Senate File 350 - Introduced SENATE FILE 350 BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO SSB 1116) 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, making miscellaneous changes to other 6 economic development authority programs, and including 7 effective date and retroactive and other applicability 8 provisions. 9 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 10 TLSB 1212SV (3) 86 mm/sc

S.F. 350 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 1212SV (3) 86 mm/sc 1/ 26

S.F. 350 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 1212SV (3) 86 mm/sc 2/ 26

S.F. 350 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 1212SV (3) 86 mm/sc 3/ 26

S.F. 350 (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 1212SV (3) 86 mm/sc 4/ 26

S.F. 350 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 1212SV (3) 86 mm/sc 5/ 26

S.F. 350 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 1212SV (3) 86 mm/sc 6/ 26

S.F. 350 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. EFFECTIVE UPON ENACTMENT. This division of this 35 -7- LSB 1212SV (3) 86 mm/sc 7/ 26

S.F. 350 Act, being deemed of immediate importance, takes effect upon 1 enactment. 2 Sec. 11. APPLICABILITY. This division of this Act applies 3 to renewable chemicals produced in the state from biomass 4 feedstock on or after the effective date of this division of 5 this Act. 6 Sec. 12. RETROACTIVE APPLICABILITY. This division of this 7 Act applies retroactively to January 1, 2015, for tax years 8 beginning on or after that date. 9 DIVISION II 10 ANGEL INVESTOR TAX CREDITS 11 Sec. 13. Section 2.48, subsection 3, paragraph d, 12 subparagraph (1), Code 2015, is amended to read as follows: 13 (1) Tax credits for investments in qualifying businesses 14 and community-based seed capital funds under chapter 15E, 15 division V . 16 Sec. 14. Section 15.119, subsection 2, paragraph d, Code 17 2015, is amended to read as follows: 18 d. The tax credits for investments in qualifying businesses 19 and community-based seed capital funds issued pursuant to 20 section 15E.43 . In allocating tax credits pursuant to this 21 subsection , the authority shall allocate two million dollars 22 for purposes of this paragraph, unless the authority determines 23 that the tax credits awarded will be less than that amount. 24 Sec. 15. Section 15E.41, Code 2015, is amended by striking 25 the section and inserting in lieu thereof the following: 26 15E.41 Purpose. 27 The purpose of this division is to stimulate job growth, 28 create wealth, and accelerate the creation of new ventures by 29 using investment tax credits to incentivize the transfer of 30 capital from investors to entrepreneurs, particularly during 31 early-stage growth. 32 Sec. 16. Section 15E.42, Code 2015, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 2A. “Entrepreneurial assistance 35 -8- LSB 1212SV (3) 86 mm/sc 8/ 26

S.F. 350 program” includes the entrepreneur investment awards program 1 administered under section 15E.362, the receipt of services 2 from a service provider engaged pursuant to section 15.411, 3 subsection 1, or the program administered under section 15.411, 4 subsection 2. 5 Sec. 17. Section 15E.42, subsection 3, Code 2015, is amended 6 to read as follows: 7 3. “Investor” means a person making a cash investment in 8 a qualifying business or in a community-based seed capital 9 fund . “Investor” does not include a person that holds at least 10 a seventy percent ownership interest as an owner, member, or 11 shareholder in a qualifying business. 12 Sec. 18. Section 15E.42, subsection 4, Code 2015, is amended 13 by striking the subsection. 14 Sec. 19. Section 15E.43, subsections 1 and 2, Code 2015, are 15 amended to read as follows: 16 1. a. For tax years beginning on or after January 1, 2002 17 2015 , a tax credit shall be allowed against the taxes imposed 18 in chapter 422, divisions II, III, and V, and in chapter 432, 19 and against the moneys and credits tax imposed in section 20 533.329, for a portion of a taxpayer’s equity investment, 21 as provided in subsection 2 , in a qualifying business or a 22 community-based seed capital fund . 23 b. An individual may claim a tax credit under this 24 paragraph section of a partnership, limited liability company, 25 S corporation, estate, or trust electing to have income 26 taxed directly to the individual. The amount claimed by the 27 individual shall be based upon the pro rata share of the 28 individual’s earnings from the partnership, limited liability 29 company, S corporation, estate, or trust. 30 b. c. A tax credit shall be allowed only for an investment 31 made in the form of cash to purchase equity in a qualifying 32 business or in a community-based seed capital fund. A 33 taxpayer that has received a tax credit for an investment in 34 a community-based seed capital fund shall not claim the tax 35 -9- LSB 1212SV (3) 86 mm/sc 9/ 26

