H.F. 768 Section 1. Section 2.48, subsection 3, paragraph e, 1 subparagraph (1), Code 2019, is amended to read as follows: 2 (1) The agricultural assets transfer beginning farmer 3 tax credit program as provided in section 16.80 chapter 16, 4 subchapter VIII, part 5, subpart B . 5 Sec. 2. Section 16.2, subsection 1, unnumbered paragraph 1, 6 Code 2019, is amended to read as follows: 7 An Iowa finance authority board of directors is created. The 8 powers of the authority are vested in and shall be exercised 9 by the board. The authority includes nine members appointed 10 by the governor subject to confirmation by the senate. The 11 authority also includes one ex officio voting member who must 12 be designated by the agricultural development board created in 13 section 16.2C and be a member of that board. 14 Sec. 3. Section 16.2, subsections 2 and 3, Code 2019, are 15 amended to read as follows: 16 2. Members The members of the authority shall be appointed 17 by the governor shall serve for staggered terms of six years 18 beginning and ending as provided in section 69.19 . A person 19 appointed by the governor to fill a vacancy shall serve only 20 for the unexpired portion of the term. A member is eligible 21 for reappointment. The ex officio voting member designated by 22 the agricultural development board shall serve at the pleasure 23 of that board. A member of the authority may be removed from 24 office by the governor for misfeasance, malfeasance, or willful 25 neglect of duty or other just cause, after notice and hearing, 26 unless the notice and hearing is expressly waived in writing. 27 3. Five Six members of the authority constitute a quorum and 28 the affirmative vote of a majority of the appointed members is 29 necessary for any substantive action taken by the authority. 30 The majority shall not include any member who has a conflict of 31 interest and a statement by a member of a conflict of interest 32 shall be conclusive for this purpose. A vacancy in the 33 membership does not impair the right of a quorum to exercise 34 all rights and perform all duties of the authority. 35 -1- LSB 1882HZ (2) 88 da/jh 1/ 19

H.F. 768 Sec. 4. Section 16.2B, subsection 3, paragraph b, Code 2019, 1 is amended to read as follows: 2 b. Obtain agricultural assets transfer Claim beginning 3 farmer tax credits, including tax credit certificates issued 4 pursuant to subchapter VIII, part 5 , subpart B . 5 Sec. 5. Section 16.58, subsection 6, Code 2019, is amended 6 to read as follows: 7 6. “Beginning farmer” means an individual, partnership, 8 family farm corporation, or family farm limited liability 9 company , with a low or moderate net worth that engages 10 in farming or wishes to engage in farming and meets the 11 eligibility requirements of the applicable program as provided 12 in this subchapter . 13 Sec. 6. Section 16.59, subsection 4, Code 2019, is amended 14 to read as follows: 15 4. For a family farm limited liability company, an aggregate 16 net worth of all members, including each member’s ownership 17 interest in the family farm limited liability company, and 18 each member’s spouse and minor children of not greater than 19 twice the low or moderate net worth. However, the aggregate 20 net worth of each member and that member’s spouse and minor 21 children shall not exceed the low or moderate net worth. 22 Sec. 7. Section 16.75, subsection 3, Code 2019, is amended 23 by adding the following new paragraph: 24 NEW PARAGRAPH . h. The beginning farmer has a low or 25 moderate net worth. 26 Sec. 8. NEW SECTION . 16.77 Definitions. 27 As used in this subpart B, unless the context otherwise 28 requires: 29 1. “Agricultural development board” or “board” means the 30 agricultural development board created in section 16.2C. 31 2. “Agricultural lease agreement” or “agreement” means an 32 agreement for the transfer of agricultural assets, that must at 33 least include a lease of agricultural land, from an eligible 34 taxpayer to a qualified beginning farmer as provided in section 35 -2- LSB 1882HZ (2) 88 da/jh 2/ 19

