Senate File 657 - Introduced SENATE FILE 657 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 1205) A BILL FOR An Act relating to matters under the purview of the Iowa 1 economic development authority, including tax credit limits, 2 targeted jobs tax credits, and the major economic growth 3 attraction program; creation of the business incentives 4 for growth program, the seed investor tax credit program, 5 the Iowa film production incentive program, the research 6 and development tax credit program, and the sustainable 7 aviation fuel production tax credit program; elimination of 8 the high quality jobs program, the investments in qualifying 9 businesses tax credit, employer child care tax credits, 10 assistive device tax credits, endow Iowa tax credits, and 11 research activities tax credits; and including effective 12 date provisions and criminal penalties. 13 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 14 TLSB 1186SV (1) 91 nls/ko

S.F. 657 DIVISION I 1 ECONOMIC DEVELOPMENT PROGRAMS —— TAX CREDIT LIMITS 2 Section 1. Section 15.119, Code 2025, is amended to read as 3 follows: 4 15.119 Aggregate tax credit limit for certain economic 5 business development programs. 6 1. a. Notwithstanding any provision to the contrary in any 7 of the business development programs listed in subsection 2 , 8 the authority, except as provided in paragraph “b” , shall not 9 authorize for any one fiscal year an amount of tax credits for 10 the programs specified in subsection 2 that is in excess of one 11 hundred seventy ten million dollars. 12 b. (1) The authority may authorize an amount of tax credits 13 during a fiscal year that is in excess of the amount specified 14 in paragraph “a” , but the amount of such excess shall not exceed 15 twenty percent of the amount specified in paragraph “a” , and 16 shall be counted against the total amount of tax credits that 17 may be authorized for the next fiscal year. 18 (2) Any amount of tax credits authorized and awarded during 19 a fiscal year for a program specified in subsection 2 which are 20 irrevocably declined by the awarded business on or before June 21 30 of the next fiscal year may be reallocated, authorized, and 22 awarded during the fiscal year in which the declination occurs. 23 Tax credits authorized pursuant to this subparagraph shall not 24 be considered for purposes of subparagraph (1). 25 2. The authority, with the approval of the board, shall 26 adopt by rule a procedure for allocating the aggregate tax 27 credit limit established in this section among the following 28 The aggregate tax credit limit specified in subsection 1 shall 29 be allocated to business development programs as follows : 30 a. (1) The high quality jobs program administered pursuant 31 to subchapter II, part 13 . 32 (2) In allocating tax credits pursuant to this subsection 33 for the fiscal year beginning July 1, 2022, and for each fiscal 34 year thereafter, the authority shall not allocate more than 35 -1- LSB 1186SV (1) 91 nls/ko 1/ 74

S.F. 657 sixty-eight million dollars for purposes of this paragraph. 1 (3) In allocating tax credits pursuant to this subsection , 2 the authority shall prioritize issuing additional research 3 activities tax credits pursuant to section 15.335 . 4 b. The enterprise zones program administered pursuant to 5 sections 15E.191 through 15E.197, Code 2014 . 6 c. The assistive device tax credit program administered 7 pursuant to section 422.33, subsection 9 . 8 d. The tax credits for investments in qualifying businesses 9 issued pursuant to section 15E.43 . In allocating tax credits 10 pursuant to this subsection , the authority shall allocate two 11 million dollars for purposes of this paragraph, unless the 12 authority determines that the tax credits awarded will be less 13 than that amount. 14 e. a. The tax credits for investments in an innovation fund 15 pursuant to section 15E.52 chapter 15E, subchapter VI, and the 16 seed investor tax credit pursuant to chapter 15E, subchapter 17 IV . In allocating tax credits pursuant to this subsection , the 18 authority shall allocate eight ten million dollars for purposes 19 of this paragraph, unless the authority determines that the tax 20 credits awarded will be less than that amount and the board 21 shall determine the tax credit amount allocated to each program 22 under this paragraph each fiscal year . 23 f. The redevelopment tax credit program for brownfields 24 and grayfields administered pursuant to sections 15.293A and 25 15.293B . 26 g. The workforce housing tax incentives program administered 27 pursuant to subchapter II, part 17 . In allocating tax credits 28 pursuant to this subsection , the authority shall not allocate 29 more than thirty-five million dollars for purposes of this 30 paragraph. Of the moneys allocated under this paragraph, 31 seventeen million five hundred thousand dollars shall be 32 reserved for allocation to qualified housing projects in small 33 cities, as defined in section 15.352 , that are registered on 34 or after July 1, 2017. 35 -2- LSB 1186SV (1) 91 nls/ko 2/ 74

