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Senate Study Bill 1162 - IntroducedA Bill ForAn Act 1establishing the major economic growth attraction
2program to be administered by the economic development
3authority, and providing penalties.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 9I.3, subsection 3, Code 2023, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. f. (1) An interest in agricultural land
4acquired by a foreign business for an immediate use other than
5farming if all of the following requirements are met:
6(a) The foreign business qualifies as an eligible business
7pursuant to section 15.283.
8(b) The foreign business is incorporated under the laws of
9a foreign country that is an allied country and the foreign
10business is wholly owned directly or indirectly by nonresident
11aliens of an allied country, or is a business entity, whether
12or not incorporated, which is wholly owned directly or
13indirectly by nonresident aliens of an allied country. As part
14of the foreign business’s application under section 15.284,
15the foreign business provides documentation to the authority,
16as deemed necessary by the authority, to establish that the
17foreign business is incorporated under the laws of a foreign
18country that is an allied country and the foreign business is
19wholly owned directly or indirectly by nonresident aliens of
20an allied country; or is a business entity, whether or not
21incorporated, which is wholly owned directly or indirectly by
22nonresident aliens of an allied country.
23(c) The agricultural land is a mega site, or included in a
24mega site.
25(d) The foreign business is not actively engaged in farming.
26(e) The board authorizes the acquisition of the
27agricultural land under the MEGA program administered by the
28economic development authority pursuant to sections 15.281
29through 15.289.
30(2) As used in this paragraph:
31(a) “Actively engaged in farming” means the same as defined
32in section 15.282.
33(b) “Allied country” means the same as defined in 10 U.S.C.
34§2350f(d)(1).
35(c) “Authority” means the economic development authority.
-1- 1(d) “Board” means the members of the authority appointed by
2the governor and in whom the powers of the authority are vested
3pursuant to section 15.105.
4(e) “Certified site” means a site that has been issued a
5certificate of readiness by the authority pursuant to section
615E.18.
7(f) “Mega site” means the same as defined in section 15.282.
8 Sec. 2. NEW SECTION. 15.281 Short title.
9This part shall be known and may be cited as the “Major
10Economic Growth Attraction Program” or “MEGA Program”.
11 Sec. 3. NEW SECTION. 15.282 Definitions.
12As used in this part, unless the context otherwise requires:
131. “Actively engaged in farming” means any of the following:
14a. Performing physical work which significantly contributes
15to crop or livestock production.
16b. Regularly and frequently making or taking an important
17part in making management decisions substantially contributing
18to or affecting the success of a farm’s operations.
192. “Base employment level” means the number of full-time
20equivalent positions at a business, as established by the
21authority and the business using the business’s payroll
22records, as of the date the business applies for tax incentives
23under the program.
243. “Benefit” means nonwage compensation provided to an
25employee. “Benefits” include medical and dental insurance, a
26pension, a retirement plan, a profit-sharing plan, child care,
27life insurance, vision insurance, and disability insurance.
284. “Certified site” means a site that has been issued a
29certificate of readiness by the authority pursuant to section
3015E.18.
315. “Community” means a city, county, or entity established
32pursuant to chapter 28E.
336. “Contract completion” means the date of completion of
34the terms of a contract between a contractor and an eligible
35business.
-2- 17. “Contractor” means a person that has executed a contract
2with an eligible business for the provision of property,
3materials, or services for the construction or equipping of a
4facility that is part of the eligible business’s project.
58. “Created jobs” or “create jobs” means new, permanent,
6full-time equivalent positions added to an eligible business’s
7payroll in excess of the eligible business’s base employment
8level.
99. “Data center business” means the same as defined in
10section 423.3, subsection 95.
1110. “Eligible business” means a business that meets the
12requirements of section 15.283.
1311. “Foreign business” means the same as defined in section
149I.1.
1512. “Full-time equivalent position” means a non-part-time
16position for the number of hours or days per week considered
17to be full-time work for the kind of service or work performed
18for an employer. Typically, a “full-time equivalent position”
19requires two thousand eighty hours of work in a calendar year,
20including all paid holidays, vacations, sick time, and other
21paid leave.
2213. “Maintenance period” means the period of time between
23the project completion date and the maintenance period
24completion date during which an eligible business must maintain
25all created jobs per the agreement under section 15.285.
2614. “Maintenance period completion date” means the date on
27which the maintenance period ends.
2815. “Mega site” means a certified site greater than one
29thousand acres.
3016. “Program” means the major economic growth attraction
31program.
3217. “Project” means an activity or set of activities
33directly related to the start-up or location of an eligible
34business, proposed in an eligible business’s application to the
35program, that will accomplish the goals of the program.
-3- 118. “Project completion date” means the date by which
2an eligible business that has been issued a tax incentive
3certificate by the authority under the program agrees to
4complete the terms and conditions of the agreement under
5section 15.285.
619. “Project completion period” means the period of
7time between the date the authority issues a tax incentive
8certificate to an eligible business and the project completion
9date.
1020. “Qualifying investment” means a capital investment
11in real property located on a certified site, including the
12purchase price of the land, site preparation, infrastructure,
13and building construction. “Qualifying investment” also means a
14capital investment in depreciable assets.
1521. “Qualifying wage threshold” means the wage level
16represented by the wages within two standard deviations of
17the mean wage within the laborshed area in which the eligible
18business is located, as calculated by the authority by rule,
19using the most current covered wage and employment data
20available from the department of workforce development for the
21laborshed area in which the eligible business is located.
2222. “Subcontractor” means a person that contracts with
23a contractor for the provision of property, materials, or
24services for the construction or equipping of a facility that
25is part of an eligible business’s project.
2623. “Tax incentives” means tax credits, tax refunds, or tax
27exemptions authorized under the program by the authority for an
28eligible business.
29 Sec. 4. NEW SECTION. 15.283 Eligible business.
301. To be eligible to receive tax incentives under
31the program, a business must meet all of the following
32requirements:
33a. The business’s proposed project must be located on a
34certified site greater than two hundred fifty acres that the
35authority has determined is suitable for the project.
-4- 1b. The business’s qualifying investment in the proposed
2project must exceed one billion dollars.
3c. The community in which the proposed project is located
4must approve the project either by ordinance or resolution.
5d. (1) The business must be primarily engaged in advanced
6manufacturing, biosciences, or research and development.
7The business shall not be a data center business, a retail
8business, or a business where a cover charge or membership
9requirement restricts certain individuals from entering the
10business.
11(2) Factors the authority shall consider to determine if
12a business is primarily engaged in advanced manufacturing,
13biosciences, or research and development shall include but are
14not limited to all of the following:
15(a) The business’s North American industry classification
16system code.
17(b) The business’s main sources of revenue.
18(c) The business’s customer base.
19e. (1) The business must not be solely relocating
20operations from one area of the state to another area of
21the state. A proposed project that does not create jobs or
22involve a substantial amount of new capital investment shall
23be presumed to be a relocation of operations. For purposes of
24this subparagraph, the authority shall consider a letter from
25the affected local community’s government officials supporting
26the business’s move away from the affected local community
27in making a determination whether the business is solely
28relocating operations.
29(2) This paragraph shall not be construed to prohibit
30a business from expanding the business’s operations in a
31community if the business has similar operations in this state
32that are not closing or undergoing a substantial reduction in
33operations.
