HF 2236 (LSB 5503HH (3) 89)

HOUSE FILE 2236

BY  LOHSE

A BILL FOR

An Act authorizing the establishment of entertainment areas within self-supported municipal improvement districts, authorizing the imposition of an entertainment surcharge, and making an appropriation.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 386.1, Code 2022, is amended by adding the following new subsections:
   NEW SUBSECTION.  0A.  “Alcoholic beverage” means the same as defined in section 123.3.
   NEW SUBSECTION.  2A.  “Cultural or entertainment establishment” means a sporting or concert event venue, performing arts theater, movie theater, museum, convention hall, or enclosed shopping mall.
   NEW SUBSECTION.  2B.  “Department” means the department of revenue.
   NEW SUBSECTION.  2C.  “Director” means the director of the department of revenue.
   NEW SUBSECTION.  3A.  “Entertainment area” means all or a portion of a district as designated by ordinance under this chapter and the cultural or entertainment establishments, food establishments, liquor establishments, and lessors therein that are subject to the entertainment surcharge in accordance with section 386.3A.
   NEW SUBSECTION.  3B.  “Entertainment tickets” means all tickets or admissions subject to taxation pursuant to section 423.2, subsection 3.
   NEW SUBSECTION.  3C.  “Food” means the same as defined in section 137F.1.
   NEW SUBSECTION.  3D.  “Food establishment” means a food establishment licensed pursuant to chapter 137F, at which food is served or sold at retail. “Food establishment” also includes a temporary food establishment defined in section 137F.1.
   NEW SUBSECTION.  4A.  “Licensed premises” means the same as defined in section 123.3.
   NEW SUBSECTION.  4B.  “Liquor establishment” means a licensed premises in or at which alcoholic beverages are sold at retail.
   NEW SUBSECTION.  4C.  “Lodging” means the same as defined in section 423A.2. “Lodging” does not include lodging exempted from tax pursuant to section 423A.5.
   NEW SUBSECTION.  6A.  “Retail sale” means the same as defined in section 423.1.
   NEW SUBSECTION.  7A.  “Surcharge” means an entertainment surcharge imposed pursuant to this chapter.
    Sec. 2.  Section 386.2, Code 2022, is amended to read as follows:
   386.2  Authorization.
   1.  A city which that proposes to create a district, to provide for its existence and operation, to provide for improvements or self-liquidating improvements for the district, to authorize and issue bonds for the purposes of the district, and to levy the taxes authorized by this chapter must do so in accordance with the provisions of this chapter.
   2.  A city that proposes to create an entertainment area within a district and impose an entertainment surcharge must do so in accordance with the provisions of this chapter.
    Sec. 3.  NEW SECTION.  386.3A  Establishment of an entertainment area —— entertainment surcharge —— use of revenues.
   1.  An entertainment area may be created by ordinance of the council in accordance with the provisions of this section. A proposed entertainment area shall meet the following requirements:
   a.  The combined attendance at cultural or entertainment establishments, food establishments, and liquor establishments within the proposed entertainment area exceeded five hundred thousand persons during the previous calendar year, or the attendance forecast at such establishments is reasonably expected to exceed five hundred thousand persons per calendar year within two years of the establishment of the entertainment area.
   b.  The proposed entertainment area consists of contiguous parcels and does not exceed seventy-five acres in total.
   c.  The proposed entertainment area does not include the entire incorporated area of the city.
   2.  Prior to adopting the ordinance under subsection 3, a proposed entertainment area plan shall be developed by the council. The plan shall state the council’s intent to establish an entertainment area and a legal description of the real estate forming the boundaries of the area to be included along with a map depicting the existing parcels of real estate located in the proposed entertainment area.
   3.  After developing a plan and stating the council’s intent to establish such an area, the council may establish the entertainment area and impose an entertainment surcharge pursuant to this chapter by adopting an ordinance. The surcharge shall be imposed at a rate not to exceed three percent upon the following within the entertainment area:
   a.  The retail sales price of food or alcoholic beverages sold at a cultural or entertainment establishment, food establishment, or liquor establishment.
   b.  The sales price of all sales of entertainment tickets sold at a cultural or entertainment establishment.
   c.  The sales price for the renting of any lodging.
   4.  The surcharge shall be in addition to the state sales tax imposed pursuant to chapter 423, subchapter II, the state-imposed and locally imposed hotel and motel tax pursuant to chapter 423A, and the local sales and services tax imposed pursuant to chapter 423B.
