HSB 274 (LSB 2290YC (2) 91)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act relating to tax credits awarded by the economic development authority for specific capital contributions made to certified rural business growth funds for investment in qualified businesses.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  15.510  Short title.
   This part shall be known and may be cited as the “Iowa Rural Development Tax Credit Program”.
    Sec. 2.  NEW SECTION.  15.511  Definitions.
   As used in this part, unless the context otherwise requires:
   1.  “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with another person. A person is controlled by another person if the controlling person holds, directly or indirectly, the majority voting or ownership interest in the controlled person or has control, by contract or by law, over the day-to-day operations of the controlled person.
   2.  “Authority” means the economic development authority created in section 15.105.
   3.  “Closing date” means the date on which a rural business growth fund completes collection of all contributions and investments and submits all required documentation to the authority pursuant to section 15.512, subsection 7.
   4.  “Credit-eligible capital contribution” means an investment of cash by a person in a rural business growth fund that is eligible for a tax credit certificate issued by the authority pursuant to section 15.513, subsection 1. The cash investment shall purchase either of the following: 
   a.  An equity interest in the growth fund.
   b.  A debt instrument, at par value or premium, issued by the growth fund that has a maturity date at least six years after the growth fund’s closing date.
   5.  “Depository institution” means the same as defined in section 524.1802. 
   6.  “Eligible investment authority” means the amount stated on the certification the authority issues pursuant to section 15.512, subsection 7, paragraph “a”. At least sixty percent of a growth fund’s eligible investment authority shall be comprised of credit-eligible capital contributions.
   7.  “Employee” means a natural person who is employed in this state by a qualified business and who is either salaried, works a minimum of thirty-five hours per week, or another period of time generally accepted by custom, industry, or practice as full-time employment.
   8.  “Equity holder” means a person that makes an equity investment in a rural business growth fund.
   9.  “Growth investment” means any of the following:
   a.  Capital or equity investments in a qualified business.
   b.  A loan to a qualified business if all of the following conditions apply:
   (1)  The loan has a stated maturity of at least two years.
   (2)  The principal payments have been deferred for at least two years.
   (3)  The pro forma financial statements of the qualified business result in a leverage ratio of greater than three to one when comparing debt to earnings before interest, taxes, depreciation, and amortization.
   c.  A senior secured loan if the senior secured loan is secured first by a mortgage on real estate with a loan to value ratio of less than eighty percent, and the qualified business has a credit refusal letter or similar correspondence from a depository institution located in this state.
   10.  “Jobs created” means the number of new employees at a qualified business, after an initial growth investment, at the end of each subsequent calendar year. This number is calculated annually by adding together the number of employees at the qualified business on the last day of each calendar month and dividing by twelve, then subtracting the number of employees at the qualified business on the date the day before the date of the initial growth investment. If the resulting total is less than zero, the jobs created is equal to zero.
   11.  “Jobs retained” means the number of employees at a qualified business the day before the date of an initial growth investment that the qualified business’s chief executive officer or similar officer certifies as being positions located in this state that would have been eliminated but for the initial growth investment.
   12.  “Located in” means the place or places at which a business’s operations are located and where at least sixty percent of the business’s employees work, or where employees that are paid at least sixty percent of the business’s payroll work.
   13.  “Program” means the Iowa rural development tax credit program administered under this part.
   14.  “Qualified business” means any business within this state that has fewer than two hundred fifty employees, including ostensible subcontractors pursuant to 13 C.F.R. §121.103(h)(4), and is not located in whole or in part in one or more of the twelve most populous counties in the state, as determined by the most recent decennial census released by the United States bureau of census.
   15.  “Revenue” means the total state and local income produced by a rural business growth fund’s economic activity. 
   16.  “Rural business growth fund” or “growth fund” means a person, or an affiliate of a person, certified by the authority pursuant to section 15.512, subsection 7, paragraph “a”.