S.F. 350 credit prior to the third tax year following the tax year in 1 which the investment is made. Any tax credit in excess of the 2 taxpayer’s liability for the tax year may be credited to the 3 tax liability for the following five years or until depleted, 4 whichever is earlier. A tax credit shall not be carried back 5 to a tax year prior to the tax year in which the taxpayer 6 redeems the tax credit . 7 c. In the case of a tax credit allowed against the taxes 8 imposed in chapter 422, division II , where the taxpayer died 9 prior to redeeming the entire tax credit, the remaining credit 10 can be redeemed on the decedent’s final income tax return. 11 d. For an investment made by a natural person, any tax 12 credit in excess of the tax liability is refundable. In lieu 13 of claiming a refund, the taxpayer may elect to have the 14 overpayment shown on the taxpayer’s final, completed return 15 credited to the tax liability for the following tax year. For 16 any other person, any tax credit in excess of the taxpayer’s 17 liability for the tax year may be credited to the tax liability 18 for the following three years or until depleted, whichever is 19 earlier. A tax credit shall not be carried back to a tax year 20 prior to the tax year in which the taxpayer redeems the tax 21 credit. 22 2. A The amount of the tax credit shall equal twenty 23 twenty-five percent of the taxpayer’s equity investment. The 24 maximum amount of a tax credit for an investment by an investor 25 in any one qualifying business shall be fifty thousand dollars. 26 Each year, an investor and all affiliates of the investor shall 27 not claim tax credits under this section for more than five 28 different investments in five different qualifying businesses 29 that may be claimed per tax year by a natural person and the 30 person’s spouse, child, or sibling shall not exceed one hundred 31 thousand dollars combined . The maximum amount of tax credits 32 that may be issued per tax year for equity investments in any 33 one qualifying business shall not exceed five hundred thousand 34 dollars. 35 -10- LSB 1212SV (3) 86 mm/sc 10/ 26

S.F. 350 Sec. 20. Section 15E.43, subsections 5 and 7, Code 2015, are 1 amended to read as follows: 2 5. A tax credit shall not be transferable transferred to any 3 other taxpayer person . 4 7. The authority shall develop a system for registration 5 and authorization issuance of tax credits authorized pursuant 6 to this division and shall control distribution of all tax 7 credits distributed credit certificates to investors pursuant 8 to this division . The authority shall develop rules for the 9 qualification and administration of qualifying businesses 10 and community-based seed capital funds . The department of 11 revenue shall adopt these criteria as administrative rules and 12 any other rules pursuant to chapter 17A as necessary for the 13 administration of this division . 14 Sec. 21. Section 15E.43, subsections 6 and 8, Code 2015, are 15 amended by striking the subsections. 16 Sec. 22. Section 15E.44, subsection 2, paragraph c, Code 17 2015, is amended by striking the paragraph and inserting in 18 lieu thereof the following: 19 c. The business is participating in an entrepreneurial 20 assistance program. The authority may waive this requirement 21 if a business establishes that its owners, directors, officers, 22 and employees have an appropriate level of experience such 23 that participation in an entrepreneurial assistance program 24 would not materially change the prospects of the business. 25 The authority may consult with outside service providers in 26 consideration of such a waiver. 27 Sec. 23. Section 15E.44, subsection 2, paragraphs e and f, 28 Code 2015, are amended to read as follows: 29 e. The business shall not have a net worth that exceeds five 30 ten million dollars. 31 f. The business shall have secured all of the following at 32 the time of application for tax credits: 33 (1) At least two investors. 34 (2) total Total equity financing, near equity financing, 35 -11- LSB 1212SV (3) 86 mm/sc 11/ 26

