House File 656 - Introduced HOUSE FILE 656 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 555) (SUCCESSOR TO HSB 98) A BILL FOR An Act relating to the administration of programs by the 1 economic development authority by creating a renewable 2 chemical production tax credit, modifying the tax credit for 3 investments in qualifying businesses and community-based 4 seed capital funds, modifying the entrepreneur investment 5 awards program, modifying the workforce housing tax 6 incentive program, making miscellaneous changes to other 7 economic development authority programs, and including 8 effective date and retroactive and other applicability 9 provisions. 10 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 11 TLSB 1212HZ (4) 86 mm/sc

H.F. 656 DIVISION I 1 RENEWABLE CHEMICAL PRODUCTION TAX CREDIT 2 Section 1. Section 15.119, subsection 2, Code 2015, is 3 amended by adding the following new paragraph: 4 NEW PARAGRAPH . h. The renewable chemical production tax 5 credit program administered pursuant to sections 15.315 through 6 15.320. In allocating tax credits pursuant to this subsection, 7 the authority shall not allocate more than fifteen million 8 dollars for purposes of this paragraph. 9 Sec. 2. NEW SECTION . 15.315 Short title. 10 This part shall be known and may be cited as the “Renewable 11 Chemical Production Tax Credit Program” . 12 Sec. 3. NEW SECTION . 15.316 Definitions. 13 As used in this part, unless the context otherwise requires: 14 1. “Biobased content percentage” means, with respect to any 15 renewable chemical, the amount, expressed as a percentage, of 16 renewable organic material present as determined by testing 17 representative samples using the American society for testing 18 and materials standard D6866. 19 2. “Biomass feedstock” means sugar, polysaccharide, 20 glycerin, lignin, fat, grease, or oil derived from a plant or 21 animal, or a protein capable of being converted to a building 22 block chemical by means of a biological or chemical conversion 23 process. 24 3. “Building block chemical” means a molecule converted 25 from biomass feedstock as a first product or a secondarily 26 derived product that can be further refined into a higher-value 27 chemical, material, or consumer product. “Building block 28 chemical” includes but is not limited to glycerol, methanoic 29 or formic acid, arabonic acid, erythonic acid, glyceric acid, 30 glycolic acid, lactic acid, 3-hydroxypropionate, propionic 31 acid, malonic acid, serine, succinic acid, fumaric acid, 32 malic acid, aspartic acid, 3-hydroxybutyrolactone, acetoin, 33 threonine, itaconic acid, furfural, levulinic acid, glutamic 34 acid, xylonic acid, xylaric acid, xylitol, arabitol, citric 35 -1- LSB 1212HZ (4) 86 mm/sc 1/ 29

H.F. 656 acid, aconitic acid, 5-hydroxymethylfurfural, lysine, gluconic 1 acid, glucaric acid, sorbitol, gallic acid, ferulic acid, 2 nonfuel butanol, nonfuel ethanol, a polymer or gum that can be 3 produced directly from a protein-based biomass feedstock, or 4 such additional molecules as may be included by the authority 5 by rule. 6 4. “Eligible business” means a business meeting the 7 requirements of section 15.317. 8 5. “Food additive” means a building block chemical that 9 is not primarily consumed as food but which, when combined 10 with other components, improves the taste, appearance, odor, 11 texture, or nutritional content of food. The authority, in its 12 discretion, shall determine whether or not a building block 13 chemical is primarily consumed as food. 14 6. “Program” means the renewable chemical production tax 15 credit program administered pursuant to this part. 16 7. “Renewable chemical” means a building block chemical 17 with a biobased content percentage of at least fifty percent. 18 “Renewable chemical” does not include a chemical sold or used 19 for the production of food, feed, or fuel. “Renewable chemical” 20 includes cellulosic ethanol, starch ethanol, or other ethanol 21 derived from biomass feedstock, fatty acid methyl esters, 22 or butanol, but only to the extent that such molecules are 23 produced and sold for uses other than food, feed, or fuel. 24 “Renewable chemical” also includes a building block chemical 25 that can be a food additive as long as the building block 26 chemical is not primarily consumed as food and is also sold 27 for uses other than food. “Renewable chemical” also includes 28 supplements, vitamins, nutraceuticals, and pharmaceuticals, but 29 only to the extent that such molecules do not provide caloric 30 value so as to be considered sustenance as food or feed. 31 8. “Sugar” means the organic compound glucose, fructose, 32 xylose, arabinose, lactose, sucrose, starch, cellulose, or 33 hemicellulose. 34 Sec. 4. NEW SECTION . 15.317 Eligibility requirements. 35 -2- LSB 1212HZ (4) 86 mm/sc 2/ 29