S.F. 657 h. The renewable chemical production tax credit program 1 administered pursuant to subchapter II, part 12 . In allocating 2 tax credits pursuant to this subsection for the fiscal year 3 beginning July 1, 2021, and for each fiscal year beginning 4 before July 1, 2037, the authority shall not allocate more than 5 five million dollars for purposes of this paragraph. This 6 paragraph is repealed July 1, 2039. 7 3. In allocating the amount of tax credits authorized 8 pursuant to subsection 1 among the programs specified in 9 subsection 2 , the authority shall not allocate more than 10 fifteen million dollars for purposes of subsection 2 , paragraph 11 “f” . 12 b. The renewable chemical production tax credit pursuant 13 to subchapter II, part 12, and the sustainable aviation fuel 14 production tax credit program pursuant to subchapter II, part 15 36. In allocating tax credits pursuant to this subsection, the 16 authority shall allocate ten million dollars for purposes of 17 this paragraph, and the board shall determine the tax credit 18 amount allocated to each program specified in this paragraph 19 for each fiscal year. 20 c. The research and development tax credit program pursuant 21 to subchapter II, part 35. In allocating tax credits pursuant 22 to this subsection, the authority shall allocate forty million 23 dollars for purposes of this paragraph. 24 d. The business incentives for growth program administered 25 pursuant to subchapter II, part 33. In allocating tax credits 26 pursuant to this subsection for the calendar year beginning 27 January 1, 2026, and for each fiscal year thereafter, the 28 authority shall not allocate more than fifty million dollars 29 for purposes of this paragraph. 30 4. 3. The authority shall submit to the department of 31 revenue on or before August 15 of each year a report on the tax 32 credits allocated pursuant to this section and the tax credits 33 awarded under each of the programs described in subsection 2 . 34 DIVISION II 35 -3- LSB 1186SV (1) 91 nls/ko 3/ 74

S.F. 657 ECONOMIC DEVELOPMENT PROGRAMS —— TAX CREDIT LIMITS 1 CONFORMING CHANGES 2 Sec. 2. Section 15.293A, subsection 6, Code 2025, is amended 3 to read as follows: 4 6. The amount of tax credits that may be awarded by the 5 board shall be subject to the limitation in section 15.119 6 Except as provided in section 15.293B, subsection 6, the board 7 shall not award in any one fiscal year an amount of tax credits 8 that exceeds fifteen million dollars . 9 Sec. 3. Section 15.293B, subsection 6, Code 2025, is amended 10 to read as follows: 11 6. a. (1) Tax credits revoked under subsection 3 including 12 tax credits revoked up to five years prior to July 1, 2021, and 13 tax credits not awarded under subsection 4 or 5 , may be awarded 14 in the next annual application period established in subsection 15 1 , paragraph “c” . 16 (2) Any amount of tax credits authorized and awarded during 17 a fiscal year which are irrevocably declined by the awarded 18 investor on or before June 30 of the immediately succeeding 19 fiscal year may be awarded in the next annual application 20 period established in subsection 1, paragraph “c” . 21 b. Tax credits awarded pursuant to paragraph “a” shall not 22 be counted against the limit under section 15.119, subsection 3 23 15.293A, subsection 6 . 24 Sec. 4. Section 15.318, subsection 3, paragraph e, Code 25 2025, is amended to read as follows: 26 e. In each fiscal year beginning on or after July 1, 2023 27 2025 , and ending on or before June 30, 2036, the authority 28 may award an amount of tax credits under the program not to 29 exceed the maximum aggregate amount allocated in determined by 30 the board pursuant to section 15.119, subsection 2, paragraph 31 “h” “b” . 32 Sec. 5. Section 15.354, subsection 4, Code 2025, is amended 33 by striking the subsection and inserting in lieu thereof the 34 following: 35 -4- LSB 1186SV (1) 91 nls/ko 4/ 74

