H.F. 2236 Section 1. Section 386.1, Code 2022, is amended by adding 1 the following new subsections: 2 NEW SUBSECTION . 0A. “Alcoholic beverage” means the same as 3 defined in section 123.3. 4 NEW SUBSECTION . 2A. “Cultural or entertainment 5 establishment” means a sporting or concert event venue, 6 performing arts theater, movie theater, museum, convention 7 hall, or enclosed shopping mall. 8 NEW SUBSECTION . 2B. “Department” means the department of 9 revenue. 10 NEW SUBSECTION . 2C. “Director” means the director of the 11 department of revenue. 12 NEW SUBSECTION . 3A. “Entertainment area” means all or a 13 portion of a district as designated by ordinance under this 14 chapter and the cultural or entertainment establishments, food 15 establishments, liquor establishments, and lessors therein that 16 are subject to the entertainment surcharge in accordance with 17 section 386.3A. 18 NEW SUBSECTION . 3B. “Entertainment tickets” means all 19 tickets or admissions subject to taxation pursuant to section 20 423.2, subsection 3. 21 NEW SUBSECTION . 3C. “Food” means the same as defined in 22 section 137F.1. 23 NEW SUBSECTION . 3D. “Food establishment” means a food 24 establishment licensed pursuant to chapter 137F, at which food 25 is served or sold at retail. “Food establishment” also includes 26 a temporary food establishment defined in section 137F.1. 27 NEW SUBSECTION . 4A. “Licensed premises” means the same as 28 defined in section 123.3. 29 NEW SUBSECTION . 4B. “Liquor establishment” means a licensed 30 premises in or at which alcoholic beverages are sold at retail. 31 NEW SUBSECTION . 4C. “Lodging” means the same as defined in 32 section 423A.2. “Lodging” does not include lodging exempted 33 from tax pursuant to section 423A.5. 34 NEW SUBSECTION . 6A. “Retail sale” means the same as defined 35 -1- LSB 5503HH (3) 89 md/jh 1/ 9

H.F. 2236 in section 423.1. 1 NEW SUBSECTION . 7A. “Surcharge” means an entertainment 2 surcharge imposed pursuant to this chapter. 3 Sec. 2. Section 386.2, Code 2022, is amended to read as 4 follows: 5 386.2 Authorization. 6 1. A city which that proposes to create a district, to 7 provide for its existence and operation, to provide for 8 improvements or self-liquidating improvements for the district, 9 to authorize and issue bonds for the purposes of the district, 10 and to levy the taxes authorized by this chapter must do so in 11 accordance with the provisions of this chapter . 12 2. A city that proposes to create an entertainment area 13 within a district and impose an entertainment surcharge must do 14 so in accordance with the provisions of this chapter. 15 Sec. 3. NEW SECTION . 386.3A Establishment of an 16 entertainment area —— entertainment surcharge —— use of revenues. 17 1. An entertainment area may be created by ordinance of 18 the council in accordance with the provisions of this section. 19 A proposed entertainment area shall meet the following 20 requirements: 21 a. The combined attendance at cultural or entertainment 22 establishments, food establishments, and liquor establishments 23 within the proposed entertainment area exceeded five hundred 24 thousand persons during the previous calendar year, or the 25 attendance forecast at such establishments is reasonably 26 expected to exceed five hundred thousand persons per calendar 27 year within two years of the establishment of the entertainment 28 area. 29 b. The proposed entertainment area consists of contiguous 30 parcels and does not exceed seventy-five acres in total. 31 c. The proposed entertainment area does not include the 32 entire incorporated area of the city. 33 2. Prior to adopting the ordinance under subsection 3, 34 a proposed entertainment area plan shall be developed by 35 -2- LSB 5503HH (3) 89 md/jh 2/ 9

