HSB 62 (LSB 1206XD (4) 85)

SENATE/HOUSE FILE _____

BY  (PROPOSED ECONOMIC DEVELOPMENT AUTHORITY BILL)

A BILL FOR

An Act relating to the administration of duties and programs by the economic development authority.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

CONTRACT ADMINISTRATION
    Section 1.  Section 15.106B, subsection 4, paragraph c, Code 2013, is amended by striking the paragraph.
    Sec. 2.  Section 15.329, subsection 2, Code 2013, is amended to read as follows:
   2.
  a.  If the authority finds that a business has a record of violations of the law, including but not limited to
 
antitrust, environmental, and worker safety statutes, rules, and regulations,
 
that over a period of time that tends to show a consistent pattern
 
or that establishes intentional, criminal, or reckless conduct in violation of such laws, the business shall not qualify for economic development assistance under this part, unless
 
except as provided in paragraph “b”.
   b.  If
 
the authority finds that the violations
 
described in paragraph “a” did not seriously affect public health or, public safety, or the environment, or if it did,
 
the authority finds that there were mitigating circumstances
 
involved, the business may qualify for economic development assistance under this part, notwithstanding paragraph “a”.
   c.  In making the findings and determinations regarding violations, mitigating circumstances, and whether the business is disqualified for economic development assistance under this part, the authority shall be exempt from chapter 17A.
    Sec. 3.  Section 15.330, unnumbered paragraph 1, Code 2013, is amended to read as follows:
   A business shall enter into an agreement with the authority specifying the requirements that must be met to confirm eligibility pursuant to this part
 
and the requirements that must be maintained throughout the period of the agreement in order to retain the incentives or financial assistance received. The authority shall consult with the community during negotiations relating to the agreement. The agreement shall contain, at a minimum, the following provisions:
    Sec. 4.  Section 15.330, subsection 2, Code 2013, is amended to read as follows:
   2.  The repayment of incentives or financial assistance by the business if the business does not meet any of the requirements of this part or the resulting agreement.

The repayment of incentives pursuant to this subsection shall be considered a tax payment due and payable to the department of revenue by any taxpayer who has claimed such incentives, and the failure to make such a repayment may be treated by the department of revenue in the same manner as a failure to pay the tax shown due or required to be shown due with the filing of a return or deposit form. In addition, the county shall have the authority to take action to recover the value of property taxes not collected as a result of the exemption provided to the business under this part.
    Sec. 5.  Section 15.333, subsection 1, Code 2013, is amended to read as follows:
   1.  An eligible business may claim a tax credit equal to a percentage of the new investment directly related to new jobs created or retained by the location or expansion of an eligible business under the program. The tax credit shall be amortized equally over five calendar years
 
over the period of time determined by the authority and specified in the agreement entered into pursuant to section 15.330. The tax credit may be amortized in amounts negotiated with the authority. The tax credit shall be allowed against taxes imposed under chapter 422, division II, III, or V, and against the moneys and credits tax imposed in section 533.329. If the business is a partnership, S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust. The percentage shall be determined as provided in section 15.335A. Any tax credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs first.

DIVISION II

MICROENTERPRISES
    Sec. 6.  Section 15.102, subsections 5 and 9, Code 2013, are amended by striking the subsections.
    Sec. 7.  REPEAL.  Section 15.240, Code 2013, is repealed.

DIVISION III

BROADBAND ACCESS GOVERNING BOARD
    Sec. 8.  2009 Iowa Acts, chapter 173, section 13, subsection 5, paragraphs b, c, and d, are amended by striking the paragraphs.

