Senate File 575 - Reprinted SENATE FILE 575 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SF 408) (SUCCESSOR TO SSB 1087) (As Amended and Passed by the Senate April 27, 2023 ) A BILL FOR An Act relating to the economic development authority, 1 including renewable chemical production, workforce housing, 2 and innovation fund tax credits, the Iowa wine, beer, and 3 spirits promotion board, and the beer and liquor control 4 fund, and including applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 SF 575 (3) 90 ko/jh/mb

S.F. 575 DIVISION I 1 TAX CREDITS 2 Section 1. Section 15.119, subsection 2, paragraph h, Code 3 2023, is amended to read as follows: 4 h. The renewable chemical production tax credit program 5 administered pursuant to sections 15.315 through 15.322 . In 6 allocating tax credits pursuant to this subsection for the 7 fiscal year beginning July 1, 2021, and for each fiscal year 8 thereafter beginning before July 1, 2037 , the authority shall 9 not allocate more than five million dollars for purposes of 10 this paragraph. This paragraph is repealed July 1, 2030 2039 . 11 Sec. 2. Section 15.316, subsection 3, Code 2023, is amended 12 to read as follows: 13 3. “Building block chemical” means a molecule converted 14 from biomass feedstock as a first product or a secondarily 15 derived product that can be further refined into a higher-value 16 chemical, material, or consumer product. “Building block 17 chemical” includes but is not limited to high-purity glycerol, 18 oleic acid, lauric acid, methanoic or formic acid, arabonic 19 acid, erythonic acid, glyceric acid, glycolic acid, lactic 20 acid, 3-hydroxypropionate, propionic acid, malonic acid, 21 serine, succinic acid, fumaric acid, malic acid, aspartic 22 acid, 3-hydroxybutyrolactone, acetoin, threonine, itaconic 23 acid, furfural, levulinic acid, glutamic acid, xylonic acid, 24 xylaric acid, xylitol, arabitol, citric acid, aconitic acid, 25 5-hydroxymethylfurfural, lysine, gluconic acid, glucaric acid, 26 sorbitol, gallic acid, ferulic acid, butyric acid, nonfuel 27 butanol, nonfuel ethanol, or such additional molecules as may 28 be included by the authority by rule after consultation with 29 appropriate experts from Iowa state university, including 30 but not limited to the Iowa state university center for 31 biorenewable chemicals. 32 Sec. 3. Section 15.318, subsection 1, Code 2023, is amended 33 by adding the following new paragraph: 34 NEW PARAGRAPH . f. All complete applications submitted 35 -1- SF 575 (3) 90 ko/jh/mb 1/ 8

S.F. 575 by eligible businesses shall be reviewed and scored on a 1 competitive basis by the authority pursuant to rules adopted 2 by the authority. 3 Sec. 4. Section 15.318, subsection 2, paragraphs c and d, 4 Code 2023, are amended to read as follows: 5 c. An eligible business shall fulfill all the requirements 6 of the program and the agreement before receiving the authority 7 issues the business a tax credit certificate or entering enters 8 into a subsequent agreement with the business under this 9 section . The authority may decline to enter into a subsequent 10 agreement with the business under this section or to issue a 11 tax credit if an agreement is not successfully fulfilled. 12 d. Upon establishing that all requirements of the program 13 and the agreement have been fulfilled, the authority shall 14 issue a tax credit and related tax credit certificate to the 15 eligible business stating the amount of renewable chemical 16 production tax credit the eligible business may claim. 17 Sec. 5. Section 15.318, subsection 3, paragraphs a, d, and 18 e, Code 2023, are amended to read as follows: 19 a. The maximum amount of tax credit that the authority may 20 be issued issue under section 15.319 to an eligible business 21 for the production of renewable chemicals in a calendar year 22 shall not exceed the following: 23 (1) In the case of an eligible business that has been in 24 operation in the state for five years or less at the time of 25 application, is one million dollars. 26 (2) In the case of an eligible business that has been in 27 operation in the state for more than five years at the time of 28 application, five hundred thousand dollars. 29 d. An The authority shall not issue an eligible business 30 shall not receive more than five tax credits credit 31 certificates under the program. 32 e. The authority shall issue tax credits under the program 33 on a first-come, first-served basis until the maximum amount of 34 tax credits allocated pursuant to section 15.119, subsection 35 -2- SF 575 (3) 90 ko/jh/mb 2/ 8

