HF 620 (LSB 1207HZ (3) 85)

HOUSE FILE 620

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO HF 584)
(SUCCESSOR TO HSB 132)

A BILL FOR

An Act relating to the economic development financial assistance duties and powers of the economic development authority by authorizing and creating fees, affecting the aggregate tax credit limit for certain economic development programs and the tax credit for the endow Iowa tax credit, authorizing the diversion of withholding tax payments for certain programs, making an appropriation, and including effective date and retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

COLLECTION OF FEES
    Section 1.  Section 15.106B, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  5.
  a.  The authority may charge fees to businesses or individuals who receive financial assistance under chapter 15 or 15E. The amount of such fees shall be determined based on the costs of the authority associated with its performance of contract administration and compliance duties relating to economic development programs.
   b.  The authority may charge businesses and individuals a fee for the use of the authority’s federal EB-5 immigrant investor regional center.
   c.  Fees collected by the authority pursuant to this subsection shall be deposited in a fund within the state treasury created pursuant to section 15.106A, subsection 1, paragraph “o”, and are appropriated to the authority for the purposes set out in section 15.106A, subsection 1, paragraph “o”.
    Sec. 2.  Section 15.330, Code 2013, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.
  a.  The imposition of a one-time compliance cost fee of five hundred dollars to be collected by the authority prior to the issuance of a tax incentive certificate or the disbursement of financial assistance.
   b.  The imposition of a compliance cost fee equal to one-half of one percent of the value of tax incentives claimed pursuant to an agreement that has an aggregate tax incentive value of one hundred thousand dollars or greater. The authority shall collect the fee from the business after the tax incentive is claimed by the business from the department of revenue.
    Sec. 3.  NEW SECTION.  15E.198  Compliance cost fees.
   The compliance cost fees imposed in 15.330, subsection 12, shall apply to all agreements entered into under this division and shall be collected by the authority in the same manner and to the same extent as described in that subsection.
    Sec. 4.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 5.  APPLICABILITY.  This division of this Act applies to agreements entered into on or after the effective date of this division of this Act.

DIVISION II

AGGREGATE TAX CREDIT LIMITATION
    Sec. 6.  Section 15.119, subsection 1, Code 2013, is amended to read as follows:
   1.
  a.  Notwithstanding any provision to the contrary in any of the programs listed in subsection 2, the authority, except as provided in paragraph “b”, shall not authorize for any one fiscal year an amount of tax credits for the programs specified in subsection 2 that is in excess of one hundred twenty
 
eighty-five million dollars.
   b.
  (1)  The authority may authorize an amount of tax credits during a fiscal year that is in excess of the amount specified in paragraph “a”, but the amount of such excess shall be counted against the total amount of tax credits that may be authorized for the next fiscal year.
   (2)  Any amount of tax credits authorized and awarded during a fiscal year for a program specified in subsection 2 which are irrevocably declined by the awarded business on or before June 30 of the next fiscal year may be reallocated, authorized, and awarded during the fiscal year in which the declination occurs. Tax credits authorized pursuant to this subparagraph shall not be considered for purposes of subparagraph (1).
    Sec. 7.  Section 15.119, subsection 2, paragraphs d and e, Code 2013, are amended to read as follows:
   d.  The tax credits for investments in qualifying businesses and community-based seed capital funds issued pursuant to section 15E.43. In allocating tax credits pursuant to this subsection, the authority shall allocate two million dollars for purposes of this paragraph, unless the authority determines that the tax credits awarded will be less than that amount.
   e.  The tax credits for investments in an innovation fund pursuant to section 15E.52. In allocating tax credits pursuant to this subsection, the authority shall allocate eight million dollars for purposes of this paragraph, unless the authority determines that the tax credits awarded will be less than that amount.
    Sec. 8.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 9.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to July 1, 2012.