34f. The business must create jobs as part of the business’s
35proposed project. The business must demonstrate that the
-5-1created jobs will pay at least one hundred forty percent of the
2qualifying wage threshold by the project completion date, and
3through the maintenance period completion date.
4g. The business must provide comprehensive benefits to
5each employee employed in a created job. The authority may
6adopt rules under chapter 17A to determine the requirements for
7comprehensive benefits.
8h. (1) The business must not have a record of violations
9of the law or of regulations, including but not limited to
10antitrust, environmental, trade, or worker safety, that over
11a period of time show a consistent pattern or that establish
12the business’s intentional, criminal, or reckless conduct in
13violation of such laws or regulations.
14(2) If the authority determines that the business has a
15record of violations described in subparagraph (1), and the
16authority finds that the violations did not seriously affect
17public health, public safety, or the environment, the business
18may be eligible to qualify for tax incentives under the
19program.
20(3) If the authority determines that the business has
21a record of violations described in subparagraph (1), and
22the authority finds that there were mitigating circumstances
23related to the violations, the business may be eligible to
24qualify for tax incentives under the program.
25(4) In making determinations and findings under
26subparagraphs (2) and (3), and making a determination whether a
27business is disqualified from the program, the authority shall
28be exempt from chapter 17A.
292. a. In determining if a business is eligible to
30participate in the program, the authority shall consider a
31variety of factors, including but not limited to all of the
32following:
33(1) The quality of the business’s proposed project’s
34created jobs. The authority shall place greater emphasis on
35created jobs that are high wage, low turnover, that provide
-6-1comprehensive benefits, and that expose employees to minimal
2occupational hazards. A business that pays wages substantially
3below that of similar businesses located in the same geographic
4area shall not be given priority under the program.
5(2) The impact of the business’s proposed project on
6businesses that are in competition with the business.
7The authority shall make a good-faith effort to identify
8existing Iowa businesses in competition with the business
9being considered for the program. The authority shall make
10a good-faith effort to determine the probability that any
11proposed tax incentives will displace employees of the
12competing businesses. In determining the impact on the
13competing businesses, created jobs resulting from employees
14being displaced from the competing businesses shall not be
15counted as created jobs for the applying business’s project.
16(3) The business’s proposed project’s economic impact
17on the state. The authority shall place greater emphasis
18on businesses and proposed projects that meet the following
19requirements:
20(a) The business has a high proportion of in-state
21suppliers.
22(b) The proposed project will diversify the state economy.
23(c) The business has few in-state competitors.
24(d) The proposed project has the potential to create jobs on
25an ongoing basis.
26(e) Any other factors the authority deems relevant in
27determining the economic impact of a proposed project.
28 Sec. 5. NEW SECTION. 15.284 Applications — authorization
29of tax credits and exemptions.
301. Applications for the program shall be submitted to the
31authority in the form and manner prescribed by the authority by
32rule. Each application must be accompanied by an application
33fee in an amount determined by the authority by rule.
342. In determining the eligibility of a business to
35participate in the program, the authority may engage outside
-7-1experts to complete a technical, financial, or other review
2of an application submitted by a business if such review is
3outside the expertise of the authority.
43. a. The authority and the board may negotiate with an
5eligible business regarding the terms of, and the aggregate
6value of, the tax incentives the eligible business may receive
7under the program.
8b. The board may authorize any combination of tax incentives
9available under the program for an eligible business.
104. The board may authorize an exemption to restrictions on
11agricultural land holdings pursuant to section 9I.3, subsection
123, paragraph “f”.
13 Sec. 6. NEW SECTION. 15.285 Agreement.
141. An eligible business that is approved by the authority to
15participate in the program shall enter into an agreement with
16the authority that specifies the criteria for the successful
17completion of all requirements of the program. The agreement
18must contain, at a minimum, provisions related to all of the
19following:
20a. The eligible business must certify to the authority
21annually that the business is in compliance with the agreement.
22b. If the eligible business fails to comply with any
23requirements of the program or the agreement, the eligible
24business may be required to repay any tax incentives the
25authority issued to the eligible business. A required
26repayment of a tax incentive shall be considered a tax payment
27due and payable to the department of revenue by any taxpayer
28that claimed the tax incentive, and the failure to make the
29repayment may be treated by the department of revenue in the
30same manner as a failure to pay the tax shown due, or required
31to be shown due, with the filing of a return or deposit form.
32c. If the eligible business undergoes a layoff or
33permanently closes any of its facilities within the state, the
34eligible business may be subject to all of the following:
35(1) A reduction or elimination of some or all of the tax
-8-1incentives the authority issued to the eligible business.
2(2) Repayment of any tax incentives that the business
3has claimed, and payment of any penalties assessed by the
4department of revenue.
5d. The project completion date, the maintenance period
6completion date, the required number of created jobs, and any
7other terms and obligations the authority deems necessary.
8e. The eligible business shall only employ individuals
9legally authorized to work in this state. If the eligible
10business is found to knowingly employ individuals who are
11not legally authorized to work in this state, in addition
12to any penalties provided by law, all or a portion of any
13tax incentives issued by the authority shall be subject to
14recapture by the authority or the department of revenue.
15f. Any terms deemed necessary by the authority to effect the
16eligible business’s ongoing compliance with section 15.283.
172. The business shall satisfy all applicable terms of
18the agreement by the project completion date; however, the
19board may for good cause extend the project completion date or
20otherwise amend the terms of the agreement.
213. The eligible business shall not assign the agreement
22to another entity without the advance written approval of the
23board.
244. The authority may enforce the terms of the agreement as
25necessary and appropriate.
26 Sec. 7. NEW SECTION. 15.286 Sales and use tax refund.
271. An eligible business that has been issued a tax incentive
28certificate under the program shall be entitled to a refund
29of the sales and use taxes paid under chapter 423 for gas,
30electricity, water, and sewer utility services, tangible
31personal property, or on services rendered, furnished, or
32performed to or for a contractor or subcontractor and used
33in the fulfillment of the contract for the construction or
34equipping of a facility that is part of the eligible business’s
35project. Taxes attributable to intangible property and
-9-1furniture and furnishings shall not be refunded.
22. To receive the sales and use tax refund, the eligible
3business shall file a claim with the department of revenue as
4follows:
5a. The contractor or subcontractor shall state under oath,
6on forms provided by the department of revenue, the amount of
7the sales of tangible personal property or services rendered,
8furnished, or performed including water, sewer, gas, and
9electric utility services upon which sales or use tax has been
10paid prior to contract completion, and shall submit the forms
11to the eligible business before contract completion.
12b. The eligible business shall inform the department of
13revenue in writing of contract completion. The eligible
14business shall, after contract completion, submit an
15application to the department of revenue for a refund of the
16amount of the sales and use taxes paid pursuant to chapter 423
17upon any tangible personal property, or services rendered,
18furnished, or performed, including water, sewer, gas, and
19electric utility services. The application shall be submitted
20in the form and manner prescribed by the department of revenue.
21The department of revenue shall audit the application and,
22if approved, issue a warrant to the eligible business in the
23amount of the sales or use tax which has been paid to the
24state of Iowa under subsection 1. The eligible business’s
25application must be submitted to the department of revenue
26within one year after the project completion date. An
27application filed by the eligible business in accordance with
28this section shall not be denied by reason of a limitation set
29forth in chapter 421 or 423.
