S.F. 408 DIVISION I 1 TAX CREDITS 2 Section 1. Section 15.119, subsection 2, paragraphs d, e, 3 and h, Code 2023, are amended to read as follows: 4 d. The tax credits for investments in qualifying businesses 5 issued pursuant to section 15E.43 , and the tax credits for 6 investments in an innovation fund pursuant to section 15E.52 . 7 In allocating tax credits pursuant to this subsection , the 8 authority shall allocate two million an aggregate amount of tax 9 credits that is not more than ten million dollars for purposes 10 of this paragraph, unless the authority determines that the tax 11 credits awarded will be less than that amount . On or before 12 June 30 of each year, the authority shall determine the amount 13 of the aggregate amount of tax credits that shall be allocated 14 for tax credits issued for investments in qualifying businesses 15 pursuant to section 15E.43, and the amount that shall be 16 allocated for tax credits for investments in an innovation fund 17 pursuant to section 15E.52. 18 e. The tax credits for investments in an innovation fund 19 pursuant to section 15E.52 . In allocating tax credits pursuant 20 to this subsection , the authority shall allocate eight million 21 dollars for purposes of this paragraph, unless the authority 22 determines that the tax credits awarded will be less than that 23 amount. 24 h. The renewable chemical production tax credit program 25 administered pursuant to sections 15.315 through 15.322 . In 26 allocating tax credits pursuant to this subsection for the 27 fiscal year beginning July 1, 2021, and for each fiscal year 28 thereafter beginning before July 1, 2037 , the authority shall 29 not allocate more than five million dollars for purposes of 30 this paragraph. This paragraph is repealed July 1, 2030 2039 . 31 Sec. 2. Section 15.316, subsection 3, Code 2023, is amended 32 to read as follows: 33 3. “Building block chemical” means a molecule converted 34 from biomass feedstock as a first product or a secondarily 35 -1- LSB 1164SV (1) 90 ko/jh 1/ 14

S.F. 408 derived product that can be further refined into a higher-value 1 chemical, material, or consumer product. “Building block 2 chemical” includes but is not limited to high-purity glycerol, 3 oleic acid, lauric acid, methanoic or formic acid, arabonic 4 acid, erythonic acid, glyceric acid, glycolic acid, lactic 5 acid, 3-hydroxypropionate, propionic acid, malonic acid, 6 serine, succinic acid, fumaric acid, malic acid, aspartic 7 acid, 3-hydroxybutyrolactone, acetoin, threonine, itaconic 8 acid, furfural, levulinic acid, glutamic acid, xylonic acid, 9 xylaric acid, xylitol, arabitol, citric acid, aconitic acid, 10 5-hydroxymethylfurfural, lysine, gluconic acid, glucaric acid, 11 sorbitol, gallic acid, ferulic acid, butyric acid, nonfuel 12 butanol, nonfuel ethanol, or such additional molecules as may 13 be included by the authority by rule after consultation with 14 appropriate experts from Iowa state university, including 15 but not limited to the Iowa state university center for 16 biorenewable chemicals. 17 Sec. 3. Section 15.318, subsection 1, Code 2023, is amended 18 by adding the following new paragraph: 19 NEW PARAGRAPH . f. All complete applications submitted 20 by eligible businesses shall be reviewed and scored on a 21 competitive basis by the authority pursuant to rules adopted 22 by the authority. 23 Sec. 4. Section 15.318, subsection 2, paragraphs c and d, 24 Code 2023, are amended to read as follows: 25 c. An eligible business shall fulfill all the requirements 26 of the program and the agreement before receiving the authority 27 issues the business a tax credit certificate or entering enters 28 into a subsequent agreement with the business under this 29 section . The authority may decline to enter into a subsequent 30 agreement with the business under this section or to issue a 31 tax credit if an agreement is not successfully fulfilled. 32 d. Upon establishing that all requirements of the program 33 and the agreement have been fulfilled, the authority shall 34 issue a tax credit and related tax credit certificate to the 35 -2- LSB 1164SV (1) 90 ko/jh 2/ 14