H.F. 768 16.79A. 1 3. “Department” means the department of revenue. 2 4. “Eligible taxpayer” means a taxpayer who may participate 3 in the beginning farmer tax credit program, including by 4 meeting all the criteria as provided in section 16.79. 5 5. “Program” means the beginning farmer tax credit program 6 created pursuant to section 16.78. 7 6. “Qualified beginning farmer” means a beginning farmer who 8 meets the requirements to participate in a beginning farmer tax 9 credit program as provided in section 16.79. 10 7. “Tax credit” means the beginning farmer tax credit 11 allowed under section 16.82. 12 Sec. 9. NEW SECTION . 16.78 Beginning farmer tax credit 13 program —— establishment and administration. 14 1. A beginning farmer tax credit program is established 15 under the control of the authority and the department. 16 2. The authority and the department shall cooperate in 17 administering the program. The authority shall have control 18 over and responsibility for administering provisions of the 19 program under sections 16.79, 16.79A, 16.81, and 16.82A related 20 to program eligibility criteria, the approval of applications 21 and agreements, tax credit amounts, the issuance of eligibility 22 certifications, and the issuance of tax credit certificates. 23 The department shall have control over and responsibility 24 for administering provisions of the program related to tax 25 credit calculations, claims, allowances, and the filing of 26 tax credit certificates under section 16.82. The department 27 shall have all rulemaking powers necessary to administer its 28 responsibilities under this subpart as it does under chapter 29 422. 30 3. To every extent practicable, the authority shall 31 administer the program in a manner that encourages 32 participation by eligible taxpayers and qualifying beginning 33 farmers for the primary purposes of providing beginning farmers 34 access to farmland and enhancing the stability of the beginning 35 -3- LSB 1882HZ (2) 88 da/jh 3/ 19

H.F. 768 farmer’s farming business. 1 4. The authority and the department shall each adopt 2 rules in accordance with chapter 17A as necessary for the 3 administration of their respective responsibilities under this 4 subpart. The eligibility requirements for taxpayers and the 5 qualifications for beginning farmers as provided in the rules 6 shall not be more stringent than provided in this subpart. 7 5. The authority and the department shall each provide for 8 the preparation or revision and publication or distribution of 9 forms necessary to administer their responsibilities under this 10 subpart. 11 Sec. 10. NEW SECTION . 16.79 Beginning farmer tax credit 12 program —— eligibility criteria. 13 1. A taxpayer is eligible to participate in the beginning 14 farmer tax credit program if the taxpayer meets all of the 15 following requirements: 16 a. The taxpayer is a person who may acquire or otherwise 17 obtain or lease agricultural land in this state pursuant to 18 chapter 9H or 9I. However, the taxpayer must not be a person 19 who may acquire or otherwise obtain or lease agricultural 20 land exclusively because of an exception provided in one of 21 those chapters or in a provision of another chapter of this 22 Code including but not limited to chapter 10, 10D, or 501, or 23 section 15E.207. 24 b. The taxpayer has entered into an agricultural lease 25 agreement with a qualified beginning farmer to lease 26 agricultural land as provided in section 16.79A. 27 c. The taxpayer has not been at fault for terminating a 28 prior agreement under the program or another agreement in which 29 the taxpayer was allowed to claim a tax credit under section 30 175.37 as it existed prior to January 1, 2015, or section 16.80 31 as it existed prior to January 1, 2018. 32 d. If the agreement includes the lease of a confinement 33 feeding operation structure as defined in section 459.102, the 34 taxpayer is not a party to a pending administrative or judicial 35 -4- LSB 1882HZ (2) 88 da/jh 4/ 19

H.F. 768 action, including a contested case proceeding under chapter 1 17A, relating to an alleged violation involving an animal 2 feeding operation as regulated by the department of natural 3 resources, regardless of whether the pending action is brought 4 by the department or the attorney general. 5 e. The taxpayer is not classified as a habitual violator for 6 a violation of state law involving an animal feeding operation 7 as regulated by the department of natural resources under 8 chapter 459. 9 2. A beginning farmer is a qualified beginning farmer 10 eligible to participate in the program by meeting all of the 11 following criteria: 12 a. Is a resident of the state. If the beginning farmer is a 13 partnership, all partners must be residents of the state. If a 14 beginning farmer is a family farm corporation, all shareholders 15 must be residents of the state. If the beginning farmer is 16 a family farm limited liability company, all members must be 17 residents of the state. 18 b. Has sufficient education, training, or experience in 19 farming. If the beginning farmer is a partnership, at least 20 one partner who is not a minor must have sufficient education, 21 training, or experience in farming. If the beginning farmer is 22 a family farm corporation, at least one shareholder who is not 23 a minor must have sufficient education, training, or experience 24 in farming. If the beginning farmer is a family farm limited 25 liability company, at least one member who is not a minor must 26 have sufficient education, training, or experience in farming. 27 The individual who is the partner, shareholder, or member 28 meeting the requirements of this paragraph shall also meet the 29 criteria described in paragraph “e” . The eligible taxpayer 30 claiming the beginning farmer tax credit shall not be a partner 31 of a partnership, shareholder of a family farm corporation, or 32 member of a family farm limited liability company leasing the 33 agricultural asset. 34 c. Has access to adequate working capital and production 35 -5- LSB 1882HZ (2) 88 da/jh 5/ 19

