SSB 3129 (LSB 5320XD (9) 85)

SENATE/HOUSE FILE _____

BY  (PROPOSED ECONOMIC DEVELOPMENT AUTHORITY BILL)

A BILL FOR

An Act relating to the administration of programs by the economic development authority by modifying the high quality jobs program, creating a workforce housing tax incentives program and making penalties applicable, and repealing the enterprise zone program, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I

HIGH QUALITY JOBS PROGRAM
    Section 1.  Section 15.327, Code 2014, is amended by adding the following new subsections:
   NEW SUBSECTION.  3A.  “Brownfield site” means the same as defined in section 15.291.
   NEW SUBSECTION.  12A.  “Grayfield site” means the same as defined in section 15.291.
   NEW SUBSECTION.  17A.  “Project” means an activity or set of activities directly related to the start-up, location, modernization, or expansion of a business, and proposed in an application by a business, that will result in the accomplishment of the goals of the program.
    Sec. 2.  Section 15.327, subsection 18, Code 2014, is amended to read as follows:
   18.  “Project completion assistance” means financial assistance or technical assistance provided to an eligible business in order to facilitate the start-up, location, or expansion of the business completion of a project in this state and provided in an expedient manner to ensure the successful completion of the start-up, location, or expansion project.
    Sec. 3.  Section 15.329, subsection 1, paragraph a, Code 2014, is amended to read as follows:
   a.  If the qualifying investment is ten million dollars or more, the community has approved by ordinance or resolution the start-up, location, or expansion of the business project for the purpose of receiving the benefits of this part.
    Sec. 4.  Section 15.331A, subsection 1, Code 2014, is amended to read as follows:
   1.  The eligible business shall be entitled to a refund of the sales and use taxes paid under chapter 423 for gas, electricity, water, or sewer utility services, goods, wares, or merchandise, or on services rendered, furnished, or performed to or for a contractor or subcontractor and used in the fulfillment of a written contract relating to the construction or equipping of a facility that is part of a project of the eligible business. Taxes attributable to intangible property and furniture and furnishings shall not be refunded. However, an eligible business shall be entitled to a refund for taxes attributable to racks, shelving, and conveyor equipment to be used in a warehouse or distribution center subject to section 15.331C.
    Sec. 5.  Section 15.332, subsection 1, Code 2014, is amended to read as follows:
   1.  The community may exempt from taxation all or a portion of the actual value added by improvements to real property directly related to new jobs created by the location or expansion of an eligible business under the program project and used in the operations of the eligible business. The exemption may be allowed for a period not to exceed twenty years beginning the year the improvements are first assessed for taxation.
    Sec. 6.  Section 15.333, subsection 1, Code 2014, 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 project. The tax credit shall be amortized equally over five calendar years. 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.
    Sec. 7.  Section 15.333, subsection 2, unnumbered paragraph 1, Code 2014, is amended to read as follows:

   For purposes of this subsection, “new investment directly related to new jobs created by the location or expansion of an eligible business under the program project” means the cost of machinery and equipment, as defined in section 427A.1, subsection 1, paragraphs “e” and “j”, purchased for use in the operation of the eligible business, the purchase price of which has been depreciated in accordance with generally accepted accounting principles, the purchase price of real property and any buildings and structures located on the real property, and the cost of improvements made to real property which is used in the operation of the eligible business. “New investment directly related to new jobs created by the location or expansion of an eligible business under the program project” also means the annual base rent paid to a third-party developer by an eligible business for a period not to exceed ten years, provided the cumulative cost of the base rent payments for that period does not exceed the cost of the land and the third-party developer’s costs to build or renovate the building for the eligible business. The eligible business shall enter into a lease agreement with the third-party developer for a minimum of five years. If, however, within five years of purchase, the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other existing structures for which tax credit was claimed under this section, the tax liability of the eligible business for the year in which all or part of the property is sold, disposed of, razed, or otherwise rendered unusable shall be increased by one of the following amounts:
    Sec. 8.  Section 15.333A, subsection 1, Code 2014, is amended to read as follows:
   1.  An eligible business may claim an insurance premium tax credit equal to a percentage of the new investment directly related to new jobs created by the location or expansion of an eligible business under the program project. The tax credit shall be amortized equally over a five-year period. The tax credit shall be allowed against taxes imposed in chapter 432. A 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. The percentage shall be determined as provided in section 15.335A.
    Sec. 9.  Section 15.333A, subsection 2, unnumbered paragraph 1, Code 2014, is amended to read as follows:

   For purposes of this section, “new investment directly related to new jobs created by the location or expansion of an eligible business under the program project” means the cost of machinery and equipment, as defined in section 427A.1, subsection 1, paragraphs “e” and “j”, purchased for use in the operation of the eligible business, the purchase price of which has been depreciated in accordance with generally accepted accounting principles, the purchase price of real property and any buildings and structures located on the real property, and the cost of improvements made to real property which is used in the operation of the eligible business. “New investment directly related to new jobs created by the location or expansion of an eligible business under the program project” also means the annual base rent paid to a third-party developer by an eligible business for a period not to exceed ten years, provided the cumulative cost of the base rent payments for that period does not exceed the cost of the land and the third-party developer’s costs to build or renovate the building for the eligible business. The eligible business shall enter into a lease agreement with the third-party developer for a minimum of five years. If, however, within five years of purchase, the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other existing structures for which tax credit was claimed under this section, the tax liability of the eligible business for the year in which all or part of the property is sold, disposed of, razed, or otherwise rendered unusable shall be increased by one of the following amounts:
    Sec. 10.  Section 15.335C, Code 2014, is amended to read as follows:
   15.335C  Economically Wage thresholds for brownfield and grayfield projects and economically distressed areas.
   1.  a.  Notwithstanding section 15.329, subsection 1, paragraph “c”, the authority may provide tax incentives or project completion assistance under this part to an eligible a business paying for a project that will create or retain jobs that will pay less than one hundred twenty percent of the qualifying wage threshold if that business project is located at a brownfield site, a grayfield site, or in an economically distressed area.
   b.  (1)  A business with a project located in an economically distressed area or at a grayfield site and receiving incentives or assistance pursuant to this section shall be required to pay at least one hundred percent of the qualifying wage threshold for jobs created or retained by the project.
   (2)  A business with a project located at a brownfield site and receiving incentives or assistance pursuant to this section shall be required to pay at least ninety percent of the qualifying wage threshold for jobs created or retained by the project.
   2.  For purposes of this section, “economically distressed area” means a county that ranks among the bottom twenty-five thirty-three of all Iowa counties, as measured by one of the following:
   a.  Average monthly unemployment level for the most recent twelve-month period.
   b.  Average annualized unemployment level for the most recent five-year period.
    Sec. 11.  APPLICABILITY.  This division of this Act applies to high quality jobs program agreements entered into by an eligible business and the economic development authority on or after the effective date of this division of this Act, and high quality jobs program agreements entered into by an eligible business and the economic development authority prior to the effective date of this division of this Act shall be governed by sections 15.327, 15.329, 15.333, 15.333A, and 15.335C, Code 2014.

DIVISION II

WORKFORCE HOUSING TAX INCENTIVES PROGRAM
    Sec. 12.  Section 15.119, subsection 2, Code 2014, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  g.  The workforce housing tax incentives program administered pursuant to sections 15.351 through 15.356. In allocating tax credits pursuant to this subsection, the authority shall not allocate more than twenty million dollars for purposes of this paragraph.
    Sec. 13.  NEW SECTION.  15.351  Short title.

   This part shall be known and may be cited as the “Workforce Housing Tax Incentives Program”.
    Sec. 14.  NEW SECTION.  15.352  Definitions.

   As used in this part, unless the context otherwise requires:

   1.  “Brownfield site” means an abandoned, idled, or underutilized property where expansion or redevelopment is complicated by real or perceived environmental contamination. A brownfield site includes property contiguous with the site on which the property is located. A brownfield site does not include property which has been placed, or is proposed for placement, on the national priorities list established pursuant to the federal Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. 
   2.  “Community” means a city or county.
   3.  “Grayfield site” means a property meeting all of the following requirements:
   a.  The property has been developed and has infrastructure in place but the property’s current use is outdated or prevents a better or more efficient use of the property. Such property includes vacant, blighted, obsolete, or otherwise underutilized property.
   b.  The property’s improvements and infrastructure are at least twenty-five years old and one or more of the following conditions exists:
   (1)  Thirty percent or more of a building located on the property that is available for occupancy has been vacant or unoccupied for a period of twelve months or more.
   (2)  The assessed value of the improvements on the property has decreased by twenty-five percent or more.
   (3)  The property is currently being used as a parking lot.
   (4)  The improvements on the property no longer exist. 
   4.  “Housing business” means a business that is a housing developer, housing contractor, or nonprofit organization that completes a housing project in the state.
   5.  “Housing project” means a project located in this state meeting the requirements of section 15.353.
   6.  “Multi-use building” means a building whose street-level ground story is used for a purpose that is other than residential, and whose upper story or stories are currently used for a residential purpose, or will be used for a residential purpose after completion of the housing project associated with the building.
   7.  “Program” means the workforce housing tax incentives program administered under this part.
   8.  a.  “Qualifying new investment” means costs that are directly related to the acquisition, repair, rehabilitation, or redevelopment of a housing project in this state.
   b.  “Qualifying new investment” includes costs that are directly related to new construction of dwelling units if the new construction occurs in a distressed workforce housing community.
   c.  The amount of costs that may be used to compute “qualifying new investment” shall not exceed the costs used for the first one hundred fifty thousand dollars of value for each dwelling unit that is part of a housing project.
   d.  “Qualifying new investment” does not include the following:
   (1)  The portion of the total cost of a housing project that is financed by federal, state, or local government tax credits, grants, forgivable loans, or other forms of financial assistance that do not require repayment, excluding the tax incentives provided under this part.
   (2)  If a housing project includes the rehabilitation, repair, or redevelopment of an existing multi-use building, the portion of the total acquisition costs of the multi-use building, including a proportionate share of the total acquisition costs of the land upon which the multi-use building is situated, that are attributable to the street-level ground story that is used for a purpose that is other than residential.
    Sec. 15.  NEW SECTION.  15.353  Housing project requirements.
   1.  To receive workforce housing tax incentives pursuant to the program, a proposed housing project shall meet all of the following requirements:
   a.  The project includes at least one of the following:
   (1)  Four or more single-family dwelling units.
   (2)  One or more multiple dwelling unit buildings each containing three or more individual dwelling units.
   (3)  Two or more dwelling units located in the upper story of an existing multi-use building.
   b.  The project consists of any of the following:
   (1)  The rehabilitation, repair, or redevelopment of dwelling units at a brownfield or grayfield site.
   (2)  The rehabilitation, repair, or redevelopment of dilapidated dwelling units.
   (3)  The rehabilitation, repair, or redevelopment of dwelling units located in the upper story of an existing multi-use building.
   (4)  (a)  The new construction, rehabilitation, repair, or redevelopment of dwelling units in a distressed workforce housing community.
   (b)  The determination as to whether a community is considered a distressed workforce housing community shall be within the discretion of the authority after considering all of the following:
   (i)  Whether or not the community has a severe housing shortage relative to demand, low vacancy rates, or rising housing costs combined with low unemployment.
   (ii)  The relative merits of all applications for designation as a distressed workforce housing community.
   (iii)  The demand for projects applying under this subparagraph compared to the demand for projects applying under subparagraphs (1) through (3).
   c.  (1)  Except as provided in subparagraph (2), the average dwelling unit cost does not exceed two hundred thousand dollars per dwelling unit.
   (2)  The average dwelling unit cost does not exceed two hundred fifty thousand dollars per dwelling unit if the project involves the rehabilitation, repair, redevelopment, or preservation of eligible property, as that term is defined in section 404A.1, subsection 2.
   d.  The dwelling units, when completed and made available for occupancy, meet the United States department of housing and urban development’s housing quality standards and all applicable local safety standards.
    Sec. 16.  NEW SECTION.  15.354  Housing project application and agreement.
   1.  Application.
   a.  A housing business seeking workforce housing tax incentives provided in section 15.355 shall make application to the authority in the manner prescribed by the authority. The authority may accept applications on a continuous basis.
   b.  The application shall include all of the following:
   (1)  The following information establishing local participation for the housing project:
   (a)  A resolution in support of the housing project by the community where the housing project will be located.
   (b)  Documentation of local matching funds pledged for the housing project in an amount equal to at least one thousand dollars per dwelling unit, including but not limited to a funding agreement between the housing business and the community where the housing project will be located. For purposes of this paragraph, local matching funds shall be in the form of cash or cash equivalents, or in the form of a local property tax exemption, rebate, refund, or reimbursement.
   (2)  A report that meets the requirements and conditions of section 15.330, subsection 9.
   (3)  Information showing the total costs and funding sources of the housing project sufficient to allow the authority to adequately determine the financing that will be utilized for the housing project, the actual cost of the dwelling units, and the amount of qualifying new investment.
   (4)  Any other information deemed necessary by the authority to evaluate the eligibility and financial need of the housing project under the program.
   2.  Registration.
   a.  Upon review of the application, the authority may register the housing project under the program. If the authority registers the housing project, the authority shall make a preliminary determination as to the amount of tax incentives for which the housing project qualifies.
