S.F. 373 Section 1. NEW SECTION . 15E.152 Short title. 1 This subchapter shall be known and may be cited as the 2 “Homeownership Development Tax Credit Act” . 3 Sec. 2. NEW SECTION . 15E.153 Purpose. 4 The purpose of this subchapter is to increase the 5 availability of affordable housing in this state by encouraging 6 taxpayers to make charitable contributions to certain nonprofit 7 housing developers that create affordable single-family housing 8 to be sold to low-income households in this state. 9 Sec. 3. NEW SECTION . 15E.154 Definitions. 10 As used in this subchapter, unless the context otherwise 11 requires: 12 1. “Department” means the department of revenue. 13 2. “Eligible housing developer” means an organization 14 meeting the requirements of section 15E.155, subsection 2, and 15 certified as an eligible housing developer by the authority 16 pursuant to that section. 17 3. “Eligible rural housing developer” means an organization 18 meeting the requirements of section 15E.155, subsection 3, 19 and certified as an eligible rural housing developer by the 20 authority pursuant to that section. 21 4. “Low-income household” means a household with income 22 of eighty percent or less of the area median family income by 23 county as determined by the United States department of housing 24 and urban development. 25 Sec. 4. NEW SECTION . 15E.155 Developer certification. 26 1. Application. An organization may apply to the authority 27 in the manner prescribed by the authority to be certified as 28 an eligible housing developer or an eligible rural housing 29 developer. 30 2. Eligible housing developer. In order to be certified as 31 an eligible housing developer, an organization must meet the 32 requirements of paragraph “a” or “b” : 33 a. (1) The organization is organized under chapter 504 and 34 qualifying under section 501(c)(3) of the Internal Revenue Code 35 -1- LSB 2540XS (3) 89 jm/jh 1/ 10

S.F. 373 as an organization exempt from federal income tax under section 1 501(a) of the Internal Revenue Code. 2 (2) The organization has, for a minimum of three years prior 3 to the time of the application, been developing single-family 4 housing in this state to be sold to low-income households. 5 (3) The bylaws, articles, or other document relating to the 6 establishment of the organization provide that a purpose of the 7 organization is to develop affordable housing in this state to 8 be sold to low-income households. 9 (4) The organization agrees to provide to the authority 10 information reasonably required by the authority in order to 11 verify the receipt, donor identity, value, and eligibility for 12 the tax credit of contributions received by the organization. 13 b. (1) The organization is organized under chapter 504 and 14 qualifying under section 501(c)(3) of the Internal Revenue Code 15 as an organization exempt from federal income tax under section 16 501(a) of the Internal Revenue Code. 17 (2) A purpose of the organization is to serve or support 18 an organization certified as an eligible housing developer 19 pursuant to paragraph “a” of this subsection. 20 (3) The organization accepts contributions on behalf of 21 an organization certified as an eligible housing developer 22 pursuant to paragraph “a” of this subsection, and redistributes 23 any and all such contributions to that organization. 24 (4) The organization agrees to provide to the authority 25 information reasonably required by the authority in order to 26 verify the receipt, donor identity, value, and eligibility for 27 the tax credit of contributions received by the organization. 28 3. Eligible rural housing developer. In order to be 29 certified as an eligible rural housing developer, an 30 organization must meet the requirements of paragraph “a” or “b” : 31 a. The organization meets the requirements of subsection 32 2, paragraph “a ”, and for the three years preceding the 33 application, the organization has conducted at least fifty-one 34 percent of its housing development activities in Iowa counties 35 -2- LSB 2540XS (3) 89 jm/jh 2/ 10

