House File 606 - Introduced HOUSE FILE 606 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HF 363) (SUCCESSOR TO HF 3) A BILL FOR An Act permitting businesses’ new onsite daycare facilities or 1 businesses’ expansion of existing onsite daycare facilities 2 to qualify as projects under the high quality jobs program, 3 and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 1167HZ (2) 89 ko/jh

H.F. 606 Section 1. NEW SECTION . 15.329A Eligible business —— onsite 1 daycare facilities. 2 1. As used in this section, unless the context otherwise 3 requires: 4 a. “Child” or “children” means a person or persons twelve 5 years of age or younger. 6 b. “Child care” means the care, supervision, and guidance of 7 a child or children by a person other than the child’s parent, 8 guardian, or custodian. 9 c. “Project completion” means the first date upon which the 10 business’s onsite daycare facility begins offering child care 11 for the business’s employees’ children. 12 2. Notwithstanding section 15.327, subsection 20, the 13 authority may provide tax incentives or project completion 14 assistance under this part to a business for a project that 15 involves a new onsite child care facility, or the expansion of 16 an existing onsite child care facility, that offers low-cost 17 child care for the business’s employees. 18 3. Notwithstanding section 15.329, subsection 1, paragraphs 19 “c” and “g” , the authority may provide tax incentives or 20 project completion assistance under this part to a business 21 for a project pursuant to this section if the project creates 22 or retains jobs that will pay a percent of the qualifying 23 wage threshold as determined pursuant to rules adopted by the 24 authority. 25 4. Notwithstanding section 15.329, subsection 1, paragraph 26 “e” , the authority may, pursuant to rules adopted by the 27 authority, determine alternative metrics, other than the fiscal 28 impact ratio, to qualify a business to be eligible for tax 29 incentives or project completion assistance for a project under 30 this section. The authority may consult with the department 31 of human services as necessary if the authority determines 32 alternative metrics. 33 5. Notwithstanding section 15.329, subsection 3, the 34 authority shall consider, and may consult with the department 35 -1- LSB 1167HZ (2) 89 ko/jh 1/ 7

H.F. 606 of human services on, a variety of factors, including but 1 not limited to the following, in determining the eligibility 2 of a business to participate in the program pursuant to this 3 section: 4 a. The quality of the jobs to be created or retained. 5 In rating the quality of the jobs, the authority shall 6 place greater emphasis on those jobs that are full-time or 7 career-type positions, that provide comprehensive health 8 benefits, and that pay a wage equal to or higher than similar 9 jobs within a twenty-five-mile radius of the proposed project. 10 b. The impact of the proposed project on other businesses 11 in competition with the business’s proposed project. The 12 authority shall make a good-faith effort to identify existing 13 child care providers in competition with the business’s 14 proposed project. The authority shall make a good-faith effort 15 to determine the probability that the proposed tax incentives 16 or project completion assistance will displace workers at 17 existing child care providers. In determining the impact 18 on child care providers in competition with the business’s 19 proposed project, jobs created or retained as a result of 20 similar jobs being displaced elsewhere in a twenty-five-mile 21 radius shall not be considered direct jobs created or retained. 22 c. The economic impact to the state of the proposed project. 23 In measuring the economic impact, the authority shall place 24 greater emphasis on projects that meet one or more of the 25 following conditions: 26 (1) Are located in an economically distressed area. For 27 purposes of this section, “economically distressed area” means 28 a county that ranks among the bottom thirty-three of all Iowa 29 counties, as measured by one of the following: 30 (a) Average monthly unemployment level for the most recent 31 twelve-month period. 32 (b) Average annualized unemployment level for the most 33 recent five-year period. 34 (2) Will have the capacity to care for twenty or more 35 -2- LSB 1167HZ (2) 89 ko/jh 2/ 7

H.F. 606 children. 1 (3) Are located in an area that has an inadequate number 2 of existing child care providers based on the population of 3 children in the area. 4 (4) Will provide child care to a business’s employees at a 5 low-cost rate as determined pursuant to rules adopted by the 6 authority. 7 6. If a business that is approved to receive tax incentives 8 or project completion assistance under this section closes or 9 reduces the capacity of the child care facility for which the 10 tax incentives or project completion assistance was received, 11 the authority shall have the discretion to reduce or eliminate 12 some or all of the tax incentives or project completion 13 assistance, and the business may be subject to repayment of 14 all or a portion of the tax incentives or project completion 15 assistance that the business has received. 16 7. a. A business that is awarded tax incentives pursuant 17 to this section shall be entitled to a refund of the sales 18 and use taxes paid under chapter 423 for gas, electricity, 19 water, or sewer utility services, goods, wares, or merchandise, 20 or on services rendered, furnished, or performed to or for a 21 contractor or subcontractor and used in the fulfillment of a 22 written contract relating to the construction or equipping 23 of a child care facility that is part of the project of the 24 eligible business. Taxes attributable to intangible property, 25 furniture, and furnishings shall not be refunded. 26 b. To receive a refund, a claim shall be filed by the 27 eligible business with the department as follows: 28 (1) The contractor or subcontractor shall state under oath, 29 on forms provided by the department, the amount of the sales 30 of goods, wares, or merchandise, or the services rendered, 31 furnished, or performed, including gas, electric, water, and 32 sewer utility services upon which sales or use tax has been 33 paid prior to project completion, and shall file the forms with 34 the eligible business before final settlement is made between 35 -3- LSB 1167HZ (2) 89 ko/jh 3/ 7