H.F. 656 To be eligible to receive the renewable chemical production 1 tax credit pursuant to the program, a business shall meet all 2 of the following requirements: 3 1. The business is physically located in this state. 4 2. The business is operated for profit and under single 5 management. 6 3. The business is not an entity providing professional 7 services, health care services, or medical treatments or an 8 entity engaged primarily in retail operations. 9 4. The business organized, expanded, or located in the state 10 on or after the effective date of this division of this Act. 11 5. The business shall not be relocating or reducing 12 operations as described in section 15.329, subsection 1, 13 paragraph “b” , and as determined under the discretion of the 14 authority. 15 6. The business is in compliance with all agreements entered 16 into under this program or other programs administered by the 17 authority. 18 Sec. 5. NEW SECTION . 15.318 Eligible business application 19 and agreement —— maximum tax credits. 20 1. Application. 21 a. An eligible business that produces a renewable chemical 22 in this state from biomass feedstock during a calendar year may 23 apply to the authority for the renewable chemical production 24 tax credit provided in section 15.319. 25 b. The application shall be made to the authority in the 26 manner prescribed by the authority. 27 c. The application shall be made during the calendar year 28 following the calendar year in which the renewable chemicals 29 are produced. 30 d. The authority may accept applications on a continuous 31 basis or may establish, by rule, an annual application 32 deadline. 33 e. The application shall include all of the following 34 information: 35 -3- LSB 1212HZ (4) 86 mm/sc 3/ 29

H.F. 656 (1) The amount of renewable chemicals produced in the state 1 from biomass feedstock by the eligible business during the 2 calendar year, measured in pounds. 3 (2) Any other information reasonably required by the 4 authority in order to establish and verify eligibility under 5 the program. 6 2. Agreement and fees. 7 a. Before being issued a tax credit under section 15.319, 8 an eligible business shall enter into an agreement with the 9 authority for the successful completion of all requirements of 10 the program. 11 b. The compliance cost fees authorized in section 15.330, 12 subsection 12, shall apply to all agreements entered into 13 under this program and shall be collected by the authority in 14 the same manner and to the same extent as described in that 15 subsection. 16 c. An eligible business shall fulfill all the requirements 17 of the program and the agreement before receiving a tax credit 18 or entering into a subsequent agreement under this section. 19 The authority may decline to enter into a subsequent agreement 20 under this section or issue a tax credit if an agreement is not 21 successfully fulfilled. 22 d. Upon establishing that all requirements of the program 23 and the agreement have been fulfilled, the authority shall 24 issue a tax credit and related tax credit certificate to the 25 eligible business stating the amount of renewable chemical 26 production tax credit under section 15.319 the eligible 27 business may claim. 28 3. Maximum tax credit amount. 29 a. The maximum amount of tax credit that may be issued under 30 section 15.319 to an eligible business for the production of 31 renewable chemicals in a calendar year shall not exceed the 32 following: 33 (1) In the case of an eligible business that has been in 34 operation in the state for five years or less at the time of the 35 -4- LSB 1212HZ (4) 86 mm/sc 4/ 29