   b.  After registering the housing project, the authority shall notify the housing business of successful registration under the program. The notification shall include the amount of tax incentives under section 15.355 for which the housing business has received preliminary approval and a statement that the amount is a preliminary determination only. The amount of tax credits included on a tax credit certificate issued pursuant to this section, or a claim for refund of sales and use taxes, shall be contingent upon completion of the requirements in subsection 3.
   3.  Agreement and fees.
   a.  Upon successful registration of the housing project, the housing business shall enter into an agreement with the authority for the successful completion of all requirements of the program.
   b.  The compliance cost fees imposed in section 15.330, subsection 12, shall apply to all agreements entered into under this program and shall be collected by the authority in the same manner and to the same extent as described in that subsection.
   c.  A housing business shall complete its housing project within three years from the date the housing project is registered by the authority.
   d.  Upon completion of a housing project, an audit of the project, completed by an independent certified public accountant licensed in this state, shall be submitted to the authority.
   e.  Upon review of the audit and verification of the amount of the qualifying new investment, the authority may issue a tax credit certificate to the housing business stating the amount of workforce housing investment tax credits under section 15.355 the eligible housing business may claim.
   4.  Maximum tax incentives amount.
   a.  The maximum aggregate amount of tax incentives that may be awarded under section 15.355 to a housing business for a housing project shall not exceed one million dollars.
   b.  If a housing business qualifies for a higher amount of tax incentives under section 15.355 than is allowed by the limitation imposed in paragraph “a”, the authority and the housing business may negotiate an apportionment of the reduction in tax incentives between the sales tax refund provided in section 15.355, subsection 2, and the workforce housing investment tax credits provided in section 15.355, subsection 3, provided the total aggregate amount of tax incentives after the apportioned reduction does not exceed the amount in paragraph “a”.
   c.  The authority shall issue tax incentives under the program on a first-come, first-served basis until the maximum amount of tax incentives allocated pursuant to section 15.119, subsection 2, is reached. The authority shall maintain a list of registered housing projects under the program so that if the maximum aggregate amount of tax incentives is reached in a given fiscal year, registered housing projects that were completed but for which tax incentives were not issued shall be placed on a wait list in the order the registered housing projects were completed and shall be given priority for receiving tax incentives in succeeding fiscal years.
   5.  Termination and repayment.  The failure by a housing business in completing a housing project to comply with any requirement of this program or any of the terms and obligations of an agreement entered into pursuant to this section may result in the reduction, termination, or recision of the approved tax incentives and may subject the housing business to the repayment or recapture of tax incentives claimed under section 15.355. The repayment or recapture of tax incentives pursuant to this section shall be accomplished in the same manner as provided in section 15.330, subsection 2.
    Sec. 17.  NEW SECTION.  15.355  Workforce housing tax incentives.
   1.  A housing business that has entered into an agreement pursuant to section 15.354 is eligible to receive the tax incentives described in subsections 2 and 3.
   2.  A housing business may claim a refund of the sales and use taxes paid under chapter 423 that are directly related to a housing project. The refund available pursuant to this subsection shall be as provided in section 15.331A to the extent applicable for purposes of this program.
   3.  a.  A housing business may claim a tax credit in an amount not to exceed ten percent of the qualifying new investment of a housing project.
   b.  The tax credit shall be allowed against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329.
   c.  An individual may claim a tax credit under this subsection of a partnership, limited liability company, S corporation, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings from the partnership, limited liability company, S corporation, estate, or trust.
   d.  Any tax credit in excess of the taxpayer’s liability for the tax year is not refundable but may be credited to the tax liability for the following five years or until depleted, whichever is earlier.
   e.  (1)  To claim a tax credit under this subsection, a taxpayer shall include one or more tax credit certificates with the taxpayer’s tax return.
   (2)  The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the amount of the credit, the name of the eligible housing business, any other information required by the department of revenue, and a place for the name and tax identification number of a transferee and the amount of the tax credit being transferred.
   (3)  The tax credit certificate, unless rescinded by the authority, shall be accepted by the department of revenue as payment for taxes imposed pursuant to chapter 422, divisions II, III, and V, and in chapter 432, and for the moneys and credits tax imposed in section 533.329, subject to any conditions or restrictions placed by the authority upon the face of the tax credit certificate and subject to the limitations of this program.
   (4)  Tax credit certificates issued under section 15.354, subsection 3, paragraph “e”, may be transferred to any person. Within ninety days of transfer, the transferee shall submit the transferred tax credit certificate to the department of revenue along with a statement containing the transferee’s name, tax identification number, and address, the denomination that each replacement tax credit certificate is to carry, and any other information required by the department of revenue. However, tax credit certificate amounts of less than the minimum amount established by rule of the authority shall not be transferable.
   (5)  Within thirty days of receiving the transferred tax credit certificate and the transferee’s statement, the department of revenue shall issue one or more replacement tax credit certificates to the transferee. Each replacement tax credit certificate must contain the information required for the original tax credit certificate and must have the same expiration date that appeared on the transferred tax credit certificate.
   (6)  A tax credit shall not be claimed by a transferee under this section until a replacement tax credit certificate identifying the transferee as the proper holder has been issued. The transferee may use the amount of the tax credit transferred against the taxes imposed in chapter 422, divisions II, III, and V, and in chapter 432, and against the moneys and credits tax imposed in section 533.329, for any tax year the original transferor could have claimed the tax credit. Any consideration received for the transfer of the tax credit shall not be included as income under chapter 422, divisions II, III, and V. Any consideration paid for the transfer of the tax credit shall not be deducted from income under chapter 422, divisions II, III, and V.
   f.  For purposes of the individual and corporate income taxes and the franchise tax, the increase in the basis of the property that would otherwise result from the qualifying new investment shall be reduced by the amount of the tax credit computed under this subsection.
    Sec. 18.  NEW SECTION.  15.356  Rules.

