H.F. 213 Section 1. NEW SECTION . 423H.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Alcoholic beverage” means the same as defined in section 4 123.3. 5 2. “Cultural or entertainment establishment” means a sporting 6 or concert event venue, performing arts theater, movie theater, 7 museum, convention hall, or enclosed shopping mall. 8 3. “Department” means the department of revenue. 9 4. “Director” means the director of the department of 10 revenue. 11 5. “District” means either of the following: 12 a. An area within a municipality that is established as a 13 local entertainment district pursuant to section 423H.2. 14 b. An area within two or more municipalities pursuant to 15 an agreement under chapter 28E that is established as a local 16 entertainment district pursuant to section 423H.2. 17 6. “Entertainment tickets” means all tickets or admissions 18 subject to taxation pursuant to section 423.2, subsection 3. 19 7. “Food” means the same as defined in section 137F.1. 20 8. “Food establishment” means a “food establishment” licensed 21 pursuant to chapter 137F, at which food is served or sold at 22 retail. “Food establishment” also includes a “temporary food 23 establishment” defined in chapter 137F.1. 24 9. “Governing body” means the county board of supervisors, 25 city council, or other body in which the legislative powers of 26 the municipality are vested. 27 10. “Licensed premises” means the same as defined in section 28 123.3. 29 11. “Liquor establishment” means a licensed premises in or 30 at which alcoholic beverages are sold at retail. 31 12. “Lodging” means the same as defined in section 423A.2. 32 “Lodging” does not include lodging exempted from tax pursuant 33 to section 423A.5. 34 13. “Municipality” means any of the following: 35 -1- LSB 1987YH (4) 89 jm/jh 1/ 10

H.F. 213 a. A county. 1 b. An incorporated city. 2 c. A joint board or other legal entity established or 3 designated in an agreement between two or more contiguous 4 municipalities identified in paragraph “a” or “b” pursuant to 5 chapter 28E. 6 14. “Retail sale” means the same as defined in section 7 423.1. 8 15. “Surcharge” means a local entertainment surcharge 9 imposed pursuant to this chapter. 10 Sec. 2. NEW SECTION . 423H.2 Local entertainment district 11 establishment —— approval. 12 A municipality may establish a district for purposes of 13 imposing a surcharge. To be established as a district, a 14 proposed district shall meet the following requirements: 15 1. The combined attendance at cultural or entertainment 16 establishments, food establishments, and liquor establishments 17 within the proposed district exceeded five hundred thousand 18 persons during the previous calendar year, or the attendance 19 forecast at such establishments is reasonably expected to 20 exceed five hundred thousand persons per calendar year within 21 two years of the establishment of the district. 22 2. The proposed district consists of contiguous parcels and 23 does not exceed seventy-five acres in total. 24 3. For a municipality that is a city, the proposed district 25 does not include the entire incorporated area of the city. 26 4. The proposed district is not located in whole or in part 27 within another district established under this chapter. 28 Sec. 3. NEW SECTION . 423H.3 Local entertainment surcharge 29 —— approval. 30 1. Prior to adopting the ordinance or resolution under 31 subsection 2, a proposed district plan shall be developed by 32 the governing body of the municipality. The proposed district 33 plan shall state the governing body’s intent to establish a 34 district and a legal description of the real estate forming the 35 -2- LSB 1987YH (4) 89 jm/jh 2/ 10

H.F. 213 boundaries of the area to be included in the proposed district 1 along with a map depicting the existing parcels of real estate 2 located in the proposed district. 3 2. After developing a proposed district plan and stating 4 the governing body’s intent to establish such a district under 5 subsection 1, the governing body of a municipality may impose a 6 surcharge pursuant to this chapter by adopting an ordinance, or 7 in the case of a municipality under section 423H.1, subsection 8 13, paragraph “c” , a resolution. The surcharge shall be imposed 9 at a rate not to exceed three percent upon the following within 10 the district: 11 a. The retail sales price of food or alcoholic beverages 12 sold at a cultural or entertainment establishment, food 13 establishment, or liquor establishment. 14 b. The sales price of all sales of entertainment tickets 15 sold at a cultural or entertainment establishment. 16 c. The sales price for the renting of any lodging. 17 3. The surcharge shall be in addition to the state sales 18 tax imposed pursuant to chapter 423, subchapter II, the 19 state-imposed and locally imposed hotel and motel tax pursuant 20 to chapter 423A, and the local sales and services tax imposed 21 pursuant to chapter 423B. 22 4. a. Within ten days of the passage of an ordinance 23 or resolution imposing a surcharge, the county auditor of 24 the county with the largest parcel in the district shall 25 give written notice to the director by sending a copy of the 26 district plan to the director. 27 b. A surcharge shall be imposed either January 1 or July 28 1 following the notification of the director but not sooner 29 than ninety days following the passage of the ordinance or 30 resolution imposing the surcharge and not sooner than sixty 31 days following notice to sellers, as defined in section 423.1. 32 c. (1) A surcharge shall be repealed only on June 30 or 33 December 31 but not sooner than ninety days following repeal of 34 the ordinance or resolution. At least forty days before the 35 -3- LSB 1987YH (4) 89 jm/jh 3/ 10