H.F. 656 application, one million dollars. 1 (2) In the case of an eligible business that has been in 2 operation in the state for more than five years at the time of 3 the application, five hundred thousand dollars. 4 b. An eligible business shall not receive a tax credit for 5 renewable chemicals produced before the date the business first 6 qualified as an eligible business pursuant to section 15.317. 7 c. An eligible business shall not receive more than five tax 8 credits under the program. 9 d. The authority shall issue tax credits under the program 10 on a first-come, first-served basis until the maximum amount of 11 tax credits allocated pursuant to section 15.119, subsection 12 2, paragraph “h” , is reached. The authority shall maintain 13 a list of successful applicants under the program, so that 14 if the maximum aggregate amount of tax credits is reached in 15 a given fiscal year, eligible businesses that successfully 16 applied but for which tax credits were not issued shall be 17 placed on a wait list in the order the eligible businesses 18 applied and shall be given priority for receiving tax credits 19 in succeeding fiscal years. Placement on a wait list pursuant 20 to this paragraph shall not constitute a promise binding the 21 state. The availability of a tax credit and issuance of a tax 22 credit certificate pursuant to this subsection in a future 23 fiscal year is contingent upon the availability of tax credits 24 in that particular fiscal year. 25 4. Termination and repayment. The failure by an eligible 26 business in fulfilling any requirement of the program or any of 27 the terms and obligations of an agreement entered into pursuant 28 to this section may result in the reduction, termination, 29 or recision of the tax credits under section 15.319 and may 30 subject the eligible business to the repayment or recapture of 31 tax credits claimed. The repayment or recapture of tax credits 32 pursuant to this subsection shall be accomplished in the same 33 manner as provided in section 15.330, subsection 2. 34 5. Confidentiality. 35 -5- LSB 1212HZ (4) 86 mm/sc 5/ 29

H.F. 656 a. Except as provided in paragraph “b” , any information 1 or record in the possession of the authority with respect to 2 the program shall be presumed by the authority to be a trade 3 secret protected under chapter 550 or common law and shall be 4 kept confidential by the authority unless otherwise ordered by 5 a court. 6 b. The identity of a tax credit recipient and the amount 7 of the tax credit shall be considered public information under 8 chapter 22. 9 Sec. 6. NEW SECTION . 15.319 Renewable chemical production 10 tax credit. 11 1. An eligible business that has entered into an agreement 12 pursuant to section 15.318 may claim a tax credit equal to 13 the product of five cents multiplied by the number of pounds 14 of renewable chemicals produced in this state from biomass 15 feedstock by the eligible business during the calendar year. 16 However, an eligible business shall not receive a tax credit 17 for the production of a secondarily derived building block 18 chemical if that chemical is also the subject of a credit at 19 the time of production as a first product. The renewable 20 chemical production tax credit shall not be available for any 21 renewable chemical produced after the 2025 calendar year. 22 2. The tax credit shall be allowed against taxes imposed 23 under chapter 422, division II or III. 24 3. The tax credit shall be claimed for the tax year during 25 which the eligible business was issued the tax credit. 26 4. An individual may claim a tax credit under this section 27 of a partnership, limited liability company, S corporation, 28 cooperative organized under chapter 501 and filing as a 29 partnership for federal tax purposes, estate, or trust electing 30 to have income taxed directly to the individual. The amount 31 claimed by the individual shall be based upon the pro rata 32 share of the individual’s earnings from the partnership, 33 limited liability company, S corporation, cooperative, estate, 34 or trust. 35 -6- LSB 1212HZ (4) 86 mm/sc 6/ 29

H.F. 656 5. Any tax credit in excess of the tax liability is 1 refundable. In lieu of claiming a refund, the taxpayer 2 may elect to have the overpayment shown on the taxpayer’s 3 final, completed return credited to the tax liability for the 4 following tax year. 5 6. a. To claim a tax credit under this section, a taxpayer 6 shall include one or more tax credit certificates with the 7 taxpayer’s tax return. 8 b. The tax credit certificate shall contain the taxpayer’s 9 name, address, tax identification number, the amount of the 10 credit, the name of the eligible business, and any other 11 information required by the department of revenue. 12 c. The tax credit certificate, unless rescinded by the 13 authority, shall be accepted by the department of revenue as 14 payment for taxes imposed pursuant to chapter 422, divisions II 15 and III, subject to any conditions or restrictions placed by 16 the authority upon the face of the tax credit certificate and 17 subject to the limitations of the program. 18 d. Tax credit certificates issued pursuant to this section 19 shall not be transferred to any other person. 20 Sec. 7. NEW SECTION . 15.320 Rules. 21 The authority and the department of revenue shall each adopt 22 rules as necessary for the implementation and administration 23 of this part. 24 Sec. 8. NEW SECTION . 422.10A Renewable chemical production 25 tax credit. 26 The taxes imposed under this division, less the credits 27 allowed under section 422.12, shall be reduced by a renewable 28 chemical production tax credit allowed under section 15.319. 29 Sec. 9. Section 422.33, Code 2015, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 22. The taxes imposed under this division 32 shall be reduced by a renewable chemical production tax credit 33 allowed under section 15.319. 34 Sec. 10. TRANSITION. Notwithstanding Code section 15.319, 35 -7- LSB 1212HZ (4) 86 mm/sc 7/ 29