   The authority and the department of revenue shall adopt rules as necessary for the implementation and administration of this part.
    Sec. 19.  NEW SECTION.  422.11C  Workforce housing investment tax credit.

   The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by a workforce housing investment tax credit allowed under section 15.355, subsection 3.
    Sec. 20.  Section 422.33, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  15.  The taxes imposed under this division shall be reduced by a workforce housing investment tax credit allowed under section 15.355, subsection 3.
    Sec. 21.  Section 422.60, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.  The taxes imposed under this division shall be reduced by a workforce housing investment tax credit allowed under section 15.355, subsection 3.
    Sec. 22.  NEW SECTION.  432.12G  Workforce housing investment tax credit.

   The taxes imposed under this chapter shall be reduced by a workforce housing investment tax credit allowed under section 15.355, subsection 3.
    Sec. 23.  Section 533.329, subsection 2, Code 2014, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  k.  The moneys and credits tax imposed under this section shall be reduced by a workforce housing investment tax credit allowed under section 15.355, subsection 3.

DIVISION III

TERMINATION AND TRANSITION OF ENTERPRISE ZONE PROGRAM
    Sec. 24.  INVESTMENT TAX CREDITS ISSUED TO ELIGIBLE HOUSING BUSINESSES UNDER THE ENTERPRISE ZONE PROGRAM —— TRANSFERABILITY.  Notwithstanding the requirement in section 15E.193B, subsection 8, Code 2014, that not more than three million dollars worth of tax credits for housing developments located in a brownfield site or a blighted area shall be eligible for transfer in a calendar year unless the eligible housing business is also eligible for low-income housing tax credits authorized under section 42 of the Internal Revenue Code, and notwithstanding the requirement in section 15E.193B, subsection 8, Code 2014, that the economic development authority shall not approve more than one million five hundred thousand dollars in tax credit certificates for transfer to any one eligible housing business located on a brownfield site or in a blighted area in a calendar year, all investment tax credits determined under section 15E.193B, subsection 6, paragraph “a”, Code 2014, for housing developments located on a brownfield site or in a blighted area may be approved by the economic development authority for transfer in calendar year 2014, or any subsequent calendar year, provided the eligible housing business was awarded the investment tax credit before the effective date of this section of this division of this Act and notifies the economic development authority, in writing, before July 1, 2014, of its intent to transfer such tax credits, and provided the eligible housing business and the related housing development meet all other applicable requirements under section 15E.193B, Code 2014.
    Sec. 25.  Section 2.48, subsection 3, paragraph e, subparagraph (9), Code 2014, is amended by striking the subparagraph.
    Sec. 26.  Section 15.106B, subsection 5, paragraph c, Code 2014, is amended to read as follows:
   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”. However, fees collected by the authority pursuant to section 15.330, subsection 12, and section 15E.198, Code 2014, and section 15.354, subsection 2, paragraph “f”, shall be used exclusively for costs associated with the administration of due diligence and compliance.
    Sec. 27.  Section 15.119, subsection 2, paragraph b, Code 2014, is amended to read as follows:
   b.  The enterprise zones program administered pursuant to sections 15E.191 through 15E.197, Code 2014.
    Sec. 28.  Section 15A.1, subsection 5, paragraph c, Code 2014, is amended by striking the paragraph.
    Sec. 29.  Section 15H.5, subsection 2, Code 2014, is amended to read as follows:
   2.  The Iowa summer youth corps program is established to provide meaningful summer enrichment programming to Iowa youth. The program shall be administered by the Iowa commission on volunteer service using a competitive grant process to implement projects in accordance with program requirements. The commission shall adopt administrative rules for the program, including but not limited to incentives, grant criteria, and grantee selection processes. A percentage of the grants shall be designated by the commission to address the needs of city enterprise zones that meet the distress criteria outlined in section 15E.194 economically distressed areas as defined in section 15.335C.
    Sec. 30.  Section 15H.5, subsection 5, paragraph c, Code 2014, is amended to read as follows:
   c.  The commission shall give priority consideration to approving those projects that target communities that have disproportionately high rates of juvenile crime or low rates of high school graduation or that have been designated as city enterprise zones that meet the distress criteria outlined in section 15E.194 economically distressed areas as defined in section 15.335C.
    Sec. 31.  Section 15J.4, subsection 1, paragraph b, Code 2014, is amended to read as follows:
   b.  The area is was in whole or in part either an a designated economic development enterprise zone designated under chapter 15E, division XVIII, Code 2014, immediately prior to the effective date of this Act, or the area is in whole or in part an urban renewal area established pursuant to chapter 403.
    Sec. 32.  Section 403.19A, subsection 3, paragraph j, Code 2014, is amended to read as follows:
   j.  An employer may participate in a new jobs credit from withholding under section 260E.5, or a supplemental new jobs credit from withholding under section 15E.197, Code 2014, or under section 15.331, Code 2005, at the same time as the employer is participating in the withholding credit under this section. Notwithstanding any other provision in this section, the new jobs credit from withholding under section 260E.5, and the supplemental new jobs credit from withholding under section 15E.197, Code 2014, or under section 15.331, Code 2005, shall be collected and disbursed prior to the withholding credit under this section.
    Sec. 33.  Section 422.11F, subsection 2, Code 2014, is amended to read as follows:
   2.  The taxes imposed under this division, less the credits allowed under section 422.12, shall be reduced by investment tax credits authorized pursuant to sections section 15.333 and section 15E.193B, subsection 6, Code 2014.
    Sec. 34.  Section 422.16A, Code 2014, is amended to read as follows:
   422.16A  Job training withholding —— certification and transfer.