30c. The refund shall be remitted by the department of revenue
31to the eligible business equally over not fewer than three tax
32years, and not more than five tax years, as elected by the
33eligible business in its application under paragraph “b”.
343. A contractor or subcontractor that willfully makes a
35false report of tax paid under this section is guilty of an
-10-1aggravated misdemeanor, and shall be liable for payment of the
2tax and any applicable penalty and interest.
3 Sec. 8. NEW SECTION. 15.286A Qualifying investment tax
4credit.
51. The authority may authorize a tax credit for an
6eligible business that is up to five percent of the eligible
7business’s qualifying investment in a certified site. The
8eligible business shall not claim the tax credit until the
9eligible business’s project has been placed in service,
10and at least fifty percent of the created jobs the eligible
11business agreed to in the agreement under section 15.285 have
12been created. The department of revenue shall remit the tax
13credit to the eligible business equally over five tax years.
14The tax credit shall be allowed against taxes imposed under
15chapter 422, subchapter II, III, or V, and against the moneys
16and credits tax imposed in section 533.329. If the eligible
17business is a partnership, S corporation, limited liability
18company, cooperative organized under chapter 501 and filing
19as a partnership for federal tax purposes, or estate or trust
20electing to have the income taxed directly to the individual,
21an individual may claim the tax credit allowed. The amount
22claimed by the individual shall be based upon the pro rata
23share of the individual’s earnings of the partnership, S
24corporation, limited liability company, cooperative organized
25under chapter 501 and filing as a partnership for federal tax
26purposes, or estate or trust. Any tax credit in excess of
27the eligible business’s tax liability for the tax year may be
28refunded or, at the eligible business’s election, credited to
29the eligible business’s tax liability in any of the following
30five consecutive tax years or until depleted, whichever occurs
31first. A tax credit shall not be carried back to a tax year
32prior to the tax year in which the tax credit is first claimed
33by the eligible business.
342. If within five years of the date the authority issues
35an eligible business a tax credit under subsection 1, the
-11-1eligible business sells, disposes of, razes, or otherwise
2renders unusable all or a part of the land, buildings, or
3other structures for which the tax credit was claimed under
4this section, the tax liability of the eligible business for
5the year in which all or part of the land, buildings, or other
6existing structures are sold, disposed of, razed, or otherwise
7rendered unusable shall be increased by one of the following
8amounts:
9a. One hundred percent of the tax credit claimed under
10this section if all or a part of the land, buildings, or other
11structures for which the tax credit was claimed under this
12section cease to be eligible for the tax credit within one
13year after the date the authority issued the tax credit to the
14eligible business.
15b. Eighty percent of the tax credit claimed under this
16section if all or a part of the land, buildings, or other
17structures for which the tax credit was claimed under this
18section cease to be eligible for the tax credit within two
19years after the date the authority issued the tax credit to the
20eligible business.
21c. Sixty percent of the tax credit claimed under this
22section if all or a part of the land, buildings, or other
23structures for which the tax credit was claimed under this
24section cease to be eligible for the tax credit within three
25years after the date the authority issued the tax credit to the
26eligible business.
27d. Forty percent of the tax credit claimed under this
28section if all or a part of the land, buildings, or other
29structures for which the tax credit was claimed under this
30section cease to be eligible for the tax credit within four
31years after the date the authority issued the tax credit to the
32eligible business.
33e. Twenty percent of the tax credit claimed under this
34section if all or a part of the land, buildings, or other
35structures for which the tax credit was claimed under this
-12-1section cease to be eligible for the tax credit within five
2years after the date the authority issued the tax credit to the
3eligible business.
4 Sec. 9. NEW SECTION. 15.286B Withholding tax credit.
51. From the remittance due to the department of revenue
6pursuant to section 422.16, subsection 2, an eligible business
7may withhold an amount not to exceed three percent of the gross
8wages paid to each employee in a created job that pays at least
9the qualifying wage threshold pursuant to the agreement under
10section 15.285.
112. If the amount withheld under subsection 1 is less than
12three percent of the gross wages paid to each employee in a
13created job, the eligible business shall receive a credit
14against the remaining withholding taxes due from the eligible
15business, or the eligible business may carry the credit forward
16up to five consecutive tax years or until depleted, whichever
17is earlier.
183. In any tax year, the aggregate amount of withholding tax
19credit under this section and under any other program for which
20an eligible business is receiving a withholding tax credit
21shall not exceed the amount the eligible business is required
22to deduct and remit to the department of revenue under section
23422.16, subsection 2, for that tax year.
24 Sec. 10. NEW SECTION. 15.287 Foreign businesses —
25acquisition of agricultural land.
261. If a foreign business’s proposed project is located on a
27mega site that includes agricultural land, the requirements of
28section 9I.3, subsection 3, paragraph “f”, must be satisfied in
29order for the foreign business to be eligible for the program.
302. a. A foreign business under subsection 1 that is
31approved by the authority to participate in the program shall
32enter into an agreement with the authority pursuant to section
3315.285. The agreement shall include a provision that requires
34the foreign business to comply with chapter 9I, and specifies
35that failure to do so may result in revocation of all tax
-13-1incentives issued by the authority to the foreign business.
2b. The authority may grant the foreign business one or
3more one-year extensions in which the foreign business must
4comply with section 9I.4. The authority shall not grant
5more than five one-year extensions. The community in which
6the agricultural land is located must approve each one-year
7extension by ordinance or resolution prior to the authority
8granting each extension. The foreign business shall comply
9with the remaining provisions of chapter 9I to the extent the
10provisions do not conflict with this section.
11 Sec. 11. NEW SECTION. 15.288 Other incentives.
121. Except for the high quality jobs program administered
13by the authority pursuant to sections 15.326 through 15.336,
14and the targeted jobs withholding credit pursuant to section
15403.19A, an eligible business may apply for and be eligible to
16receive other federal, state, and local incentives in addition
17to the tax incentives issued by the authority to the eligible
18business under the program.
192. The authority, in its discretion, may prohibit an
20eligible business that has been issued tax incentives under
21the program from receiving any additional tax incentive, tax
22credit, grant, loan, or other financial assistance under any
23program administered by the authority.
24 Sec. 12. NEW SECTION. 15.289 Property tax exemption.
251. A community in which an eligible business’s project
26is located may grant the eligible business a property tax
27exemption for all of, or a portion of, the actual value added
28by improvements to real property directly related to the
29eligible business’s created jobs. The community may allow a
30property tax exemption for a period not to exceed twenty years
31beginning the year that the improvements to real property are
32first assessed for taxation.
332. For purposes of this section, “improvements” means new
34construction, and rehabilitation of and additions to existing
35structures.
-14- 13. A property tax exemption granted under subsection 1 shall
2apply to all taxing districts, except for school districts, in
3which the real property is located.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill establishes a major economic growth attraction
8program (program) to be administered by the economic
9development authority (authority).