   17.  “Within this state” means in the state of Iowa, or an out-of-state business that has agreed to use a proposed growth investment to become a qualified business within one hundred eighty days of receiving the growth investment.
    Sec. 3.  NEW SECTION.  15.512  Application and agreement.
   1.  The authority shall begin accepting program applications on January 7, 2026. An application is deemed received based on the date and time stamp that shall be generated by the authority upon receipt of the application. Applications received by the authority on the same day shall be deemed to have been received simultaneously.
   2.  A person seeking certification as a rural business growth fund shall apply to the authority in the form and manner prescribed by the authority. The application must include all of the following:
   a.  The eligible investment authority sought by the applicant.
   b.  A copy of the applicant’s, or an affiliate of the applicant’s, license as a rural business investment company as defined under 7 U.S.C. §2009cc(14), or license as a small business investment company under 15 U.S.C. §681.
   c.  Documentation as required by the authority to establish that at least one principal of the applicant has been an officer or an employee of the rural business investment company, the small business investment company, or an affiliate thereof, for a minimum of four years prior to the date of application.
   d.  A revenue impact assessment for the applicant’s proposed growth investments as determined by an econometric analysis conducted by a nationally recognized third-party independent econometric firm. The revenue impact assessment must provide an analysis of the applicant’s proposed growth investments over the ten consecutive years following the date the applicant’s application is submitted to the authority, and must demonstrate that there will be a positive revenue impact on this state that exceeds the cumulative amount of tax credits, that if the application is approved, may be issued by the authority to the rural business growth fund’s investors.
   e.  The number of jobs created and the number of jobs retained assumed in the revenue impact assessment required by paragraph “d”.
   f.  A signed affidavit from each investor that identifies the investor and the amount of the credit-eligible capital contribution that the investor has committed to the applicant’s proposed growth fund. 
   g.  A nonrefundable application fee of five thousand dollars. All application fees submitted to the authority pursuant to this paragraph shall be used by the authority to administer this part.
   3.  The authority shall review and make a determination to approve or deny each application within the time frame adopted by rule by the authority. The authority shall review applications on a first-come, first-served basis as determined pursuant to subsection 1.
   4.  The authority shall not approve more than forty-five million dollars in eligible investment authority and not more than twenty-seven million dollars in credit-eligible capital contributions under the program. If approved applications that are simultaneously received would collectively exceed the maximum limit on eligible investment authority or the maximum on credit-eligible capital contributions, the authority shall proportionally reduce the growth fund’s eligible investment authority and credit-eligible capital contributions for each of the simultaneous applications as necessary to comply with the maximum limits.
   5.  The authority shall reject an application for any of the following reasons:
   a.  The applicant failed to comply with any of the requirements pursuant to subsection 2.
   b.  The authority has already approved the maximum eligible investment authority or the maximum credit-eligible capital contributions pursuant to subsection 4.
   6.  a.  If the authority rejects an application, the authority shall send a notice of rejection to the applicant and provide a reason for the rejection. 
   b.  If the authority has rejected an application on any grounds other than subsection 5, paragraph “b”, the applicant may provide additional information to the authority to cure the defects in the application. All additional information must be received by the authority within fifteen business days from the date the authority sent the notice of rejection to the applicant. The authority shall review and reconsider, within the time frame adopted by rule by the authority, any application for which additional information is provided within the fifteen business days. If an application is approved by the authority after review and reconsideration, the application shall be considered complete as of its original date of submission. 
   c.  If an applicant does not submit additional information within fifteen business days from the date the authority sent the applicant the notice of rejection, the applicant may submit a new application at any time pursuant to subsection 2 and the application shall be reviewed by the authority pursuant to subsection 3.
   7.  a.  If the authority approves an application, the authority shall send a notice to the applicant certifying all of the following:
   (1)  The applicant as a rural business growth fund.
   (2)  The growth fund’s eligible investment authority and required credit-eligible contributions.