   Upon the completion by a business of its repayment obligation for a training project funded under chapter 260E, including a job training project funded under section 15A.8 or repaid in whole or in part by the supplemental new jobs credit from withholding under section 15A.7 or section 15E.197, Code 2014, the sponsoring community college shall report to the economic development authority the amount of withholding paid by the business to the community college during the final twelve months of withholding payments. The economic development authority shall notify the department of revenue of that amount. The department shall credit to the workforce development fund account established in section 15.342A twenty-five percent of that amount each quarter for a period of ten years. If the amount of withholding from the business or employer is insufficient, the department shall prorate the quarterly amount credited to the workforce development fund account. The maximum amount from all employers which shall be transferred to the workforce development fund account in any year is four million dollars.
    Sec. 35.  Section 422.33, subsection 12, paragraph b, Code 2014, is amended to read as follows:
   b.  The taxes imposed under this division shall be reduced by investment tax credits authorized pursuant to section 15.333 and section 15E.193B, subsection 6, Code 2014.
    Sec. 36.  Section 422.60, subsection 5, paragraph b, Code 2014, is amended to read as follows:
   b.  The taxes imposed under this division shall be reduced by investment tax credits authorized pursuant to sections 15.333 and 15E.193B, subsection 6, Code 2014.
    Sec. 37.  Section 432.12C, subsection 2, Code 2014, is amended to read as follows:
   2.  The taxes imposed under this chapter shall be reduced by investment tax credits authorized pursuant to section 15.333A and section 15E.193B, subsection 6, Code 2014.
    Sec. 38.  REPEAL.  Sections 15E.191, 15E.192, 15E.193, 15E.193B, 15E.194, 15E.195, 15E.196, 15E.197, and 15E.198, Code 2014, are repealed.
    Sec. 39.  EFFECTIVE UPON ENACTMENT.  The following provision or provisions of this division of this Act, being deemed of immediate importance, take effect upon enactment:
   1.  The section of this division of this Act allowing the transfer of certain investment tax credits issued to eligible housing businesses under the enterprise zone program, notwithstanding the requirements limiting transfer of such credits under section 15E.193B, subsection 8.
    Sec. 40.  APPLICABILITY.
   1.  On or after the effective date of this division of this Act, a city or county shall not create an enterprise zone under chapter 15E, division XVIII, or enter into a new agreement or amend an existing agreement under chapter 15E, division XVIII.
   2.  a.  Agreements entered into under chapter 15E, division XVIII before the effective date of this division of this Act between an eligible business and a city, county, or the economic development authority or between an eligible business and the department of revenue and a community college or between an eligible housing business and the economic development authority shall remain in effect until they expire under their own terms and except as otherwise provided in this division of this Act, such agreements shall be governed by chapter 15E, division XVIII, Code 2014.
   b.  The elimination of the enterprise zone program under this Act shall not constitute grounds for recision or modification of agreements entered into under the program, except as otherwise provided in this division of this Act.
   3.  Except as otherwise provided in this division of this Act, this division of this Act is not intended to and shall not limit, modify, or otherwise adversely affect any tax credit certificate or related tax credit issued before the effective date of this Act or limit, modify, or otherwise adversely affect the redemption or transfer of any tax credit or tax credit certificate issued before the effective date of this division of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to the administration of programs by the economic development authority (EDA) by modifying the high quality jobs program, creating a workforce housing tax incentives program, and repealing the enterprise zone program.
   DIVISION I —— HIGH QUALITY JOBS PROGRAM. Division I modifies the high quality jobs program administered by the EDA. The division adds a definition for “project” for purposes of the program and strikes language that references the start-up, location, or expansion of an eligible business, and replaces it with reference to a “project”. “Project” is defined as an activity or set of activities directly related to the start-up, location, modernization, or expansion of a business, and proposed in an application by a business, that will result in the accomplishment of the goals of the program.
   The division amends the requirements for claiming the sales and use tax refund under the program for the construction or equipping of a facility of the eligible business to require that the facility also be part of a project.
   The division modifies the type of projects that will qualify for tax incentives or project completion assistance under the program. Under current law, the EDA only provides tax incentives or project completion assistance to businesses creating jobs if the business will pay at least 120 percent of the qualifying wage threshold, unless the business is located in an economically distressed area, in which case the business must pay at least 100 percent of the qualifying wage threshold. Economically distressed areas include the 25 lowest-ranked Iowa counties by average monthly or annual unemployment.
   The division amends the definition of “economically distressed area” by increasing to 33 from 25 the number of Iowa counties that will qualify as an economically distressed area. The division also permits businesses creating or retaining jobs as part of a project at a grayfield site or a brownfield site, as currently defined in statute, to qualify for tax incentives or project completion assistance if the business will pay at least 100 percent or 90 percent, respectively, of the qualifying wage threshold.