10To be eligible to receive tax incentives (incentives) under
11the program, a business’s proposed project (project) must
12be located on a certified site greater than 250 acres that
13the authority has determined is suitable for the project,
14and the business’s qualifying investment in the project must
15exceed $1 billion. Other requirements for a business to be
16eligible for the program are detailed in the bill. “Qualifying
17investment” is defined in the bill as a capital investment
18in real property located on a certified site, including the
19purchase price of the land, site preparation, infrastructure,
20and building construction. “Qualifying investment” also means
21a capital investment in depreciable assets. “Certified site”
22is defined as a site that has been issued a certificate of
23readiness by the authority pursuant to Code section 15E.18.
24“Tax incentives” and “project” are also defined in the bill.
25In determining if a business is eligible to participate
26in the program, the authority shall consider a variety of
27factors, including but not limited to whether the jobs created
28by the business’s project are high wage, low turnover, provide
29comprehensive benefits, and expose employees to minimal
30occupational hazards; the impact of the project on businesses
31that compete with the business applying to the program; and
32the project’s economic impact on the state. The bill requires
33the authority to place greater emphasis on businesses that
34have a high proportion of in-state suppliers and few in-state
35competitors; and on projects that diversify the state economy
-15-1and have the potential to create jobs on an ongoing basis.
2Applications for the program shall be submitted in the
3form and manner prescribed by the authority by rule and be
4accompanied by an application fee in an amount determined by
5the authority by rule. In determining a business’s eligibility
6for the program, the authority may engage outside experts
7to complete a technical, financial, or other review of an
8application if such review is outside the expertise of the
9authority. The authority and the authority’s board (board)
10may negotiate with an eligible business regarding the terms
11of, and the aggregate value of, the incentives the eligible
12business may receive under the program. The board may
13authorize any combination of incentives available under the
14program for an eligible business. The board may authorize an
15exemption to restrictions on agricultural land holdings for a
16foreign business that qualifies for the program pursuant to
17the requirements detailed in the bill. “Foreign business” is
18defined in the bill.
19The bill requires an eligible business that is approved to
20participate in the program to enter into an agreement with
21the authority that specifies the criteria for the successful
22completion of all requirements of the program. The agreement
23shall contain, at a minimum, the provisions as detailed in
24the bill. The business shall satisfy all applicable terms
25of the agreement by the project completion date; however,
26the board may for good cause extend the project completion
27date or otherwise amend the terms of the agreement. “Project
28completion date” is defined in the bill. The bill permits the
29authority to enforce the terms of the agreement as necessary
30and appropriate.
31An eligible business that has been issued a certificate
32under the program shall be entitled to a refund of the sales
33and use taxes (refund) paid under Code chapter 423 for gas,
34electricity, water, and sewer utility services, tangible
35personal property, or on services rendered, furnished, or
-16-1performed to or for a contractor or subcontractor and used in
2the fulfillment of the contract relating to the construction or
3equipping of a facility that is part of the eligible business’s
4project. Taxes attributable to intangible property and
5furniture and furnishings shall not be refunded. The procedure
6for the business to receive the refund is detailed in the bill.
7The refund shall be remitted by the department to the eligible
8business equally over not fewer than three tax years, and not
9more than five tax years, as elected by the business in its
10application to the department. A contractor or subcontractor
11that willfully makes a false report of tax paid is guilty of
12an aggravated misdemeanor, and shall be liable for payment of
13the tax and any applicable penalty and interest. An aggravated
14misdemeanor is punishable by confinement for no more than two
15years and a fine of at least $855 but not more than $8,540.
16The authority may authorize a tax credit for an eligible
17business that is up to 5 percent of the business’s qualifying
18investment in a certified site. The eligible business shall
19not claim the tax credit until the eligible business’s project
20has been placed in service, and at least 50 percent of the
21created jobs the eligible business agreed to in the agreement
22the business entered into with the authority have been created.
23The department shall remit the tax credit to the eligible
24business equally over five tax years. The tax credit shall
25be allowed against taxes imposed under Code chapter 422,
26subchapter II, III, or V, and against the moneys and credits
27tax imposed in Code section 533.329. Any tax credit in excess
28of the eligible business’s tax liability for the tax year
29may be refunded or, at the eligible business’s election,
30credited to the eligible business’s tax liability in each of
31the following five consecutive tax years or until depleted,
32whichever occurs first. A tax credit shall not be carried back
33to a tax year prior to the tax year in which the tax credit
34is first claimed by the eligible business. If within five
35years of the date the authority issues an eligible business a
-17-1qualifying investment tax credit the eligible business sells,
2disposes of, razes, or otherwise renders unusable all or a part
3of the land, buildings, or other structures for which the tax
4credit was claimed, the tax liability of the eligible business
5for the year in which all or part of the land, buildings, or
6other existing structures are sold, disposed of, razed, or
7otherwise rendered unusable shall be increased by an amount as
8detailed in the bill.
9From the remittance due to the department of revenue
10pursuant to Code section 422.16(2), an eligible business may
11withhold an amount not to exceed 3 percent of the gross wages
12paid to each employee in a created job that pays at least
13the qualifying wage threshold specified in the agreement the
14business entered into with the authority. “Created job” and
15“qualifying wage threshold” are defined in the bill. If the
16amount withheld is less than 3 percent of the gross wages
17paid to each employee in a created job, the eligible business
18shall receive a credit against the remaining withholding
19taxes due from the business, or the business may carry the
20credit forward up to five consecutive tax years or until
21depleted, whichever is earlier. In any tax year, the aggregate
22amount of withholding tax credit under this program, and any
23other program for which an eligible business is receiving
24a withholding tax credit, shall not exceed the amount the
25eligible business is required to deduct and remit to the
26department of revenue under Code section 422.16(2) for that tax
27year.
28If a foreign business’s proposed project is located on a
29mega site that includes agricultural land, the requirements as
30detailed in the bill must be satisfied for the foreign business
31to be eligible for the program. “Mega site” is defined in the
32bill as a certified site greater than 1,000 acres. A foreign
33business that is approved by the authority to participate in
34the program shall enter into an agreement with the authority
35that includes a provision that requires the foreign business
-18-1to comply with Code chapter 9I, and specifies that failure to
2do so may result in revocation of incentives issued by the
3authority to the foreign business. The authority may grant the
4foreign business one or more one-year extensions in which the
5foreign business must come into compliance with Code section
69I.4. The authority shall not grant a business more than five
7one-year extensions. The community in which the agricultural
8land is located must approve each extension by ordinance or
9resolution prior to the authority granting each extension.
10Except for the high quality jobs program, and the targeted
11jobs withholding credit, an eligible business may apply
12for and be eligible to receive other federal, state, and
13local incentives in addition to the incentives the authority
14issues to the business under the program. The authority, in
15its discretion, may prohibit an eligible business that has
16been issued incentives under the program from receiving any
17additional tax incentive, tax credit, grant, loan, or other
18financial assistance under any program administered by the
19authority.
20The bill allows a community in which an eligible business’s
21project is located to grant the eligible business a property
22tax exemption (exemption) for all of, or a portion of, the
23actual value added by improvements to real property directly
24related to the eligible business’s created jobs. The community
25may allow an exemption for a period not to exceed 20 years
26beginning the year that the improvements are first assessed
27for taxation. “Improvements” is defined as new construction,
28and rehabilitation of and additions to existing structures.
29An exemption granted by a community shall apply to all taxing
30districts, except for school districts, in which the real
31property is located.