H.F. 656 subsection 3, as enacted in this division of this Act, tax 1 credits issued to an eligible business during the 2016 calendar 2 year for renewable chemicals produced during the 2015 calendar 3 year may be claimed by the eligible business for a tax year 4 beginning on or after January 1, 2015. 5 Sec. 11. EFFECTIVE UPON ENACTMENT. This division of this 6 Act, being deemed of immediate importance, takes effect upon 7 enactment. 8 Sec. 12. APPLICABILITY. This division of this Act applies 9 to renewable chemicals produced in the state from biomass 10 feedstock on or after the effective date of this division of 11 this Act. 12 Sec. 13. RETROACTIVE APPLICABILITY. This division of this 13 Act applies retroactively to January 1, 2015, for tax years 14 beginning on or after that date. 15 DIVISION II 16 ANGEL INVESTOR TAX CREDITS 17 Sec. 14. Section 2.48, subsection 3, paragraph d, 18 subparagraph (1), Code 2015, is amended to read as follows: 19 (1) Tax credits for investments in qualifying businesses 20 and community-based seed capital funds under chapter 15E, 21 division V . 22 Sec. 15. Section 15.119, subsection 2, paragraph d, Code 23 2015, is amended to read as follows: 24 d. The tax credits for investments in qualifying businesses 25 and community-based seed capital funds issued pursuant to 26 section 15E.43 . In allocating tax credits pursuant to this 27 subsection , the authority shall allocate two million dollars 28 for purposes of this paragraph, unless the authority determines 29 that the tax credits awarded will be less than that amount. 30 Sec. 16. Section 15E.41, Code 2015, is amended by striking 31 the section and inserting in lieu thereof the following: 32 15E.41 Purpose. 33 The purpose of this division is to stimulate job growth, 34 create wealth, and accelerate the creation of new ventures by 35 -8- LSB 1212HZ (4) 86 mm/sc 8/ 29

H.F. 656 using investment tax credits to incentivize the transfer of 1 capital from investors to entrepreneurs, particularly during 2 early-stage growth. 3 Sec. 17. Section 15E.42, Code 2015, is amended by adding the 4 following new subsection: 5 NEW SUBSECTION . 2A. “Entrepreneurial assistance 6 program” includes the entrepreneur investment awards program 7 administered under section 15E.362, the receipt of services 8 from a service provider engaged pursuant to section 15.411, 9 subsection 1, or the program administered under section 15.411, 10 subsection 2. 11 Sec. 18. Section 15E.42, subsection 3, Code 2015, is amended 12 to read as follows: 13 3. “Investor” means a person making a cash investment in 14 a qualifying business or in a community-based seed capital 15 fund . “Investor” does not include a person that holds at least 16 a seventy percent ownership interest as an owner, member, or 17 shareholder in a qualifying business. 18 Sec. 19. Section 15E.42, subsection 4, Code 2015, is amended 19 by striking the subsection. 20 Sec. 20. Section 15E.43, subsections 1 and 2, Code 2015, are 21 amended to read as follows: 22 1. a. For tax years beginning on or after January 1, 2002 23 2015 , a tax credit shall be allowed against the taxes imposed 24 in chapter 422, divisions II, III, and V, and in chapter 432, 25 and against the moneys and credits tax imposed in section 26 533.329, for a portion of a taxpayer’s equity investment, 27 as provided in subsection 2 , in a qualifying business or a 28 community-based seed capital fund . 29 b. An individual may claim a tax credit under this 30 paragraph section of a partnership, limited liability company, 31 S corporation, estate, or trust electing to have income 32 taxed directly to the individual. The amount claimed by the 33 individual shall be based upon the pro rata share of the 34 individual’s earnings from the partnership, limited liability 35 -9- LSB 1212HZ (4) 86 mm/sc 9/ 29