S.F. 657 4. Maximum tax incentives amount. 1 a. (1) In the fiscal year beginning July 1, 2025, and 2 ending June 30, 2026, the authority shall not award an amount 3 of tax credits in excess of forty-three million dollars. 4 (2) In the fiscal year beginning July 1, 2026, and ending 5 June 30, 2027, the authority shall not award an amount of tax 6 credits in excess of forty million dollars. 7 (3) In the fiscal year beginning July 1, 2027, and for each 8 fiscal year thereafter, the authority shall not award an amount 9 of tax credits in excess of thirty-five million dollars. 10 b. Of the tax credits allocated under paragraph “a” , fifty 11 percent of the allocation available in each fiscal year shall 12 be reserved for allocation to qualified housing projects in 13 small cities. 14 c. Notwithstanding paragraph “b” , if the sum of the amount 15 of tax incentives awarded in a given fiscal year for housing 16 projects located in small cities based on the authority’s 17 review and scoring of applications does not exceed the amount 18 reserved for housing projects located in small cities pursuant 19 to paragraph “b” , the authority may award the remaining amount 20 of tax incentives reserved for housing projects located in 21 small cities to other housing projects during that same fiscal 22 year. 23 d. Tax credits revoked by the authority or irrevocably 24 declined by a housing business before June 30 of the fiscal 25 year following the award may be awarded during the fiscal year 26 the revocation or declination occurs. 27 e. The maximum aggregate amount of tax incentives that 28 may be awarded and issued under section 15.355 to a housing 29 business for a housing project shall not exceed one million 30 dollars. 31 f. If a housing business qualifies for a higher amount 32 of tax incentives under section 15.355 than is allowed by 33 the limitation imposed in paragraph “e” , the authority and 34 the housing business may negotiate an apportionment of the 35 -5- LSB 1186SV (1) 91 nls/ko 5/ 74

S.F. 657 reduction in tax incentives between the sales tax refund 1 provided in section 15.355, subsection 2, and the workforce 2 housing investment tax credits provided in section 15.355, 3 subsection 3, provided the total aggregate amount of tax 4 incentives after the apportioned reduction does not exceed the 5 amount in paragraph “e” . 6 g. The authority shall issue tax incentives under the 7 program on a first-come, first-served basis until the maximum 8 amount of tax incentives allowed under paragraph “a” is reached. 9 Sec. 6. Section 15.354, subsection 6, paragraph d, Code 10 2025, is amended to read as follows: 11 d. The authority shall administer tax credit allocations 12 for disaster recovery housing projects separately from the 13 general allocation and separately from the allocation reserved 14 for small cities in section 15.119, subsection 2, paragraph 15 “g” . The authority shall issue tax incentives under the 16 program for disaster recovery housing projects on a first-come, 17 first-served basis until the maximum amount of tax incentives 18 allocated under section 15.119, subsection 5 , is reached. The 19 authority shall maintain a list of disaster recovery housing 20 projects awarded tax incentives under the program, so that if 21 the maximum aggregate amount of tax incentives allocated for 22 disaster recovery housing projects under the program is reached 23 in a given fiscal year, such disaster recovery housing projects 24 that were completed but for which tax incentives were not 25 issued shall be placed on a wait list in the order the disaster 26 recovery housing projects were awarded tax incentives pursuant 27 to paragraph “c” , and shall be given priority for receiving 28 tax incentives in succeeding fiscal years maximum tax credit 29 amounts specified in section 15.354, subsection 4, paragraphs 30 “a” and “b” . 31 DIVISION III 32 BUSINESS INCENTIVES FOR GROWTH PROGRAM 33 Sec. 7. NEW SECTION . 15.111 Assistance for certain programs 34 and projects. 35 -6- LSB 1186SV (1) 91 nls/ko 6/ 74