H.F. 768 items. 1 d. Will materially and substantially participate in 2 farming. If the beginning farmer is a partnership, family 3 farm corporation, or family farm limited liability company, 4 at least one of the partners, shareholders, or members who is 5 not a minor must materially and substantially participate in 6 farming. The individual who is the partner, shareholder, or 7 member meeting the requirements of this paragraph shall also 8 meet the criteria described in paragraph “e” . 9 e. Has owned and operated a farming business for ten years 10 or less at the time of the first application for participation 11 in the program. The years of owning and operating a farming 12 business shall be based on the number of years a beginning 13 farmer has filed a schedule F as part of an annual form 1040 14 or 1041 with the United States internal revenue service, or 15 has been an owner in a partnership, limited liability company, 16 or corporation that filed a form 1065, 1120S, or 1120 return 17 with the United States internal revenue service that included a 18 schedule F or that indicated by the principal business activity 19 code that the entity is engaged in a farming enterprise. 20 However, a schedule F or such a federal 1065, 1120S, or 1120 21 return filed at any time for any tax year prior to the tax 22 year in which the beginning farmer attained twenty-six years 23 of age shall not be considered for this purpose. Time spent 24 as an employee in another person’s farm business shall also be 25 excluded from the ten-year limitation. 26 f. Does not own more than a ten percent ownership interest 27 in an agricultural asset included in the agreement. 28 Sec. 11. NEW SECTION . 16.79A Agricultural lease agreement. 29 1. A beginning farmer tax credit is allowed only for 30 agricultural assets that are subject to an agricultural lease 31 agreement entered into by an eligible taxpayer and a qualifying 32 beginning farmer participating in the beginning farmer tax 33 credit program established pursuant to section 16.78. 34 2. The agreement must include the lease of agricultural 35 -6- LSB 1882HZ (2) 88 da/jh 6/ 19

H.F. 768 land located in this state, including any improvements, and may 1 provide for the rental of agricultural equipment as defined in 2 section 322F.1. 3 3. a. The agreement must include provisions which describe 4 the consideration paid for the agreement in a manner that 5 allows the authority to calculate the value of the lease in 6 order to determine the tax credit amount as provided in section 7 16.82. 8 b. The agreement must be in writing. 9 c. The agreement must be for at least two years, but not 10 more than five years. The agreement may be renewed by the 11 eligible taxpayer and qualified beginning farmer for a term of 12 at least two years, but not more than five years. 13 d. The agreement shall not include a lease or rental of 14 equipment intended as a security. 15 e. The agreement cannot be assigned and the agricultural 16 land subject to the agreement shall not be subleased. 17 f. The agricultural assets shall not be leased or rented at 18 a rate that is substantially higher or lower than the market 19 rate for similar agricultural assets leased or rented within 20 the same community. 21 4. The agreement may be amended after the authority issues 22 an eligibility certificate without changing the eligibility 23 status of the taxpayer. However, the underlying lease for 24 agricultural land may only be amended without submitting a new 25 application, if any of the following apply: 26 a. The terms of the amended lease are more favorable to the 27 qualified beginning farmer, including but not limited to the 28 rent payment being reduced. 29 b. A party has changed their name. 30 c. The owner of an agricultural asset is changed to the 31 owner’s estate or trust upon the eligible taxpayer’s death. 32 5. An eligible taxpayer or qualified beginning farmer may 33 terminate an agreement as provided in the agreement or by 34 law. The eligible taxpayer must notify the authority of the 35 -7- LSB 1882HZ (2) 88 da/jh 7/ 19