   5.  a.  Within ten days of the passage of an ordinance imposing a surcharge, the county auditor of the county with the largest parcel in the entertainment area shall give written notice to the director by sending a copy of the entertainment area plan and the ordinance to the director.
   b.  A surcharge shall be imposed either January 1 or July 1 following the notification of the director but not sooner than ninety days following the passage of the ordinance imposing the surcharge and not sooner than sixty days following notice to sellers, as defined in section 423.1.
   c.  A surcharge shall be repealed only on June 30 or December 31 but not sooner than ninety days following repeal of the ordinance. At least forty days before the repeal of the surcharge, the council shall provide notice of the action by certified mail to the director of revenue.
   6.  a.  If within thirty days after adoption of the ordinance that imposes a surcharge, or if after the ordinance has been in effect for one year, the council receives a valid petition as provided in section 362.4 requesting that the question of whether to repeal the ordinance be submitted to the registered voters of the city, the council shall direct the county commissioner of elections to submit to the voters at an election held on a date specified in section 39.2, subsection 4, paragraph “b”, the question of whether the ordinance that imposes the surcharge shall be repealed.
   b.  If a majority of the total votes cast for and against the proposition favors repeal of the surcharge the ordinance shall be repealed and collection of the surcharge shall terminate on either June 30 or December 31 following the election, whichever is sooner.
   7.  The ordinance creating an entertainment area may be amended and property may be added to the entertainment area and the entertainment surcharge may be changed at any time in the same manner and by the same procedure as for the establishment of the entertainment area and imposition of the surcharge.
   8.  a.  Upon the remittance of the revenues from the state revenue surcharge fund to the city under section 386.3C, the revenues shall be deposited into the general fund of the city.
   b.  Surcharge revenues deposited into the general fund of the city shall be used as follows, as applicable:
   (1)  For deposit into the debt service fund in section 384.4.
   (2)  For deposit into the emergency fund in section 384.8.
   (3)  For deposit into the capital improvements fund in section 384.7.
   (4)  For the purposes described in section 384.3A, subsection 3, paragraph “b”, “c”, “e”, “f”, or “g”.
    Sec. 4.  NEW SECTION.  386.3B  Administration of surcharge.
   1.  The director shall administer the surcharge imposed pursuant to this chapter as nearly as possible in conjunction with the administration of state sales tax laws. The director shall provide appropriate forms, or provide space on the regular state tax forms, for reporting surcharge liability.
   2.  a.  Section 422.25, subsection 4, sections 422.30, 422.67, and 422.68, section 422.69, subsection 1, sections 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent with the provisions of this chapter, apply with respect to the surcharge authorized under this chapter, in the same manner and with the same effect as retail sales taxes within the meaning of those statutes. The director may require all persons who are engaged in the business of deriving any sales price subject to a surcharge under this chapter to register with the department. All surcharges collected under this chapter are deemed to be held in trust for the state of Iowa and the local jurisdictions imposing the surcharges. Local officials shall confer with the director of revenue for assistance in drafting the ordinance imposing the surcharge. A certified copy of the ordinance shall be filed with the director as soon as possible after passage.
   b.  Frequency of deposits and quarterly reports of the surcharge with the department of revenue are governed by the provisions in section 423.31. Local surcharge collections shall not be included in computation of the total tax to determine frequency of filing under section 423.31.
   c.  The director shall apply a boundary change of an entertainment area to the imposition or collection of that surcharge only on the first day of a calendar quarter which occurs sixty days or more after the director has given notice of the boundary change to sellers.
   3.  a.  The director, in consultation with local officials, shall collect and account for the surcharge. The director shall certify each quarter the amount of the surcharge receipts and any interest and penalties to be credited to the city account in the state surcharge revenue fund established in section 386.3C. Local authorities shall not require any permit not required by the director of revenue.
   b.  All surcharge revenues and interest and penalties received or refunded one hundred eighty days or more after the date on which the city repeals the surcharge shall be deposited in or withdrawn from the general fund of the state.
   4.  Each city that has established an entertainment area under this chapter shall assist the department in identifying new establishments required to impose the surcharge in the entertainment area. This process shall be ongoing until the surcharge is repealed.
    Sec. 5.  NEW SECTION.  386.3C  State surcharge revenue fund —— district accounts.
   1.  A state surcharge revenue fund is established in the state treasury under the control of the department consisting of the surcharge revenues collected within each entertainment area and deposited in the fund pursuant to section 386.3B. Revenues deposited in the fund are appropriated to the department for the purposes of this section.
   2.  A district account is created within the fund for each city creating an entertainment area under this chapter.
   3.  The department shall deposit the revenues described in subsection 1 that were collected in a quarter beginning on or after the entertainment area’s commencement date into the appropriate district account in the fund.