S.F. 408 eligible business stating the amount of renewable chemical 1 production tax credit the eligible business may claim. 2 Sec. 5. Section 15.318, subsection 3, paragraphs a, d, and 3 e, Code 2023, are amended to read as follows: 4 a. The maximum amount of tax credit that the authority may 5 be issued issue under section 15.319 to an eligible business 6 for the production of renewable chemicals in a calendar year 7 shall not exceed the following: 8 (1) In the case of an eligible business that has been in 9 operation in the state for five years or less at the time of 10 application, is one million dollars. 11 (2) In the case of an eligible business that has been in 12 operation in the state for more than five years at the time of 13 application, five hundred thousand dollars. 14 d. An The authority shall not issue an eligible business 15 shall not receive more than five tax credits credit 16 certificates under the program. 17 e. The authority shall issue tax credits under the program 18 on a first-come, first-served basis until the maximum amount of 19 tax credits allocated pursuant to section 15.119, subsection 20 2 , paragraph “h” , is reached. The authority shall maintain a 21 list of successful applicants under the program, so that if the 22 maximum aggregate amount of tax credits is reached in a given 23 fiscal year, eligible businesses that successfully applied 24 but for which tax credits were not issued shall be placed on 25 a wait list in the order the eligible businesses applied and 26 shall be given priority for receiving tax credits in succeeding 27 fiscal years. Placement on a wait list pursuant to this 28 paragraph shall not constitute a promise binding the state. 29 The availability of a tax credit and issuance of a tax credit 30 certificate pursuant to this subsection in a future fiscal year 31 is contingent upon the availability of tax credits in that 32 particular fiscal year. In each fiscal year beginning on or 33 after July 1, 2023, and ending on or before June 30, 2036, the 34 authority may award an amount of tax credits under the program 35 -3- LSB 1164SV (1) 90 ko/jh 3/ 14

S.F. 408 not to exceed the maximum aggregate amount allocated in section 1 15.119, subsection 2, paragraph “h” . 2 Sec. 6. Section 15.319, subsection 1, Code 2023, is amended 3 to read as follows: 4 1. An eligible business that has entered into an agreement 5 pursuant to section 15.318 may claim a tax credit in an amount 6 equal to the product of five cents multiplied by the number 7 of pounds of renewable chemicals produced in this state from 8 biomass feedstock by the eligible business during the calendar 9 year in excess of the eligible business’s pre-eligibility 10 production threshold. However, an eligible business shall 11 not receive a tax credit for the production of a secondarily 12 derived building block chemical if that chemical is also the 13 subject of a credit at the time of production as a first 14 product. The renewable chemical production tax credit shall 15 not be available for any renewable chemical produced before the 16 2017 calendar year or after the 2026 2035 calendar year. 17 Sec. 7. Section 15.320, subsection 1, Code 2023, is amended 18 to read as follows: 19 1. For purposes of this section , “successful tax credit 20 applicant” includes, with respect to each calendar year, an 21 eligible business that was issued a tax credit certificate for 22 production of renewable chemicals during that calendar year , 23 and an eligible business that successfully applied for a tax 24 credit for the production of renewable chemicals during that 25 calendar year, but was not issued a tax credit and was instead 26 placed on a wait list pursuant to section 15.318, subsection 27 3 , paragraph “e” . 28 Sec. 8. Section 15.320, subsection 2, Code 2023, is amended 29 by striking the subsection and inserting in lieu thereof the 30 following: 31 2. By January 31 of each year, the board, in cooperation 32 with the department of revenue, shall submit to the general 33 assembly and to the governor a report describing the activities 34 of the program for the most recent calendar year for which the 35 -4- LSB 1164SV (1) 90 ko/jh 4/ 14