DIVISION III

ENDOW IOWA TAX CREDIT LIMIT
    Sec. 10.  Section 15E.305, subsection 2, Code 2013, is amended to read as follows:
   2.  The aggregate amount of tax credits authorized pursuant to this section shall not exceed a total of three
 
five million five hundred thousand dollars plus such additional credit amount as provided by this section annually.
   a.  The maximum amount of tax credits granted to a taxpayer shall not exceed five percent of the aggregate amount of tax credits authorized.
   a.

b.  Ten percent of the aggregate amount of tax credits authorized in a calendar year shall be reserved for those endowment gifts in amounts of thirty thousand dollars or less. If by September 1 of a calendar year the entire ten percent of the reserved tax credits is not distributed, the remaining tax credits shall be available to any other eligible applicants.
   b.  For purposes of this subsection, the additional credit amount shall be an amount for each applicable calendar year determined by the department of revenue equal to the amount of money credited as provided by section 99F.11, subsection 3, paragraph “d”, subparagraph (3), for the prior fiscal year.
    Sec. 11.  Section 99F.11, subsection 3, paragraph d, subparagraph (3), Code 2013, is amended by striking the subparagraph.
    Sec. 12.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 13.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to January 1, 2012, for endow Iowa tax credits authorized on or after that date and for endow Iowa tax credit applications received on or after that date.

DIVISION IV

WITHHOLDING TAX DIVERSION
    Sec. 14.  NEW SECTION.  15.331  Withholding tax payment diversion.
   1.  If the authority enters into an agreement pursuant to this part, or pursuant to chapter 15E, division XVIII, for any of the incentives or assistance provided under this part, the authority and the eligible business may agree to credit a portion of the withholding payments required under section 422.16 to the authority as provided in this section.
   2.
  a.  An eligible business entering into a withholding agreement with the authority pursuant to this section shall remit the total amount of withholding payments due pursuant to section 422.16 to the department of revenue.
   b.  The department of revenue shall quarterly deposit in a fund created pursuant to section 15.106A an amount equal to two and one-half percent of the gross wages paid by the eligible business to each employee holding a created or retained job covered by an agreement entered into pursuant to this part or chapter 15E, division XVIII. Moneys to be deposited pursuant to this paragraph shall not be paid to the authority until the correct amounts have been verified by the department of revenue.
   3.  Withholding payments shall be deposited pursuant to this section by the department of revenue for each employee holding a created or retained job for the duration of the agreement between the eligible business and the authority.
   4.  The authority and the eligible business shall provide to the department of revenue any information necessary to correctly process the diversion of withholding tax payments pursuant to this section.
   5.  An employee holding a created or retained job shall receive full credit for the amount withheld as provided in section 422.16.
   6.  If a portion of the employee’s gross wages are subject to a withholding credit diversion under chapter 260E, chapter 260G, or section 403.19A, or a supplemental withholding credit diversion under section 15E.197, then the withholding payments shall be credited in the following order of priority, regardless of when the agreement was entered into under this section:
   a.  First, the withholding payments to be credited pursuant to chapters 260E and 260G and section 15E.197.
   b.  Second, the withholding payments to be credited pursuant to this section.
   c.  Third, the withholding payments to be credited pursuant to section 403.19A.
   7.  The authority, in conjunction with the department of revenue, shall adopt rules for the administration of this section.
    Sec. 15.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 16.  RETROACTIVE APPLICABILITY.  This division of this Act applies retroactively to July 1, 2012, for high quality jobs program agreements and enterprise zone program agreements entered into on or after that date, and for awards of incentives or assistance made under those programs on or after that date.

DIVISION V

CITY DEVELOPMENT BOARD FEES
    Sec. 17.  Section 368.10, Code 2013, is amended to read as follows:
   368.10  Rules —— establishment of filing fees.
   The board may establish rules for the performance of its duties and the conduct of proceedings before it. The rules may include establishing filing fees for applications and petitions submitted to the board.