H.F. 768 termination within thirty days of the date of termination. 1 Sec. 12. NEW SECTION . 16.81 Beginning farmer tax credit 2 —— application. 3 1. The deadline for submitting an application to the 4 authority to claim a beginning farmer tax credit is August 1 of 5 each year. The application shall be for a period that is not 6 longer than the term of the lease. 7 2. a. The authority shall impose, assess, and collect 8 application fees on an interim basis until December 31, 2021. 9 The amount of an application fee shall not be more than the 10 following: 11 (1) For an application that includes an agreement for the 12 lease of one hundred acres or less of agricultural land, a fee 13 of three hundred dollars. 14 (2) For an application that includes an agreement for the 15 lease of more than one hundred acres, but not more than two 16 hundred fifty acres of agricultural land, a fee of four hundred 17 dollars. 18 (3) For an application that includes an agreement for the 19 lease of more than two hundred fifty acres of agricultural 20 land, a fee of five hundred dollars. 21 b. Any amount of fees collected by the authority under this 22 subsection shall be considered repayment receipts as defined 23 in section 8.2. 24 c. This subsection is repealed on January 1, 2022. 25 3. a. The authority shall impose, assess, and collect 26 application fees and shall adopt rules as necessary to 27 administer this subsection, including by providing for the rate 28 of those fees. 29 b. The authority may establish different rates based on 30 separate categories of applications or agricultural lease 31 agreements as determined relevant by the authority. 32 c. The authority shall calculate the rates of the 33 application fees to be effective for each successive 34 twelve-month period. The total amount of application fees 35 -8- LSB 1882HZ (2) 88 da/jh 8/ 19

H.F. 768 collected by the authority for that period shall not be more 1 than the authority’s estimate of the total amount of revenues 2 necessary to administer the provisions of this subpart based 3 on the expected revenue to be collected from the application 4 fees and the expected costs to be incurred by the authority 5 in administering the provisions of this subpart during that 6 period. The authority may adjust the rates throughout that 7 period as the authority determines necessary to comply with 8 this paragraph. 9 d. The amount of application fees collected by the authority 10 under this subsection shall be considered repayment receipts as 11 defined in section 8.2. 12 e. (1) The rules described in this subsection shall first 13 take effect immediately after the repeal of subsection 2. 14 (2) This paragraph “e” is repealed immediately after the 15 rules described in this subsection take effect. 16 4. a. A qualified beginning farmer shall not participate in 17 the beginning farmer tax credit program for more than a total 18 of ten tax years. 19 b. Notwithstanding paragraph “a” , a qualified beginning 20 farmer may participate in the program for the term of a renewed 21 agreement, entered into by the eligible taxpayer and qualified 22 beginning farmer under section 16.79A, for a total of not more 23 than five additional tax years, if the qualified beginning 24 farmer entered into the renewed agreement prior to the date 25 that the current agreement would expire and could not otherwise 26 be renewed under that paragraph. 27 5. The agricultural development board shall review and 28 recommend approval of an application for a tax credit as 29 provided by rules adopted by the authority. The application 30 must include a copy of the agricultural lease agreement. The 31 authority may require that the parties to an agreement provide 32 additional information as determined relevant by the authority. 33 The board shall review an application which includes the 34 renewal of an agreement to determine that the parties to the 35 -9- LSB 1882HZ (2) 88 da/jh 9/ 19