S.F. 350 binding investment commitments, or some combination thereof, 1 equal to at least two hundred fifty five hundred thousand 2 dollars , from investors. For purposes of this subparagraph, 3 “investor” includes a person who executes a binding investment 4 commitment to a business . 5 Sec. 24. Section 15E.46, Code 2015, is amended to read as 6 follows: 7 15E.46 Reports Confidentiality —— reports . 8 1. Except as provided in subsection 2, all information or 9 records in the possession of the authority with respect to 10 this division shall be presumed by the authority to be a trade 11 secret protected under chapter 550 or common law and shall be 12 kept confidential by the authority unless otherwise ordered by 13 a court. 14 2. All of the following shall be considered public 15 information under chapter 22: 16 a. The identity of a qualifying business. 17 b. The identity of an investor and the qualifying business 18 in which the investor made an equity investment. 19 c. The number of tax credit certificates issued by the 20 authority. 21 d. The total dollar amount of tax credits issued by the 22 authority. 23 3. The authority shall publish an annual report of the 24 activities conducted pursuant to this division and shall 25 submit the report to the governor and the general assembly. 26 The report shall include a listing of eligible qualifying 27 businesses and the number of tax credit certificates and the 28 amount of tax credits issued by the authority. 29 Sec. 25. Section 15E.52, subsection 4, Code 2015, is amended 30 to read as follows: 31 4. A taxpayer shall not claim a tax credit under this 32 section if the taxpayer is a venture capital investment fund 33 allocation manager for the Iowa fund of funds created in 34 section 15E.65 or an investor that receives a tax credit for 35 -12- LSB 1212SV (3) 86 mm/sc 12/ 26

S.F. 350 the same investment in a qualifying business as described in 1 section 15E.44 or in a community-based seed capital fund as 2 described in section 15E.45 , Code 2015 . 3 Sec. 26. Section 422.11F, subsection 1, Code 2015, is 4 amended to read as follows: 5 1. The taxes imposed under this division , less the credits 6 allowed under section 422.12 , shall be reduced by an investment 7 tax credit authorized pursuant to section 15E.43 for an 8 investment in a qualifying business or a community-based seed 9 capital fund . 10 Sec. 27. Section 422.33, subsection 12, paragraph a, Code 11 2015, is amended to read as follows: 12 a. The taxes imposed under this division shall be reduced by 13 an investment tax credit authorized pursuant to section 15E.43 14 for an investment in a qualifying business or a community-based 15 seed capital fund . 16 Sec. 28. Section 422.60, subsection 5, paragraph a, Code 17 2015, is amended to read as follows: 18 a. The taxes imposed under this division shall be reduced by 19 an investment tax credit authorized pursuant to section 15E.43 20 for an investment in a qualifying business or a community-based 21 seed capital fund . 22 Sec. 29. Section 432.12C, subsection 1, Code 2015, is 23 amended to read as follows: 24 1. The tax imposed under this chapter shall be reduced by 25 an investment tax credit authorized pursuant to section 15E.43 26 for an investment in a qualifying business or a community-based 27 seed capital fund . 28 Sec. 30. REPEAL. Section 15E.45, Code 2015, is repealed. 29 Sec. 31. EFFECTIVE UPON ENACTMENT. This division of this 30 Act, being deemed of immediate importance, takes effect upon 31 enactment. 32 Sec. 32. APPLICABILITY. Unless otherwise provided in this 33 division of this Act, this division of this Act applies to 34 equity investments in a qualifying business made on or after 35 -13- LSB 1212SV (3) 86 mm/sc 13/ 26

S.F. 350 the effective date of this division of this Act, and equity 1 investments made in a qualifying business or community-based 2 seed capital fund prior to the effective date of this division 3 of this Act shall be governed by sections 15E.41 through 4 15E.46, 422.11F, 422.33, 422.60, 432.12C, and 533.329, Code 5 2015. 6 Sec. 33. APPLICABILITY. The sections of this division 7 of this Act amending section 15E.44, subsection 2, apply 8 to businesses that submit an application to the economic 9 development authority to be registered as a qualifying business 10 on or after the effective date of this division of this Act, 11 and businesses that submit an application to the economic 12 development authority to be registered as a qualifying business 13 before the effective date of this division of this Act shall be 14 governed by section 15E.44, subsection 2, Code 2015. 15 DIVISION III 16 ENTREPRENEUR INVESTMENT AWARDS PROGRAM 17 Sec. 34. Section 15E.362, Code 2015, is amended by striking 18 the section and inserting in lieu thereof the following: 19 15E.362 Entrepreneur investment awards program. 20 1. For purposes of this division, unless the context 21 otherwise requires: 22 a. “Business development services” includes but is not 23 limited to corporate development services, business model 24 development services, business planning services, marketing 25 services, financial strategies and management services, 26 mentoring and management coaching, and networking services. 27 b. “Eligible entrepreneurial assistance provider” means a 28 person meeting the requirements of subsection 3. 29 c. “Financial assistance” means the same as defined in 30 section 15.327. 31 d. “Program” means the entrepreneur investment awards 32 program administered pursuant to this division. 33 2. The authority shall establish and administer an 34 entrepreneur investment awards program for purposes of 35 -14- LSB 1212SV (3) 86 mm/sc 14/ 26