S.F. 657 1. a. Under the authority provided in section 15.106A, 1 there shall be established one or more funds within the state 2 treasury, under the control of the authority, to be used for 3 purposes of this section. 4 b. A fund established for purposes of this section shall 5 consist of any moneys appropriated to the authority for 6 purposes of this section, or moneys otherwise accruing to 7 the authority and deposited in the fund for purposes of this 8 section. 9 c. Interest or earnings on moneys in a fund used for the 10 purposes of this section, and all repayments or recaptures of 11 the assistance provided under this section, shall accrue to 12 the authority and shall be used for purposes of this section, 13 notwithstanding section 12C.7. Moneys in a fund are not 14 subject to section 8.33. 15 2. a. The moneys in a fund established for purposes of 16 this section, as described in subsection 1, shall be allocated 17 by the authority in appropriate amounts to be used for the 18 following purposes: 19 (1) For program support. 20 (2) For deposit in the innovation and commercialization 21 development fund created pursuant to section 15.412. 22 (3) For providing financial assistance to businesses 23 engaged in disaster recovery. For purposes of this 24 subparagraph, “business engaged in disaster recovery” means 25 a business located in an area declared a disaster area by a 26 federal official, that has sustained physical damage, has 27 closed as a result of a natural disaster, and has a plan for 28 reopening that includes employing a substantial number of the 29 employees the business employed before the natural disaster 30 occurred. 31 (4) For deposit in the entrepreneur investment awards 32 program fund pursuant to section 15E.363. 33 (5) For deposit in a fund created for purposes of the 34 strategic infrastructure program established pursuant to 35 -7- LSB 1186SV (1) 91 nls/ko 7/ 74

S.F. 657 section 15.313. 1 (6) For deposit in the nuisance property remediation fund 2 established pursuant to section 15.338. 3 (7) For deposit in the community catalyst building 4 remediation fund established pursuant to section 15.231. 5 (8) For providing financial assistance to eligible 6 businesses for the business incentives for growth program 7 pursuant to section 15.504. 8 b. Each fiscal year, the authority shall estimate the 9 amount of revenues available for purposes of this section and 10 shall develop a budget appropriate for the expenditure of the 11 revenues available. 12 Sec. 8. NEW SECTION . 15.502 Short title. 13 This part shall be known and may be cited as the “Business 14 Incentives for Growth Program” or “BIG Program” . 15 Sec. 9. NEW SECTION . 15.503 Definitions. 16 As used in this part, unless the context otherwise requires: 17 1. “Base employment level” means the number of full-time 18 equivalent positions at a business, as established by the 19 authority and the business using the business’s payroll 20 records, as of the date the business applies for tax incentives 21 under the program. 22 2. “Benefits” means nonwage compensation provided to an 23 employee. “Benefits” include medical and dental insurance, a 24 pension, a retirement plan, a profit-sharing plan, child care, 25 life insurance, vision insurance, and disability insurance. 26 3. “Community” means a city, county, or entity established 27 pursuant to chapter 28E. 28 4. “Contract completion” means the date of completion of 29 the terms of a contract between a contractor and an eligible 30 business. 31 5. “Contractor” means a person that has executed a contract 32 with an eligible business for the provision of property, 33 materials, or services for the construction or equipping of a 34 facility that is part of the eligible business’s project. 35 -8- LSB 1186SV (1) 91 nls/ko 8/ 74