   The division applies to high quality jobs program agreements entered into on or after the effective date of the division, and high quality jobs program agreements entered into prior to the effective date of the division shall be governed by current law.
   DIVISION II —— WORKFORCE HOUSING TAX INCENTIVES PROGRAM.  Division II creates a workforce housing tax incentives program (program) that will be administered by the EDA and that will provide tax incentives to housing businesses that complete housing projects in the state. A “housing business” means a business that is a housing developer, housing contractor, or nonprofit organization that completes a housing project in the state. In order to qualify for the tax incentives under the program, a housing project must meet several requirements.
   First, the housing project must consist of a certain type and number of dwelling units. The project must include, at a minimum, four or more single-family dwelling units, one or more multiple dwelling unit buildings that each contain three or more individual dwelling units, or two or more dwelling units located in the upper story of an existing multi-use building. “Multi-use building” is defined as a building whose street-level ground story is used for a purpose that is other than residential, and whose upper story or stories are currently used for a residential purpose, or will be used for a residential purpose after completion of the housing project associated with the building.
   Second, the housing project must involve a certain type of development in a certain geographic location. The project may involve the rehabilitation, repair, or redevelopment of any dwelling unit if it occurs at a brownfield or grayfield site, as those terms are defined in the bill, or in a distressed workforce housing community. The project may involve the rehabilitation, repair, or redevelopment anywhere in the state of a dilapidated dwelling unit or a dwelling unit located in the upper story of an existing multi-use building. The project may involve the new construction of a dwelling unit if it is in a distressed workforce housing community, but shall not include the new construction of a multi-use building.
   The designation of a community as a distressed workforce housing community shall be within the discretion of the EDA after it considers the merits of all applications for such a designation and the demand for projects in distressed workforce housing communities compared to the demand for all other projects and after considering whether or not a particular community has a severe housing shortage relative to demand, low vacancy rates, or rising housing costs combined with low unemployment. “Community” means a city or county.
   Third, the average dwelling unit cost of a housing project must not exceed $200,000 per dwelling unit, or $250,000 per dwelling unit if the project involves the rehabilitation, repair, redevelopment, or preservation of “eligible property”, which means the same as defined for purposes of the historic preservation and cultural and entertainment district tax credit in Code chapter 404A and includes property listed or eligible for listing on the national register of historic places or property designated or eligible for designation as of historic significance to a district listed in the national register of historic places or property or a district designated a local landmark by a city or county ordinance or property that is a barn constructed prior to 1937.
   Fourth, the dwelling units that are part of the housing project must meet the United States Department of Housing and Urban Development’s housing quality standards and applicable local safety standards.
   A housing business seeking tax incentives for a housing project under the program is required to apply to the EDA. The application must include a resolution in support of the housing project by the community where the housing project will be located, documentation of local matching funds pledged of $1,000 or more per dwelling unit, a funding agreement between the housing business and the community, a report describing all violations of environmental law or worker safety law within the last five years, and any other information deemed necessary by the EDA to evaluate the eligibility and financial need of the housing project under the program. The EDA is not required to accept applications on a continuous basis. Upon review of an application, the EDA may register a housing project under the program. The EDA is required to notify a housing business of successful registration and the amount of tax incentives for which the EDA preliminarily determines it qualifies for. A housing business is then required to enter into an agreement with the EDA for the successful completion of its housing project within three years from the date it was registered by the EDA. A compliance cost fee equal to 0.5 percent of the value of the tax incentives claimed pursuant to an agreement will be imposed upon all agreements with an aggregate tax incentive value of $100,000 or greater.
   A housing business that fails to comply with the requirements of the program or the terms of an agreement with the EDA may have its tax incentives reduced, terminated, or rescinded, and may be subject to the repayment or recapture of claimed tax incentives.
   Upon completion of a registered housing project, a housing business must have its housing project audited by an independent certified public accountant licensed in this state. The EDA will then review the audit, verify the amount of workforce investment tax credits the eligible business may claim, and issue a tax credit certificate for that amount.
   The maximum amount of tax incentives that may be awarded by the EDA to a housing business for a housing project shall not exceed $1 million. In the event a housing business qualifies for tax incentives in excess of $1 million, the housing business and EDA may negotiate an apportionment of the reduction between the program’s two tax incentives.