S.F. 373 with a population of fewer than fifty thousand as determined by 1 the most recent federal decennial census. 2 b. (1) The organization is organized under chapter 504 and 3 qualifying under section 501(c)(3) of the Internal Revenue Code 4 as an organization exempt from federal income tax under section 5 501(a) of the Internal Revenue Code. 6 (2) A purpose of the organization is to serve or support an 7 organization certified as an eligible rural housing developer 8 pursuant to paragraph “a” of this subsection. 9 (3) The organization accepts contributions on behalf of an 10 organization certified as an eligible rural housing developer 11 pursuant to paragraph “a” of this subsection, and redistributes 12 any and all such contributions to that organization. 13 (4) The organization agrees to provide to the authority 14 information reasonably required by the authority in order to 15 verify the receipt, donor identity, value, and eligibility for 16 the tax credit of contributions received by the organization. 17 4. Length of certification and recertification. Unless 18 certification is revoked pursuant to subsection 5, a 19 certification received pursuant to this section shall be valid 20 for a period of three years, at which time the organization 21 may apply to the authority in the manner prescribed by the 22 authority to become recertified as an eligible housing 23 developer or eligible rural housing developer pursuant to this 24 section. 25 5. Revocation of certification. An organization shall 26 notify the authority in a timely manner of any changes that 27 affect the organization’s ability to qualify as an eligible 28 housing developer or eligible rural housing developer. The 29 authority shall revoke the certification of an organization 30 certified as an eligible housing developer or eligible rural 31 housing developer if that organization subsequently fails to 32 meet the requirements of subsection 2 or 3, as applicable. 33 The revocation of a certification under this subsection shall 34 not prohibit an organization from subsequently applying to be 35 -3- LSB 2540XS (3) 89 jm/jh 3/ 10

S.F. 373 certified as an eligible housing developer or eligible rural 1 housing developer under this section. 2 Sec. 5. NEW SECTION . 15E.156 Tax credit application —— 3 maximum tax credits. 4 1. Application. 5 a. To receive a tax credit under section 15E.157, a taxpayer 6 must submit an application in the manner and form prescribed 7 by the authority on or after the date of the charitable 8 contribution to the eligible housing developer or eligible 9 rural housing developer for which a tax credit is sought. The 10 eligible housing developer or eligible rural housing developer 11 shall forward the application to the authority. 12 b. The authority shall issue tax credits and related tax 13 credit certificates on a first-come, first-served basis in 14 the order applications are received from eligible housing 15 developers and eligible rural housing developers until the 16 maximum amount of tax credits authorized pursuant to subsection 17 2 is reached. If for a calendar year the maximum amount 18 of tax credits applied for exceeds the amount specified in 19 subsection 2, the authority shall establish a wait list for 20 tax credits. Valid applications received but not approved 21 by the authority shall be placed on a wait list in the order 22 the applications were received by the authority and those 23 applicants shall be given priority for receiving tax credits in 24 succeeding calendar years. Placement on a wait list pursuant 25 to this paragraph shall not constitute a promise binding the 26 state. The availability of a tax credit and approval of a tax 27 credit application pursuant to this section in a future year 28 is contingent upon the availability of tax credits in that 29 particular year. 30 2. Maximum tax credit amounts. 31 a. The aggregate amount of tax credits issued pursuant to 32 this section shall not exceed a total of seven million dollars 33 per calendar year. 34 b. Twenty percent of the aggregate amount of tax credits 35 -4- LSB 2540XS (3) 89 jm/jh 4/ 10

S.F. 373 issued in a calendar year shall be reserved for charitable 1 contributions to an eligible rural housing developer. 2 c. (1) Except as provided in subparagraph (2), the maximum 3 amount of tax credits issued to any one taxpayer for charitable 4 contributions in a tax year shall not exceed two hundred fifty 5 thousand dollars. 6 (2) The maximum amount of tax credits issued to any one 7 taxpayer for charitable contributions in a tax year shall 8 not exceed three hundred thousand dollars if at least twenty 9 percent of the taxpayer’s total charitable contributions made 10 during the tax year that are eligible for the tax credit in 11 section 15E.157 are to one or more eligible rural housing 12 developers. 13 Sec. 6. NEW SECTION . 15E.157 Homeownership development tax 14 credit. 15 1. a. A tax credit shall be allowed against the taxes 16 imposed in chapter 422, subchapters II, III, and V, and in 17 chapter 432, and against the moneys and credits tax imposed in 18 section 533.329, equal to fifty percent of the amount of the 19 voluntary cash or noncash charitable contributions made by a 20 taxpayer during the tax year to an eligible housing developer 21 or eligible rural housing developer. 22 b. The charitable contribution must equal or exceed five 23 hundred dollars in order to qualify for the tax credit. 24 However, an eligible housing developer or eligible rural 25 housing developer may set a higher minimum qualifying amount 26 pursuant to rules prescribed by the authority. 27 2. The tax credit shall be claimed for the tax year during 28 which the taxpayer was issued the tax credit. 29 3. An individual may claim a tax credit under this section 30 of a partnership, limited liability company, S corporation, 31 estate, or trust electing to have income taxed directly to 32 the individual. The amount claimed by the individual shall 33 be based upon the pro rata share of the individual’s earnings 34 from the partnership, limited liability company, S corporation, 35 -5- LSB 2540XS (3) 89 jm/jh 5/ 10