S.F. 657 6. “Created jobs” or “create jobs” means new, permanent, 1 full-time equivalent positions added to an eligible business’s 2 payroll, at the location of the eligible business’s project, in 3 excess of the eligible business’s base employment level. 4 7. “Data center business” means the same as defined in 5 section 423.3, subsection 95. 6 8. “Eligible business” means a business that meets the 7 requirements of section 15.504. 8 9. “Full-time equivalent position” means a non-part-time 9 position for the number of hours or days per week considered 10 to be full-time work for the kind of service or work performed 11 for an employer. Typically, a full-time equivalent position 12 requires two thousand eighty hours of work in a calendar year, 13 including all paid holidays, vacations, sick time, and other 14 paid leave. 15 10. “Program” means the business incentives for growth 16 program. 17 11. “Project” means an activity or set of activities 18 directly related to the start-up or location of an eligible 19 business, proposed in an eligible business’s application to the 20 program, that will accomplish the goals of the program. 21 12. “Project completion date” means the date by which an 22 eligible business that has been approved by the authority to 23 participate in the program agrees to complete the terms and 24 conditions of the agreement under section 15.506. 25 13. “Project completion period” means the period of time 26 between the date the authority approves an eligible business to 27 participate in the program and the project completion date. 28 14. “Qualifying investment” means a capital investment in 29 real property, including the purchase price of the land, site 30 preparation, infrastructure, and building construction for 31 use in the operation of an eligible business. “ Qualifying 32 investment” also means a capital investment in depreciable 33 assets for use in the operation of an eligible business. 34 15. “Qualifying wage threshold” means the mean wage level 35 -9- LSB 1186SV (1) 91 nls/ko 9/ 74

S.F. 657 represented by the wages within two standard deviations of 1 the mean wage within the laborshed area in which the eligible 2 business is located, as calculated by the authority by rule, 3 using the most current covered wage and employment data 4 available from the department of workforce development for the 5 laborshed area in which the eligible business is located. 6 16. “Subcontractor” means a person that contracts with 7 a contractor for the provision of property, materials, or 8 services for the construction or equipping of a facility that 9 is part of an eligible business’s project. 10 17. “Tax incentives” means tax credits, tax refunds, or tax 11 exemptions authorized under the program by the authority for an 12 eligible business. 13 Sec. 10. NEW SECTION . 15.504 Eligible business. 14 1. To be eligible to receive tax incentives under 15 the program, a business must meet all of the following 16 requirements: 17 a. The community in which the proposed project is located 18 must approve the project either by ordinance or resolution. 19 b. (1) The business must be primarily engaged in advanced 20 manufacturing, bioscience, insurance and finance, or technology 21 and innovation. The business shall not be a data center 22 business, a retail business, or a business where a cover charge 23 or membership requirement restricts certain individuals from 24 entering the business. 25 (2) Factors the authority shall consider to determine if 26 a business is primarily engaged in advanced manufacturing, 27 biosciences, insurance and finance, or technology and 28 innovation shall include but are not limited to all of the 29 following: 30 (a) The business’s North American industry classification 31 system code. 32 (b) The business’s main sources of revenue. 33 (c) The business’s customer base. 34 c. (1) The business must not be solely relocating 35 -10- LSB 1186SV (1) 91 nls/ko 10/ 74

S.F. 657 operations from one area of the state to another area of 1 the state. A proposed project that does not create jobs or 2 involve a substantial amount of new capital investment shall 3 be presumed to be a relocation of operations. For purposes of 4 this subparagraph, the authority shall consider a letter from 5 the affected local community’s government officials supporting 6 the business’s move away from the affected local community 7 in making a determination whether the business is solely 8 relocating operations. 9 (2) This paragraph shall not be construed to prohibit 10 a business from expanding the business’s operations in a 11 community if the business has similar operations in this state 12 that are not closing or undergoing a substantial reduction in 13 operations. 14 d. The business must provide comprehensive benefits to 15 each full-time equivalent employee employed at the project. 16 The authority may adopt rules under chapter 17A to determine 17 the procedure for establishing requirements for comprehensive 18 benefits. 19 e. (1) The business must not have a record of violations of 20 the law or of rules, including but not limited to antitrust, 21 environmental, trade, or worker safety, that over a period of 22 time show a consistent pattern or that establish the business’s 23 intentional, criminal, or reckless conduct in violation of such 24 laws or rules. 25 (2) If the authority determines that the business has a 26 record of violations described in subparagraph (1), and the 27 authority finds that the violations did not seriously affect 28 public health, public safety, or the environment, the business 29 may be eligible to qualify for the program. 30 (3) If the authority determines that the business has 31 a record of violations described in subparagraph (1), and 32 the authority finds that there were mitigating circumstances 33 related to the violations, the business may be eligible to 34 qualify for the program. 35 -11- LSB 1186SV (1) 91 nls/ko 11/ 74