S.F. 350 providing financial assistance to eligible entrepreneurial 1 assistance providers that provide technical and financial 2 assistance to entrepreneurs and start-up companies seeking to 3 create, locate, or expand a business in the state. Financial 4 assistance under the program shall be provided from the 5 entrepreneur investment awards program fund created in section 6 15E.363. 7 3. In order to be eligible for financial assistance under 8 the program an entrepreneurial assistance provider must meet 9 all of the following requirements: 10 a. The provider must have its principal place of operations 11 located in this state. 12 b. The provider must offer a comprehensive set of business 13 development services to emerging and early-stage innovation 14 companies to assist in the creation, location, growth, and 15 long-term success of the company in this state. 16 c. The business development services may be performed at the 17 physical location of the provider or the company. 18 d. The business development services may be provided in 19 consideration of equity participation in the company, a fee 20 for services, a membership agreement with the company, or any 21 combination thereof. 22 4. Entrepreneurial assistance providers may apply for 23 financial assistance under the program in the manner and form 24 prescribed by the authority. 25 5. The economic development authority board in its 26 discretion may approve, deny, or defer each application 27 for financial assistance under the program from persons 28 it determines to be an eligible entrepreneurial assistance 29 provider. 30 6. Subject to subsection 7, the amount of financial 31 assistance awarded to an eligible entrepreneurial assistance 32 provider shall be within the discretion of the authority. 33 7. a. The maximum amount of financial assistance awarded 34 to an eligible entrepreneurial assistance provider shall not 35 -15- LSB 1212SV (3) 86 mm/sc 15/ 26

S.F. 350 exceed two hundred thousand dollars. 1 b. The maximum amount of financial assistance provided under 2 the program shall not exceed one million dollars in a fiscal 3 year. 4 8. The authority shall award financial assistance on a 5 competitive basis. In making awards of financial assistance, 6 the authority may develop scoring criteria and establish 7 minimum requirements for the receipt of financial assistance 8 under the program. In making awards of financial assistance, 9 the authority may consider all of the following: 10 a. The business experience of the professional staff 11 employed or retained by the eligible entrepreneurial assistance 12 provider. 13 b. The business plan review capacity of the professional 14 staff of the eligible entrepreneurial assistance provider. 15 c. The expertise in all aspects of business disciplines 16 of the professional staff of the eligible entrepreneurial 17 assistance provider. 18 d. The access of the eligible entrepreneurial assistance 19 provider to external service providers, including legal, 20 accounting, marketing, and financial services. 21 e. The service model and likelihood of success of the 22 eligible entrepreneurial assistance provider and its similarity 23 to other successful entrepreneurial assistance providers in the 24 country. 25 f. The financial need of the eligible entrepreneurial 26 assistance provider. 27 9. Financial assistance awarded to an eligible 28 entrepreneurial assistance provider shall only be used for 29 the purpose of operating costs incurred by the eligible 30 entrepreneurial assistance provider in providing business 31 development services to emerging and early-stage innovation 32 companies in this state. Such financial assistance shall not 33 be distributed to owners or investors of the company to which 34 business development services are provided and shall not be 35 -16- LSB 1212SV (3) 86 mm/sc 16/ 26

S.F. 350 distributed to other persons assisting with the provision of 1 business development services to the company. 2 10. The authority may contract with outside service 3 providers for assistance with the program or may delegate 4 the administration of the program to the Iowa innovation 5 corporation pursuant to section 15.106B. 6 11. The authority may make client referrals to eligible 7 entrepreneurial assistance providers. 8 Sec. 35. Section 15E.363, subsection 3, Code 2015, is 9 amended to read as follows: 10 3. The Moneys credited to the fund are appropriated to 11 the authority and shall be used to provide grants under the 12 entrepreneur investment awards program established in section 13 15E.362 financial assistance under the program . 14 DIVISION IV 15 MISCELLANEOUS CHANGES 16 Sec. 36. Section 15.355, subsection 2, Code 2015, is amended 17 to read as follows: 18 2. A housing business may claim a refund of the sales and 19 use taxes paid under chapter 423 that are directly related 20 to a housing project. The refund available pursuant to this 21 subsection shall be as provided in section 15.331A to the 22 extent applicable for purposes of this program , excluding 23 subsection 2, paragraph “c” , of that section . For purposes of 24 the program, the term “project completion” , as used in section 25 15.331A, shall mean the date on which the authority notifies 26 the department of revenue that all applicable requirements 27 of an agreement entered into pursuant to section 15.354 are 28 satisfied. 29 Sec. 37. SPECIAL PROJECT EXTENSION. Notwithstanding 30 any other provision of law to the contrary, the economic 31 development authority may extend the project completion 32 date for a project awarded tax incentives under both the 33 redevelopment tax credit program in sections 15.293A and 34 15.293B and the housing enterprise zone tax incentives program 35 -17- LSB 1212SV (3) 86 mm/sc 17/ 26