S.F. 408 tax credit application period has ended pursuant to section 1 15.318, subsection 1, paragraph “d” . The report shall, at a 2 minimum, include the following information: 3 a. The aggregate number of pounds, and a list of each type, 4 of renewable chemicals produced in Iowa by all successful 5 tax credit applicants during the calendar year prior to the 6 calendar year for which the successful applicants first applied 7 for a tax credit under the program. 8 b. The aggregate number of pounds, and a list of each type, 9 of renewable chemicals produced in Iowa by all successful tax 10 credit applicants during each calendar year. 11 c. The number of employees located in Iowa of all successful 12 tax credit applicants during the calendar year prior to the 13 calendar year for which the successful applicants first applied 14 for a tax credit under the program. 15 d. The number of employees located in Iowa of all successful 16 tax credit applicants during each calendar year. 17 e. For each eligible business issued a renewable chemical 18 production tax credit during each calendar year: 19 (1) The identity of the eligible business. 20 (2) The amount of the tax credit. 21 (3) The manner in which the eligible business first 22 qualified as an eligible business under section 15.317, 23 subsection 4, whether by organizing, expanding, or locating in 24 the state. 25 f. The total amount of all renewable chemical production tax 26 credits claimed during each calendar year, and the portion of 27 each claim issued as a refund. 28 Sec. 9. Section 15.320, subsection 3, Code 2023, is amended 29 to read as follows: 30 3. To protect the presumption of confidentiality 31 established in section 15.318, subsection 5 , the board shall 32 report all information in an aggregate form to prevent, 33 as much as possible, information being attributable to any 34 particular eligible business, except as provided in subsection 35 -5- LSB 1164SV (1) 90 ko/jh 5/ 14

S.F. 408 2 , paragraph “k” “e” . 1 Sec. 10. Section 15.322, Code 2023, is amended to read as 2 follows: 3 15.322 Future repeal. 4 Section 15.315 , 15.316 , 15.317 , 15.318 , 15.319 , 15.320 , 5 15.321 , and this section , are repealed July 1, 2030 2039 . 6 Sec. 11. Section 15E.43, subsection 2, paragraphs b and c, 7 Code 2023, are amended to read as follows: 8 b. The maximum amount of a tax credit that may be issued 9 per calendar fiscal year to a natural person and the person’s 10 spouse or dependent shall not exceed one hundred thousand 11 dollars combined. For purposes of this paragraph, a tax 12 credit issued to a partnership, limited liability company, S 13 corporation, estate, or trust electing to have income taxed 14 directly to the individual shall be deemed to be issued to 15 the individual owners based upon the pro rata share of the 16 individual’s earnings from the entity. For purposes of this 17 paragraph, “dependent” has the same meaning as provided by the 18 Internal Revenue Code. 19 c. The maximum amount of tax credits that may be issued 20 per calendar fiscal year for equity investments in any one 21 qualifying business shall not exceed five hundred thousand 22 dollars. 23 Sec. 12. Section 15E.44, subsection 1, Code 2023, is amended 24 to read as follows: 25 1. In order for an equity investment to qualify for a 26 tax credit, the business in which the equity investment 27 is made shall, within one hundred twenty sixty days of the 28 date of the first investment, notify the authority of the 29 names, addresses, shares issued, consideration paid for the 30 shares, and the amount of any tax credits, of all shareholders 31 who may initially qualify for the tax credits. The list 32 of shareholders who may qualify for the tax credits shall 33 be amended as new equity investments are sold or as any 34 information on the list shall change. 35 -6- LSB 1164SV (1) 90 ko/jh 6/ 14

S.F. 408 Sec. 13. Section 15E.44, subsection 2, Code 2023, is amended 1 by adding the following new paragraph: 2 NEW PARAGRAPH . 0e. The business is a business engaged 3 primarily in advanced manufacturing, biosciences, finance, 4 insurance, information technology, or educational technology. 5 Sec. 14. Section 15E.44, subsection 4, Code 2023, is amended 6 to read as follows: 7 4. After verifying the eligibility of a qualifying 8 business , and an investor’s investment in the qualifying 9 business , the authority shall issue a tax credit certificate 10 to be included with the equity investor’s tax return. The tax 11 credit certificate shall contain the taxpayer’s name, address, 12 tax identification number, the amount of credit, the name of 13 the qualifying business, and other information required by the 14 department of revenue. The tax credit certificate, unless 15 rescinded by the authority, shall be accepted by the department 16 of revenue as payment for taxes imposed pursuant to chapter 17 422, subchapters II , III , and V , and in chapter 432 , and for 18 the moneys and credits tax imposed in section 533.329 , subject 19 to any conditions or restrictions placed by the authority upon 20 the face of the tax credit certificate and subject to the 21 limitations of section 15E.43 . 22 Sec. 15. Section 15E.52, subsection 1, paragraph c, Code 23 2023, is amended to read as follows: 24 c. “Innovative business” means a business applying novel 25 or original methods to the manufacture of a product or the 26 delivery of a service. “Innovative business” includes but is 27 not limited to a business engaged in the industries of advanced 28 manufacturing, biosciences, and information technology , or 29 educational technology . 30 Sec. 16. Section 15E.52, subsection 5, paragraph a, Code 31 2023, is amended to read as follows: 32 a. To receive a tax credit, a taxpayer must submit an 33 application to the board. The board shall issue certificates 34 under this section on a first-come, first-served basis, which 35 -7- LSB 1164SV (1) 90 ko/jh 7/ 14