-19-ko/jh
2program to be administered by the economic development
3authority, and providing penalties.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 9I.3, subsection 3, Code 2023, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. f. (1) An interest in agricultural land
4acquired by a foreign business for an immediate use other than
5farming if all of the following requirements are met:
6(a) The foreign business qualifies as an eligible business
7pursuant to section 15.283.
8(b) The foreign business is incorporated under the laws of
9a foreign country that is an allied country and the foreign
10business is wholly owned directly or indirectly by nonresident
11aliens of an allied country, or is a business entity, whether
12or not incorporated, which is wholly owned directly or
13indirectly by nonresident aliens of an allied country. As part
14of the foreign business’s application under section 15.284,
15the foreign business provides documentation to the authority,
16as deemed necessary by the authority, to establish that the
17foreign business is incorporated under the laws of a foreign
18country that is an allied country and the foreign business is
19wholly owned directly or indirectly by nonresident aliens of
20an allied country; or is a business entity, whether or not
21incorporated, which is wholly owned directly or indirectly by
22nonresident aliens of an allied country.
23(c) The agricultural land is a mega site, or included in a
24mega site.
25(d) The foreign business is not actively engaged in farming.
26(e) The board authorizes the acquisition of the
27agricultural land under the MEGA program administered by the
28economic development authority pursuant to sections 15.281
29through 15.289.
30(2) As used in this paragraph:
31(a) “Actively engaged in farming” means the same as defined
32in section 15.282.
33(b) “Allied country” means the same as defined in 10 U.S.C.
34§2350f(d)(1).
35(c) “Authority” means the economic development authority.
-1- 1(d) “Board” means the members of the authority appointed by
2the governor and in whom the powers of the authority are vested
3pursuant to section 15.105.
4(e) “Certified site” means a site that has been issued a
5certificate of readiness by the authority pursuant to section
615E.18.
7(f) “Mega site” means the same as defined in section 15.282.
8 Sec. 2. NEW SECTION. 15.281 Short title.
9This part shall be known and may be cited as the “Major
10Economic Growth Attraction Program” or “MEGA Program”.
11 Sec. 3. NEW SECTION. 15.282 Definitions.
12As used in this part, unless the context otherwise requires:
131. “Actively engaged in farming” means any of the following:
14a. Performing physical work which significantly contributes
15to crop or livestock production.
16b. Regularly and frequently making or taking an important
17part in making management decisions substantially contributing
18to or affecting the success of a farm’s operations.
192. “Base employment level” means the number of full-time
20equivalent positions at a business, as established by the
21authority and the business using the business’s payroll
22records, as of the date the business applies for tax incentives
23under the program.
243. “Benefit” means nonwage compensation provided to an
25employee. “Benefits” include medical and dental insurance, a
26pension, a retirement plan, a profit-sharing plan, child care,
27life insurance, vision insurance, and disability insurance.
284. “Certified site” means a site that has been issued a
29certificate of readiness by the authority pursuant to section
3015E.18.
315. “Community” means a city, county, or entity established
32pursuant to chapter 28E.
336. “Contract completion” means the date of completion of
34the terms of a contract between a contractor and an eligible
35business.
-2- 17. “Contractor” means a person that has executed a contract
2with an eligible business for the provision of property,
3materials, or services for the construction or equipping of a
4facility that is part of the eligible business’s project.
58. “Created jobs” or “create jobs” means new, permanent,
6full-time equivalent positions added to an eligible business’s
7payroll in excess of the eligible business’s base employment
8level.
99. “Data center business” means the same as defined in
10section 423.3, subsection 95.
1110. “Eligible business” means a business that meets the
12requirements of section 15.283.
1311. “Foreign business” means the same as defined in section
149I.1.
1512. “Full-time equivalent position” means a non-part-time
16position for the number of hours or days per week considered
17to be full-time work for the kind of service or work performed
18for an employer. Typically, a “full-time equivalent position”
19requires two thousand eighty hours of work in a calendar year,
20including all paid holidays, vacations, sick time, and other
21paid leave.
2213. “Maintenance period” means the period of time between
23the project completion date and the maintenance period
24completion date during which an eligible business must maintain
25all created jobs per the agreement under section 15.285.
2614. “Maintenance period completion date” means the date on
27which the maintenance period ends.
2815. “Mega site” means a certified site greater than one
29thousand acres.
3016. “Program” means the major economic growth attraction
31program.
3217. “Project” means an activity or set of activities
33directly related to the start-up or location of an eligible
34business, proposed in an eligible business’s application to the
35program, that will accomplish the goals of the program.
-3- 118. “Project completion date” means the date by which
2an eligible business that has been issued a tax incentive
3certificate by the authority under the program agrees to
4complete the terms and conditions of the agreement under
5section 15.285.
619. “Project completion period” means the period of
7time between the date the authority issues a tax incentive
8certificate to an eligible business and the project completion
9date.
1020. “Qualifying investment” means a capital investment
11in real property located on a certified site, including the
12purchase price of the land, site preparation, infrastructure,
13and building construction. “Qualifying investment” also means a
14capital investment in depreciable assets.
1521. “Qualifying wage threshold” means the wage level
16represented by the wages within two standard deviations of
17the mean wage within the laborshed area in which the eligible
18business is located, as calculated by the authority by rule,
19using the most current covered wage and employment data
20available from the department of workforce development for the
21laborshed area in which the eligible business is located.
2222. “Subcontractor” means a person that contracts with
23a contractor for the provision of property, materials, or
24services for the construction or equipping of a facility that
25is part of an eligible business’s project.
2623. “Tax incentives” means tax credits, tax refunds, or tax
27exemptions authorized under the program by the authority for an
28eligible business.
29 Sec. 4. NEW SECTION. 15.283 Eligible business.
301. To be eligible to receive tax incentives under
31the program, a business must meet all of the following
32requirements:
33a. The business’s proposed project must be located on a
34certified site greater than two hundred fifty acres that the
35authority has determined is suitable for the project.
-4- 1b. The business’s qualifying investment in the proposed
2project must exceed one billion dollars.
3c. The community in which the proposed project is located
4must approve the project either by ordinance or resolution.
5d. (1) The business must be primarily engaged in advanced
6manufacturing, biosciences, or research and development.
7The business shall not be a data center business, a retail
8business, or a business where a cover charge or membership
9requirement restricts certain individuals from entering the
10business.
11(2) Factors the authority shall consider to determine if
12a business is primarily engaged in advanced manufacturing,
13biosciences, or research and development shall include but are
14not limited to all of the following:
15(a) The business’s North American industry classification
16system code.
17(b) The business’s main sources of revenue.
18(c) The business’s customer base.
19e. (1) The business must not be solely relocating
20operations from one area of the state to another area of
21the state. A proposed project that does not create jobs or
22involve a substantial amount of new capital investment shall
23be presumed to be a relocation of operations. For purposes of
24this subparagraph, the authority shall consider a letter from
25the affected local community’s government officials supporting
26the business’s move away from the affected local community
27in making a determination whether the business is solely
28relocating operations.
29(2) This paragraph shall not be construed to prohibit
30a business from expanding the business’s operations in a
31community if the business has similar operations in this state
32that are not closing or undergoing a substantial reduction in
33operations.