H.F. 768 renewed agreement meet the same qualifications as required for 1 an original application. 2 6. The authority shall approve all beginning farmer tax 3 credit applications that meet the requirements of this subpart 4 on a first-come, first-served basis. However, an application 5 that includes a renewed agreement as provided in section 6 16.79A and which is submitted to the authority during the 7 period when the lease being renewed is in effect shall be 8 approved on a first-come, first-served basis, prior to all 9 other applications. The authority shall approve an application 10 regardless of whether the eligible taxpayer has previously 11 been allowed a tax credit under this section, section 175.37 12 as it existed prior to January 1, 2015, or section 16.80 as it 13 existed prior to January 1, 2018. 14 7. After the authority has approved an application, all of 15 the following apply: 16 a. The authority shall issue a beginning farmer tax credit 17 eligibility certification to an eligible taxpayer as provided 18 in section 16.82A. 19 b. An eligible taxpayer may claim the tax credit each tax 20 year as provided in section 16.82. 21 8. Any financial, contractual, or legal authorization 22 records provided to the authority shall be kept confidential 23 and are not subject to chapter 22. 24 Sec. 13. NEW SECTION . 16.82 Beginning farmer tax credit 25 —— allowance. 26 1. A beginning farmer tax credit is authorized under the 27 beginning farmer tax credit program as provided in section 28 16.78. The beginning farmer tax credit is allowed against 29 the taxes imposed in chapter 422, division II, as provided in 30 section 422.11E, and in chapter 422, division III, as provided 31 in section 422.33, subsection 21, to facilitate the transfer of 32 agricultural assets from an eligible taxpayer to a qualifying 33 beginning farmer participating in the program. 34 2. An individual may claim a beginning farmer tax credit 35 -10- LSB 1882HZ (2) 88 da/jh 10/ 19

H.F. 768 under this section of a partnership, limited liability company, 1 S corporation, estate, or trust electing to have income 2 taxed directly to the individual. The amount claimed by the 3 individual shall be based upon the pro rata share of the 4 individual’s earnings from the partnership, limited liability 5 company, S corporation, estate, or trust. 6 3. Subject to the limitations described in subsections 5, 7 6, and 7, the authority shall determine the amount of the tax 8 credit under an agreement using the following methods: 9 a. In the case of an agreement on a fixed basis, in which 10 an eligible taxpayer receives a fixed cash rent payment, the 11 amount of the tax credit equals five percent of the amount of 12 the fixed cash rent payment for each year. 13 b. In the case of an agreement on a commodity share basis, 14 in which an eligible taxpayer receives as a rent payment a 15 percentage of the commodity produced, the amount of the tax 16 credit shall equal fifteen percent of the gross amount that 17 the eligible taxpayer would receive as a rent payment from 18 the sale of the eligible taxpayer’s share of the crop in each 19 harvest year. The amount of the tax credit shall be based on 20 an equation established by rule adopted by the authority which 21 shall use data compiled by the United States department of 22 agriculture, which shall include all of the following factors: 23 (1) The past ten-year average per bushel yield for the 24 same type of grain as produced under the agreement in the same 25 county where the leased agricultural land is located excluding 26 the years of highest and lowest per bushel yields. 27 (2) The per bushel state price established for the same 28 type of grain harvested as described in subparagraph (1). 29 Price information shall be averaged from the past five years 30 excluding the years of the highest and lowest per bushel state 31 price. 32 c. In the case of an agreement made on a flexible basis in 33 which an eligible taxpayer receives a rent payment consisting 34 of a fixed cash payment and an amount subject to adjustment 35 -11- LSB 1882HZ (2) 88 da/jh 11/ 19

H.F. 768 according to a risk-sharing arrangement, or receives a rent 1 payment consisting of an amount subject to adjustment according 2 to a risk-sharing arrangement, the amount of the tax credit 3 equals the sum of the following amounts: 4 (1) To the extent that a portion of the amount of the 5 rent payment is calculated on a fixed basis as described in 6 paragraph “a” , that portion of the tax credit equals five 7 percent of the fixed cash payment in the same manner as 8 provided in paragraph “a” . 9 (2) To the extent that a portion of the amount of the rent 10 payment is calculated on a commodity share basis as described 11 in paragraph “b” , that portion of the tax credit equals fifteen 12 percent of the amount that the eligible taxpayer would receive 13 from the sale of the eligible taxpayer’s share of the commodity 14 in the same manner as provided in paragraph “b” . 15 (3) (a) To the extent that the amount of the rent payment 16 may be adjusted after taking into account all risk-sharing 17 factors provided in the agreement, that portion of the tax 18 credit equals fifteen percent of the highest adjusted amount 19 that the eligible taxpayer could receive in excess of the 20 amounts calculated in subparagraphs (1) and (2) based on an 21 equation adopted by rule by the authority. 22 (b) As used in subparagraph division (a), “risk-sharing 23 factor” means an occurrence or lack of occurrence, that may 24 affect the commodity’s production or profitability as provided 25 in the agreement, and which may include but is not limited to 26 production costs, per acre crop yield, gross revenue, or market 27 price. 28 (c) The authority shall adopt rules establishing criteria 29 for commonly used risk-sharing factors and adjustment limits. 30 4. The authority shall provide the department of revenue 31 with a list of certified eligible taxpayers and persons who 32 have been decertified due to lease termination by January 31. 33 The list shall include the estimated amount of the tax credit 34 and the type of agreement. 35 -12- LSB 1882HZ (2) 88 da/jh 12/ 19