H.F. 213 repeal of the surcharge, a municipality shall provide notice of 1 the action by certified mail to the director of revenue. 2 (2) The terms of any chapter 28E agreement shall govern the 3 repeal of the surcharge in the case of a municipality under 4 section 423H.1, subsection 13, paragraph “c” . 5 5. a. (1) If within thirty days after adoption of the 6 ordinance that imposes a surcharge, or if after the ordinance 7 has been in effect for one year, the board of supervisors of a 8 municipality receives a valid petition as provided in section 9 331.306 requesting that the question of whether to repeal 10 the ordinance be submitted to the registered voters of the 11 unincorporated area of the county, the board shall direct the 12 county commissioner of elections to submit to the voters at an 13 election held on a date specified in section 39.2, subsection 14 4, paragraph “a” , the question of whether the ordinance that 15 imposes the surcharge shall be repealed. 16 (2) If within thirty days after adoption of the ordinance 17 that imposes a surcharge, or if after the ordinance has been 18 in effect for one year, the city council of a municipality 19 receives a valid petition as provided in section 362.4 20 requesting that the question of whether to repeal the ordinance 21 be submitted to the registered voters of the city, the city 22 council shall direct the county commissioner of elections to 23 submit to the voters at an election held on a date specified 24 in section 39.2, subsection 4, paragraph “b” , the question 25 of whether the ordinance that imposes the surcharge shall be 26 repealed. 27 (3) For a municipality under section 423H.1, subsection 13, 28 paragraph “c” , the terms of any chapter 28E agreement shall 29 govern the repeal of the surcharge, but shall, at a minimum, 30 allow for a petition under section 331.306 or 362.4 requesting 31 that a question to repeal the resolution be submitted to the 32 voters after the resolution has been in effect for one year. 33 b. If a majority of the total votes cast for and against the 34 proposition favors repeal of the surcharge, or in the case of 35 -4- LSB 1987YH (4) 89 jm/jh 4/ 10

H.F. 213 a municipality under section 423H.1, subsection 13, paragraph 1 “c” , a majority of at least one of the municipalities favors 2 repeal, the ordinance or resolution shall be repealed, and 3 collection of the surcharge shall terminate on either June 30 4 or December 31 following the election, whichever is sooner. 5 Sec. 4. NEW SECTION . 423H.4 Administration. 6 1. The director shall administer the surcharge imposed 7 pursuant to this chapter as nearly as possible in conjunction 8 with the administration of state sales tax laws. The director 9 shall provide appropriate forms, or provide space on the 10 regular state tax forms, for reporting surcharge liability. 11 2. a. Section 422.25, subsection 4, sections 422.30, 12 422.67, and 422.68, section 422.69, subsection 1, sections 13 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, 14 subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 15 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent 16 with the provisions of this chapter, apply with respect to the 17 surcharge authorized under this chapter, in the same manner and 18 with the same effect as retail sales taxes within the meaning 19 of those statutes. The director may require all persons 20 who are engaged in the business of deriving any sales price 21 subject to a surcharge under this chapter to register with 22 the department. All surcharges collected under this chapter 23 are deemed to be held in trust for the state of Iowa and the 24 local jurisdictions imposing the surcharges. Local officials 25 shall confer with the director of revenue for assistance in 26 drafting the ordinance or resolution imposing the surcharge. A 27 certified copy of the ordinance or resolution shall be filed 28 with the director as soon as possible after passage. 29 b. Frequency of deposits and quarterly reports of the 30 surcharge with the department of revenue are governed by the 31 provisions in section 423.31. Local surcharge collections 32 shall not be included in computation of the total tax to 33 determine frequency of filing under section 423.31. 34 c. The director shall apply a boundary change of a city 35 -5- LSB 1987YH (4) 89 jm/jh 5/ 10