H.F. 2236 the council. The plan shall state the council’s intent to 1 establish an entertainment area and a legal description of the 2 real estate forming the boundaries of the area to be included 3 along with a map depicting the existing parcels of real estate 4 located in the proposed entertainment area. 5 3. After developing a plan and stating the council’s 6 intent to establish such an area, the council may establish 7 the entertainment area and impose an entertainment surcharge 8 pursuant to this chapter by adopting an ordinance. The 9 surcharge shall be imposed at a rate not to exceed three 10 percent upon the following within the entertainment area: 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 4. 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 5. a. Within ten days of the passage of an ordinance 23 imposing a surcharge, the county auditor of the county with the 24 largest parcel in the entertainment area shall give written 25 notice to the director by sending a copy of the entertainment 26 area plan and the ordinance to the director. 27 b. A surcharge shall be imposed either January 1 or July 1 28 following the notification of the director but not sooner than 29 ninety days following the passage of the ordinance imposing the 30 surcharge and not sooner than sixty days following notice to 31 sellers, as defined in section 423.1. 32 c. A surcharge shall be repealed only on June 30 or December 33 31 but not sooner than ninety days following repeal of the 34 ordinance. At least forty days before the repeal of the 35 -3- LSB 5503HH (3) 89 md/jh 3/ 9

H.F. 2236 surcharge, the council shall provide notice of the action by 1 certified mail to the director of revenue. 2 6. a. If within thirty days after adoption of the ordinance 3 that imposes a surcharge, or if after the ordinance has 4 been in effect for one year, the council receives a valid 5 petition as provided in section 362.4 requesting that the 6 question of whether to repeal the ordinance be submitted to the 7 registered voters of the city, the council shall direct the 8 county commissioner of elections to submit to the voters at an 9 election held on a date specified in section 39.2, subsection 10 4, paragraph “b” , the question of whether the ordinance that 11 imposes the surcharge shall be repealed. 12 b. If a majority of the total votes cast for and against the 13 proposition favors repeal of the surcharge the ordinance shall 14 be repealed and collection of the surcharge shall terminate on 15 either June 30 or December 31 following the election, whichever 16 is sooner. 17 7. The ordinance creating an entertainment area may be 18 amended and property may be added to the entertainment area and 19 the entertainment surcharge may be changed at any time in the 20 same manner and by the same procedure as for the establishment 21 of the entertainment area and imposition of the surcharge. 22 8. a. Upon the remittance of the revenues from the state 23 revenue surcharge fund to the city under section 386.3C, the 24 revenues shall be deposited into the general fund of the city. 25 b. Surcharge revenues deposited into the general fund of the 26 city shall be used as follows, as applicable: 27 (1) For deposit into the debt service fund in section 384.4. 28 (2) For deposit into the emergency fund in section 384.8. 29 (3) For deposit into the capital improvements fund in 30 section 384.7. 31 (4) For the purposes described in section 384.3A, 32 subsection 3, paragraph “b” , “c” , “e” , “f” , or “g” . 33 Sec. 4. NEW SECTION . 386.3B Administration of surcharge. 34 1. The director shall administer the surcharge imposed 35 -4- LSB 5503HH (3) 89 md/jh 4/ 9

H.F. 2236 pursuant to this chapter as nearly as possible in conjunction 1 with the administration of state sales tax laws. The director 2 shall provide appropriate forms, or provide space on the 3 regular state tax forms, for reporting surcharge liability. 4 2. a. Section 422.25, subsection 4, sections 422.30, 5 422.67, and 422.68, section 422.69, subsection 1, sections 6 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, 7 subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 8 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent 9 with the provisions of this chapter, apply with respect to the 10 surcharge authorized under this chapter, in the same manner and 11 with the same effect as retail sales taxes within the meaning 12 of those statutes. The director may require all persons 13 who are engaged in the business of deriving any sales price 14 subject to a surcharge under this chapter to register with the 15 department. All surcharges collected under this chapter are 16 deemed to be held in trust for the state of Iowa and the local 17 jurisdictions imposing the surcharges. Local officials shall 18 confer with the director of revenue for assistance in drafting 19 the ordinance imposing the surcharge. A certified copy of the 20 ordinance shall be filed with the director as soon as possible 21 after passage. 22 b. Frequency of deposits and quarterly reports of the 23 surcharge with the department of revenue are governed by the 24 provisions in section 423.31. Local surcharge collections 25 shall not be included in computation of the total tax to 26 determine frequency of filing under section 423.31. 27 c. The director shall apply a boundary change of an 28 entertainment area to the imposition or collection of that 29 surcharge only on the first day of a calendar quarter which 30 occurs sixty days or more after the director has given notice 31 of the boundary change to sellers. 32 3. a. The director, in consultation with local officials, 33 shall collect and account for the surcharge. The director 34 shall certify each quarter the amount of the surcharge receipts 35 -5- LSB 5503HH (3) 89 md/jh 5/ 9