H.F. 656 company, S corporation, estate, or trust. 1 b. c. A tax credit shall be allowed only for an investment 2 made in the form of cash to purchase equity in a qualifying 3 business or in a community-based seed capital fund. A 4 taxpayer that has received a tax credit for an investment in 5 a community-based seed capital fund shall not claim the tax 6 credit prior to the third tax year following the tax year in 7 which the investment is made. Any tax credit in excess of the 8 taxpayer’s liability for the tax year may be credited to the 9 tax liability for the following five years or until depleted, 10 whichever is earlier. A tax credit shall not be carried back 11 to a tax year prior to the tax year in which the taxpayer 12 redeems the tax credit . 13 c. In the case of a tax credit allowed against the taxes 14 imposed in chapter 422, division II , where the taxpayer died 15 prior to redeeming the entire tax credit, the remaining credit 16 can be redeemed on the decedent’s final income tax return. 17 d. For a tax credit claimed against the taxes imposed in 18 chapter 422, division II, any tax credit in excess of the 19 tax liability is refundable. In lieu of claiming a refund, 20 the taxpayer may elect to have the overpayment shown on 21 the taxpayer’s final, completed return credited to the tax 22 liability for the following tax year. For a tax credit claimed 23 against the taxes imposed in chapter 422, divisions III and 24 V, and in chapter 432, and against the moneys and credits tax 25 imposed in section 533.329, any tax credit in excess of the 26 taxpayer’s liability for the tax year may be credited to the 27 tax liability for the following three years or until depleted, 28 whichever is earlier. A tax credit shall not be carried back 29 to a tax year prior to the tax year in which the taxpayer 30 redeems the tax credit. 31 2. a. A The amount of the tax credit shall equal twenty 32 twenty-five percent of the taxpayer’s equity investment. 33 b. The maximum amount of a tax credit for an investment 34 by an investor in any one qualifying business shall be fifty 35 -10- LSB 1212HZ (4) 86 mm/sc 10/ 29

H.F. 656 thousand dollars. Each year, an investor and all affiliates 1 of the investor shall not claim tax credits under this section 2 for more than five different investments in five different 3 qualifying businesses that may be issued per calendar year to a 4 natural person and the person’s spouse or dependent shall not 5 exceed one hundred thousand dollars combined. For purposes of 6 this paragraph, a tax credit issued to a partnership, limited 7 liability company, S corporation, estate, or trust electing to 8 have income taxed directly to the individual shall be deemed 9 to be issued to the individual owners based upon the pro rata 10 share of the individual’s earnings from the entity. For 11 purposes of this paragraph, “dependent” has the same meaning as 12 provided by the Internal Revenue Code . 13 c. The maximum amount of tax credits that may be issued 14 per calendar year for equity investments in any one qualifying 15 business shall not exceed five hundred thousand dollars. 16 Sec. 21. Section 15E.43, subsections 5 and 7, Code 2015, are 17 amended to read as follows: 18 5. A tax credit shall not be transferable transferred to any 19 other taxpayer person . 20 7. The authority shall develop a system for registration 21 and authorization issuance of tax credits authorized pursuant 22 to this division and shall control distribution of all tax 23 credits distributed credit certificates to investors pursuant 24 to this division . The authority shall develop rules for the 25 qualification and administration of qualifying businesses 26 and community-based seed capital funds . The department of 27 revenue shall adopt these criteria as administrative rules and 28 any other rules pursuant to chapter 17A as necessary for the 29 administration of this division . 30 Sec. 22. Section 15E.43, subsections 6 and 8, Code 2015, are 31 amended by striking the subsections. 32 Sec. 23. Section 15E.44, subsection 2, paragraph c, Code 33 2015, is amended by striking the paragraph and inserting in 34 lieu thereof the following: 35 -11- LSB 1212HZ (4) 86 mm/sc 11/ 29

H.F. 656 c. The business is participating in an entrepreneurial 1 assistance program. The authority may waive this requirement 2 if a business establishes that its owners, directors, officers, 3 and employees have an appropriate level of experience such 4 that participation in an entrepreneurial assistance program 5 would not materially change the prospects of the business. 6 The authority may consult with outside service providers in 7 consideration of such a waiver. 8 Sec. 24. Section 15E.44, subsection 2, paragraphs e and f, 9 Code 2015, are amended to read as follows: 10 e. The business shall not have a net worth that exceeds five 11 ten million dollars. 12 f. The business shall have secured all of the following at 13 the time of application for tax credits: 14 (1) At least two investors. 15 (2) total Total equity financing, near equity financing, 16 binding investment commitments, or some combination thereof, 17 equal to at least two hundred fifty five hundred thousand 18 dollars , from investors. For purposes of this subparagraph, 19 “investor” includes a person who executes a binding investment 20 commitment to a business . 21 Sec. 25. Section 15E.46, Code 2015, is amended to read as 22 follows: 23 15E.46 Reports Confidentiality —— reports . 24 1. Except as provided in subsection 2, all information or 25 records in the possession of the authority with respect to 26 this division shall be presumed by the authority to be a trade 27 secret protected under chapter 550 or common law and shall be 28 kept confidential by the authority unless otherwise ordered by 29 a court. 30 2. All of the following shall be considered public 31 information under chapter 22: 32 a. The identity of a qualifying business. 33 b. The identity of an investor and the qualifying business 34 in which the investor made an equity investment. 35 -12- LSB 1212HZ (4) 86 mm/sc 12/ 29