S.F. 657 (4) In making determinations and findings under 1 subparagraphs (2) and (3), and making a determination whether a 2 business is disqualified from the program, the authority shall 3 be exempt from chapter 17A. 4 2. In determining if a business is eligible to participate 5 in the program, the authority shall consider a variety of 6 factors, including but not limited to all of the following: 7 a. The impact of the business’s proposed project on 8 businesses that are in competition with the business. 9 The authority shall make a good-faith effort to identify 10 existing Iowa businesses in competition with the business 11 being considered for the program. The authority shall make 12 a good-faith effort to determine the probability that any 13 proposed tax incentives will displace employees of the 14 competing businesses. 15 b. The business’s proposed project’s economic impact on 16 the state. The authority shall place greater emphasis on 17 businesses and proposed projects that meet the following 18 requirements: 19 (1) The business has a high proportion of in-state 20 suppliers. 21 (2) The proposed project will diversify the state economy. 22 (3) The business has few in-state competitors. 23 (4) The proposed project has the potential to create jobs on 24 an ongoing basis. 25 (5) The proposed project has the potential to increase 26 productivity, efficiency, and competitiveness through adoption 27 and integration of smart technologies including specialized 28 hardware, software, or other equipment. 29 (6) The proposed project has the potential to increase the 30 state’s overall gross domestic product. 31 (7) Any other factors the authority deems relevant in 32 determining the economic impact of a proposed project. 33 Sec. 11. NEW SECTION . 15.505 Applications —— authorization 34 of tax credits and exemptions. 35 -12- LSB 1186SV (1) 91 nls/ko 12/ 74

S.F. 657 1. a. Applications for the program shall be submitted 1 to the authority in the form and manner prescribed by the 2 authority by rule. Each application must be accompanied by an 3 application fee in an amount determined by the authority by 4 rule. 5 b. For a proposed project that will result in elevated 6 water consumption by the business, the application shall be 7 accompanied by a water conservation and waste reduction plan, 8 and shall be submitted to the authority in the form and manner 9 prescribed by the authority by rule. 10 2. In determining the eligibility of a business to 11 participate in the program, the authority may engage outside 12 experts to complete a technical, financial, or other review of 13 an application submitted by a business. 14 3. a. The authority and the board may negotiate with an 15 eligible business regarding the terms of, and the aggregate 16 value of, the tax incentives the eligible business may receive 17 under the program. The maximum aggregate value of the tax 18 incentives that any one eligible business may receive shall 19 not exceed five percent of the eligible business’s qualifying 20 investment. 21 b. The board may authorize any combination of tax incentives 22 available under the program for an eligible business. 23 4. The board shall not authorize an award under this part 24 before January 1, 2026. 25 Sec. 12. NEW SECTION . 15.506 Agreement. 26 1. An eligible business that is approved by the authority to 27 participate in the program shall enter into an agreement with 28 the authority that specifies the criteria for the successful 29 completion of all requirements of the program. The agreement 30 must contain, at a minimum, provisions related to all of the 31 following: 32 a. The eligible business must certify to the authority 33 annually that the business is in compliance with the agreement. 34 b. If the eligible business fails to comply with any 35 -13- LSB 1186SV (1) 91 nls/ko 13/ 74