   (3)  The required number of jobs created and the required number of jobs retained based on the number submitted in the applicant’s application, prorated if the growth fund’s eligible investment authority is reduced pursuant to subsection 4.
   b.  Within forty-five calendar days of the date the authority sent the notice of certification pursuant to paragraph “a”, the rural business growth fund shall comply with all of the following requirements:
   (1)  Collect all credit-eligible capital contributions from each investor whose affidavit was included in the growth fund’s application. If the growth fund’s requested eligible investment authority has been proportionally reduced pursuant to subsection 4, each investor’s required credit-eligible capital contribution shall be reduced by the same proportion.
   (2)  Collect one or more equity investments contributed directly or indirectly by affiliates of the growth fund, including employees and principals of such affiliates, that must equal at least ten percent of the growth fund’s eligible investment authority.
   (3)  Collect one or more investments of cash that, when added to the contributions collected under subparagraphs (1) and (2), equal the growth fund’s total eligible investment authority.
   c.  Within sixty-five calendar days of the date the authority sent the notice of certification pursuant to paragraph “a”, the rural business growth fund shall comply with all of the following requirements:
   (1)  Submit documentation to the authority sufficient to prove to the satisfaction of the authority that the growth fund has collected amounts described in paragraph “b”, subparagraphs (1), (2), and (3).
   (2)  Submit documentation to the authority that identifies all affiliates of an investor described in paragraph “b”, subparagraph (1), that may be eligible to claim a tax credit issued by the authority pursuant to section 15.513, subsection 1.
   8.  If a growth fund fails to comply with subsection 7, paragraph “b” or “c”, the growth fund’s certification shall lapse. Any eligible investment authority and credit-eligible capital contributions that lapse pursuant to this subsection shall not count toward the maximum limits on eligible investment authority and credit-eligible capital contributions pursuant to subsection 4. If a growth fund’s eligible investment authority lapses pursuant to this subsection, the authority shall first award the lapsed eligible investment authority pro rata to each rural business growth fund that was awarded less than the eligible investment authority that the rural business growth fund sought in the growth fund’s application. A rural business growth fund that is awarded lapsed eligible investment authority must comply with the requirements of subsection 7, paragraph “b”, as related to the additional eligible investment authority. The authority may award any remaining lapsed eligible investment authority to new applicants until the maximum limits on eligible investment authority and credit-eligible capital contributions pursuant to subsection 4 are met.
   9.  After a growth fund’s successful submission to the authority of the required documentation pursuant to subsection 7, paragraph “c”, subparagraphs (1) and (2), the growth fund shall enter into an agreement with the authority that specifies the requirements that must be met for successful completion of the program. At a minimum, the agreement shall contain provisions addressing all of the following:
   a.  The legal name of the growth fund.
   b.  The growth fund’s closing date.
   c.  The growth fund’s eligible investment authority as certified by the authority. 
   d.  Each investor of the growth fund and each investor’s credit-eligible capital contribution.
   e.  The minimum number of jobs that must be created and the minimum number of jobs that must be retained as a result of the growth fund’s growth investments to avoid paying state reimbursement pursuant to section 15.517.
   f.  Revocation and recapture of tax credits pursuant to section 15.514.
   g.  Any terms deemed necessary by the authority to effect compliance with the program requirements pursuant to this part.
    Sec. 4.  NEW SECTION.  15.513  Tax credits.
   1.  After an agreement is executed pursuant to section 15.512, subsection 9, the authority shall issue a tax credit certificate to each investor whose affidavit was included in the growth fund’s application and whose credit-eligible capital contribution was collected pursuant to section 15.512, subsection 7, paragraph “b”, subparagraph (1). The tax credit certificate shall specify the amount of the tax credit allocated to that investor as a result of the investor’s credit-eligible capital contribution. The tax credit allocated to any one investor shall be equal to the investor’s credit-eligible capital contribution to the growth fund. The tax credit certificate shall contain the taxpayer’s name, address, tax identification number, the name of the rural business growth fund associated with the tax credit, and any other information required by the department of revenue. The tax credit may be claimed against the taxes imposed in chapter 422, subchapter V, the insurance premium and insurance retaliatory premium tax imposed in chapter 432, or the moneys and credits tax imposed in section 533.329.