   4.  All revenues in each district account within the fund shall be remitted quarterly by the department to the city that established the entertainment area for deposit in the general fund of the city.
   5.  The department shall adopt rules pursuant to chapter 17A necessary to administer the department’s responsibilities under this chapter.
    Sec. 6.  Section 423A.5A, subsection 3, Code 2022, is amended to read as follows:
   3.  Unless otherwise provided in this section, the state-imposed tax under section 423A.3 and any locally imposed tax under section 423A.4 shall be collected by the lodging provider from the user of that lodging and shall be remitted to the department. The lodging provider shall add the state-imposed tax to the sales price of the lodging and the tax, when collected, shall be stated as a distinct item, separate and apart from the sales price of the lodging and from the locally imposed tax under section 423A.4 or entertainment surcharge under chapter 386, if any. The lodging provider shall add the locally imposed tax, if any, to the sales price of the lodging and the tax, when collected, shall be stated as a distinct item, separate and apart from the sales price of the lodging and from the state-imposed tax or entertainment surcharge under chapter 386, if any.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to self-supported municipal improvement districts (district) by authorizing cities to establish entertainment areas within a district and to impose an entertainment surcharge within the area.
   Under the bill, a city may establish an entertainment area (area) by ordinance for the purpose of imposing an entertainment surcharge (surcharge). The proposed area shall meet all of the following requirements: the combined attendance at cultural or entertainment establishments, food establishments, and liquor establishments within the proposed area exceeded 500,000 persons during the previous calendar year, or the expected attendance forecast at such establishments is expected to exceed 500,000 persons per calendar year within two years; the proposed area consists of contiguous parcels and does not exceed 75 acres; and the proposed area does not include the entire incorporated area of the city.
   The bill defines “cultural or entertainment establishment” to mean a sporting or concert event venue, performing arts theater, movie theater, museum, convention hall, or enclosed shopping mall. The bill defines “food establishment” to mean a food establishment licensed pursuant to Code chapter 137F, at which food is served or sold at retail. “Food establishment” also includes a “temporary food establishment” defined in Code section 137F.1. The bill defines “liquor establishment” to mean a licensed premises in or at which alcoholic beverages are sold at retail. The bill defines “entertainment tickets” to mean all tickets or admissions subject to taxation pursuant to Code section 423.2(3). The bill defines “lodging” to mean the same as defined in Code section 432A.2. However, lodging does not include lodging exempted from tax pursuant to Code section 423A.5.
   The surcharge imposed under the bill shall be a rate not to exceed 3 percent, which shall be imposed upon the following within the area: the retail sales price of food or alcoholic beverages sold at a cultural or entertainment establishment, food establishment, or liquor establishment; the sales price of all sales of entertainment tickets sold at a cultural or entertainment establishment; or the sales price for the renting of any lodging.
   The bill specifies that the surcharge shall be in addition to the state sales tax imposed pursuant to Code chapter 423, subchapter II, the state-imposed and locally imposed hotel and motel tax pursuant to Code chapter 423A, or the local sales and services tax imposed pursuant to Code chapter 423B.
   The bill establishes a process to adopt or repeal the surcharge. A surcharge shall be imposed either on January 1 or July 1 following notification of the director of revenue but not sooner than 90 days following the passage of the ordinance imposing the rate of the surcharge and not sooner than 60 days following notice to the sellers in the area. A surcharge shall be repealed only on June 30 or December 31 but no sooner than 90 days following the repeal of the ordinance. A surcharge may also be repealed by petition upon the majority vote of persons in the city beginning 30 days after adoption of the ordinance.
   The bill specifies the director of the department of revenue shall administer the surcharge as nearly as possible in conjunction with the administration of the state sales tax. The bill specifies that administrative and enforcement laws relating to the sales tax apply to surcharges imposed under the bill. The bill requires each city to assist the department in identifying new establishments required to impose the surcharge in the area.
   The bill creates a state surcharge revenue fund in the state treasury under the control of the department of revenue consisting of surcharge revenues collected within each entertainment area. The bill creates a district account for each city creating an area. The bill requires the revenues be deposited into the appropriate district account.
   All revenues in each district account within the state surcharge revenue fund shall be remitted quarterly by the department to the city that established the area for deposit in the general fund of the city. Surcharge revenues deposited into the general fund of the city may be deposited in any of the following funds: the debt service fund in Code section 384.4, the emergency fund in Code section 384.8, or the capital improvements fund in Code section 384.7. If the surcharge revenues are not deposited in any of the above-mentioned funds, the surcharge revenues shall be used for any of the purposes described under Code section 384.3A(3)(b), (c), (e), (f), or (g).