S.F. 350 in section 15E.193B, Code 2014, if the property that is the 1 subject of the project suffered a catastrophic fire during the 2 2014 calendar year. 3 Sec. 38. EFFECTIVE UPON ENACTMENT. The section of this 4 division of this Act amending section 15.355, being deemed of 5 immediate importance, takes effect upon enactment. 6 Sec. 39. RETROACTIVE APPLICABILITY. The section of 7 this division of this Act amending section 15.355 applies 8 retroactively to July 1, 2014, for all agreements entered into 9 pursuant to section 15.354 on or after that date. 10 EXPLANATION 11 The inclusion of this explanation does not constitute agreement with 12 the explanation’s substance by the members of the general assembly. 13 This bill relates to the administration of programs by the 14 economic development authority (EDA) by creating a renewable 15 chemical production tax credit, modifying the tax credit for 16 investments in qualifying businesses and community-based seed 17 capital funds, and modifying the entrepreneur investment awards 18 program. 19 DIVISION I —— RENEWABLE CHEMICAL PRODUCTION TAX CREDIT. 20 Division I creates a renewable chemical production tax credit 21 program (program) that will be administered by the EDA and that 22 will provide tax credits to eligible businesses that produce 23 renewable chemicals in Iowa from biomass feedstock. “Renewable 24 chemical”, “biomass feedstock”, and other related terms are 25 defined in the division. 26 In order to qualify for the tax credit, a business must 27 meet several requirements. First, the business must be 28 physically located in Iowa and operated for profit under 29 single management. Second, the business must not be an 30 entity providing professional services, health care services, 31 or medical treatments, or be engaged primarily in retail 32 operations. Third, the business must have organized, expanded, 33 or located in Iowa on or after the effective date of the 34 division. Fourth, the business must not be, in the discretion 35 -18- LSB 1212SV (3) 86 mm/sc 18/ 26

S.F. 350 of the EDA, ineligible under certain provisions relating to the 1 relocation or reduction of business operations within Iowa. 2 Fifth, the business must be in compliance with all agreements 3 entered into under the program or other programs administered 4 by the EDA. 5 An eligible business seeking a tax credit is required 6 to apply to the EDA during the calendar year following the 7 calendar year in which the renewable chemicals are produced. 8 The application must include the amount of renewable chemicals 9 produced in Iowa from biomass feedstock by the eligible 10 business during the calendar year, measured in pounds, and any 11 other information reasonably required by the EDA in order to 12 establish and verify eligibility under the program. The EDA 13 may accept applications on a continuous basis or may establish 14 an annual application deadline. 15 Before being issued a tax credit, an eligible business 16 is required to enter into an agreement with the EDA for the 17 successful completion of all requirements of the program. The 18 EDA is authorized to impose two compliance cost fees under the 19 program. The first fee equals $500 per agreement. The second 20 fee equals 0.5 percent of the value of the tax credit claimed 21 pursuant to the agreement if the agreement has an aggregate tax 22 credit value of $100,000 or greater. 23 An eligible business that fails to comply with the 24 requirements of the program or the terms of an agreement with 25 the EDA may have its tax credits reduced, terminated, or 26 rescinded, and may be subject to the repayment or recapture of 27 claimed tax credits. 28 Upon determining that all requirements of an agreement and 29 the program have been fulfilled, the EDA shall issue a tax 30 credit and related tax credit certificate to the eligible 31 business in an amount equal to the product of $.05 multiplied 32 by the number of pounds of renewable chemicals produced in Iowa 33 from biomass feedstock by the eligible business during the 34 calendar year. Renewable chemicals produced by an eligible 35 -19- LSB 1212SV (3) 86 mm/sc 19/ 26