S.F. 657 requirements of the program or the agreement, as determined 1 by the authority, the eligible business may be required to 2 repay any tax incentives the authority issued to the eligible 3 business. The authority will notify the department of revenue 4 of any required repayment of a tax incentive, which shall be 5 considered a tax payment due and payable to the department of 6 revenue by any taxpayer that claimed the tax incentive, and the 7 failure to make the repayment may be treated by the department 8 of revenue in the same manner as a failure to pay the tax shown 9 due, or required to be shown due, with the filing of a return 10 or deposit form. A county shall have the authority to take 11 action to recover the value of property taxes not collected as 12 a result of the exemption provided to the business under this 13 part. 14 c. If the eligible business undergoes a layoff or 15 permanently closes any of its facilities within the state, the 16 eligible business may be subject to all of the following: 17 (1) A reduction or elimination of some or all of the tax 18 incentives the authority issued to the eligible business. 19 (2) Repayment of any tax incentives that the business 20 has claimed, and payment of any penalties assessed by the 21 department of revenue. 22 d. The project completion date, the number of created 23 jobs, the qualifying wage threshold that is applicable to the 24 project, the amount of qualifying investment, the maximum 25 aggregate value of the tax incentives authorized by the 26 board, and any other terms and obligations the authority deems 27 necessary. 28 e. The eligible business shall only employ individuals 29 legally authorized to work in this state. If the eligible 30 business is found to knowingly employ individuals who are 31 not legally authorized to work in this state, in addition 32 to any penalties provided by law, all or a portion of any 33 tax incentives issued by the authority shall be subject 34 to repayment as described in section 15.506, subsection 1, 35 -14- LSB 1186SV (1) 91 nls/ko 14/ 74

S.F. 657 paragraph “b” . 1 f. Any terms deemed necessary by the authority to effect the 2 eligible business’s ongoing compliance with section 15.504. 3 2. The business shall satisfy all applicable terms of 4 the agreement by the project completion date; however, the 5 board may for good cause extend the project completion date or 6 otherwise amend the terms of the agreement. The board shall 7 not amend the terms of the agreement to allow an increase in 8 the maximum aggregate value of the tax incentives authorized by 9 the board under section 15.505, subsection 3. 10 3. The eligible business shall comply with all applicable 11 terms of the agreement during the term of the agreement. 12 4. The eligible business shall not assign the agreement 13 to another entity without the advance written approval of the 14 board. 15 5. The authority may enforce the terms of the agreement as 16 necessary and appropriate. 17 Sec. 13. NEW SECTION . 15.507 Sales and use tax refund. 18 1. An eligible business that has been issued a tax incentive 19 certificate under the program shall be entitled to a refund, 20 as negotiated under section 15.505, subsection 3, of the sales 21 and use taxes paid under chapter 423 for gas, electricity, 22 water, and sewer utility services, tangible personal property, 23 or on services rendered, furnished, or performed to or for 24 a contractor or subcontractor and used in the fulfillment 25 of a written contract for the construction or equipping of 26 a facility that is part of the eligible business’s project. 27 Taxes attributable to intangible property and furniture and 28 furnishings shall not be refunded. 29 2. To receive the sales and use tax refund, the eligible 30 business shall file a claim with the department of revenue as 31 follows: 32 a. The contractor or subcontractor shall state under oath, 33 on forms provided by the department of revenue, the amount of 34 the sales of tangible personal property or services rendered, 35 -15- LSB 1186SV (1) 91 nls/ko 15/ 74

S.F. 657 furnished, or performed including water, sewer, gas, and 1 electric utility services upon which sales or use tax has been 2 paid prior to contract completion, and shall submit the forms 3 to the eligible business before contract completion. 4 b. The eligible business shall inform the department of 5 revenue in writing of contract completion. The eligible 6 business shall, after contract completion, submit an 7 application to the department of revenue for a refund of the 8 amount of the sales and use taxes paid pursuant to chapter 423 9 upon any tangible personal property, or services rendered, 10 furnished, or performed, including water, sewer, gas, and 11 electric utility services. The application shall be submitted 12 in the form and manner prescribed by the department of revenue. 13 The department of revenue shall audit the application and, 14 if approved, issue a warrant or warrants to the eligible 15 business in the amount of the sales or use tax which has been 16 paid to the state of Iowa under subsection 1. The eligible 17 business’s application must be submitted to the department of 18 revenue within one year after the project completion date. An 19 application filed by the eligible business in accordance with 20 this section shall not be denied by reason of a limitation set 21 forth in chapter 421 or 423. 22 c. The refund shall be remitted by the department of revenue 23 to the eligible business on a quarterly basis. Interest shall 24 not accrue on any part of the refund that has not yet been 25 remitted by the department of revenue to the eligible business. 26 3. A contractor or subcontractor that willfully makes a 27 false report of tax paid under this section is guilty of an 28 aggravated misdemeanor, and shall be liable for payment of the 29 tax and any applicable penalty and interest. 30 Sec. 14. NEW SECTION . 15.508 Qualifying investment tax 31 credit. 32 1. The authority may authorize a tax credit for an eligible 33 business pursuant to section 15.505, subsection 3. The 34 authority shall not issue a tax credit certificate to the 35 -16- LSB 1186SV (1) 91 nls/ko 16/ 74

