S.F. 122 Section 1. Section 403.19A, subsection 1, paragraphs c and 1 f, Code 2013, are amended to read as follows: 2 c. “Employer” means a business creating or retaining 3 targeted jobs in an urban renewal area of a pilot project city 4 pursuant to a withholding agreement. 5 f. “Targeted job” means a job in a business which is or 6 will be located in an urban renewal area of a pilot project 7 city that pays a wage at least equal to the countywide average 8 wage. “Targeted job” includes new or retained jobs from Iowa 9 business expansions or retentions within the city limits of the 10 pilot project city and those jobs resulting from established 11 out-of-state businesses, as defined by the economic development 12 authority, moving to or expanding in Iowa. 13 Sec. 2. Section 403.19A, subsection 3, paragraphs a and b, 14 Code 2013, are amended to read as follows: 15 a. A pilot project city may provide by ordinance resolution 16 for the deposit into a designated account in the special 17 withholding project fund described in section 403.19, 18 subsection 2 , of the targeted jobs withholding credit described 19 in this section . The targeted jobs withholding credit shall 20 be based upon the wages paid to employees pursuant to a 21 withholding agreement. 22 b. An amount equal to three percent of the gross wages paid 23 by an employer to each employee under a withholding agreement 24 shall be credited from the payment made by the employer 25 pursuant to section 422.16 . If the amount of the withholding 26 by the employer is less than three percent of the gross wages 27 paid to the employees covered by the withholding agreement, 28 the employer shall receive a credit against other withholding 29 taxes due by the employer or may carry the credit forward for 30 up to ten years or until depleted, whichever is the earlier. 31 The employer shall remit the amount of the credit quarterly, 32 in the same manner as withholding payments are reported to 33 the department of revenue, to the pilot project city to be 34 allocated to and when collected paid into a designated account 35 -1- LSB 1661XS (2) 85 md/sc 1/ 6

S.F. 122 in the special withholding project fund for the urban renewal 1 area in which the targeted jobs are located project . All 2 amounts so deposited shall be used or pledged by the pilot 3 project city for an urban renewal a project related to the 4 employer pursuant to the withholding agreement. 5 Sec. 3. Section 403.19A, subsection 3, paragraph c, 6 subparagraphs (1), (2), and (3), Code 2013, are amended to read 7 as follows: 8 (1) The pilot project city shall enter into a withholding 9 agreement with each employer concerning the targeted jobs 10 withholding credit. The withholding agreement shall provide 11 for the total amount of withholding credits awarded. An 12 agreement shall not provide for an amount of withholding 13 credits that exceeds the amount of the qualifying investment 14 made in the project. An agreement shall not be entered into by 15 a pilot project city with a business currently located in this 16 state unless the business either creates or retains ten new 17 jobs or makes a qualifying investment of at least five hundred 18 thousand dollars within the urban renewal area pilot project 19 city . The withholding agreement may have a term of up to ten 20 years. An employer shall not be obligated to enter into a 21 withholding agreement. An agreement shall not be entered into 22 with an employer not already located in a pilot project city 23 when another Iowa community is competing for the same project 24 and both the pilot project city and the other Iowa community 25 are seeking assistance from the authority. 26 (2) The pilot project city shall not enter into a 27 withholding agreement after June 30, 2013 2018 . 28 (3) The pilot project city shall provide on an annual basis 29 to the economic development authority information documenting 30 the total amount of payments and receipts under a withholding 31 agreement, including all agreements with an employer to 32 suspend, abate, exempt, rebate, refund, or reimburse property 33 taxes, to provide a grant for property taxes paid or a grant 34 not related to property taxes, or to make a direct payment of 35 -2- LSB 1661XS (2) 85 md/sc 2/ 6

S.F. 122 taxes, with moneys in the special withholding project fund. 1 The economic development authority shall verify the information 2 provided by the pilot project city. 3 Sec. 4. Section 403.19A, subsection 3, paragraph d, 4 subparagraph (1), Code 2013, is amended to read as follows: 5 (1) A copy of the adopted local development agreement 6 plan of between the pilot project city and the employer 7 that outlines local incentives or assistance for the project 8 using urban renewal or urban revitalization incentives, if 9 applicable . 10 Sec. 5. Section 403.19A, subsection 3, Code 2013, is amended 11 by adding the following new paragraph: 12 NEW PARAGRAPH . 0f. Pursuant to rules adopted by the 13 economic development authority, the pilot project city 14 shall provide on an annual basis to the economic development 15 authority information documenting the compliance of each 16 employer with each requirement of the withholding agreement, 17 including but not limited to the number of jobs created or 18 retained and the amount of investment made by the employer. 19 The economic development authority shall, in response to 20 receiving such information from the pilot project city, assess 21 the level of compliance by each employer and provide to the 22 pilot project city recommendations for either maintaining 23 employer compliance with the withholding agreement or 24 terminating the agreement for noncompliance under paragraph 25 “f” . The economic development authority shall also provide each 26 such assessment and recommendation report to the department of 27 revenue. 28 Sec. 6. Section 403.19A, subsection 3, paragraph f, Code 29 2013, is amended to read as follows: 30 f. If the employer ceases to meet the requirements of the 31 withholding agreement, the agreement shall be terminated by the 32 pilot project city and any withholding credits for the benefit 33 of the employer shall cease. However, in regard to the number 34 of jobs that are to be created or retained, if the employer 35 -3- LSB 1661XS (2) 85 md/sc 3/ 6