H.F. 656 c. The number of tax credit certificates issued by the 1 authority. 2 d. The total dollar amount of tax credits issued by the 3 authority. 4 3. The authority shall publish an annual report of the 5 activities conducted pursuant to this division and shall 6 submit the report to the governor and the general assembly. 7 The report shall include a listing of eligible qualifying 8 businesses and the number of tax credit certificates and the 9 amount of tax credits issued by the authority. 10 Sec. 26. Section 15E.52, subsection 4, Code 2015, is amended 11 to read as follows: 12 4. A taxpayer shall not claim a tax credit under this 13 section if the taxpayer is a venture capital investment fund 14 allocation manager for the Iowa fund of funds created in 15 section 15E.65 or an investor that receives a tax credit for 16 the same investment in a qualifying business as described in 17 section 15E.44 or in a community-based seed capital fund as 18 described in section 15E.45 , Code 2015 . 19 Sec. 27. Section 422.11F, subsection 1, Code 2015, is 20 amended to read as follows: 21 1. The taxes imposed under this division , less the credits 22 allowed under section 422.12 , shall be reduced by an investment 23 tax credit authorized pursuant to section 15E.43 for an 24 investment in a qualifying business or a community-based seed 25 capital fund . 26 Sec. 28. Section 422.33, subsection 12, paragraph a, Code 27 2015, is amended to read as follows: 28 a. The taxes imposed under this division shall be reduced by 29 an investment tax credit authorized pursuant to section 15E.43 30 for an investment in a qualifying business or a community-based 31 seed capital fund . 32 Sec. 29. Section 422.60, subsection 5, paragraph a, Code 33 2015, is amended to read as follows: 34 a. The taxes imposed under this division shall be reduced by 35 -13- LSB 1212HZ (4) 86 mm/sc 13/ 29

H.F. 656 an investment tax credit authorized pursuant to section 15E.43 1 for an investment in a qualifying business or a community-based 2 seed capital fund . 3 Sec. 30. Section 432.12C, subsection 1, Code 2015, is 4 amended to read as follows: 5 1. The tax imposed under this chapter shall be reduced by 6 an investment tax credit authorized pursuant to section 15E.43 7 for an investment in a qualifying business or a community-based 8 seed capital fund . 9 Sec. 31. REPEAL. Section 15E.45, Code 2015, is repealed. 10 Sec. 32. EFFECTIVE UPON ENACTMENT. This division of this 11 Act, being deemed of immediate importance, takes effect upon 12 enactment. 13 Sec. 33. APPLICABILITY. Unless otherwise provided in this 14 division of this Act, this division of this Act applies to 15 equity investments in a qualifying business made on or after 16 the effective date of this division of this Act, and equity 17 investments made in a qualifying business or community-based 18 seed capital fund prior to the effective date of this division 19 of this Act shall be governed by sections 15E.41 through 20 15E.46, 422.11F, 422.33, 422.60, 432.12C, and 533.329, Code 21 2015. 22 Sec. 34. APPLICABILITY. The sections of this division 23 of this Act amending section 15E.44, subsection 2, apply 24 to businesses that submit an application to the economic 25 development authority to be registered as a qualifying business 26 on or after the effective date of this division of this Act, 27 and businesses that submit an application to the economic 28 development authority to be registered as a qualifying business 29 before the effective date of this division of this Act shall be 30 governed by section 15E.44, subsection 2, Code 2015. 31 DIVISION III 32 ENTREPRENEUR INVESTMENT AWARDS PROGRAM 33 Sec. 35. Section 15E.362, Code 2015, is amended by striking 34 the section and inserting in lieu thereof the following: 35 -14- LSB 1212HZ (4) 86 mm/sc 14/ 29