   2.  One-third of the amount of a tax credit issued to an investor pursuant to subsection 1 may be claimed in the tax year of the third, fourth, and fifth anniversaries of the growth fund’s closing date, exclusive of the amount of tax credit carried forward pursuant to subsection 4.
   3.  a.  A tax credit issued under this part is not refundable and shall not be sold, transferred, or allocated by the investor to any person other than an affiliate of the investor that was an affiliate at the time of the growth fund’s submission of the investor’s affidavit pursuant to section 15.512, subsection 2, paragraph “f”.
   b.  Within ninety calendar days of the sale, transfer, or allocation of a tax credit, the affiliate shall submit the tax credit certificate to the department of revenue along with a statement containing the affiliate’s name, tax identification number, address, and any other information required by the department of revenue.
   c.  Within thirty calendar days of receiving the tax credit certificate and the affiliate’s statement, the department of revenue shall issue the affiliate a replacement tax credit certificate. The replacement tax credit certificate must contain all of the information required for the original tax credit certificate and must have the same expiration date that appeared on the original tax credit certificate. 
   4.  To claim a tax credit under this section, a taxpayer shall submit the tax credit certificate with the taxpayer’s tax return for each taxable year in which the tax credit is claimed. Any tax credit in excess of the taxpayer’s tax liability for the tax year may be carried forward to the taxpayer’s tax liability for subsequent years until the tax credit is depleted.
    Sec. 5.  NEW SECTION.  15.514  Revocation and recapture of tax credits.
   1.  The authority shall recapture any tax credits used by a taxpayer and shall revoke any tax credits issued pursuant to section 15.513, subsection 1, if, before a rural business growth fund exits the program pursuant to section 15.516, any of the following occur:
   a.  The growth fund cannot provide documentation to the authority to substantiate to the satisfaction of the authority all of the following:
   (1)  That the growth fund, within thirty months after the growth fund’s closing date, has invested one hundred percent of the growth fund’s eligible investment authority in growth investments.
   (2)  That the growth fund, after investing one hundred percent of the growth fund’s eligible investment authority in growth investments within thirty months after the growth fund’s closing date, has maintained growth investments equal to one hundred percent of the growth fund’s eligible investment authority at all times up to the fifth anniversary after the growth fund’s closing date. For purposes of this subparagraph, a growth investment is maintained even if it is sold or repaid, as long as the growth fund reinvests an amount equal to the growth investment returned or recovered from the original growth investment, exclusive of any profits realized, in other growth investments in this state within the twelve consecutive months immediately after the date of the return or recovery of such growth investment. Amounts received periodically by a growth fund are deemed continuously invested in growth investments if the amounts are reinvested by the growth fund in one or more qualified businesses by the end of the following calendar year.
   b.  The growth fund makes a growth investment in a qualified business that directly, or indirectly through an affiliate, owns, has the right to acquire an ownership interest in, makes a loan to, or makes an investment in, the growth fund, an affiliate of the growth fund, or an investor in the growth fund. This paragraph shall not apply to investments in publicly traded securities by a qualified business, or to an owner or an affiliate of the qualified business. For purposes of this paragraph, a growth fund shall not be considered an affiliate of a qualified business solely because of the growth fund’s growth investment in the qualified business.
   c.  The growth fund, before exiting the program pursuant to section 15.516, makes a distribution or payment that results in the growth fund having less than one hundred percent of its initial investment authority invested in growth investments in this state, available for growth investments, or held in cash and marketable securities.