H.F. 213 imposing or collecting the surcharge to the imposition or 1 collection of that surcharge only on the first day of a 2 calendar quarter which occurs sixty days or more after the 3 director has given notice of the boundary change to sellers. 4 3. a. The director, in consultation with local officials, 5 shall collect and account for the surcharge. The director 6 shall certify each quarter the amount of the surcharge 7 receipts and any interest and penalties to be credited to 8 the municipality account in the state surcharge revenue fund 9 established in section 423H.5. Local authorities shall not 10 require any permit not required by the director of revenue. 11 b. All surcharge revenues and interest and penalties 12 received or refunded one hundred eighty days or more after the 13 date on which the municipality repeals the surcharge, shall be 14 deposited in or withdrawn from the general fund of the state. 15 4. Each municipality that has established a district 16 under this chapter shall assist the department in identifying 17 new establishments required to impose the surcharge in the 18 district. This process shall be ongoing until the surcharge 19 is repealed. 20 Sec. 5. NEW SECTION . 423H.5 State surcharge revenue fund. 21 1. A state surcharge revenue fund is established in the 22 state treasury under the control of the department consisting 23 of the surcharge revenues collected within each district and 24 deposited in the fund pursuant to section 423H.4. Revenues 25 deposited in the fund are appropriated to the department for 26 the purposes of this section. 27 2. A district account is created within the fund for each 28 municipality creating a district under this chapter. 29 3. The department shall deposit the revenues described in 30 subsection 1 that were collected in a quarter beginning on or 31 after the district’s commencement date into the appropriate 32 district account in the fund. 33 4. All revenues in each district account within the 34 fund shall be remitted quarterly by the department to the 35 -6- LSB 1987YH (4) 89 jm/jh 6/ 10

H.F. 213 municipality that established the district for deposit in 1 the general fund of the municipality. In the case of a 2 municipality described in section 423H.1, subsection 13, 3 paragraph “c” , revenues shall be remitted to the municipalities 4 that are parties to the chapter 28E agreement in such 5 proportions as described in the chapter 28E agreement. 6 Sec. 6. NEW SECTION . 423H.6 Payment to municipality —— use 7 of revenues. 8 1. Upon the remittance of the revenues from the state 9 revenue surcharge fund to the municipality under section 10 423H.5, subsection 4, the revenues shall be deposited into the 11 general fund of the municipality. 12 2. Surcharge revenues deposited into the general fund of the 13 municipality shall be used as follows, as applicable: 14 a. For deposit into the debt service fund in section 331.430 15 or 384.4. 16 b. For deposit into the emergency services fund in section 17 331.424C or emergency fund in section 384.8. 18 c. For deposit into the capital improvements fund in section 19 384.7. 20 d. For the purposes described in section 384.3A, subsection 21 3, paragraph “b” , “c” , “e” , “f” , or “g” . 22 Sec. 7. NEW SECTION . 423H.7 Rules. 23 The department shall adopt rules pursuant to chapter 17A to 24 administer this chapter. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill relates to local government revenues by 29 authorizing cities or counties to impose a local entertainment 30 surcharge, and makes an appropriation. 31 The bill authorizes a city, county, or an area within two or 32 more municipalities pursuant to a Code chapter 28E agreement 33 (municipality) to establish a local entertainment district 34 (district) by ordinance or, in the case of a Code chapter 28E 35 -7- LSB 1987YH (4) 89 jm/jh 7/ 10

