Print
Senate Study Bill 1034 - IntroducedA Bill ForAn Act 1relating to water quality by amending the wastewater
2treatment financial assistance program, making
3appropriations from the rebuild Iowa infrastructure fund,
4creating a water quality infrastructure fund, establishing
5a water quality financing program, providing for cost-share
6programs for infrastructure on agricultural and urban land
7under the water quality initiative, creating a water service
8excise tax and a related sales tax exemption, and making
9appropriations.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8.57, subsection 5, Code 2017, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. 0h. (1) Notwithstanding paragraph “c” of
4this subsection, there is appropriated from the rebuild Iowa
5infrastructure fund to the water quality infrastructure fund
6created in section 8.57B the following amounts:
7(a) For the fiscal year beginning July 1, 2017, and ending
8June 30, 2018, four million three hundred thousand dollars.
9(b) For the fiscal year beginning July 1, 2018, and ending
10June 30, 2019, four million three hundred thousand dollars.
11(c) For the fiscal year beginning July 1, 2019, and ending
12June 30, 2020, eleven million five hundred thousand dollars.
13(d) For the fiscal year beginning July 1, 2020, and ending
14June 30, 2021, sixteen million five hundred thousand dollars.
15(e) For the fiscal year beginning July 1, 2021, and ending
16June 30, 2022, sixteen million five hundred thousand dollars.
17(f) For the fiscal year beginning July 1, 2022, and ending
18June 30, 2023, twenty-two million dollars.
19(g) For the fiscal year beginning July 1, 2023, and ending
20June 30, 2024, twenty-two million dollars.
21(h) For the fiscal year beginning July 1, 2024, and ending
22June 30, 2025, twenty-two million dollars.
23(i) For the fiscal year beginning July 1, 2025, and ending
24June 30, 2026, twenty-two million dollars.
25(j) For the fiscal year beginning July 1, 2026, and ending
26June 30, 2027, twenty-two million dollars.
27(k) For the fiscal year beginning July 1, 2027, and ending
28June 30, 2028, twenty-two million dollars.
29(l) For the fiscal year beginning July 1, 2028, and ending
30June 30, 2029, twenty-two million dollars.
31(m) For the fiscal year beginning July 1, 2029, and ending
32June 30, 2030, twenty-two million dollars.
33(2) This paragraph “0h” is repealed on January 1, 2031.
34 Sec. 2. NEW SECTION. 8.57B Water quality infrastructure
35fund — creation — appropriations.
-1- 11. A water quality infrastructure fund is created within
2the division of soil conservation and water quality of the
3department of agriculture and land stewardship. The fund
4shall consist of moneys appropriated from the rebuild Iowa
5infrastructure fund pursuant to section 8.57, subsection 5,
6paragraph “0h”.
72. The fund shall be separate from the general fund of the
8state and the balance in the fund shall not be considered part
9of the balance of the general fund of the state. However, the
10fund shall be considered a special account for the purposes
11of section 8.53, relating to generally accepted accounting
12principles.
133. Moneys in the fund are appropriated to the division
14of soil conservation and water quality of the department of
15agriculture and land stewardship for the exclusive purpose of
16supporting water quality agriculture infrastructure programs
17created in section 466B.43.
184. Notwithstanding section 8.33, moneys in the fund
19that remain unencumbered or unobligated at the close of a
20fiscal year shall not revert but shall remain available for
21expenditure for the purposes designated. Notwithstanding
22section 12C.7, subsection 2, interest or earnings on moneys in
23the fund shall be credited to the fund.
245. This section is repealed on the date that all moneys
25transferred to the water quality infrastructure fund from
26the rebuild Iowa infrastructure fund pursuant to section
278.57, subsection 5, paragraph “0h”, including any interest
28or earnings on such moneys credited to the water quality
29infrastructure fund, are expended by the division of soil
30conservation and water quality of the department of agriculture
31and land stewardship, and the balance of the water quality
32infrastructure fund is zero. The director of the division
33of soil conservation and water quality of the department of
34agriculture and land stewardship shall notify the Code editor
35of this occurrence.