   2.  The maximum amount of a growth investment in a qualified business, including any amounts invested in affiliates of the qualified business, that a growth fund may count toward the growth fund’s satisfaction of the requirements pursuant to subsection 1, paragraph “a”, is the greater of twenty percent of the growth fund’s eligible investment authority and two million five hundred thousand dollars, excluding any amounts reinvested in a qualified business. 
   3.  Before revoking or recapturing a tax credit, the authority shall provide notice to the growth fund of the reason for the pending revocation or recapture. The growth fund shall have ninety calendar days after the date the authority sends the notice to address to the satisfaction of the authority any issues identified in the notice. Failure of the growth fund to satisfactorily address any issues in the notice shall result in revocation or recapture of the tax credit.
   4.  The authority shall not revoke or recapture a tax credit for any action of a growth fund that occurs after the growth fund has exited the program pursuant to section 15.516. This subsection shall not prohibit the authority from revoking or recapturing a tax credit due to an action of a growth fund pursuant to subsection 1 that occurs before the date the growth fund exits the program, even if the growth fund’s action is discovered after the date the growth fund exits the program.
    Sec. 6.  NEW SECTION.  15.515  Annual report.
   On or before March 31, unless a growth fund has exited the program pursuant to section 15.516, each growth fund shall submit an annual report to the authority in the form and manner the authority prescribes that covers the preceding calendar year. The report must include each of the growth fund’s growth investments and must contain all of the following information: 
   1.  Financial statements that provide evidence of each growth investment.
   2.  Evidence that the growth fund is in compliance with applicable investment requirements pursuant to section 15.514, subsection 1, paragraph “a”.
   3.  The name, location, and industry for each qualified business that received a growth investment, and evidence that the business met the requirements to be a qualified business at the time the growth investment was made.
   4.  The number of employees at each qualified business on the date of the growth fund’s initial growth investment in the qualified business.
   5.  The number of jobs created at each qualified business and the average annual salary for the jobs created.
   6.  The number of jobs retained at each qualified business and the average annual salary for the jobs retained. The number of jobs retained at a qualified business may not exceed the number of jobs retained at the same qualified business on the first annual report submitted by the growth fund.
   7.  Any other information the authority requires.
    Sec. 7.  NEW SECTION.  15.516  Exiting the program.
   1.  On or after the fifth anniversary of a rural business growth fund’s closing date, in the form and manner the authority prescribes, the growth fund may apply to the authority to exit the program. The growth fund’s application must include the state reimbursement calculation pursuant to section 15.517.
   2.  The growth fund shall be eligible to exit the program if a tax credit associated with the growth fund has not been revoked or recaptured pursuant to section 15.514.
   3.  Within the time frame adopted by rule by the authority, the authority shall send notice to the growth fund of the authority’s determination regarding the growth fund’s application and confirmation of the state reimbursement the growth fund owes pursuant to section 15.517. If the authority denies the growth fund’s application, the notice shall include the reasons for the denial. If the authority approves the growth fund’s application, the growth fund is deemed to have exited the program on the date the authority sends notice to the growth fund. If the growth fund owes the state reimbursement, the growth fund shall be prohibited from making any distributions to any equity holders of the fund until the growth fund has remitted the state reimbursement amount to the authority. All state reimbursement amounts remitted to the authority shall be deposited in the general fund of the state.
    Sec. 8.  NEW SECTION.  15.517  State reimbursement calculation.
   1.  A state reimbursement shall be calculated any time a rural business growth fund exits the program or any time a rural business growth fund proposes to make a distribution to the growth fund’s equity holders. The state reimbursement shall equal the proposed distribution multiplied by one minus a fraction that is composed of the following:
   a.  The numerator shall be the aggregate number of jobs created plus the number of jobs retained as reported pursuant to section 15.515, subsections 5 and 6.
   b.  The denominator shall be the number of jobs created plus the number of jobs retained as stated in the certification pursuant to section 15.512, subsection 7, paragraph “a”, subparagraph (3). 