S.F. 408 certificates may be redeemed for tax credits. The board shall 1 issue such certificates so that not more than the amount 2 allocated for such tax credits under section 15.119, subsection 3 2 , may be claimed. The board shall not issue a certificate 4 before September 1, 2014. 5 Sec. 17. Section 15E.52, subsection 5, paragraph b, Code 6 2023, is amended by striking the paragraph. 7 Sec. 18. Section 15E.52, subsection 8, Code 2023, is amended 8 to read as follows: 9 8. The board shall not certify an innovation fund after June 10 30, 2023 2028 . 11 Sec. 19. Section 15E.52, subsection 10, paragraph b, Code 12 2023, is amended by striking the paragraph. 13 Sec. 20. Section 422.10B, Code 2023, is amended to read as 14 follows: 15 422.10B Renewable chemical production tax credit. 16 The taxes imposed under this subchapter , less the credits 17 allowed under section 422.12 , shall be reduced by a renewable 18 chemical production tax credit allowed under section 15.319 . 19 This section is repealed January 1, 2033 2041 . 20 Sec. 21. Section 422.33, subsection 22, Code 2023, is 21 amended to read as follows: 22 22. The taxes imposed under this subchapter shall be reduced 23 by a renewable chemical production tax credit allowed under 24 section 15.319 . This subsection is repealed January 1, 2033 25 2041 . 26 Sec. 22. APPLICABILITY. 27 1. The following apply to all applications submitted to the 28 renewable chemical production tax credit program on or after 29 July 1, 2023: 30 a. The section of this division of this Act amending section 31 15.316, subsection 3. 32 b. The section of this division of this Act amending section 33 15.318, subsection 1. 34 c. The section of this division of this Act amending section 35 -8- LSB 1164SV (1) 90 ko/jh 8/ 14

S.F. 408 15.318, subsection 3, paragraphs “a”, “d”, and “e”. 1 2. The following apply to all eligible businesses placed on 2 a wait list pursuant to section 15.318, subsection 3, paragraph 3 “e”, on or before June 30, 2023: 4 a. The portion of the section of this division of this Act 5 amending section 15.318, subsection 3, paragraph “e”. 6 b. The section of this division of this Act amending section 7 15.320, subsection 1. 8 3. The following apply to all applications submitted to 9 the economic development authority’s board for investments in 10 qualifying businesses, administered pursuant to sections 15E.41 11 through 15E.46, on or after July 1, 2023: 12 a. The section of this division of this Act amending section 13 15E.44, subsection 1. 14 b. The section of this division of this Act enacting section 15 15E.44, subsection 2, paragraph “0e”. 16 4. The following applies to all applications submitted 17 to the economic development authority’s board for innovation 18 fund investment tax credits, administered pursuant to section 19 15E.52, on or after July 1, 2023: 20 The section of this division of this Act amending section 21 15E.52, subsection 1, paragraph “c”. 22 5. The following applies to all applications submitted for 23 innovation fund tax credits, administered pursuant to section 24 15E.52, placed on a wait list pursuant to section 15E.52, 25 subsection 5, paragraph “b”: 26 The section of this division of this Act amending section 27 15E.52, subsection 5, paragraph “b”. 28 DIVISION II 29 IOWA WINE, BEER, AND SPIRITS PROMOTION BOARD 30 Sec. 23. Section 15E.116, Code 2023, is amended to read as 31 follows: 32 15E.116 Iowa wine , and beer , and spirits promotion board. 33 An Iowa wine , and beer , and spirits promotion board is 34 created. The board consists of three four members appointed 35 -9- LSB 1164SV (1) 90 ko/jh 9/ 14