H.F. 768 5. The amount of the tax credit claimed shall not exceed 1 fifty thousand dollars in any tax year. 2 6. The amount of the tax credit shall be reduced by the 3 percent ownership interest of the qualifying beginning farmer 4 in the agricultural asset. 5 7. A tax credit in excess of the eligible taxpayer’s 6 tax liability for the tax year is not refundable but may be 7 credited to the tax liability for the following ten tax years 8 or until depleted, whichever is earlier. A tax credit shall 9 not be carried back to a tax year prior to the tax year in which 10 the eligible taxpayer redeems the tax credit. 11 8. A tax credit shall not be transferable to any other 12 person other than the taxpayer’s estate or trust upon the 13 eligible taxpayer’s death. 14 9. If an agreement is terminated by the eligible taxpayer, 15 all of the following shall apply: 16 a. Any properly claimed tax credit for income received 17 pursuant to an agreement shall be allowed, but no additional 18 tax credits may be claimed in future tax years under the 19 program. The eligible taxpayer may apply for and be issued 20 another beginning farmer tax credit certificate under a new 21 agreement for the same agricultural assets as provided in this 22 section. 23 b. If the authority determines that the eligible taxpayer is 24 at fault for the termination, the beginning farmer tax credit 25 that had been allowed for that tax year shall be disallowed 26 and the amount shall be considered a tax payment due. If an 27 eligible taxpayer does not immediately notify the authority of 28 the termination, the eligible taxpayer shall be conclusively 29 deemed at fault for the termination. 30 Sec. 14. NEW SECTION . 16.82A Beginning farmer tax credit 31 eligibility certification —— amount and availability. 32 1. The amount of beginning farmer tax credits that may be 33 approved by the authority under the beginning farmer tax credit 34 program shall not in the aggregate exceed a limit of twelve 35 -13- LSB 1882HZ (2) 88 da/jh 13/ 19

H.F. 768 million dollars in each tax year. The twelve million dollar 1 limitation shall be reduced by the total amount of the tax 2 credit that may be claimed by each eligible taxpayer for the 3 entire period of the agricultural lease agreement beginning in 4 the tax year when that eligible taxpayer is first allowed to 5 claim the tax credit. The amount of the approved tax credits 6 shall be determined by the authority after the agricultural 7 development board reviews applications as provided in section 8 16.81 and the authority determines tax credit amounts for the 9 approved applications as provided in section 16.82, aggregated 10 for purposes of meeting the program limits. 11 2. a. The authority shall issue a tax credit certificate to 12 an eligible taxpayer not later than December 15 of each year 13 until all income is realized by the eligible taxpayer from the 14 agreement. 15 b. A tax credit certificate, unless rescinded by the 16 authority, shall be accepted by the department as payment for 17 taxes pursuant to chapter 422, divisions II and III, subject 18 to any conditions or restrictions placed by the authority upon 19 the face of the tax credit certificate and subject to the 20 limitations of the program. 21 3. The eligibility certification shall be valid for the 22 estate or trust of the eligible taxpayer upon the eligible 23 taxpayer’s death. 24 Sec. 15. NEW SECTION . 422.11E Beginning farmer tax credit 25 program. 26 The taxes imposed under this division, less the credits 27 allowed under section 422.12, shall be reduced by a beginning 28 farmer tax credit as allowed under chapter 16, subchapter VIII, 29 part 5, subpart B. 30 Sec. 16. Section 422.33, subsection 21, Code 2019, is 31 amended to read as follows: 32 21. The taxes imposed under this division shall be reduced 33 by an agricultural assets transfer a beginning farmer tax 34 credit as allowed under section 16.80 chapter 16, subchapter 35 -14- LSB 1882HZ (2) 88 da/jh 14/ 19