S.F. 575 2 , paragraph “h” , is reached. The authority shall maintain a 1 list of successful applicants under the program, so that if the 2 maximum aggregate amount of tax credits is reached in a given 3 fiscal year, eligible businesses that successfully applied 4 but for which tax credits were not issued shall be placed on 5 a wait list in the order the eligible businesses applied and 6 shall be given priority for receiving tax credits in succeeding 7 fiscal years. Placement on a wait list pursuant to this 8 paragraph shall not constitute a promise binding the state. 9 The availability of a tax credit and issuance of a tax credit 10 certificate pursuant to this subsection in a future fiscal year 11 is contingent upon the availability of tax credits in that 12 particular fiscal year. In each fiscal year beginning on or 13 after July 1, 2023, and ending on or before June 30, 2036, the 14 authority may award an amount of tax credits under the program 15 not to exceed the maximum aggregate amount allocated in section 16 15.119, subsection 2, paragraph “h” . 17 Sec. 6. Section 15.319, subsection 1, Code 2023, is amended 18 to read as follows: 19 1. An eligible business that has entered into an agreement 20 pursuant to section 15.318 may claim a tax credit in an amount 21 equal to the product of five cents multiplied by the number 22 of pounds of renewable chemicals produced in this state from 23 biomass feedstock by the eligible business during the calendar 24 year in excess of the eligible business’s pre-eligibility 25 production threshold. However, an eligible business shall 26 not receive a tax credit for the production of a secondarily 27 derived building block chemical if that chemical is also the 28 subject of a credit at the time of production as a first 29 product. The renewable chemical production tax credit shall 30 not be available for any renewable chemical produced before the 31 2017 calendar year or after the 2026 2035 calendar year. 32 Sec. 7. Section 15.320, subsection 1, Code 2023, is amended 33 to read as follows: 34 1. For purposes of this section , “successful tax credit 35 -3- SF 575 (3) 90 ko/jh/mb 3/ 8

S.F. 575 applicant” includes, with respect to each calendar year, an 1 eligible business that was issued a tax credit certificate for 2 production of renewable chemicals during that calendar year , 3 and an eligible business that successfully applied for a tax 4 credit for the production of renewable chemicals during that 5 calendar year, but was not issued a tax credit and was instead 6 placed on a wait list pursuant to section 15.318, subsection 7 3 , paragraph “e” . 8 Sec. 8. Section 15.320, subsection 2, Code 2023, is amended 9 by striking the subsection and inserting in lieu thereof the 10 following: 11 2. By January 31 of each year, the board, in cooperation 12 with the department of revenue, shall submit to the general 13 assembly and to the governor a report describing the activities 14 of the program for the most recent calendar year for which the 15 tax credit application period has ended pursuant to section 16 15.318, subsection 1, paragraph “d” . The report shall, at a 17 minimum, include the following information: 18 a. The aggregate number of pounds, and a list of each type, 19 of renewable chemicals produced in Iowa by all successful 20 tax credit applicants during the calendar year prior to the 21 calendar year for which the successful applicants first applied 22 for a tax credit under the program. 23 b. The aggregate number of pounds, and a list of each type, 24 of renewable chemicals produced in Iowa by all successful tax 25 credit applicants during each calendar year. 26 c. The number of employees located in Iowa of all successful 27 tax credit applicants during the calendar year prior to the 28 calendar year for which the successful applicants first applied 29 for a tax credit under the program. 30 d. The number of employees located in Iowa of all successful 31 tax credit applicants during each calendar year. 32 e. For each eligible business issued a renewable chemical 33 production tax credit during each calendar year: 34 (1) The identity of the eligible business. 35 -4- SF 575 (3) 90 ko/jh/mb 4/ 8

S.F. 575 (2) The amount of the tax credit. 1 (3) The manner in which the eligible business first 2 qualified as an eligible business under section 15.317, 3 subsection 4, whether by organizing, expanding, or locating in 4 the state. 5 f. The total amount of all renewable chemical production tax 6 credits claimed during each calendar year, and the portion of 7 the claims issued as a refund. 8 Sec. 9. Section 15.320, subsection 3, Code 2023, is amended 9 to read as follows: 10 3. To protect the presumption of confidentiality 11 established in section 15.318, subsection 5 , the board shall 12 report all information in an aggregate form to prevent, 13 as much as possible, information being attributable to any 14 particular eligible business, except as provided in subsection 15 2 , paragraph “k” “e” . 16 Sec. 10. Section 15.322, Code 2023, is amended to read as 17 follows: 18 15.322 Future repeal. 19 Section 15.315 , 15.316 , 15.317 , 15.318 , 15.319 , 15.320 , 20 15.321 , and this section , are repealed July 1, 2030 2039 . 21 Sec. 11. Section 15.353, subsection 2, paragraph d, Code 22 2023, is amended to read as follows: 23 d. For a housing project located in a small city that 24 meets program requirements under subsection 1 , paragraph “a” , 25 development Construction of new dwelling units at a greenfield 26 site. 27 Sec. 12. Section 15E.52, subsection 5, paragraph b, Code 28 2023, is amended by striking the paragraph. 29 Sec. 13. Section 15E.52, subsection 8, Code 2023, is amended 30 to read as follows: 31 8. The board shall not certify an innovation fund after June 32 30, 2023 2028 . 33 Sec. 14. Section 15E.52, subsection 10, paragraph b, Code 34 2023, is amended by striking the paragraph. 35 -5- SF 575 (3) 90 ko/jh/mb 5/ 8