   2.  If the fraction is greater than one hundred percent, the growth fund shall not owe state reimbursement.
   3.  The authority may adopt by rule additional options for the state reimbursement calculation that are equivalent to job creation and job retention to measure a growth fund’s growth investments impact on economic activity at a qualified business. 
    Sec. 9.  NEW SECTION.  15.518  Remedies.
   The remedies for a breach or default of any of the terms of this part by a rural business growth fund shall be revocation or recapture of tax credits pursuant to section 15.514 and the state reimbursement pursuant to section 15.517.
    Sec. 10.  NEW SECTION.  15.519  Rules.
   The authority, in conjunction with the department of revenue, shall adopt rules pursuant to chapter 17A as necessary for the implementation and administration of this part.
    Sec. 11.  Section 422.60, Code 2025, is amended by adding the following new subsection:
   NEW SUBSECTION.  16.  The taxes imposed under this subchapter shall be reduced by a rural development tax credit allowed under section 15.513.
    Sec. 12.  NEW SECTION.  432.12P  Rural development tax credits.
   The taxes imposed under this chapter shall be reduced by a rural development tax credit allowed under section 15.513 for a credit-eligible capital contribution to a rural business growth fund.
    Sec. 13.  Section 533.329, subsection 2, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  n.  The moneys and credits tax imposed under this section shall be reduced by a rural development tax credit under section 15.513.
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 tax credits awarded by the economic development authority for specific capital contributions made to certified rural business growth funds for investment in qualified businesses. The bill defines “qualified business” to mean any business within this state that has fewer than 250 employees, including certain subcontractors, and is not located in whole or in part in one or more of the 12 most populous counties in the state.
   The bill directs the economic development authority (authority) to begin accepting Iowa rural development tax credit program (program) applications beginning January 7, 2026. 
   The bill provides that a person seeking certification as a rural business growth fund (growth fund) must apply to the authority and that the application must include the eligible investment authority sought by the applicant, a copy of the applicant’s license as a rural business investment company under 7 U.S.C. §2009cc(14) or as a small business investment company under 15 U.S.C. §681, documentation that establishes that at least one principal of the applicant has been an officer or an employee of the rural business investment company, the small business investment company or an affiliate, for a minimum of four years prior to the date of application, a revenue impact assessment for the applicant’s proposed growth investments as determined by an econometric analysis conducted by a third-party independent econometric firm, the number of jobs created and the number of jobs retained assumed in the revenue impact assessment, a signed affidavit from each investor that states the amount of the credit-eligible capital contribution that the investor has committed to the applicant’s proposed growth fund, and a nonrefundable $5,000 application fee. The bill defines “growth investment” to mean any of the following: capital or equity investments in a qualified business, a loan to a qualified business subject to certain conditions, or a senior secured loan under certain conditions. The bill defines “credit-eligible capital contribution” as an investment of cash by a person in a growth fund that is eligible for a tax credit issued by the authority. The investment must be used to purchase either an equity interest in the growth fund or a debt instrument, at par value or premium, issued by the growth fund that has a maturity date at least six years after the growth fund’s closing date. “Eligible investment authority” is defined in the bill as the amount of investment authority that the authority certifies for a specific growth fund. 
   The bill requires the authority to review each application on a first-come, first-served basis and to make a determination to approve or deny each application within the time frame adopted by rule by the authority. The authority shall not approve more than $45 million in eligible investment authority and not more than $27 million in credit-eligible capital contributions.
   The authority must reject an application if the applicant fails to submit any of the required information, or if the authority has already approved the maximum eligible investment authority or the maximum credit-eligible capital contributions. If the authority rejects an application, the authority must send a notice of rejection to the applicant, and provide a reason for the rejection. If an application has been rejected because the applicant failed to submit all of the required information, the applicant has 15 days to provide additional information to cure any defects in the application. The authority shall review and reconsider, within the time frame adopted by rule by the authority, any application for which additional information is provided within the 15 business days. If an application is approved by the authority after review and reconsideration, the application shall be considered complete as of its original date of submission. 