H.F. 768 VIII, part 5, subpart B . 1 Sec. 17. REPEAL. Sections 16.80 and 422.11M, Code 2019, 2 are repealed. 3 Sec. 18. APPLICABILITY OF PRIOR TAX CREDITS —— APPROVED 4 APPLICATIONS AND CERTIFICATES. 5 1. Notwithstanding any provision of this Act to the 6 contrary, on or after the effective date of this Act any 7 agricultural asset transfer tax credit application approved 8 under section 16.80 as that section existed on or before 9 December 31, 2018, for which tax credit certificates could have 10 been issued for a tax year beginning on or after January 1, 11 2019, shall be approved for the beginning farmer tax credit 12 program as provided in this Act and shall be eligible to 13 receive tax credits for tax years beginning on or after January 14 1, 2019, for the remainder of the agricultural lease term. 15 The taxpayer shall be allowed to claim a beginning farmer tax 16 credit in the same manner as an eligible taxpayer may claim a 17 beginning farmer tax credit as provided in this Act. 18 2. Any application which was submitted for the agricultural 19 assets transfer tax credit pursuant to section 16.80 as 20 that section existed on December 31, 2018, for the tax year 21 beginning January 1, 2019, shall be deemed to be a new pending 22 application for the beginning farmer tax credit as enacted in 23 this Act. The date the new application was received shall be 24 deemed to be the same date that the pending application for 25 the agricultural asset transfer tax credit was received. An 26 application described in this subsection shall be reviewed and 27 approved based on the requirements of the beginning farmer tax 28 credit program as provided in this Act, including requirements 29 relating to the eligibility of the taxpayer and qualifications 30 of the beginning farmer under section 16.79 as enacted in this 31 Act. 32 Sec. 19. APPLICABILITY OF PRIOR TAX CREDITS —— CONTINUANCE 33 OF CARRYOVER PROVISIONS. For any tax year commencing in 34 calendar years 2014 through 2018, a tax credit that could 35 -15- LSB 1882HZ (2) 88 da/jh 15/ 19

H.F. 768 have been first issued, awarded, or allowed and claimed under 1 sections 16.75 through 16.82 as those sections existed on 2 December 31, 2017, or under section 16.80 as that section 3 existed on December 31, 2018, may be credited to the tax 4 liability of that taxpayer for ten tax years following the tax 5 year for which the eligible taxpayer could have first claimed 6 the tax credit, or until depleted, whichever is earlier. 7 Sec. 20. EFFECTIVE DATE. This Act, being deemed of 8 immediate importance, takes effect upon enactment. 9 Sec. 21. RETROACTIVE APPLICABILITY. This Act applies 10 retroactively to January 1, 2019, for tax years beginning on 11 or after that date. 12 EXPLANATION 13 The inclusion of this explanation does not constitute agreement with 14 the explanation’s substance by the members of the general assembly. 15 IOWA FINANCE AUTHORITY. This bill amends provisions 16 in several Code chapters, including Code chapter 16, which 17 governs the Iowa finance authority (IFA). IFA is under the 18 jurisdiction of a board of directors. The Code chapter also 19 provides for several other boards, including the agricultural 20 development board, which oversees programs associated with 21 beginning farmers. The bill provides that the agricultural 22 development board is to designate one of its members to serve 23 on IFA’s board of directors. 24 TAXPAYERS AND FARMERS QUALIFYING TO PARTICIPATE IN THE 25 BEGINNING FARMER TAX PROGRAM. The bill creates a beginning 26 farmer tax credit program, which replaces the agricultural 27 assets transfer tax credit, under IFA’s jurisdiction. 28 Under the program, an eligible taxpayer (taxpayer) who 29 holds agricultural assets (agricultural land, depreciable 30 agricultural property, crops, or livestock) and who assists 31 a qualified beginning farmer (farmer) acquire agricultural 32 assets by a form of specified legal arrangement is entitled 33 to claim a tax credit against the taxpayer’s individual or 34 corporate income tax liability. Specifically, the taxpayer 35 -16- LSB 1882HZ (2) 88 da/jh 16/ 19