S.F. 373 estate, or trust. 1 4. Any tax credit in excess of the taxpayer’s tax liability 2 for the tax year may be credited to the tax liability for the 3 following five years or until depleted, whichever occurs first. 4 A tax credit shall not be carried back to a tax year prior to 5 the tax year in which the taxpayer claims the tax credit. 6 5. a. To claim a tax credit under this section, a taxpayer 7 shall include one or more tax credit certificates with the 8 taxpayer’s tax return. 9 b. The tax credit certificate shall contain the taxpayer’s 10 name, address, tax identification number, the amount of the 11 credit, and any other information required by the department. 12 c. The tax credit certificate, unless rescinded by the 13 authority, shall be accepted by the department as payment for 14 taxes imposed pursuant to chapter 422, subchapters II, III, 15 and V, and in chapter 432, and against the moneys and credits 16 tax imposed in section 533.329, subject to any conditions or 17 restrictions placed by the authority upon the face of the tax 18 credit certificate and subject to the limitations of this 19 subchapter. 20 d. Tax credit certificates issued pursuant to this 21 subchapter shall not be transferred to any other person. 22 6. The amount of the charitable contribution for which the 23 tax credit is claimed shall not be deductible in determining 24 taxable income for state income tax purposes. 25 Sec. 7. NEW SECTION . 15E.158 Reports to general assembly. 26 The authority shall publish an annual report of the 27 activities conducted pursuant to this subchapter and shall 28 submit the report to the governor and the general assembly. 29 The report shall include a listing of certified eligible 30 housing developers and certified eligible rural housing 31 developers, the number of tax credit certificates and the 32 amount of tax credits issued by the authority, and the number 33 of taxpayers and the amount of tax applications on the tax 34 credit wait list, if any. 35 -6- LSB 2540XS (3) 89 jm/jh 6/ 10

S.F. 373 Sec. 8. NEW SECTION . 15E.159 Rules. 1 The authority and the department shall each adopt rules 2 pursuant to chapter 17A as necessary for the implementation of 3 this subchapter. 4 Sec. 9. NEW SECTION . 422.12O Homeownership development tax 5 credit. 6 The taxes imposed under this subchapter, less the 7 credits allowed under section 422.12, shall be reduced by a 8 homeownership development tax credit allowed under section 9 15E.157. 10 Sec. 10. Section 422.33, Code 2021, is amended by adding the 11 following new subsection: 12 NEW SUBSECTION . 23. The taxes imposed under this subchapter 13 shall be reduced by a homeownership development tax credit 14 allowed under section 15E.157. 15 Sec. 11. Section 422.60, Code 2021, is amended by adding the 16 following new subsection: 17 NEW SUBSECTION . 14. The taxes imposed under this subchapter 18 shall be reduced by a homeownership development tax credit 19 allowed under section 15E.157. 20 Sec. 12. NEW SECTION . 432.12O Homeownership development 21 tax credit. 22 The taxes imposed under this chapter shall be reduced by 23 a homeownership development tax credit allowed under section 24 15E.157. 25 Sec. 13. Section 533.329, subsection 2, Code 2021, is 26 amended by adding the following new paragraph: 27 NEW PARAGRAPH . l. The moneys and credits tax imposed under 28 this section shall be reduced by a homeownership development 29 tax credit allowed under section 15E.157. 30 Sec. 14. RETROACTIVE APPLICABILITY. This Act applies to tax 31 years beginning on or after January 1, 2021. 32 Sec. 15. RETROACTIVE APPLICABILITY. This Act applies 33 retroactively to January 1, 2021, to charitable contributions 34 to eligible housing developers and eligible rural housing 35 -7- LSB 2540XS (3) 89 jm/jh 7/ 10