   If the authority approves an application, the authority must send a notice to the applicant certifying the applicant as a rural business growth fund, the growth fund’s eligible investment authority, and the required number of jobs created and the required number of jobs retained based on the number submitted in the applicant’s application. Within 45 days of the date the authority sent the notice of certification, the growth fund is required to collect all credit-eligible capital contributions from each investor whose affidavit was included in the growth fund’s application, collect one or more equity investments contributed directly or indirectly by affiliates of the growth fund, including employees and principals of such affiliates, that equal at least 10 percent of the growth fund’s eligible investment authority, and collect one or more investments of cash that when added to the credit-eligible capital contributions and the equity investments equal the growth fund’s eligible investment authority. Within 65 days of the date the authority sent the notice of certification, the growth fund must submit documentation to the authority to prove that the appropriate amounts have been collected by the growth fund, and documentation that identifies all affiliates of the investor that may be eligible to claim a tax credit issued by the authority. If the growth fund fails to comply with the collection and documentation requirements, all eligible investment authority and credit-eligible capital contributions lapse. Eligible investment authority and credit-eligible capital contributions that lapse do not count toward the maximum limits on eligible investment authority and credit-eligible capital contributions and may be awarded by the authority as outlined in the bill.
   If a growth fund successfully complies with the collection and documentation requirements, the growth fund must enter into an agreement with the authority that specifies the requirements that must be met for successful completion of the program. The agreement must contain, at a minimum, the legal name of the growth fund, the growth fund’s closing date, the growth fund’s eligible investment authority as certified by the authority, each investor of the growth fund and each investor’s credit-eligible capital contribution, the minimum number of jobs that must be created and the minimum number of jobs that must be retained as a result of the growth fund’s growth investments to avoid paying state reimbursement, and a provision related to revocation and recapture of tax credits if the growth fund fails to meet the applicable program investment requirements. 
   After the agreement is executed, the authority must issue a tax credit certificate to each investor whose affidavit was included in the growth fund’s application and whose credit-eligible capital contribution was collected by the growth fund. The certificate must specify the amount of tax credit allocated to that investor and the amount of the tax credit the eligible taxpayer may claim against the franchise tax imposed in Code section 422.60, the insurance premium tax and insurance retaliatory premium tax imposed in Code chapter 432, or the moneys and credits tax imposed in Code section 533.329. The tax credit allocated to any one investor is equal to the investor’s credit-eligible capital contribution to the growth fund. An investor may use one-third percent of the tax credit in each taxable year beginning in the calendar year following the third, fourth, and fifth anniversaries of the growth fund’s closing date. Any tax credit in excess of the taxpayer’s tax liability for a tax year may be carried forward to the taxpayer’s tax liability for subsequent tax years until the tax credit is depleted.
   The tax credits are not refundable and cannot be sold, transferred, or allocated by the investor to any person other than an affiliate of the investor. The affiliate must submit the tax credit certificate within 90 days to the department of revenue (department) along with a statement containing the affiliate’s name, tax identification number, address, and any other information required by the department. The department must issue the affiliate a replacement tax credit certificate with the same expiration date that appeared on the original tax credit certificate.
   The authority shall revoke or recapture a tax credit if, before a growth fund exits the program, the growth fund cannot provide documentation to the authority to substantiate that the growth fund, within 30 months after the growth fund’s closing date, has invested 100 percent of the growth fund’s investment authority in growth investments; that the growth fund, after investing 100 percent of the growth fund’s investment authority in growth investments within 30 months after the growth fund’s closing date, has maintained growth investments equal to 100 percent of its investment authority at all times up to the fifth anniversary after the growth fund’s closing date. The bill specifies that a growth investment is maintained even if it is sold or repaid, as long as the growth fund reinvests an amount equal to the growth investment returned or recovered from the original investment, exclusive of any profits realized, in other growth investments in this state within the 12 consecutive months immediately after the date of the return or recovery of such growth investment. The bill also specifies that amounts received periodically by a growth fund are deemed continuously invested in growth investments if the amounts are reinvested by the growth fund in one or more qualified businesses by the end of the following calendar year.