-2-1 Sec. 3. Section 16.134, Code 2017, is amended to read as
2follows:
316.134 Wastewater and drinking water treatment financial
4assistance program.
51. The Iowa finance authority shall establish and
6administer a wastewater and drinking water treatment financial
7assistance program. The purpose of the program shall be to
8provide financial assistance to enhance water quality. The
9program shall be administered in accordance with rules adopted
10by the authority pursuant to chapter 17A. For purposes of
11this section, “program” means the wastewater and drinking water
12 treatment financial assistance program and “committee” means the
13water quality financing review committee created in subsection
149.
152. A wastewater and drinking water treatment financial
16assistance fund is created and shall consist of appropriations
17made to the fund and transfers of interest, earnings, and
18moneys from other funds as provided by law. Moneys transferred
19to the fund pursuant to section 16.134A are appropriated to the
20authority for purposes of the program. Moneys in the fund are
21not subject to section 8.33. Notwithstanding section 12C.7,
22subsection 2, interest or earnings on moneys in the fund shall
23be credited to the fund.
243. Financial assistance under the program shall be used
25to install or upgrade wastewater treatment facilities and
26systems and drinking water treatment facilities and systems,
27including source water protection projects, and for engineering
28or technical assistance for facility planning and design.
294. The authority committee shall distribute approve
30 financial assistance in from the fund in accordance with the
31following:
32a. The goal of the program shall be to base awards on the
33impact of the grant combined with other sources of financing to
34ensure that sewer rates do not exceed one and one-half percent
35of a community’s median household income.
-3- 1b. a. Communities shall be eligible for financial
2assistance by qualifying as Priority shall be given for
3projects in which a disadvantaged community and is seeking
4financial assistance for the installation or upgrade of
5wastewater treatment facilities due to regulatory activity
6by the department of natural resources and drinking water
7treatment facilities. For purposes of this section, the term
8“disadvantaged community” means the same as defined by the
9department.
10c. b. Priority shall be given to projects in which the
11 meeting criteria established in section 455B.199B in which the
12applicant seeks financial assistance is to be used to obtain
13 with financing under the water pollution control works and
14drinking water facilities financing program pursuant to section
1516.131 or other federal, or state, or private financing.
16d. c. Priority shall also be given to projects whose
17completion will provide significant improvement to water
18quality in the relevant watershed.
19e. d. Priority shall also be given to communities that
20employ an alternative wastewater treatment technology pursuant
21to section 455B.199C.
22f. e. Priority shall be also be given to those communities
23where sewer or water rates are the highest as a percentage of
24that community’s median household income.
25f. Priority shall also be given to communities that employ
26technology to address the latest version of the “Iowa Nutrient
27Reduction Strategy” initially presented in November 2012 by the
28department of agriculture and land stewardship, the department
29of natural resources, and Iowa state university of science and
30technology.
31g. Financial assistance in the form of grants shall be
32issued on an annual basis.
33h. An applicant shall not receive a grant that exceeds five
34hundred thousand dollars.
354A. A utility management organization formed under chapter
-4-128E or operated by a rural water system organized under chapter
2357A or chapter 504 shall be considered eligible for financial
3assistance under the program.
45. The authority in cooperation with the department of
5natural resources shall share provide information and resources
6to the committee when the committee is determining the
7qualifications of a community for financial assistance from the
8fund.
96. The authority shall enter into agreements with financial
10assistance recipients and distribute moneys under the program
11pursuant to financial assistance determinations made by the
12committee.The authority may use an amount of not more than
13four one percent of any moneys appropriated for deposit in the
14fund for administration purposes.
157. By October 1 of each year, the authority shall submit
16a report to the governor and the general assembly itemizing
17expenditures under the program during the previous fiscal year.