DIVISION IV

INDUSTRIAL PROPERTY TAX EXEMPTION APPROVALS
    Sec. 9.  Section 427B.1, subsection 1, Code 2013, is amended to read as follows:
   1.  A city council, or a county board of supervisors as authorized by section 427B.2, may provide by ordinance for a partial exemption from property taxation of the actual value added to industrial real estate by the new construction of industrial real estate, research-service facilities, warehouses, distribution centers and the acquisition of or improvement to machinery and equipment assessed as real estate pursuant to section 427A.1, subsection 1, paragraph “e”. “New construction” means new buildings and structures and includes new buildings and structures which are constructed as additions to existing buildings and structures. “New construction” does not include reconstruction of an existing building or structure which does not constitute complete replacement of an existing building or structure or refitting of an existing building or structure, unless the reconstruction of an existing building or structure is required due to economic obsolescence and the reconstruction is necessary to implement recognized industry standards for the manufacturing and processing of specific products and the reconstruction is required for the owner of the building or structure to continue to competitively manufacture or process those products which determination shall receive prior approval from the city council of the city or the board of supervisors of the county upon the recommendation of the economic development authority. The exemption shall also apply to new machinery and equipment assessed as real estate pursuant to section 427A.1, subsection 1, paragraph “e”, unless the machinery or equipment is part of the normal replacement or operating process to maintain or expand the existing operational status. “Research-service facilities” means a building or group of buildings devoted primarily to research and development activities, including, but not limited to, the design and production or manufacture of prototype products for experimental use, and corporate-research services which do not have a primary purpose of providing on-site services to the public. “Warehouse” means a building or structure used as a public warehouse for the storage of goods pursuant to chapter 554, article 7, except that it does not mean a building or structure used primarily to store raw agricultural products or from which goods are sold at retail. “Distribution center” means a building or structure used primarily for the storage of goods which are intended for subsequent shipment to retail outlets. “Distribution center” does not mean a building or structure used primarily to store raw agricultural products, used primarily by a manufacturer to store goods to be used in the manufacturing process, used primarily for the storage of petroleum products, or used for the retail sale of goods.
EXPLANATION
   This bill relates to the administration of duties and programs of the economic development authority.
   Division I of the bill eliminates the two-year limitation on the length of a contract for services entered into by the authority.
   Currently, a business is generally ineligible to receive economic development assistance under the high quality jobs program if the business has a record that tends to show a consistent pattern of violations of the law, including environmental and worker safety laws as well as violations of related rules and regulations. The division adds that a business is also ineligible for economic development assistance if the business engages in a pattern of antitrust violations or if a business’s conduct in violating any laws, including environmental, worker safety, and antitrust laws is intentional, criminal, or reckless.
   Current law requires that an agreement under the high quality jobs program for assistance or incentives entered into between the authority and a business include requirements for a business’s eligibility for the incentives or assistance. The bill adds that the agreement must also include the requirements that a business receiving incentives or assistance must maintain throughout the period of the agreement. The authority must ensure that a business only receives the incentives or assistance if the business meets the initial eligibility requirements and maintains the program requirements throughout the agreement period.
   Current law also provides that an agreement under the high quality jobs program must include the repayment of incentives or assistance by a business if a business does not meet the requirements in statute or the agreement. The division provides that the repayment of incentives, in this context, is a tax payment due and payable to the department of revenue by a taxpayer, and the taxpayer’s failure to make the repayment may be treated by the department of revenue in the same manner as a failure to pay the tax shown or required to be shown due when filing a return or deposit form. The division also authorizes the county to recover property taxes exempted under the agreement.
   Under current law, an eligible business under the high quality jobs program may claim a tax credit equal to a percentage of the new investment directly related to new jobs created or retained by a location expansion of the eligible business. The tax credit is amortized equally over five calendar years. The division amends this provision to allow the authority and the eligible business to negotiate the amount of amortization, and the length of the amortization period would be described in the agreement entered into between the authority and the eligible business.
   Division II of the bill eliminates the community microenterprise development organization grant program.
   Division III of the bill eliminates the broadband access governing board created in 2009 Iowa Acts. The governing board was tasked with establishing a comprehensive plan for the deployment and sustainability of high-speed broadband access in areas capable of timely implementation of the access, establishing a competitive process for the disbursement of funds for such deployment and sustainability, making recommendations to the general assembly, and establishing and maintaining separate accounts for the use of certain proceeds.
   Division IV of the bill relates to the economic development authority’s approval of industrial property tax exemptions. The division eliminates the requirement that the economic development authority recommend prior approval of industrial property tax exemptions by local governments.