   The authority must also revoke or recapture a tax credit if, before a growth fund exits the program, the growth fund makes a growth investment in a qualified business that directly, or indirectly through an affiliate, owns, has the right to acquire an ownership interest in, makes a loan to, or makes an investment in, the growth fund, an affiliate of the growth fund, or an investor in the growth fund. This does not apply to investments in publicly traded securities by a qualified business, or to an owner or an affiliate of the qualified business. Further, a growth fund is not considered an affiliate of a qualified business solely because of its growth investment in the qualified business. The authority is also required to revoke or recapture a tax credit if the growth fund, before it exits the program, makes a distribution or payment that results in the growth fund having less than 100 percent of its initial investment authority invested in growth investments in this state, available for growth investments, or held in cash and marketable securities. A growth fund may count the greater of 20 percent of the growth fund’s eligible investment authority and $5 million, excluding any amounts reinvested in a qualified business, toward the growth fund’s satisfaction of the investment requirements. Before the authority revokes or recaptures a tax credit, the authority must provide notice to the growth fund of the reason for the pending revocation or recapture and the growth fund has 90 days to address any issues identified in the notice. Failure of the growth fund to address any of the issues in the notice results in revocation or recapture of the tax credit.
   The bill prohibits the authority from revoking or recapturing a tax credit for any action of a growth fund that occurs after the growth fund has exited the program. The bill does not, however, prohibit the authority from revoking a tax credit due to an action of a growth fund that occurs before the growth fund exits the program, even if the growth fund’s action is discovered after the growth fund exits the program.
   On or after the fifth anniversary of a growth fund’s closing date, the growth fund may apply to the authority to exit the program. A growth fund is eligible to exit the program if a tax credit associated with the growth fund has not been revoked or recaptured. The growth fund’s application must include the state reimbursement calculation. The state reimbursement owed by a rural business growth fund to the authority is calculated as detailed in the bill. Within the time frame adopted by rule by the authority, the authority shall send notice to the growth fund of the authority’s determination regarding the application and confirmation of the state reimbursement owed by the growth fund. If the authority denies the application, the notice must include the reasons for the denial. If the authority approves the application, the growth fund is deemed to have exited the program on the date the notice is sent by the authority to the growth fund. If the growth fund owes the state reimbursement, the growth fund is prohibited from making any distributions to equity holders of the fund until the state reimbursement amount has been remitted to the authority. “Equity holder” is defined in the bill as a person that makes a credit-eligible capital contribution, an equity investment, or a cash investment in a rural business growth fund. The bill specifies that all state reimbursement amounts remitted to the authority shall be deposited in the general fund of the state. 
   Unless a growth fund has exited the program, the growth fund must submit an annual report to the authority that covers the preceding calendar year. The report must include documentation for each of the growth fund’s growth investments and must include financial statements that provide evidence of each growth investment, evidence that the growth fund is in compliance with applicable investment requirements; the name, location, and industry for each qualified business that received a growth investment; evidence that each business met the requirements to be a qualified business at the time the growth investment was made; the number of employees at each qualified business on the date of the growth fund’s initial growth investment; the number of jobs created at each qualified business; the average annual salary for the jobs created; the number of jobs retained at each qualified business; and the average annual salary for the jobs retained.
   The bill provides that the only remedies for a breach or default of any of the terms of the program by a growth fund are revocation or recapture of tax credits and the state reimbursement as detailed in the bill.
   The bill requires the authority, in conjunction with the department, to adopt rules as necessary to implement and administer the program.