S.F. 408 by the director of the economic development authority. Each 1 member shall serve a term of two years on the board. One member 2 shall represent the authority, one member shall represent the 3 Iowa wine makers, and one member shall represent the Iowa beer 4 makers , and one member shall represent Iowa distilleries . The 5 board shall advise the authority on the best means to promote 6 wine , and beer , and spirits made in Iowa. 7 Sec. 24. Section 15E.117, Code 2023, is amended to read as 8 follows: 9 15E.117 Promotion of Iowa wine , and beer , and spirits . 10 1. The economic development authority shall consult with 11 the Iowa wine , and beer , and spirits promotion board on the 12 best means to promote wine , and beer , and spirits made in Iowa. 13 2. The authority has shall have the authority to contract 14 with private persons for the promotion of beer , and wine , and 15 spirits made in Iowa. 16 3. Moneys appropriated to the authority pursuant to 17 sections 123.143 and 123.183 , and moneys transferred to the 18 authority pursuant to section 123.17, subsection 8A, may 19 be used by the authority for the purposes of this section , 20 including administrative expenses incurred under this section . 21 Sec. 25. Section 123.17, Code 2023, is amended by adding the 22 following new subsection: 23 NEW SUBSECTION . 8A. After any transfers provided for 24 in subsections 3, 5, 6, 7, and 8 are made, and before any 25 other transfer to the general fund, the department of commerce 26 shall transfer to the economic development authority from the 27 beer and liquor control fund the lesser of two hundred fifty 28 thousand dollars or one percent of the gross sales of native 29 distilled spirits by all class “A” native distilled spirits 30 license holders made by the division for the purposes of 31 promoting Iowa wine, beer, and spirits. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -10- LSB 1164SV (1) 90 ko/jh 10/ 14

S.F. 408 This bill relates to the economic development authority, 1 including certain tax credit programs, the Iowa wine, beer, and 2 spirits promotion board, and the beer and liquor control fund. 3 The bill is divided into two divisions. 4 DIVISION I —— TAX CREDITS. Under current law, the economic 5 development authority (authority) is required to allocate $2 6 million in tax credits (credits) for investments in qualifying 7 businesses and allocate $8 million in credits for investments 8 in an innovation fund. This division of the bill requires the 9 authority to allocate an aggregate amount of credits that is 10 not more than $10 million for both programs. On or before June 11 30 of each year, the authority shall determine the amount of 12 the aggregate amount of credits that shall be allocated for 13 credits issued for investments in qualifying businesses, and 14 the amount that shall be allocated for credits for investments 15 in an innovation fund. 16 The bill extends the future repeal date for the renewable 17 chemical program from July 1, 2030, to July 1, 2036. The bill 18 also extends the availability of the renewable chemical program 19 credit for any renewable chemical produced prior to the end of 20 calendar year 2035, rather than the end of calendar year 2026. 21 Under the bill, serine, threonine, lysine, and nonfuel 22 ethanol are removed from the definition of “building block 23 chemical” for purposes of the renewable chemical program 24 (chemical program). All completed applications submitted by 25 eligible businesses to the chemical program must be reviewed 26 and scored on a competitive basis by the authority pursuant to 27 rules adopted by the authority, and $1 million is the maximum 28 amount of credit that may be issued to an eligible business in 29 a calendar year. Under current law, if an eligible business 30 has been in operation in the state for five years or less at 31 the time of application, the maximum credit is $1 million. If 32 the business has been in operation more than five years, the 33 maximum is $500,000. The bill eliminates the wait list the 34 authority must currently maintain for the chemical program. 35 -11- LSB 1164SV (1) 90 ko/jh 11/ 14