S.F. 657 eligible business until the eligible business’s project or 1 a portion of the project has been placed in service. The 2 department of revenue shall remit the tax credit to the 3 eligible business equally over five tax years. The tax 4 credit shall be allowed against taxes imposed under chapter 5 422, subchapter II, III, or V, and against the moneys and 6 credits tax imposed in section 533.329. If the eligible 7 business is a partnership, S corporation, limited liability 8 company, cooperative organized under chapter 501 and filing 9 as a partnership for federal tax purposes, or estate or trust 10 electing to have the income taxed directly to the individual, 11 an individual may claim the tax credit allowed. The amount 12 claimed by the individual shall be based upon the pro rata 13 share of the individual’s earnings of the partnership, S 14 corporation, limited liability company, cooperative organized 15 under chapter 501 and filing as a partnership for federal tax 16 purposes, or estate or trust. Any tax credit in excess of 17 the eligible business’s tax liability for the tax year may be 18 refunded. A tax credit shall not be carried back to a tax year 19 prior to the tax year in which the tax credit is first claimed 20 by the eligible business. 21 2. If within five years of the date the authority issues 22 an eligible business a tax credit under subsection 1 the 23 eligible business sells, disposes of, razes, or otherwise 24 renders unusable all or a part of the land, buildings, or 25 other structures for which the tax credit was claimed under 26 this section, the tax liability of the eligible business for 27 the year in which all or part of the land, buildings, or other 28 existing structures are sold, disposed of, razed, or otherwise 29 rendered unusable shall be increased by one of the following 30 amounts: 31 a. One hundred percent of the tax credit claimed under 32 this section if all or a part of the land, buildings, or other 33 structures for which the tax credit was claimed under this 34 section cease to be eligible for the tax credit within one 35 -17- LSB 1186SV (1) 91 nls/ko 17/ 74

S.F. 657 year after the date the authority issued the tax credit to the 1 eligible business. 2 b. Eighty percent of the tax credit claimed under this 3 section if all or a part of the land, buildings, or other 4 structures for which the tax credit was claimed under this 5 section cease to be eligible for the tax credit within two 6 years after the date the authority issued the tax credit to the 7 eligible business. 8 c. Sixty percent of the tax credit claimed under this 9 section if all or a part of the land, buildings, or other 10 structures for which the tax credit was claimed under this 11 section cease to be eligible for the tax credit within three 12 years after the date the authority issued the tax credit to the 13 eligible business. 14 d. Forty percent of the tax credit claimed under this 15 section if all or a part of the land, buildings, or other 16 structures for which the tax credit was claimed under this 17 section cease to be eligible for the tax credit within four 18 years after the date the authority issued the tax credit to the 19 eligible business. 20 e. Twenty percent of the tax credit claimed under this 21 section if all or a part of the land, buildings, or other 22 structures for which the tax credit was claimed under this 23 section cease to be eligible for the tax credit within five 24 years after the date the authority issued the tax credit to the 25 eligible business. 26 Sec. 15. NEW SECTION . 15.509 Other incentives. 27 1. An eligible business may apply for and be eligible to 28 receive other federal, state, and local incentives in addition 29 to the tax incentives issued by the authority to the eligible 30 business under the program. 31 2. The authority, in its discretion, may prohibit an 32 eligible business that has been issued tax incentives under 33 the program from receiving any additional tax incentive, tax 34 credit, grant, loan, or other financial assistance under any 35 -18- LSB 1186SV (1) 91 nls/ko 18/ 74