34f. The business must create jobs as part of the business’s
35proposed project. The business must demonstrate that the
-5-1created jobs will pay at least one hundred forty percent of the
2qualifying wage threshold by the project completion date, and
3through the maintenance period completion date.
4g. The business must provide comprehensive benefits to
5each employee employed in a created job. The authority may
6adopt rules under chapter 17A to determine the requirements for
7comprehensive benefits.
8h. (1) The business must not have a record of violations
9of the law or of regulations, including but not limited to
10antitrust, environmental, trade, or worker safety, that over
11a period of time show a consistent pattern or that establish
12the business’s intentional, criminal, or reckless conduct in
13violation of such laws or regulations.
14(2) If the authority determines that the business has a
15record of violations described in subparagraph (1), and the
16authority finds that the violations did not seriously affect
17public health, public safety, or the environment, the business
18may be eligible to qualify for tax incentives under the
19program.
20(3) If the authority determines that the business has
21a record of violations described in subparagraph (1), and
22the authority finds that there were mitigating circumstances
23related to the violations, the business may be eligible to
24qualify for tax incentives under the program.
25(4) In making determinations and findings under
26subparagraphs (2) and (3), and making a determination whether a
27business is disqualified from the program, the authority shall
28be exempt from chapter 17A.
292. a. In determining if a business is eligible to
30participate in the program, the authority shall consider a
31variety of factors, including but not limited to all of the
32following:
33(1) The quality of the business’s proposed project’s
34created jobs. The authority shall place greater emphasis on
35created jobs that are high wage, low turnover, that provide
-6-1comprehensive benefits, and that expose employees to minimal
2occupational hazards. A business that pays wages substantially
3below that of similar businesses located in the same geographic
4area shall not be given priority under the program.
5(2) The impact of the business’s proposed project on
6businesses that are in competition with the business.
7The authority shall make a good-faith effort to identify
8existing Iowa businesses in competition with the business
9being considered for the program. The authority shall make
10a good-faith effort to determine the probability that any
11proposed tax incentives will displace employees of the
12competing businesses. In determining the impact on the
13competing businesses, created jobs resulting from employees
14being displaced from the competing businesses shall not be
15counted as created jobs for the applying business’s project.
16(3) The business’s proposed project’s economic impact
17on the state. The authority shall place greater emphasis
18on businesses and proposed projects that meet the following
19requirements:
20(a) The business has a high proportion of in-state
21suppliers.
22(b) The proposed project will diversify the state economy.
23(c) The business has few in-state competitors.
24(d) The proposed project has the potential to create jobs on
25an ongoing basis.
26(e) Any other factors the authority deems relevant in
27determining the economic impact of a proposed project.
28 Sec. 5. NEW SECTION. 15.284 Applications — authorization
29of tax credits and exemptions.
301. Applications for the program shall be submitted to the
31authority in the form and manner prescribed by the authority by
32rule. Each application must be accompanied by an application
33fee in an amount determined by the authority by rule.
342. In determining the eligibility of a business to
35participate in the program, the authority may engage outside
-7-1experts to complete a technical, financial, or other review
2of an application submitted by a business if such review is
3outside the expertise of the authority.
43. a. The authority and the board may negotiate with an
5eligible business regarding the terms of, and the aggregate
6value of, the tax incentives the eligible business may receive
7under the program.
8b. The board may authorize any combination of tax incentives
9available under the program for an eligible business.
104. The board may authorize an exemption to restrictions on
11agricultural land holdings pursuant to section 9I.3, subsection
123, paragraph “f”.
13 Sec. 6. NEW SECTION. 15.285 Agreement.
141. An eligible business that is approved by the authority to
15participate in the program shall enter into an agreement with
16the authority that specifies the criteria for the successful
17completion of all requirements of the program. The agreement
18must contain, at a minimum, provisions related to all of the
19following:
20a. The eligible business must certify to the authority
21annually that the business is in compliance with the agreement.
22b. If the eligible business fails to comply with any
23requirements of the program or the agreement, the eligible
24business may be required to repay any tax incentives the
25authority issued to the eligible business. A required
26repayment of a tax incentive shall be considered a tax payment
27due and payable to the department of revenue by any taxpayer
28that claimed the tax incentive, and the failure to make the
29repayment may be treated by the department of revenue in the
30same manner as a failure to pay the tax shown due, or required
31to be shown due, with the filing of a return or deposit form.
32c. If the eligible business undergoes a layoff or
33permanently closes any of its facilities within the state, the
34eligible business may be subject to all of the following:
35(1) A reduction or elimination of some or all of the tax
-8-1incentives the authority issued to the eligible business.
2(2) Repayment of any tax incentives that the business
3has claimed, and payment of any penalties assessed by the
4department of revenue.
5d. The project completion date, the maintenance period
6completion date, the required number of created jobs, and any
7other terms and obligations the authority deems necessary.
8e. The eligible business shall only employ individuals
9legally authorized to work in this state. If the eligible
10business is found to knowingly employ individuals who are
11not legally authorized to work in this state, in addition
12to any penalties provided by law, all or a portion of any
13tax incentives issued by the authority shall be subject to
14recapture by the authority or the department of revenue.
15f. Any terms deemed necessary by the authority to effect the
16eligible business’s ongoing compliance with section 15.283.
172. The business shall satisfy all applicable terms of
18the agreement by the project completion date; however, the
19board may for good cause extend the project completion date or
20otherwise amend the terms of the agreement.
213. The eligible business shall not assign the agreement
22to another entity without the advance written approval of the
23board.
244. The authority may enforce the terms of the agreement as
25necessary and appropriate.
26 Sec. 7. NEW SECTION. 15.286 Sales and use tax refund.
271. An eligible business that has been issued a tax incentive
28certificate under the program shall be entitled to a refund
29of the sales and use taxes paid under chapter 423 for gas,
30electricity, water, and sewer utility services, tangible
31personal property, or on services rendered, furnished, or
32performed to or for a contractor or subcontractor and used
33in the fulfillment of the contract for the construction or
34equipping of a facility that is part of the eligible business’s
35project. Taxes attributable to intangible property and
-9-1furniture and furnishings shall not be refunded.
22. To receive the sales and use tax refund, the eligible
3business shall file a claim with the department of revenue as
4follows:
5a. The contractor or subcontractor shall state under oath,
6on forms provided by the department of revenue, the amount of
7the sales of tangible personal property or services rendered,
8furnished, or performed including water, sewer, gas, and
9electric utility services upon which sales or use tax has been
10paid prior to contract completion, and shall submit the forms
11to the eligible business before contract completion.
12b. The eligible business shall inform the department of
13revenue in writing of contract completion. The eligible
14business shall, after contract completion, submit an
15application to the department of revenue for a refund of the
16amount of the sales and use taxes paid pursuant to chapter 423
17upon any tangible personal property, or services rendered,
18furnished, or performed, including water, sewer, gas, and
19electric utility services. The application shall be submitted
20in the form and manner prescribed by the department of revenue.
21The department of revenue shall audit the application and,
22if approved, issue a warrant to the eligible business in the
23amount of the sales or use tax which has been paid to the
24state of Iowa under subsection 1. The eligible business’s
25application must be submitted to the department of revenue
26within one year after the project completion date. An
27application filed by the eligible business in accordance with
28this section shall not be denied by reason of a limitation set
29forth in chapter 421 or 423.