H.F. 768 must be eligible to hold agricultural land generally under 1 Iowa’s corporate farming law (e.g., as an individual, 2 partnership, family farm corporation, or family farm limited 3 liability company). The taxpayer must not have been at fault 4 for terminating a prior agreement in which the taxpayer was 5 able to claim a tax credit. The taxpayer must enter into an 6 agricultural lease agreement (agreement) with the farmer who 7 must be an individual, partnership, family farm corporation, or 8 family farm limited liability company. In addition, the farmer 9 must be a resident of this state; have sufficient education, 10 training, or experience in farming; have access to adequate 11 working capital and production items; and not own more than a 12 10 percent ownership interest in an agricultural asset included 13 in the agreement. 14 BEGINNING FARMER TAX CREDIT. The tax credit is calculated 15 based on the type of rent payment arrangement agreed to 16 by the parties, which is either on a cash basis in which a 17 fixed payment is made or a commodity share basis in which the 18 taxpayer takes a percentage of the crop or livestock produced. 19 The tax credit also takes into account special risk-sharing 20 arrangements in which the parties agree to adjust the rent 21 amount based on some future happening (e.g., crop yield). For 22 an agreement which includes a rent payable on a cash basis, 23 the tax credit amount equals 5 percent of the gross amount 24 paid to the taxpayer under the agreement. For an agreement 25 which includes rent payable on a commodity share basis, the 26 tax credit amount equals 15 percent of the amount paid to 27 the eligible taxpayer from crops or livestock sold under the 28 agreement. In the case of a flexible arrangement in which 29 some risk is shared between the parties, the tax credit amount 30 equals 15 percent of the amount paid to the taxpayer as a 31 percentage of the gross value of the commodity. A tax credit 32 cannot exceed $50,000 in any tax year. 33 APPLICATIONS AND CERTIFICATES. The agricultural development 34 board is required to review and IFA is required to approve 35 -17- LSB 1882HZ (2) 88 da/jh 17/ 19

H.F. 768 applications for the tax credit. As part of this process, 1 IFA must calculate the amount of the tax credit that may be 2 awarded to that applicant. IFA must approve all applications 3 on a first-come, first-served basis and issue tax credit 4 certificates to approved taxpayers. One exception provides 5 priority to applicants who are renewing existing leases. 6 IFA is allowed to issue up to $12 million in tax credit 7 certificates each tax year, an increase from $6 million under 8 the agricultural assets transfer tax credit. 9 APPLICABILITY OF PRIOR TAX CREDITS —— APPROVED APPLICATIONS 10 AND CERTIFICATIONS. The bill provides that any approved 11 application for the agricultural asset transfer tax credit is 12 deemed an approved application under the beginning farmer tax 13 credit program. 14 APPLICABILITY OF PRIOR TAX CREDITS —— CONTINUANCE OF 15 CARRYOVER PROVISIONS. The bill allows a taxpayer who claimed 16 a tax credit under the former version of the beginning farmer 17 tax credit (the agricultural assets transfer tax credit and an 18 associated, now repealed custom farming contract tax credit) 19 may continue to carry over the respective tax credits for the 20 remaining 10 years or the depletion of the tax credit. 21 BACKGROUND. The agricultural assets transfer tax credit 22 was first established in 2006 (2006 Iowa Acts, chapter 1161) 23 and has been subsequently amended. Another form of a tax 24 credit assisting beginning farmers, referred to as the custom 25 farming contract tax credit, was established in 2013 (2013 Iowa 26 Acts, chapter 125). Both tax credits were under the beginning 27 farmer tax credit program and administered by the agricultural 28 development board (board) acting as the agricultural 29 development authority and subject to a limit of $12 million. 30 The program was transferred to IFA (2013 Iowa Acts, chapter 31 100, and 2014 Iowa Acts, chapter 1080). Amendments to the 32 agricultural assets transfer tax credit and the custom farming 33 contract tax credit were repealed on December 31, 2017 (2013 34 Iowa Acts, chapter 125), except for a provision which extended 35 -18- LSB 1882HZ (2) 88 da/jh 18/ 19