S.F. 408 Under the bill, the authority may award an amount of credits 1 under the chemical program not to exceed the maximum aggregate 2 amount allocated in Code section 15.119(2)(h) for each fiscal 3 year beginning on or after July 1, 2023, and ending on or 4 before June 30, 2036. Information regarding the chemical 5 program that must be submitted to the general assembly and 6 to the governor by January 31 each year is detailed in the 7 bill and differs from the requirements under current law. The 8 future repeal of the chemical program is extended from July 1, 9 2030, to July 1, 2039. The bill extends the future repeal of 10 the chemical program credit allowed under Code sections 422.10B 11 and 422.33 from January 1, 2033, to January 1, 2041. 12 For investments in qualifying businesses, the bill changes 13 the maximum amount of a credit that may be issued to a natural 14 person and the person’s spouse or dependent from a calendar 15 year basis to a fiscal year basis. The maximum amount of 16 credits that may be issued for equity investments in any one 17 qualifying business also changes from a calendar year to a 18 fiscal year. In order for an equity investment to qualify 19 for a credit, the business in which the equity investment is 20 made, within 60 days of the date of the first investment, must 21 provide the authority with information as detailed in the 22 bill. Under current law, the business must do so within 120 23 days. In order to be a qualifying business in which an equity 24 investment may be made and qualify for a credit, the bill adds 25 an additional requirement that the business must be a business 26 engaged primarily in advanced manufacturing, biosciences, 27 finance, insurance, information technology, or educational 28 technology. The bill requires the authority to verify the 29 eligibility of a qualifying business and an investor’s 30 investment in the qualifying business prior to issuing a credit 31 certificate to the investor. 32 For purposes of innovation fund investment credits, the 33 bill adds “educational technology” to the definition of 34 “innovative business”. The bill eliminates the wait list 35 -12- LSB 1164SV (1) 90 ko/jh 12/ 14

S.F. 408 for the innovation fund tax credit and extends the time the 1 authority’s board may certify an innovation fund from June 30, 2 2023, to June 30, 2028. 3 The bill makes conforming changes to Code sections 4 15.318(2)(c)-(d), and 15.354(4)(a)-(f). 5 The sections of this division of the bill amending Code 6 sections 15.316(3), 15.318(1), 15.318(3)(a), 15.318(3)(d), 7 and 15.318(3)(e) apply to all applications submitted to the 8 chemical program on or after July 1, 2023. The sections of the 9 division of the bill amending Code sections 15.318(3)(e) and 10 15.320(1) apply to all eligible businesses placed on a wait 11 list for the program pursuant to Code section 15.318(3)(e) on 12 or before June 30, 2023. 13 The sections of this division of the bill amending Code 14 section 15E.44(1) and enacting Code section 15E.44(2)(0e) apply 15 to all applications submitted to the authority’s board for 16 investments in qualifying businesses, administered pursuant to 17 Code sections 15E.41 through 15E.46, on or after July 1, 2023. 18 The section of this division of the bill amending Code 19 section 15E.52(1)(c) applies to all applications submitted 20 to the authority’s board for innovation fund investment tax 21 credits, administered pursuant to Code section 15E.52, on or 22 after July 1, 2023. The section of this division of the bill 23 amending Code section 15E.52(5)(b) applies to all applications 24 submitted for innovation fund tax credits, administered 25 pursuant to Code section 15E.52, placed on a wait list pursuant 26 to Code section 15E.52(5)(b). 27 DIVISION II —— IOWA WINE, BEER, AND SPIRITS PROMOTION 28 BOARD. This division of the bill modifies the Iowa wine and 29 beer promotion board (promotion board) by adding spirits, and 30 adds a fourth member to the promotion board to represent Iowa 31 distilleries. The current promotion board has three members. 32 In addition to advising the authority on the promotion of 33 Iowa-made beer and wine, the bill requires the promotion board 34 to advise the authority on the promotion of spirits made in 35 -13- LSB 1164SV (1) 90 ko/jh 13/ 14

S.F. 408 Iowa. The authority must consult with the promotion board on 1 the best means to promote spirits made in Iowa, and permits the 2 authority to contract with private persons for the promotion 3 of spirits made in Iowa. 4 The bill requires the department of commerce, after certain 5 other transfers required by current law from the beer and 6 liquor control fund are made, to transfer to the authority the 7 lesser of $250,000 or 1 percent of the gross sales of native 8 distilled spirits by all class “A” native distilled spirits 9 license holders made by the alcoholic beverages division. The 10 transferred moneys may be used by the authority to promote 11 wine, beer, and spirits made in Iowa, and for administrative 12 expenses related to such promotion. 13 -14- LSB 1164SV (1) 90 ko/jh 14/ 14