188. a. Beginning September 1, 2027, and every ten years
19thereafter, a program review committee is established for
20purposes of reviewing the wastewater and drinking water
21treatment financial assistance program. By December 1 of the
22same year, the program review committee shall file a report
23with the governor and the general assembly that reviews the
24effectiveness of the program during the prior ten fiscal years.
25b. The program review committee shall consist of the
26following members:
27(1) The governor or the governor’s designee.
28(2) The secretary of agriculture or the secretary’s
29designee.
30(3) The executive director of the authority or the executive
31director’s designee.
32(4) The director of the department of natural resources or
33the director’s designee.
34(5) Four members of the general assembly, with two from the
35senate and two from the house of representatives and not more
-5-1than one member from each chamber being from the same political
2party. The two senators shall be designated one member each
3by the president of the senate, after consultation with the
4majority leader of the senate, and by the minority leader of
5the senate. The two representatives shall be designated one
6member each by the speaker of the house of representatives,
7after consultation with the majority leader of the house of
8representatives, and by the minority leader of the house of
9representatives.
10c. Staffing services shall be provided by the authority.
119. a. A water quality financing review committee is
12created consisting of the secretary of agriculture or the
13secretary’s designee, the executive director of the authority
14or the executive director’s designee, and the director of the
15department of natural resources or the director’s designee.
16b. The committee shall review and approve or deny
17applications for financial assistance under the wastewater
18and drinking water treatment financial assistance program
19established in this section.
20 Sec. 4. NEW SECTION. 16.134A Water quality financial
21assistance fund.
221. A water quality financial assistance fund is created in
23the state treasury as a revolving fund.
242. The fund shall consist of all of the following:
25a. (1) Moneys transferred to the fund pursuant to section
26423G.6.
27(2) This paragraph “a” is repealed on January 1, 2030.
28b. Appropriations made to the fund and transfers of
29interest, earnings, and moneys from other funds as provided by
30law.
313. For each fiscal year in the fiscal period beginning
32July 1, 2017, and ending June 30, 2029, there is appropriated
33the following percentages of the balance of the fund for the
34following purposes:
35a. Forty percent to the Iowa finance authority to support
-6-1the wastewater and drinking water treatment financial
2assistance program created in section 16.134.
3b. Forty-five percent to the Iowa finance authority to be
4credited to the water quality financing program fund created
5pursuant to section 16.144.
6c. Fifteen percent to the division of soil conservation
7and water quality of the department of agriculture and land
8stewardship to support the water quality urban infrastructure
9program created in section 466B.44.
104. Moneys in the fund are not subject to section 8.33.
11Notwithstanding section 12C.7, subsection 2, interest or
12earnings on moneys in the fund shall be credited to the fund.
13 Sec. 5. NEW SECTION. 16.142 Definitions.
14As used in this part, unless the context otherwise requires:
151. “Cost” means all costs, charges, expenses, or other
16indebtedness incurred by a loan recipient and determined by
17the authority as reasonable and necessary for carrying out
18all works and undertakings necessary or incidental to the
19accomplishment of any project.
202. “Eligible entity” means a municipality or a landowner,
21as determined by the authority, a public utility as defined
22in section 476.1, or a rural water district or rural water
23association as defined in section 357A.1.
243. “Loan recipient” means an eligible entity that has
25received a loan under the program.
264. “Municipality” means a governmental body such as a state
27agency or a political subdivision of the state. Municipality
28includes but is not limited to a city, city utility, county,
29soil and water conservation district, sanitary district, a
30subdistrict of any of the foregoing districts, a state agency,
31or other governmental body or corporation empowered to provide
32sewage collection and treatment services or drinking water, or
33any entity jointly exercising governmental powers pursuant to
34chapter 28E or 28F, or any other combination of two or more
35governmental bodies or corporations acting jointly under the
-7-1laws of this state in connection with a project.
25. “Program” means the water quality financing program
3created in this part.
46. “Project” means any combination of improvements,
5structures, developments, tasks, actions, constructions,
6modifications, operations, or practices designed to improve
7water quality that are proposed by an eligible entity and
8approved by the authority. “Project” includes but is not
9limited to any of the following:
10a. A project meeting the requirements of part 2 of this
11subchapter.