   The program provides two different tax incentives. The first is a refund of the sales and use taxes paid that are directly related to the housing project. The bill provides that the willful making of a false report in connection with the sales and use tax refund is a simple misdemeanor. A simple misdemeanor is punishable by confinement for no more than 30 days or a fine of at least $65 but not more than $625, or by both. The second is a workforce housing investment tax credit in an amount not to exceed 10 percent of the qualifying new investment of the housing project. “Qualifying new investment” means the costs directly related to the acquisition, repair, rehabilitation, or redevelopment of the housing project. “Qualifying new investment” also includes costs that are directly related to new construction of dwelling units if the new construction occurs in a distressed workforce housing community. However, “qualifying new investment” does not include the portion of the total costs financed by federal, state, or local government tax credits, grants, forgivable loans, or other forms of nonrepayable financial assistance, excluding the tax incentives provided under the program. Also, if the housing project includes the rehabilitation, repair, or redevelopment of an existing multi-use building, “qualifying new investment” does not include the portion of the total acquisition costs of the multi-use building that is used for a purpose that is other than residential.
   The workforce housing investment tax credit may be claimed against the individual income tax, the corporate income tax, the franchise tax, the insurance companies tax, and the moneys and credits tax. To claim a tax credit, a taxpayer must include a tax credit certificate with the taxpayer’s tax return. The credit is nonrefundable but may be credited to the tax liability for five years. The tax credit may be transferred to any person or entity, and the division establishes procedures for the proper transfer of the tax credit. For purposes of the individual and corporate income taxes and the franchise tax, when the tax basis of property is increased as a result of qualifying new investment, that tax basis shall be reduced by the amount of the workforce housing investment tax credit issued under the program.
   The division provides that the program is part of the EDA’s maximum aggregate tax credit cap of $170 million per fiscal year, and not more than $20 million per fiscal year may be issued by the EDA under the program. The EDA is required to issue tax incentives under the program on a first-come, first-served basis until the maximum amount of $20 million per fiscal year is reached. If the amount of tax incentives exceeds this amount in a fiscal year, the EDA is required to establish a wait list and give priority in subsequent years to the registered housing projects on the wait list.
   The EDA and the department of revenue are required to adopt rules as necessary for the joint administration of the program.
   DIVISION III —— ENTERPRISE ZONE PROGRAM. Division III repeals the enterprise zone program administered by the EDA and makes conforming changes to references in the Code to the enterprise zone program and its corresponding tax incentives.
   The division amends the distribution criteria for grants and projects under the Iowa summer youth corps program to provide that a percentage of grants, and certain priority consideration for projects, shall be given to economically distressed areas, as defined in Code section 15.335C, instead of enterprise zones.
   The division amends the qualification that an area be part of an enterprise zone in order to be designated as a reinvestment district under the Iowa reinvestment Act in Code chapter 15J to require that an area be part of an enterprise zone that existed immediately prior to the effective date of the division.
   Under current law, investment tax credits issued to eligible housing businesses under the enterprise zone program are transferrable if the housing development is located on a brownfield site or in a blighted area, or if the housing development is receiving low-income housing tax credits under section 42 of the Internal Revenue Code (IRC). However, under current law, the EDA may not approve for transfer in any one calendar year more than $3 million worth of such tax credits for those housing projects not receiving low-income housing tax credits under section 42 of the IRC. The division notwithstands those current Code provisions and permits investment tax credits already issued or that will be issued to an eligible housing business under an existing enterprise zone agreement with the EDA for housing developments located on a brownfield site or in a blighted area to be eligible for transfer in calendar year 2014, or any subsequent calendar year, provided the eligible housing business was awarded the investment tax credit before the effective date of this section of the bill and notifies the authority, in writing, before July 1, 2014, of its intent to transfer such tax credits. This section of the bill takes effect upon enactment.
   The division prohibits a city or county from creating an enterprise zone, entering into a new enterprise zone agreement, or amending an existing enterprise zone agreement, on or after the effective date of the division.
   The division provides that existing enterprise zone agreements between an eligible business or an eligible housing business and a city, county, or the EDA, including existing supplemental new jobs credit from withholding agreements between an eligible business and the department of revenue and a community college, shall remain in effect until they expire under their own terms and shall be governed by chapter 15E, division XVIII, Code 2014. The elimination of the enterprise zone program under the division shall not constitute grounds for recision or modification of enterprise zone agreements.
   Except as provided in the division, tax credit certificates or related tax credits issued before the effective date of the division are not intended to and shall not be limited, modified, or otherwise adversely affected by the division.