H.F. 656 15E.362 Entrepreneur investment awards program. 1 1. For purposes of this division, unless the context 2 otherwise requires: 3 a. “Business development services” includes but is not 4 limited to corporate development services, business model 5 development services, business planning services, marketing 6 services, financial strategies and management services, 7 mentoring and management coaching, and networking services. 8 b. “Eligible entrepreneurial assistance provider” means a 9 person meeting the requirements of subsection 3. 10 c. “Financial assistance” means the same as defined in 11 section 15.327. 12 d. “Program” means the entrepreneur investment awards 13 program administered pursuant to this division. 14 2. The authority shall establish and administer an 15 entrepreneur investment awards program for purposes of 16 providing financial assistance to eligible entrepreneurial 17 assistance providers that provide technical and financial 18 assistance to entrepreneurs and start-up companies seeking to 19 create, locate, or expand a business in the state. Financial 20 assistance under the program shall be provided from the 21 entrepreneur investment awards program fund created in section 22 15E.363. 23 3. In order to be eligible for financial assistance under 24 the program an entrepreneurial assistance provider must meet 25 all of the following requirements: 26 a. The provider must have its principal place of operations 27 located in this state. 28 b. The provider must offer a comprehensive set of business 29 development services to emerging and early-stage innovation 30 companies to assist in the creation, location, growth, and 31 long-term success of the company in this state. 32 c. The business development services may be performed at the 33 physical location of the provider or the company. 34 d. The business development services may be provided in 35 -15- LSB 1212HZ (4) 86 mm/sc 15/ 29

H.F. 656 consideration of equity participation in the company, a fee 1 for services, a membership agreement with the company, or any 2 combination thereof. 3 4. Entrepreneurial assistance providers may apply for 4 financial assistance under the program in the manner and form 5 prescribed by the authority. 6 5. The economic development authority board in its 7 discretion may approve, deny, or defer each application 8 for financial assistance under the program from persons 9 it determines to be an eligible entrepreneurial assistance 10 provider. 11 6. Subject to subsection 7, the amount of financial 12 assistance awarded to an eligible entrepreneurial assistance 13 provider shall be within the discretion of the authority. 14 7. a. The maximum amount of financial assistance awarded 15 to an eligible entrepreneurial assistance provider shall not 16 exceed two hundred thousand dollars. 17 b. The maximum amount of financial assistance provided under 18 the program shall not exceed one million dollars in a fiscal 19 year. 20 8. The authority shall award financial assistance on a 21 competitive basis. In making awards of financial assistance, 22 the authority may develop scoring criteria and establish 23 minimum requirements for the receipt of financial assistance 24 under the program. In making awards of financial assistance, 25 the authority may consider all of the following: 26 a. The business experience of the professional staff 27 employed or retained by the eligible entrepreneurial assistance 28 provider. 29 b. The business plan review capacity of the professional 30 staff of the eligible entrepreneurial assistance provider. 31 c. The expertise in all aspects of business disciplines 32 of the professional staff of the eligible entrepreneurial 33 assistance provider. 34 d. The access of the eligible entrepreneurial assistance 35 -16- LSB 1212HZ (4) 86 mm/sc 16/ 29

H.F. 656 provider to external service providers, including legal, 1 accounting, marketing, and financial services. 2 e. The service model and likelihood of success of the 3 eligible entrepreneurial assistance provider and its similarity 4 to other successful entrepreneurial assistance providers in the 5 country. 6 f. The financial need of the eligible entrepreneurial 7 assistance provider. 8 9. Financial assistance awarded to an eligible 9 entrepreneurial assistance provider shall only be used for 10 the purpose of operating costs incurred by the eligible 11 entrepreneurial assistance provider in providing business 12 development services to emerging and early-stage innovation 13 companies in this state. Such financial assistance shall not 14 be distributed to owners or investors of the company to which 15 business development services are provided and shall not be 16 distributed to other persons assisting with the provision of 17 business development services to the company. 18 10. The authority may contract with outside service 19 providers for assistance with the program or may delegate 20 the administration of the program to the Iowa innovation 21 corporation pursuant to section 15.106B. 22 11. The authority may make client referrals to eligible 23 entrepreneurial assistance providers. 24 Sec. 36. Section 15E.363, subsection 3, Code 2015, is 25 amended to read as follows: 26 3. The Moneys credited to the fund are appropriated to 27 the authority and shall be used to provide grants under the 28 entrepreneur investment awards program established in section 29 15E.362 financial assistance under the program . 30 DIVISION IV 31 WORKFORCE HOUSING TAX INCENTIVES PROGRAM 32 Sec. 37. Section 15.354, subsection 3, paragraph e, Code 33 2015, is amended to read as follows: 34 e. (1) Upon review of the examination and verification of 35 -17- LSB 1212HZ (4) 86 mm/sc 17/ 29