H.F. 213 agreement by resolution, for the purpose of imposing a local 1 entertainment surcharge (surcharge). Under the bill, to be 2 established as a district, the proposed area shall meet all 3 of the following requirements: the combined attendance at 4 cultural or entertainment establishments, food establishments, 5 and liquor establishments within the proposed district exceeded 6 500,000 persons during the previous calendar year, or the 7 expected attendance forecast at such establishments is expected 8 to exceed 500,000 persons per calendar year within two years; 9 the proposed area consists of contiguous parcels and does not 10 exceed 75 acres; the proposed area does not include the entire 11 incorporated area of the city; and the proposed area is not 12 located in whole or in part within another district. 13 The bill defines “cultural or entertainment establishment” 14 to mean a sporting or concert event venue, performing arts 15 theater, movie theater, museum, convention hall, or enclosed 16 shopping mall. The bill defines “food establishment” to mean a 17 “food establishment” licensed pursuant to Code chapter 137F, at 18 which food is served or sold at retail. “Food establishment” 19 also includes a “temporary food establishment” defined in Code 20 section 137F.1. The bill defines “liquor establishment” to 21 mean a licensed premises in or at which alcoholic beverages are 22 sold at retail. 23 If the governing body of a municipality imposes a surcharge 24 pursuant to the bill, the surcharge shall be at a rate not to 25 exceed 3 percent, which shall be imposed upon the following 26 within the district: the retail sales price of food or 27 alcoholic beverages sold at a cultural or entertainment 28 establishment, food establishment, or liquor establishment; the 29 sales price of all sales of entertainment tickets sold at a 30 cultural or entertainment establishment; or the sales price for 31 the renting of any lodging. 32 The bill defines “entertainment tickets” to mean all tickets 33 or admissions subject to taxation pursuant to Code section 34 423.2(3). The bill defines “lodging” to mean the same as 35 -8- LSB 1987YH (4) 89 jm/jh 8/ 10

H.F. 213 defined in Code section 432A.2. However, “lodging” does not 1 include lodging exempted from tax pursuant to Code section 2 423A.5. 3 The bill specifies that the surcharge shall be in addition 4 to the state sales tax imposed pursuant to Code chapter 423, 5 subchapter II, the state-imposed and locally imposed hotel and 6 motel tax pursuant to Code chapter 423A, or the local sales and 7 services tax imposed pursuant to Code chapter 423B. 8 The bill establishes a process to adopt or repeal the 9 surcharge. A surcharge shall be imposed either on January 1 10 or July 1 following notification of the director of revenue 11 but not sooner than 90 days following the passage of the 12 ordinance or resolution imposing the rate of the surcharge and 13 not sooner than 60 days following notice to the sellers in the 14 local entertainment district. For a surcharge adopted by a 15 resolution, the Code chapter 28E agreement shall govern the 16 repeal of the surcharge. A surcharge adopted by resolution 17 and governed by a Code chapter 28E agreement may be repealed 18 upon the majority vote of persons in one of the municipalities 19 after the resolution has been in effect for one year. For a 20 surcharge adopted by ordinance, a surcharge shall be repealed 21 only on June 30 or December 31 but no sooner than 90 days 22 following the repeal of the ordinance. A surcharge adopted by 23 ordinance may also be repealed by petition upon the majority 24 vote of persons in the municipality beginning 30 days after 25 adoption of the ordinance. 26 The bill specifies the director of the department of 27 revenue shall administer the surcharge as nearly as possible 28 in conjunction with the administration of the state sales tax. 29 The bill specifies that numerous administrative and enforcement 30 laws relating to the sales tax apply to surcharges imposed 31 under the bill. The bill requires each municipality to assist 32 the department in identifying new establishments required to 33 impose the surcharge in the district. 34 The bill creates a state surcharge revenue fund in the 35 -9- LSB 1987YH (4) 89 jm/jh 9/ 10

H.F. 213 state treasury under the control of the department of revenue 1 consisting of surcharge revenues collected within each 2 local entertainment district. The bill creates a local 3 entertainment district account for each municipality creating a 4 district. The bill requires the revenues be deposited into the 5 appropriate district account. 6 All revenues in each district account within the state 7 surcharge revenue fund shall be remitted quarterly by 8 the department to the municipality or municipalities that 9 established the district for deposit in the general fund of 10 the municipality. Surcharge revenues deposited into the 11 general fund of the municipality shall be deposited in the 12 following funds, as applicable: the debt service fund in 13 Code section 331.430 or 384.4, the emergency services fund in 14 Code section 331.424C or the emergency fund in Code section 15 384.8, or the capital improvements fund in Code section 384.7. 16 If the surcharge revenues are not deposited in any of the 17 above-mentioned funds, the surcharge revenues shall be used for 18 any of the purposes described under Code section 384.3A(3)(b), 19 (c), (e), (f), or (g). 20 -10- LSB 1987YH (4) 89 jm/jh 10/ 10