S.F. 575 Sec. 15. Section 422.10B, Code 2023, is amended to read as 1 follows: 2 422.10B Renewable chemical production tax credit. 3 The taxes imposed under this subchapter , less the credits 4 allowed under section 422.12 , shall be reduced by a renewable 5 chemical production tax credit allowed under section 15.319 . 6 This section is repealed January 1, 2033 2041 . 7 Sec. 16. Section 422.33, subsection 22, Code 2023, is 8 amended to read as follows: 9 22. The taxes imposed under this subchapter shall be reduced 10 by a renewable chemical production tax credit allowed under 11 section 15.319 . This subsection is repealed January 1, 2033 12 2041 . 13 Sec. 17. APPLICABILITY. 14 1. The following apply to all applications submitted to the 15 renewable chemical production tax credit program on or after 16 July 1, 2023: 17 a. The section of this division of this Act amending section 18 15.316, subsection 3. 19 b. The section of this division of this Act amending section 20 15.318, subsection 1. 21 c. The section of this division of this Act amending section 22 15.318, subsection 3, paragraphs “a”, “d”, and “e”. 23 2. The following apply to all eligible businesses placed on 24 a wait list pursuant to section 15.318, subsection 3, paragraph 25 “e”, on or before June 30, 2023: 26 a. The portion of the section of this division of this Act 27 amending section 15.318, subsection 3, paragraph “e”. 28 b. The section of this division of this Act amending section 29 15.320, subsection 1. 30 3. The following applies to all applications submitted for 31 innovation fund tax credits, administered pursuant to section 32 15E.52, placed on a wait list pursuant to section 15E.52, 33 subsection 5, paragraph “b”: 34 The section of this division of this Act amending section 35 -6- SF 575 (3) 90 ko/jh/mb 6/ 8

S.F. 575 15E.52, subsection 5, paragraph “b”. 1 DIVISION II 2 IOWA WINE, BEER, AND SPIRITS PROMOTION BOARD 3 Sec. 18. Section 15E.116, Code 2023, is amended to read as 4 follows: 5 15E.116 Iowa wine , and beer , and spirits promotion board. 6 An Iowa wine , and beer , and spirits promotion board is 7 created. The board consists of three four members appointed 8 by the director of the economic development authority. Each 9 member shall serve a term of two years on the board. One member 10 shall represent the authority, one member shall represent the 11 Iowa wine makers, and one member shall represent the Iowa beer 12 makers , and one member shall represent Iowa distilleries . The 13 board shall advise the authority on the best means to promote 14 wine , and beer , and spirits made in Iowa. 15 Sec. 19. Section 15E.117, Code 2023, is amended to read as 16 follows: 17 15E.117 Promotion of Iowa wine , and beer , and spirits . 18 1. The economic development authority shall consult with 19 the Iowa wine , and beer , and spirits promotion board on the 20 best means to promote wine , and beer , and spirits made in Iowa. 21 2. The authority has shall have the authority to contract 22 with private persons for the promotion of beer , and wine , and 23 spirits made in Iowa. 24 3. Moneys appropriated to the authority pursuant to 25 sections 123.143 and 123.183 , and moneys transferred to the 26 authority pursuant to section 123.17, subsection 8A, may 27 be used by the authority for the purposes of this section , 28 including administrative expenses incurred under this section . 29 Sec. 20. Section 123.17, Code 2023, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 8A. After any transfers provided for in 32 subsections 3, 5, 6, 7, and 8 are made, and before any other 33 transfer to the general fund, the department shall transfer to 34 the economic development authority from the beer and liquor 35 -7- SF 575 (3) 90 ko/jh/mb 7/ 8