H.F. 656 the amount of the qualifying new investment, the authority may 1 issue a tax credit certificate to the housing business stating 2 the amount of workforce housing investment tax credits under 3 section 15.355 the eligible housing business may claim. 4 (2) If upon review of the examination in subparagraph 5 (1) the authority determines that a housing project has 6 incurred project costs in excess of the amount submitted in the 7 application made pursuant to subsection 1, the authority shall 8 do one of the following: 9 (a) If the project costs do not cause the housing project’s 10 average dwelling unit cost to exceed the applicable maximum 11 amount authorized in section 15.353, subsection 3, the 12 authority may consider the agreement fulfilled and may issue a 13 tax credit certificate. 14 (b) If the project costs cause the housing project’s 15 average dwelling unit cost to exceed the applicable maximum 16 amount authorized in section 15.353, subsection 3, but does 17 not cause the average dwelling unit cost to exceed one hundred 18 ten percent of such applicable maximum amount, the authority 19 may consider the agreement fulfilled and may issue a tax 20 credit certificate. In such case, the authority shall reduce 21 the amount of tax incentives the eligible housing project 22 may claim under section 15.355, subsections 2 and 3, by the 23 same percentage that the housing project’s average dwelling 24 unit cost exceeds the applicable maximum amount under section 25 15.353, subsection 3, and such tax incentive reduction shall 26 be reflected on the tax credit certificate. If the authority 27 issues a certificate pursuant to this subparagraph division, 28 the department of revenue shall accept the certificate 29 notwithstanding that the housing project’s average dwelling 30 unit costs exceeds the maximum amount specified in section 31 15.353, subsection 3. 32 (c) If the project costs cause the housing project’s average 33 dwelling unit cost to exceed one hundred ten percent of the 34 applicable maximum amount authorized in 15.353, subsection 3, 35 -18- LSB 1212HZ (4) 86 mm/sc 18/ 29

H.F. 656 the authority shall determine the eligible housing business to 1 be in default under the agreement and shall not issue a tax 2 credit certificate. 3 Sec. 38. Section 15.355, subsection 2, Code 2015, is amended 4 to read as follows: 5 2. A housing business may claim a refund of the sales and 6 use taxes paid under chapter 423 that are directly related 7 to a housing project. The refund available pursuant to this 8 subsection shall be as provided in section 15.331A to the 9 extent applicable for purposes of this program , excluding 10 subsection 2, paragraph “c” , of that section . For purposes of 11 the program, the term “project completion” , as used in section 12 15.331A, shall mean the date on which the authority notifies 13 the department of revenue that all applicable requirements 14 of an agreement entered into pursuant to section 15.354 are 15 satisfied. 16 Sec. 39. EFFECTIVE UPON ENACTMENT. This division of this 17 Act, being deemed of immediate importance, takes effect upon 18 enactment. 19 Sec. 40. RETROACTIVE APPLICABILITY. This division of this 20 Act applies retroactively to May 30, 2014, for all agreements 21 entered into pursuant to Code section 15.354 on or after that 22 date. 23 DIVISION V 24 MISCELLANEOUS CHANGES 25 Sec. 41. Section 15.293B, subsection 4, Code 2015, is 26 amended to read as follows: 27 4. A registered project shall be completed within thirty 28 months of the date the project was registered unless the 29 authority , upon recommendation of the council and approval of 30 the board, provides additional time to complete the project. 31 A project shall not be provided more than twelve months of 32 additional time. If the registered project is not completed 33 within the time required, the project is not eligible to claim 34 a tax credit provided in section 15.293A . 35 -19- LSB 1212HZ (4) 86 mm/sc 19/ 29