H.F. 606 the business and the contractor or subcontractor. 1 (2) The eligible business shall, not more than one year 2 after project completion, make application to the department 3 for any refund of the amount of the sales and use taxes paid 4 pursuant to chapter 423 upon any sales of goods, wares, or 5 merchandise, or the services rendered, furnished, or performed, 6 including gas, electric, water, and sewer utility services 7 prior to project completion. The application shall be made in 8 the manner and upon forms to be provided by the department. 9 The department shall audit the claim and, if approved, issue 10 a warrant to the eligible business in the amount of the sales 11 or use tax approved by the department. A claim filed by an 12 eligible business in accordance with this subsection shall not 13 be denied by reason of a limitation provision set forth in 14 chapter 421 or 423. 15 (3) The eligible business shall inform the department of 16 revenue of the project completion in writing after the project 17 completion. 18 (4) A contractor or subcontractor who willfully makes a 19 false report of the sales or tax paid under the provisions of 20 this subsection commits a simple misdemeanor and is liable for 21 the payment of the sales and use tax and any applicable penalty 22 and interest. 23 8. The authority shall adopt rules pursuant to chapter 17A 24 as necessary to administer this section. 25 9. The department of revenue may adopt rules pursuant to 26 chapter 17A as necessary to administer this section. 27 EXPLANATION 28 The inclusion of this explanation does not constitute agreement with 29 the explanation’s substance by the members of the general assembly. 30 This bill permits businesses’ new onsite daycare facilities 31 or businesses’ expansion of existing onsite daycare facilities 32 to qualify as projects under the high quality jobs program, and 33 makes penalties applicable. 34 The bill permits the economic development authority 35 -4- LSB 1167HZ (2) 89 ko/jh 4/ 7

H.F. 606 (authority) to provide tax incentives (incentives) or project 1 completion assistance (assistance) under the high quality jobs 2 program (program) to a business for a project that involves a 3 new onsite child care facility or the expansion of an existing 4 onsite facility that offers low-cost child care for the 5 business’s employees. The authority may provide incentives 6 or assistance under the program to a business for a project 7 that creates or retains jobs that will pay a percent of the 8 qualifying wage threshold as determined pursuant to rules 9 adopted by the authority. The bill permits the authority, 10 pursuant to rules adopted by the authority, to determine 11 metrics to qualify a business to be eligible for the program. 12 The authority may consult with the department of human services 13 (DHS) as necessary if the authority determines alternative 14 metrics. 15 In determining the eligibility of a business’s project under 16 the program, the bill requires the authority to consider, and 17 allows the authority to consult with DHS on, the quality of 18 the jobs to be created or retained, with an emphasis placed on 19 jobs that are full-time or career-type positions, that provide 20 comprehensive health benefits, and that pay wages equal to 21 or higher than similar jobs within a 25-mile radius of the 22 business’s proposed project. The authority is also required to 23 consider the impact of the proposed project on other child care 24 providers in competition with the proposed project. 25 The authority must make a good-faith effort to identify 26 existing child care providers in competition with the 27 business’s proposed project and the probability that the 28 proposed project will displace employees of the existing child 29 care providers. Jobs created or retained by the proposed 30 project as a result of similar jobs being displaced in a 31 25-mile radius from the business cannot be considered by the 32 authority as jobs created or retained. 33 The bill also requires the authority to consider the 34 economic impact of the proposed project on the state. In 35 -5- LSB 1167HZ (2) 89 ko/jh 5/ 7

H.F. 606 measuring economic impact, the authority must place greater 1 emphasis on projects that are located in economically 2 distressed areas, that will have the capacity to care for 3 20 or more children, that are located in areas that have an 4 inadequate number of existing child care providers, and that 5 will provide child care to the business’s employees at a 6 low-cost rate as determined pursuant to rules adopted by the 7 authority. The bill defines “economically distressed area” as 8 a county that ranks among the bottom 33 of all Iowa counties, 9 as measured by either the average monthly unemployment level 10 for the most recent 12-month period, or the average annualized 11 unemployment level for the most recent five-year period. 12 If a business that is approved by the authority to receive 13 incentives or assistance for its project either closes or 14 reduces the capacity of the child care facility for which the 15 incentives or assistance was received, the authority has the 16 discretion to reduce or eliminate some or all of the incentives 17 or assistance, and the business may be subject to repayment of 18 all or a portion of the incentives or assistance that it has 19 received. 20 A business that is awarded tax incentives for a child care 21 facility is entitled to a refund of the sales and use taxes 22 paid under Code chapter 423 for gas, electricity, water, or 23 sewer utility services, goods, wares, or merchandise, or 24 on services rendered, furnished, or performed to or for a 25 contractor or subcontractor and used in the fulfillment of a 26 written contract relating to the construction or equipping 27 of a child care facility that is part of the project of the 28 eligible business. Taxes attributable to intangible property, 29 furniture, and furnishings cannot be refunded. The process 30 by which a business may receive a refund of the sales and use 31 taxes paid is outlined in the bill. A business that is awarded 32 tax incentives for a child care facility may also be eligible 33 for a value-added property tax exemption pursuant to Code 34 section 15.332. 35 -6- LSB 1167HZ (2) 89 ko/jh 6/ 7

H.F. 606 A contractor or subcontractor who willfully makes a false 1 report of sales and use taxes paid under the provisions of the 2 bill commits a simple misdemeanor and is liable for the payment 3 of the taxes and any applicable penalties and interest. A 4 simple misdemeanor is punishable by confinement for no more 5 than 30 days or a fine of at least $105 but not more than $855 6 or by both. 7 The bill directs the authority to adopt rules as necessary 8 to administer the provisions of the bill. The bill allows the 9 department of revenue to adopt rules as necessary to administer 10 the provisions of the bill. 11 -7- LSB 1167HZ (2) 89 ko/jh 7/ 7