12b. A project, operation, or practice undertaken or carried
13out to address watershed protection, flood prevention, or water
14quality improvement.
15c. A project meeting the requirements of a sponsor project
16under section 455B.199.
17 Sec. 6. NEW SECTION. 16.143 Water quality financing
18program.
191. The authority, in cooperation with the department of
20natural resources and the department of agriculture and land
21stewardship, shall establish and administer a water quality
22financing program. The purpose of the program shall be to
23provide financial assistance to enhance the quality of surface
24water and groundwater, particularly by providing financial
25assistance for projects designed to improve water quality
26by addressing point and nonpoint sources, with a higher
27prioritization provided to collaborative efforts.
282. The authority shall determine the interest rate
29and repayment terms for loans made under the program, in
30cooperation with the department of natural resources and
31the department of agriculture and land stewardship, and the
32authority shall enter into loan agreements with eligible
33entities in compliance with and subject to the terms and
34conditions of the program as described in this part.
353. The authority may charge loan recipients fees and assess
-8-1costs against such recipients necessary for the continued
2operation of the program. Such fees and costs shall not exceed
3the costs directly associated with the administration of the
4program. Fees and costs collected pursuant to this subsection
5shall be deposited in the appropriate fund or account created
6in section 16.144.
74. The program shall be administered by the authority in
8accordance with rules adopted by the authority pursuant to
9chapter 17A.
10 Sec. 7. NEW SECTION. 16.144 Water quality financing program
11fund — appropriation — other funds.
121. a. A water quality financing program fund is created
13and shall consist of appropriations made to the fund, moneys
14credited to the fund pursuant to section 16.134A, and transfers
15of interest, earnings, and moneys from other funds as provided
16by law. The fund shall be administered by the authority as
17a revolving fund. Moneys in the fund are appropriated to
18the authority for purposes of the program. Notwithstanding
19section 8.33, moneys in the fund that remain unencumbered or
20unobligated at the close of a fiscal year shall not revert
21but shall remain available for expenditure for the purposes
22designated. Notwithstanding section 12C.7, subsection 2,
23interest or earnings on moneys in the fund shall be credited
24to the fund.
25b. The authority shall use the moneys in the fund to provide
26financial assistance to eligible entities under the program.
27The authority may provide financial assistance in the form
28deemed most convenient for the efficient financing of projects,
29including loans, forgivable loans, or grants. The authority
30shall administer the fund and the program in such a manner
31as to provide a permanent source of water quality project
32financial assistance to eligible entities.
33c. The authority may annually use an amount of not more
34than one percent of the moneys in the fund for administrative
35purposes.
-9- 12. a. The authority may establish and maintain other
2funds and accounts determined to be necessary to carry out the
3purposes of the program and shall provide for the funding,
4administration, investment, restrictions, and disposition of
5the funds and accounts.
6b. Moneys appropriated to and used by the authority for
7purposes of paying the costs and expenses associated with
8the administration of the program shall be administered as
9determined by the authority.
10c. All moneys transferred to the authority for purposes of
11the program shall be deposited and held in a fund or account
12established and maintained pursuant to this section.
133. The funds or accounts held by the authority, or a trustee
14acting on behalf of the authority pursuant to a trust agreement
15related to the program, shall not be considered part of the
16general fund of the state, are not subject to appropriation for
17any other purpose by the general assembly, and in determining
18a general fund balance shall not be included in the general
19fund of the state, but shall remain in the funds and accounts
20maintained by the authority or trustee pursuant to a trust
21agreement. Funds and accounts held by the authority, or a
22trustee acting on behalf of the authority pursuant to a trust
23agreement related to the program, are separate dedicated funds
24and accounts under the administration and control of the
25authority and subject to section 16.31.
264. By October 1, 2018, and by October 1 of each year
27thereafter, the authority shall submit a report to the governor
28and the general assembly itemizing expenditures from the fund
29during the previous fiscal year.