The amounts collected from the establishment of such fees are appropriated to the board for the purpose of reimbursing the economic development authority for the budgeted costs of covering the board’s expenses as described in section 368.9, subsection 1. Any amounts collected in a fiscal year by the board in excess of such budgeted costs shall be deposited in the general fund of the state. The board’s rules are subject to chapter 17A, as applicable.
EXPLANATION
   This bill relates to the financial management of the economic development authority (EDA) by authorizing and creating fees, affecting the aggregate tax credit limit for certain economic development programs and the tax credit for the endow Iowa tax credit, authorizing the diversion of withholding tax payments for certain programs, and by making an appropriation.
   COLLECTION OF FEES. Division I amends Code section 15.106B, relating to the program powers of the EDA, to allow for the imposition and collection of fees from businesses or individuals who receive financial assistance from the EDA under Code chapter 15 or 15E. The fee amounts are to be determined based on the EDA’s costs of administering contracts under its various economic development programs. The division also allows the EDA to charge a fee for the use of its federal EB-5 immigrant investor regional center. The fees are required to be deposited in a fund controlled by the EDA and are appropriated to the EDA for economic development program administration.
   The division creates two compliance cost fees to be imposed on all persons or entities that enter into an agreement with the EDA under its high quality jobs program or enterprise zone program. First, a one-time compliance cost fee of $500 due prior to the issuance of a tax incentive certificate or the disbursement of financial assistance. Second, a compliance cost fee equal to 0.5 percent of the value of tax incentives claimed under any agreement that has an aggregate tax incentive value of $100,000 or greater, which fee is due after a tax incentive is claimed from the department of revenue.
   The division takes effect upon enactment and applies to agreements entered into on or after the effective date of the division.
   AGGREGATE TAX CREDIT LIMITATION. Division II increases the aggregate tax credit limit on EDA programs listed in Code section 15.119 from $120 million per fiscal year to $185 million per fiscal year. The division allows the EDA to reallocate, authorize, and award for a fiscal year any amount of tax credits that were previously awarded by the EDA, provided the tax credit is irrevocably declined by the awarded business before the close of the fiscal year which follows the fiscal year in which it was awarded. Any amount of tax credits reallocated, authorized, and awarded under this provision shall not be included in the calculation of the aggregate tax credit limit for the fiscal year.
   The division amends the requirements that $2 million and $8 million in tax credits be allocated to the qualifying business and community-based seed capital funds investment tax credits and the innovation fund tax credit, respectively, to allow the EDA to allocate a lesser amount if it determines the tax credits awarded for that fiscal year will be lower.
   The division takes effect upon enactment and applies retroactively to July 1, 2012. 
   ENDOW IOWA TAX CREDIT LIMIT. Under current law, the amount of endow Iowa tax credits that may be authorized in a calendar year cannot exceed a total of $3.5 million plus a certain percentage of the wagering tax receipts as provided in Code section 99F.11. Division III amends this annual limit to provide that a maximum of $5 million per calendar year may be authorized and to provide that amounts collected from the wagering tax pursuant to Code section 99F.11 will no longer be used to fund the endow Iowa tax credit.
   The division takes effect upon enactment and applies retroactively to January 1, 2012, for endow Iowa tax credits authorized on or after that date and for endow Iowa tax credit applications received on or after that date.
   WITHHOLDING TAX DIVERSION. Division IV provides for a diversion of withholding tax to the EDA. The division provides that the authority may enter into agreements with recipients of financial assistance under the high quality jobs program and the enterprise zones program that allow for the diversion of withholding tax payments pursuant to Code section 422.16 from the department of revenue to the authority. The diversion amount will be 2.5 percent of gross wages paid by eligible businesses to each employee considered to be holding a created or retained job. The division establishes a priority withholding order if the employee’s wages are subject to another withholding diversion. The division provides that the withholding diversion takes effect upon enactment and applies retroactively to high quality jobs program agreements and enterprise zone program agreements entered into on or after July 1, 2012, and awards of incentives and assistance made under those programs on or after July 1, 2012.
   CITY DEVELOPMENT BOARD FEES. Under current law, the EDA is required to provide office space and staff assistance to the city development board created in Code section 368.9, and to budget funds to cover expenses of the board. Also under current law, the city development board is allowed to impose fees upon applications and petitions submitted to the board. Division V appropriates the amounts collected from those fees to the city development board for the purpose of reimbursing the EDA for the budgeted costs of covering the board’s expenses. Any fees collected in a fiscal year by the city development board in excess of such budgeted costs shall be deposited in the general fund of the state.