H.F. 2236 and any interest and penalties to be credited to the city 1 account in the state surcharge revenue fund established in 2 section 386.3C. Local authorities shall not require any permit 3 not required by the director of revenue. 4 b. All surcharge revenues and interest and penalties 5 received or refunded one hundred eighty days or more after the 6 date on which the city repeals the surcharge shall be deposited 7 in or withdrawn from the general fund of the state. 8 4. Each city that has established an entertainment area 9 under this chapter shall assist the department in identifying 10 new establishments required to impose the surcharge in the 11 entertainment area. This process shall be ongoing until the 12 surcharge is repealed. 13 Sec. 5. NEW SECTION . 386.3C State surcharge revenue fund —— 14 district accounts. 15 1. A state surcharge revenue fund is established in the 16 state treasury under the control of the department consisting 17 of the surcharge revenues collected within each entertainment 18 area and deposited in the fund pursuant to section 386.3B. 19 Revenues deposited in the fund are appropriated to the 20 department for the purposes of this section. 21 2. A district account is created within the fund for each 22 city creating an entertainment area under this chapter. 23 3. The department shall deposit the revenues described in 24 subsection 1 that were collected in a quarter beginning on 25 or after the entertainment area’s commencement date into the 26 appropriate district account in the fund. 27 4. All revenues in each district account within the fund 28 shall be remitted quarterly by the department to the city that 29 established the entertainment area for deposit in the general 30 fund of the city. 31 5. The department shall adopt rules pursuant to chapter 17A 32 necessary to administer the department’s responsibilities under 33 this chapter. 34 Sec. 6. Section 423A.5A, subsection 3, Code 2022, is amended 35 -6- LSB 5503HH (3) 89 md/jh 6/ 9

H.F. 2236 to read as follows: 1 3. Unless otherwise provided in this section , the 2 state-imposed tax under section 423A.3 and any locally 3 imposed tax under section 423A.4 shall be collected by the 4 lodging provider from the user of that lodging and shall be 5 remitted to the department. The lodging provider shall add 6 the state-imposed tax to the sales price of the lodging and 7 the tax, when collected, shall be stated as a distinct item, 8 separate and apart from the sales price of the lodging and from 9 the locally imposed tax under section 423A.4 or entertainment 10 surcharge under chapter 386 , if any. The lodging provider 11 shall add the locally imposed tax, if any, to the sales price 12 of the lodging and the tax, when collected, shall be stated as 13 a distinct item, separate and apart from the sales price of 14 the lodging and from the state-imposed tax or entertainment 15 surcharge under chapter 386, if any . 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill relates to self-supported municipal improvement 20 districts (district) by authorizing cities to establish 21 entertainment areas within a district and to impose an 22 entertainment surcharge within the area. 23 Under the bill, a city may establish an entertainment 24 area (area) by ordinance for the purpose of imposing an 25 entertainment surcharge (surcharge). The proposed area 26 shall meet all of the following requirements: the combined 27 attendance at cultural or entertainment establishments, 28 food establishments, and liquor establishments within the 29 proposed area exceeded 500,000 persons during the previous 30 calendar year, or the expected attendance forecast at such 31 establishments is expected to exceed 500,000 persons per 32 calendar year within two years; the proposed area consists 33 of contiguous parcels and does not exceed 75 acres; and the 34 proposed area does not include the entire incorporated area of 35 -7- LSB 5503HH (3) 89 md/jh 7/ 9