30c. The refund shall be remitted by the department of revenue
31to the eligible business equally over not fewer than three tax
32years, and not more than five tax years, as elected by the
33eligible business in its application under paragraph “b”.
343. A contractor or subcontractor that willfully makes a
35false report of tax paid under this section is guilty of an
-10-1aggravated misdemeanor, and shall be liable for payment of the
2tax and any applicable penalty and interest.
3 Sec. 8. NEW SECTION. 15.286A Qualifying investment tax
4credit.
51. The authority may authorize a tax credit for an
6eligible business that is up to five percent of the eligible
7business’s qualifying investment in a certified site. The
8eligible business shall not claim the tax credit until the
9eligible business’s project has been placed in service,
10and at least fifty percent of the created jobs the eligible
11business agreed to in the agreement under section 15.285 have
12been created. The department of revenue shall remit the tax
13credit to the eligible business equally over five tax years.
14The tax credit shall be allowed against taxes imposed under
15chapter 422, subchapter II, III, or V, and against the moneys
16and credits tax imposed in section 533.329. If the eligible
17business is a partnership, S corporation, limited liability
18company, cooperative organized under chapter 501 and filing
19as a partnership for federal tax purposes, or estate or trust
20electing to have the income taxed directly to the individual,
21an individual may claim the tax credit allowed. The amount
22claimed by the individual shall be based upon the pro rata
23share of the individual’s earnings of the partnership, S
24corporation, limited liability company, cooperative organized
25under chapter 501 and filing as a partnership for federal tax
26purposes, or estate or trust. Any tax credit in excess of
27the eligible business’s tax liability for the tax year may be
28refunded or, at the eligible business’s election, credited to
29the eligible business’s tax liability in any of the following
30five consecutive tax years or until depleted, whichever occurs
31first. A tax credit shall not be carried back to a tax year
32prior to the tax year in which the tax credit is first claimed
33by the eligible business.
342. If within five years of the date the authority issues
35an eligible business a tax credit under subsection 1, the
-11-1eligible business sells, disposes of, razes, or otherwise
2renders unusable all or a part of the land, buildings, or
3other structures for which the tax credit was claimed under
4this section, the tax liability of the eligible business for
5the year in which all or part of the land, buildings, or other
6existing structures are sold, disposed of, razed, or otherwise
7rendered unusable shall be increased by one of the following
8amounts:
9a. One hundred percent of the tax credit claimed under
10this section if all or a part of the land, buildings, or other
11structures for which the tax credit was claimed under this
12section cease to be eligible for the tax credit within one
13year after the date the authority issued the tax credit to the
14eligible business.
15b. Eighty percent of the tax credit claimed under this
16section if all or a part of the land, buildings, or other
17structures for which the tax credit was claimed under this
18section cease to be eligible for the tax credit within two
19years after the date the authority issued the tax credit to the
20eligible business.
21c. Sixty percent of the tax credit claimed under this
22section if all or a part of the land, buildings, or other
23structures for which the tax credit was claimed under this
24section cease to be eligible for the tax credit within three
25years after the date the authority issued the tax credit to the
26eligible business.
27d. Forty percent of the tax credit claimed under this
28section if all or a part of the land, buildings, or other
29structures for which the tax credit was claimed under this
30section cease to be eligible for the tax credit within four
31years after the date the authority issued the tax credit to the
32eligible business.
33e. Twenty percent of the tax credit claimed under this
34section if all or a part of the land, buildings, or other
35structures for which the tax credit was claimed under this
-12-1section cease to be eligible for the tax credit within five
2years after the date the authority issued the tax credit to the
3eligible business.
4 Sec. 9. NEW SECTION. 15.286B Withholding tax credit.
51. From the remittance due to the department of revenue
6pursuant to section 422.16, subsection 2, an eligible business
7may withhold an amount not to exceed three percent of the gross
8wages paid to each employee in a created job that pays at least
9the qualifying wage threshold pursuant to the agreement under
10section 15.285.
112. If the amount withheld under subsection 1 is less than
12three percent of the gross wages paid to each employee in a
13created job, the eligible business shall receive a credit
14against the remaining withholding taxes due from the eligible
15business, or the eligible business may carry the credit forward
16up to five consecutive tax years or until depleted, whichever
17is earlier.
183. In any tax year, the aggregate amount of withholding tax
19credit under this section and under any other program for which
20an eligible business is receiving a withholding tax credit
21shall not exceed the amount the eligible business is required
22to deduct and remit to the department of revenue under section
23422.16, subsection 2, for that tax year.
24 Sec. 10. NEW SECTION. 15.287 Foreign businesses —
25acquisition of agricultural land.
261. If a foreign business’s proposed project is located on a
27mega site that includes agricultural land, the requirements of
28section 9I.3, subsection 3, paragraph “f”, must be satisfied in
29order for the foreign business to be eligible for the program.
302. a. A foreign business under subsection 1 that is
31approved by the authority to participate in the program shall
32enter into an agreement with the authority pursuant to section
3315.285. The agreement shall include a provision that requires
34the foreign business to comply with chapter 9I, and specifies
35that failure to do so may result in revocation of all tax
-13-1incentives issued by the authority to the foreign business.
2b. The authority may grant the foreign business one or
3more one-year extensions in which the foreign business must
4comply with section 9I.4. The authority shall not grant
5more than five one-year extensions. The community in which
6the agricultural land is located must approve each one-year
7extension by ordinance or resolution prior to the authority
8granting each extension. The foreign business shall comply
9with the remaining provisions of chapter 9I to the extent the
10provisions do not conflict with this section.
11 Sec. 11. NEW SECTION. 15.288 Other incentives.
121. Except for the high quality jobs program administered
13by the authority pursuant to sections 15.326 through 15.336,
14and the targeted jobs withholding credit pursuant to section
15403.19A, an eligible business may apply for and be eligible to
16receive other federal, state, and local incentives in addition
17to the tax incentives issued by the authority to the eligible
18business under the program.
192. The authority, in its discretion, may prohibit an
20eligible business that has been issued tax incentives under
21the program from receiving any additional tax incentive, tax
22credit, grant, loan, or other financial assistance under any
23program administered by the authority.
24 Sec. 12. NEW SECTION. 15.289 Property tax exemption.
251. A community in which an eligible business’s project
26is located may grant the eligible business a property tax
27exemption for all of, or a portion of, the actual value added
28by improvements to real property directly related to the
29eligible business’s created jobs. The community may allow a
30property tax exemption for a period not to exceed twenty years
31beginning the year that the improvements to real property are
32first assessed for taxation.
332. For purposes of this section, “improvements” means new
34construction, and rehabilitation of and additions to existing
35structures.
-14- 13. A property tax exemption granted under subsection 1 shall
2apply to all taxing districts, except for school districts, in
3which the real property is located.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill establishes a major economic growth attraction
8program (program) to be administered by the economic
9development authority (authority).