S.F. 122 has met the number of jobs to be created or retained pursuant 1 to the withholding agreement and subsequently the number of 2 jobs falls below the required level, the employer shall not be 3 considered as not meeting the job requirement until eighteen 4 months after the date of the decrease in the number of jobs 5 created or retained. Notice shall be provided promptly to the 6 department of revenue following termination. 7 Sec. 7. APPLICABILITY. 8 1. Except as provided in subsection 2, this Act applies to 9 withholding agreements entered into by a pilot project city 10 on or after the effective date of this Act and withholding 11 agreements entered into by a pilot project city prior to 12 the effective date of this Act shall be governed by section 13 403.19A, Code 2013. 14 2. The following provisions of this Act apply to withholding 15 agreements entered into prior to the effective date of this Act 16 or entered into on or after the effective date of this Act: 17 a. The section of this Act amending section 403.19A, 18 subsection 3, paragraph “f”. 19 b. The section of this Act enacting section 403.19A, 20 subsection 3, paragraph “0f”. 21 EXPLANATION 22 This bill modifies the targeted jobs withholding tax credit 23 program, which is a pilot program enacted in 2006 to allow 24 the diversion of withholding funds paid by an employer to be 25 matched by a designated pilot project city to create economic 26 incentives that can be directed toward businesses located 27 within urban renewal areas in the city pursuant to the terms of 28 a withholding agreement with a business and after approval of 29 the agreement by the Iowa economic development authority. 30 The bill removes the requirement that an employer that is a 31 party to a withholding agreement with a pilot project city be 32 located in an urban renewal area. The bill removes a similar 33 requirement relating to the definition of targeted job. The 34 bill makes corresponding changes to Code section 403.19A to 35 -4- LSB 1661XS (2) 85 md/sc 4/ 6

S.F. 122 reflect the removal of the urban renewal area requirement, 1 including providing that the targeted jobs withholding credits 2 be deposited in a withholding project fund rather than the 3 special fund established for urban renewal purposes. 4 The bill allows a pilot project city to provide for the 5 deposit of the targeted jobs withholding credit into the 6 city’s withholding project fund by resolution, rather than by 7 ordinance. 8 Under current law, a pilot project city may not enter into a 9 withholding agreement after June 30, 2013. The bill extends 10 that deadline to June 30, 2018. 11 The bill modifies the required contents of a withholding 12 agreement and requires each pilot project city to provide 13 on an annual basis to the economic development authority 14 information documenting the compliance of each employer with 15 each requirement of the withholding agreement, including but 16 not limited to the number of jobs created or retained and the 17 amount of investment made by the employer. The bill requires 18 the economic development authority, in response to receiving 19 such information from the pilot project city, to assess the 20 level of compliance by each employer and provide to the pilot 21 project city recommendations for either maintaining employer 22 compliance with the withholding agreement or terminating 23 the withholding agreement for noncompliance. The economic 24 development authority must also provide each such assessment 25 and recommendation report to the department of revenue. 26 The bill specifies that the pilot project city is required 27 to terminate a withholding agreement if the employer ceases to 28 meet the requirements of the agreement and also requires that 29 the department of revenue be notified following termination. 30 Except as provided in the bill, the bill applies to 31 withholding agreements entered into by a pilot project city on 32 or after the effective date of the bill. The bill provides 33 that withholding agreements entered into by a pilot project 34 city prior to the effective date of the bill shall be governed 35 -5- LSB 1661XS (2) 85 md/sc 5/ 6

S.F. 122 by Code section 403.19A, Code 2013. However, the section of 1 the bill enacting Code section 403.19A(3)(0f), relating to 2 compliance reporting and the section of the bill amending 3 Code section 403.19A(3)(f), relating to authority of a city 4 to terminate a withholding agreement, apply to withholding 5 agreements entered into prior to the effective date of the bill 6 on or after the effective date of the bill. 7 -6- LSB 1661XS (2) 85 md/sc 6/ 6