H.F. 2236 the city. 1 The bill defines “cultural or entertainment establishment” 2 to mean a sporting or concert event venue, performing arts 3 theater, movie theater, museum, convention hall, or enclosed 4 shopping mall. The bill defines “food establishment” to mean a 5 food establishment licensed pursuant to Code chapter 137F, at 6 which food is served or sold at retail. “Food establishment” 7 also includes a “temporary food establishment” defined in Code 8 section 137F.1. The bill defines “liquor establishment” to 9 mean a licensed premises in or at which alcoholic beverages are 10 sold at retail. The bill defines “entertainment tickets” to 11 mean all tickets or admissions subject to taxation pursuant to 12 Code section 423.2(3). The bill defines “lodging” to mean the 13 same as defined in Code section 432A.2. However, lodging does 14 not include lodging exempted from tax pursuant to Code section 15 423A.5. 16 The surcharge imposed under the bill shall be a rate not to 17 exceed 3 percent, which shall be imposed upon the following 18 within the area: the retail sales price of food or alcoholic 19 beverages sold at a cultural or entertainment establishment, 20 food establishment, or liquor establishment; the sales price 21 of all sales of entertainment tickets sold at a cultural or 22 entertainment establishment; or the sales price for the renting 23 of any lodging. 24 The bill specifies that the surcharge shall be in addition 25 to the state sales tax imposed pursuant to Code chapter 423, 26 subchapter II, the state-imposed and locally imposed hotel and 27 motel tax pursuant to Code chapter 423A, or the local sales and 28 services tax imposed pursuant to Code chapter 423B. 29 The bill establishes a process to adopt or repeal the 30 surcharge. A surcharge shall be imposed either on January 1 or 31 July 1 following notification of the director of revenue but 32 not sooner than 90 days following the passage of the ordinance 33 imposing the rate of the surcharge and not sooner than 60 days 34 following notice to the sellers in the area. A surcharge shall 35 -8- LSB 5503HH (3) 89 md/jh 8/ 9

H.F. 2236 be repealed only on June 30 or December 31 but no sooner than 90 1 days following the repeal of the ordinance. A surcharge may 2 also be repealed by petition upon the majority vote of persons 3 in the city beginning 30 days after adoption of the ordinance. 4 The bill specifies the director of the department of 5 revenue shall administer the surcharge as nearly as possible 6 in conjunction with the administration of the state sales tax. 7 The bill specifies that administrative and enforcement laws 8 relating to the sales tax apply to surcharges imposed under the 9 bill. The bill requires each city to assist the department in 10 identifying new establishments required to impose the surcharge 11 in the area. 12 The bill creates a state surcharge revenue fund in the 13 state treasury under the control of the department of revenue 14 consisting of surcharge revenues collected within each 15 entertainment area. The bill creates a district account for 16 each city creating an area. The bill requires the revenues be 17 deposited into the appropriate district account. 18 All revenues in each district account within the state 19 surcharge revenue fund shall be remitted quarterly by the 20 department to the city that established the area for deposit 21 in the general fund of the city. Surcharge revenues deposited 22 into the general fund of the city may be deposited in any of 23 the following funds: the debt service fund in Code section 24 384.4, the emergency fund in Code section 384.8, or the capital 25 improvements fund in Code section 384.7. If the surcharge 26 revenues are not deposited in any of the above-mentioned funds, 27 the surcharge revenues shall be used for any of the purposes 28 described under Code section 384.3A(3)(b), (c), (e), (f), or 29 (g). 30 -9- LSB 5503HH (3) 89 md/jh 9/ 9