10To be eligible to receive tax incentives (incentives) under
11the program, a business’s proposed project (project) must
12be located on a certified site greater than 250 acres that
13the authority has determined is suitable for the project,
14and the business’s qualifying investment in the project must
15exceed $1 billion. Other requirements for a business to be
16eligible for the program are detailed in the bill. “Qualifying
17investment” is defined in the bill as a capital investment
18in real property located on a certified site, including the
19purchase price of the land, site preparation, infrastructure,
20and building construction. “Qualifying investment” also means
21a capital investment in depreciable assets. “Certified site”
22is defined as a site that has been issued a certificate of
23readiness by the authority pursuant to Code section 15E.18.
24“Tax incentives” and “project” are also defined in the bill.
25In determining if a business is eligible to participate
26in the program, the authority shall consider a variety of
27factors, including but not limited to whether the jobs created
28by the business’s project are high wage, low turnover, provide
29comprehensive benefits, and expose employees to minimal
30occupational hazards; the impact of the project on businesses
31that compete with the business applying to the program; and
32the project’s economic impact on the state. The bill requires
33the authority to place greater emphasis on businesses that
34have a high proportion of in-state suppliers and few in-state
35competitors; and on projects that diversify the state economy
-15-1and have the potential to create jobs on an ongoing basis.
2Applications for the program shall be submitted in the
3form and manner prescribed by the authority by rule and be
4accompanied by an application fee in an amount determined by
5the authority by rule. In determining a business’s eligibility
6for the program, the authority may engage outside experts
7to complete a technical, financial, or other review of an
8application if such review is outside the expertise of the
9authority. The authority and the authority’s board (board)
10may negotiate with an eligible business regarding the terms
11of, and the aggregate value of, the incentives the eligible
12business may receive under the program. The board may
13authorize any combination of incentives available under the
14program for an eligible business. The board may authorize an
15exemption to restrictions on agricultural land holdings for a
16foreign business that qualifies for the program pursuant to
17the requirements detailed in the bill. “Foreign business” is
18defined in the bill.
19The bill requires an eligible business that is approved to
20participate in the program to enter into an agreement with
21the authority that specifies the criteria for the successful
22completion of all requirements of the program. The agreement
23shall contain, at a minimum, the provisions as detailed in
24the bill. The business shall satisfy all applicable terms
25of the agreement by the project completion date; however,
26the board may for good cause extend the project completion
27date or otherwise amend the terms of the agreement. “Project
28completion date” is defined in the bill. The bill permits the
29authority to enforce the terms of the agreement as necessary
30and appropriate.
31An eligible business that has been issued a certificate
32under the program shall be entitled to a refund of the sales
33and use taxes (refund) paid under Code chapter 423 for gas,
34electricity, water, and sewer utility services, tangible
35personal property, or on services rendered, furnished, or
-16-1performed to or for a contractor or subcontractor and used in
2the fulfillment of the contract relating to the construction or
3equipping of a facility that is part of the eligible business’s
4project. Taxes attributable to intangible property and
5furniture and furnishings shall not be refunded. The procedure
6for the business to receive the refund is detailed in the bill.
7The refund shall be remitted by the department to the eligible
8business equally over not fewer than three tax years, and not
9more than five tax years, as elected by the business in its
10application to the department. A contractor or subcontractor
11that willfully makes a false report of tax paid is guilty of
12an aggravated misdemeanor, and shall be liable for payment of
13the tax and any applicable penalty and interest. An aggravated
14misdemeanor is punishable by confinement for no more than two
15years and a fine of at least $855 but not more than $8,540.
16The authority may authorize a tax credit for an eligible
17business that is up to 5 percent of the business’s qualifying
18investment in a certified site. The eligible business shall
19not claim the tax credit until the eligible business’s project
20has been placed in service, and at least 50 percent of the
21created jobs the eligible business agreed to in the agreement
22the business entered into with the authority have been created.
23The department shall remit the tax credit to the eligible
24business equally over five tax years. The tax credit shall
25be allowed against taxes imposed under Code chapter 422,
26subchapter II, III, or V, and against the moneys and credits
27tax imposed in Code section 533.329. Any tax credit in excess
28of the eligible business’s tax liability for the tax year
29may be refunded or, at the eligible business’s election,
30credited to the eligible business’s tax liability in each of
31the following five consecutive tax years or until depleted,
32whichever occurs first. A tax credit shall not be carried back
33to a tax year prior to the tax year in which the tax credit
34is first claimed by the eligible business. If within five
35years of the date the authority issues an eligible business a
-17-1qualifying investment tax credit the eligible business sells,
2disposes of, razes, or otherwise renders unusable all or a part
3of the land, buildings, or other structures for which the tax
4credit was claimed, the tax liability of the eligible business
5for the year in which all or part of the land, buildings, or
6other existing structures are sold, disposed of, razed, or
7otherwise rendered unusable shall be increased by an amount as
8detailed in the bill.
9From the remittance due to the department of revenue
10pursuant to Code section 422.16(2), an eligible business may
11withhold an amount not to exceed 3 percent of the gross wages
12paid to each employee in a created job that pays at least
13the qualifying wage threshold specified in the agreement the
14business entered into with the authority. “Created job” and
15“qualifying wage threshold” are defined in the bill. If the
16amount withheld is less than 3 percent of the gross wages
17paid to each employee in a created job, the eligible business
18shall receive a credit against the remaining withholding
19taxes due from the business, or the business may carry the
20credit forward up to five consecutive tax years or until
21depleted, whichever is earlier. In any tax year, the aggregate
22amount of withholding tax credit under this program, and any
23other program for which an eligible business is receiving
24a withholding tax credit, shall not exceed the amount the
25eligible business is required to deduct and remit to the
26department of revenue under Code section 422.16(2) for that tax
27year.
28If a foreign business’s proposed project is located on a
29mega site that includes agricultural land, the requirements as
30detailed in the bill must be satisfied for the foreign business
31to be eligible for the program. “Mega site” is defined in the
32bill as a certified site greater than 1,000 acres. A foreign
33business that is approved by the authority to participate in
34the program shall enter into an agreement with the authority
35that includes a provision that requires the foreign business
-18-1to comply with Code chapter 9I, and specifies that failure to
2do so may result in revocation of incentives issued by the
3authority to the foreign business. The authority may grant the
4foreign business one or more one-year extensions in which the
5foreign business must come into compliance with Code section
69I.4. The authority shall not grant a business more than five
7one-year extensions. The community in which the agricultural
8land is located must approve each extension by ordinance or
9resolution prior to the authority granting each extension.
10Except for the high quality jobs program, and the targeted
11jobs withholding credit, an eligible business may apply
12for and be eligible to receive other federal, state, and
13local incentives in addition to the incentives the authority
14issues to the business under the program. The authority, in
15its discretion, may prohibit an eligible business that has
16been issued incentives under the program from receiving any
17additional tax incentive, tax credit, grant, loan, or other
18financial assistance under any program administered by the
19authority.
20The bill allows a community in which an eligible business’s
21project is located to grant the eligible business a property
22tax exemption (exemption) for all of, or a portion of, the
23actual value added by improvements to real property directly
24related to the eligible business’s created jobs. The community
25may allow an exemption for a period not to exceed 20 years
26beginning the year that the improvements are first assessed
27for taxation. “Improvements” is defined as new construction,
28and rehabilitation of and additions to existing structures.
29An exemption granted by a community shall apply to all taxing
30districts, except for school districts, in which the real
31property is located.
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