S.F. 373 developers made on or after January 1, 2021. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanation’s substance by the members of the general assembly. 4 This bill creates a homeownership development tax credit 5 that will be administered by the economic development authority 6 (EDA) and that will provide tax credits to taxpayers who make 7 charitable contributions to eligible housing developers or 8 eligible rural housing developers in this state. 9 An “eligible housing developer” is defined in the bill to 10 include an Iowa nonprofit, tax-exempt organization that has 11 been developing single-family housing for at least three years 12 in this state to be sold to low-income households, as defined 13 in the bill, that includes the development of such housing in 14 this state for low-income households as a purpose in its bylaws 15 or other organizational documents, and that agrees to provide 16 EDA with certain information in order to properly verify 17 charitable contributions. An “eligible housing developer” 18 also includes an Iowa nonprofit, tax-exempt organization whose 19 purpose is to support an organization described above and who 20 redistributes any charitable contributions received on behalf 21 of that eligible housing developer to the developer. 22 An “eligible rural housing developer” is defined in the 23 bill to include an Iowa nonprofit, tax-exempt organization 24 that meets the requirements of an eligible housing developer 25 described above but that additionally has conducted for the 26 last three years at least 51 percent of its housing development 27 activities in Iowa counties with a population of fewer than 28 50,000 as determined by the most recent federal decennial 29 census. 30 An organization must apply to EDA to be certified as an 31 eligible housing developer or an eligible rural housing 32 developer. A certification by EDA will last for a period of 33 three years, at which time an eligible housing developer or 34 eligible rural housing developer may apply to be recertified. 35 -8- LSB 2540XS (3) 89 jm/jh 8/ 10

S.F. 373 Failure to meet the requirements specified above may cause the 1 organization to lose its certification as an eligible housing 2 developer or eligible rural housing developer, but the loss 3 of such certification does not prohibit an organization from 4 subsequently reapplying to EDA for certification. 5 In order to receive a tax credit for a charitable 6 contribution to an eligible housing developer or eligible rural 7 housing developer, a taxpayer is required to apply to the 8 developer in the manner and form prescribed by EDA on or after 9 the date the charitable contribution is made. The developer is 10 then required to forward the application to EDA. 11 The tax credit equals 50 percent of the amount of the cash or 12 noncash charitable contribution made to the eligible housing 13 developer or eligible rural housing developer during the tax 14 year. The minimum amount of charitable contribution that may 15 qualify for the tax credit is $500, but each eligible housing 16 developer or eligible rural housing developer is allowed to 17 set a higher minimum contribution amount. The bill provides 18 that EDA shall not issue more than $7 million in tax credits 19 per calendar year. Of that $7 million maximum aggregate 20 amount, 20 percent ($1.4 million) of the tax credits shall 21 be reserved for charitable contributions to eligible rural 22 housing developers. The maximum amount of tax credits that 23 may be issued per taxpayer for charitable contributions in a 24 tax year is $250,000, or $300,000 if at least 20 percent of 25 the taxpayer’s total charitable contributions to the eligible 26 housing development organizations during the tax year were to 27 one or more eligible rural housing developers. 28 The tax credit may be claimed against the individual income 29 tax, the corporate income tax, the franchise tax, the insurance 30 companies tax, and the moneys and credits tax. To claim a tax 31 credit, a taxpayer must include a tax credit certificate with 32 the taxpayer’s tax return. The tax credit is nonrefundable 33 and nontransferable, but any excess may be carried forward for 34 five tax years. The amount of the charitable contribution for 35 -9- LSB 2540XS (3) 89 jm/jh 9/ 10

S.F. 373 which the tax credit is claimed shall not be deductible in 1 determining taxable income for state tax purposes. 2 EDA is required to issue tax credits on a first-come, 3 first-served basis until the maximum amount of $7 million 4 per calendar year is reached. If the amount of tax credit 5 applications exceeds $7 million in a calendar year, EDA 6 is required to establish a wait list and give priority in 7 subsequent years to applications on the wait list. 8 The bill requires EDA and the department of revenue to 9 adopt rules as necessary for the implementation of the bill, 10 and requires EDA to publish and submit annual reports to 11 the governor and general assembly containing information as 12 described in the bill. 13 The bill applies retroactively to tax years beginning on or 14 after January 1, 2021, and applies retroactively to charitable 15 contributions to eligible housing developers and eligible rural 16 housing developers on or after that date. 17 -10- LSB 2540XS (3) 89 jm/jh 10/ 10