $100,000 or greater, which fee is due after a tax 24 incentive is claimed from the department of revenue. 25 The division takes effect upon enactment and applies to 26 agreements entered into on or after the effective date of the 27 division. 28 AGGREGATE TAX CREDIT LIMITATION. Division II increases 29 the aggregate tax credit limit on EDA programs listed in 30 Code section 15.119 from $120 million per fiscal year to 31 $185 million per fiscal year. The division allows the EDA 32 to reallocate, authorize, and award for a fiscal year any 33 amount of tax credits that were previously awarded by the EDA, 34 provided the tax credit is irrevocably declined by the awarded 35 -7- LSB 1207HV (3) 85 mm/rj 7/ 9

H.F. 584 business before the close of the fiscal year which follows the 1 fiscal year in which it was awarded. Any amount of tax credits 2 reallocated, authorized, and awarded under this provision shall 3 not be included in the calculation of the aggregate tax credit 4 limit for the fiscal year. 5 The division amends the requirements that $2 million and $8 6 million in tax credits be allocated to the qualifying business 7 and community-based seed capital funds investment tax credits 8 and the innovation fund tax credit, respectively, to allow 9 the EDA to allocate a lesser amount if it determines the tax 10 credits awarded for that fiscal year will be lower. 11 The division takes effect upon enactment and applies 12 retroactively to July 1, 2012. 13 ENDOW IOWA TAX CREDIT LIMIT. Under current law, the amount 14 of endow Iowa tax credits that may be authorized in a calendar 15 year cannot exceed a total of $3.5 million plus a certain 16 percentage of the wagering tax receipts as provided in Code 17 section 99F.11. Division III amends this annual limit to 18 provide that a maximum of $6.5 million per calendar year may 19 be authorized and to provide that amounts collected from the 20 wagering tax pursuant to Code section 99F.11 will no longer be 21 used to fund the endow Iowa tax credit. 22 The division takes effect upon enactment and applies 23 retroactively to January 1, 2012, for endow Iowa tax credits 24 authorized on or after that date and for endow Iowa tax credit 25 applications received on or after that date. 26 WITHHOLDING TAX DIVERSION. Division IV provides for 27 a diversion of withholding tax to the EDA. The division 28 provides that the authority may enter into agreements with 29 recipients of financial assistance under the high quality jobs 30 program and the enterprise zones program that allow for the 31 diversion of withholding tax payments pursuant to Code section 32 422.16 from the department of revenue to the authority. The 33 diversion amount will be 2.5 percent of gross wages paid by 34 eligible businesses to each employee considered to be holding a 35 -8- LSB 1207HV (3) 85 mm/rj 8/ 9

H.F. 584 created or retained job. The division establishes a priority 1 withholding order if the employee’s wages are subject to 2 another withholding diversion. The division provides that the 3 withholding diversion takes effect upon enactment and applies 4 retroactively to high quality jobs program agreements and 5 enterprise zone program agreements entered into on or after 6 July 1, 2012, and awards of incentives and assistance made 7 under those programs on or after July 1, 2012. 8 CITY DEVELOPMENT BOARD FEES. Under current law, the EDA 9 is required to provide office space and staff assistance to 10 the city development board created in Code section 368.9, 11 and to budget funds to cover expenses of the board. Also 12 under current law, the city development board is allowed to 13 impose fees upon applications and petitions submitted to the 14 board. Division V appropriates the amounts collected from 15 those fees to the city development board for the purpose of 16 reimbursing the EDA for the budgeted costs of covering the 17 board’s expenses. Any fees collected in a fiscal year by the 18 city development board in excess of such budgeted costs shall 19 be deposited in the general fund of the state. 20 -9- LSB 1207HV (3) 85 mm/rj 9/ 9