Senate File 436 - Introduced SENATE FILE 436 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1240) A BILL FOR An Act relating to the historic preservation and cultural and 1 entertainment district tax credit by modifying the total 2 amount of tax credits that may be issued, the definition of 3 substantial rehabilitation costs, and the qualifications 4 for certain projects, and including effective date and 5 applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 2374SV (4) 85 mm/sc

S.F. 436 Section 1. Section 404A.1, subsection 2, paragraph e, Code 1 2013, is amended to read as follows: 2 e. “Substantial rehabilitation” means qualified 3 rehabilitation costs that meet or exceed the following: 4 (1) In the case of commercial property, costs totaling at 5 least fifty thousand dollars or fifty percent of the assessed 6 value of the property, excluding the land, prior to the 7 rehabilitation , whichever is less . 8 (2) In the case of residential property or barns other 9 than commercial property , costs totaling at least twenty-five 10 thousand dollars or twenty-five percent of the assessed value, 11 excluding the land, prior to rehabilitation, whichever is less. 12 Sec. 2. Section 404A.3, subsection 3, paragraph b, Code 13 2013, is amended to read as follows: 14 b. The eligible property shall be placed in service 15 within either sixty months of the date on which the project 16 application was approved under this section , or seventy-two 17 months of the date on which the project application was 18 approved under this section if more than fifty percent of the 19 qualified rehabilitation costs are incurred within sixty months 20 of the date on which the project application was approved under 21 this section . 22 Sec. 3. Section 404A.4, subsection 2, paragraph d, Code 23 2013, is amended to read as follows: 24 d. For the fiscal year beginning July 1, 2012, and for each 25 fiscal year thereafter, the office shall reserve not more than 26 forty-five million dollars worth of tax credits for any one 27 taxable year. 28 Sec. 4. Section 404A.4, subsection 2, Code 2013, is amended 29 by adding the following new paragraphs: 30 NEW PARAGRAPH . e. For a fiscal year beginning on or after 31 July 1, 2013, but before July 1, 2016, the office shall reserve 32 not more than sixty million dollars worth of tax credits for 33 any one taxable year. 34 NEW PARAGRAPH . f. For the fiscal year beginning July 1, 35 -1- LSB 2374SV (4) 85 mm/sc 1/ 4

S.F. 436 2016, and for each fiscal year thereafter, the office shall 1 reserve not more than fifty million dollars worth of tax 2 credits for any one taxable year. 3 Sec. 5. Section 404A.4, subsection 4, paragraph a, Code 4 2013, is amended to read as follows: 5 a. The total amount of tax credits that may be approved for 6 a fiscal year prior to the fiscal year beginning July 1, 2012, 7 under this chapter shall not exceed fifty million dollars. 8 The total amount of tax credits that may be approved for a 9 the fiscal year beginning on or after July 1, 2012, shall not 10 exceed forty-five million dollars. The total amount of tax 11 credits that may be approved for a fiscal year beginning on or 12 after July 1, 2013, but before July 1, 2016, shall not exceed 13 sixty million dollars. The total amount of tax credits that 14 may be approved for a fiscal year beginning on or after July 1, 15 2016, shall not exceed fifty million dollars. 16 Sec. 6. Section 404A.4, subsection 4, paragraph b, 17 subparagraph (1), Code 2013, is amended to read as follows: 18 (1) Ten percent of the dollar amount of tax credits shall 19 be allocated for purposes of new projects with final qualified 20 rehabilitation costs of five seven hundred fifty thousand 21 dollars or less. 22 Sec. 7. EFFECTIVE UPON ENACTMENT. The following provision 23 or provisions of this Act, being deemed of immediate 24 importance, take effect upon enactment: 25 1. The section of this Act amending section 404A.3. 26 Sec. 8. APPLICABILITY. The following provision or 27 provisions of this Act apply to eligible property to be placed 28 in service on or after the effective date of this Act: 29 1. The section of this Act amending section 404A.3. 30 EXPLANATION 31 This bill relates to the historic preservation and cultural 32 and entertainment district tax credit by modifying the 33 definition of substantial rehabilitation, the amount of tax 34 credits that may be issued, and the qualifications for certain 35 -2- LSB 2374SV (4) 85 mm/sc 2/ 4

S.F. 436 projects. 1 The bill amends the definition of “substantial 2 rehabilitation” for purposes of the credit. Under current 3 law, a certain threshold amount of qualified rehabilitation 4 costs are necessary in order to meet the definition of 5 substantial rehabilitation and qualify for the tax credit. The 6 threshold amount is different depending on whether the eligible 7 property is classified as commercial property or classified as 8 residential property or barns. The bill amends the residential 9 property or barns classification to include all property other 10 than commercial property. The bill also amends the threshold 11 amount of qualified rehabilitation costs in the commercial 12 property category to be the lesser of $50,000 or 50 percent of 13 the assessed value of the property, excluding the land. 14 The bill extends from 60 to 72 months the date by which 15 eligible property is required to be placed in service after 16 approval of a project application provided that more than 50 17 percent of the qualified rehabilitation costs are incurred 18 within the first 60 months after approval of the project 19 application. This provision takes effect upon enactment and 20 applies to eligible property to be placed in service on or 21 after that date. 22 The bill increases the amount of tax credits that may be 23 approved and reserved. Under current law, not more than $45 24 million in tax credits may be approved for a fiscal year 25 and reserved for any one taxable year. The bill increases 26 this amount to $60 million for fiscal year 2013-2014, fiscal 27 year 2014-2015, and fiscal year 2015-2016. For fiscal year 28 2016-2017, and for each fiscal year thereafter, the amount is 29 $50 million. 30 The bill amends the qualifications for certain projects. 31 Under current law, 10 percent of the total amount of tax 32 credits are required to be allocated to projects with qualified 33 rehabilitation costs of $500,000 or less. The bill increases 34 to $750,000 or less the amount of qualified rehabilitation 35 -3- LSB 2374SV (4) 85 mm/sc 3/ 4