30 Sec. 8. NEW SECTION. 16.145 Eligible entities — agreements
31required.
321. An eligible entity may apply to the authority for
33financial assistance under the program by submitting a plan
34that meets the following requirements:
35a. The plan includes one or more projects that improve
-10-1water quality in the local area or watershed. Projects shall
2use practices identified in the latest version of the document
3entitled “Iowa Nutrient Reduction Strategy” initially presented
4in November 2012 by the department of agriculture and land
5stewardship, the department of natural resources, and Iowa
6state university of science and technology. A drainage or
7levee district established under chapter 468 shall utilize the
8installation of edge-of-field infrastructure as described in
9section 466B.43.
10b. The plan describes in detail the manner in which the
11projects will be financed and undertaken, including, as
12applicable, the sources of revenue directed to financing the
13improvements as well as the eligible entities that will be
14receiving the revenues and how such revenues will be spent on
15the projects.
162. The authority shall review and approve or deny
17applications for financial assistance. The provision of
18financial assistance under the program shall take into account,
19as applicable, the number of municipalities, landowners, public
20utilities, rural water districts, or rural water associations
21comprising an eligible entity and the eligible entity’s
22financing capacity. The authority shall score applications
23for financial assistance according to rules adopted pursuant
24to this part. The authority shall only provide financial
25assistance to eligible entities that have sufficient financing
26capacity and that submit an appropriate plan designed to
27improve water quality.
283. An approved eligible entity shall enter into an agreement
29with the authority for the provision of financial assistance.
30The agreement shall include standard terms for the receipt
31of program moneys and any other terms the authority deems
32necessary or convenient for the efficient administration of the
33program.
34 Sec. 9. Section 423.3, Code 2017, is amended by adding the
35following new subsection:
-11-1 NEW SUBSECTION. 103. a. The sales price from the sale or
2furnishing by a water utility of a water service in the state
3to consumers or users.
4b. For purposes of this subsection:
5(1) “Water service” means the delivery of water by piped
6distribution system.
7(2) “Water utility” means a public utility as defined in
8section 476.1 that furnishes water by piped distribution system
9to the public for compensation.
10 Sec. 10. NEW SECTION. 423G.1 Short title.
11This chapter may be cited as the “Water Service Tax Act”.
12 Sec. 11. NEW SECTION. 423G.2 Definitions.
131. All words and phrases used in this chapter and defined in
14section 423.1 have the same meaning given them by section 423.1
15for purposes of this chapter.
162. As used in this chapter, “water service” and “water
17utility” mean the same as defined in section 423.3, subsection
18103.
19 Sec. 12. NEW SECTION. 423G.3 Water service tax.
20An excise tax at the rate of six percent is imposed on the
21sales price from the sale or furnishing by a water utility of a
22water service in the state to consumers or users.
23 Sec. 13. NEW SECTION. 423G.4 Exemptions.
24The sales price from transactions exempt from state sales
25tax under section 423.3, except section 423.3, subsection 103,
26is also exempt from the tax imposed by this chapter.
27 Sec. 14. NEW SECTION. 423G.5 Administration by director.
281. The director of revenue shall administer the water
29service tax as nearly as possible in conjunction with the
30administration of the state sales and use tax law, except that
31portion of the law that implements the streamlined sales and
32use tax agreement. The director shall provide appropriate
33forms, or provide on the regular state tax forms, for reporting
34water service tax liability.
352. The director may require all persons who are engaged
-12-1in the business of deriving any sales price or purchase
2price subject to tax under this chapter to register with
3the department. The director may also require a tax permit
4applicable only to this chapter for any retailer not
5collecting, or any user not paying, taxes under chapter 423.
63. Section 422.25, subsection 4, sections 422.30, 422.67,
7and 422.68, section 422.69, subsection 1, sections 422.70,
8422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
91, and sections 423.23, 423.24, 423.25, 423.31 through
10423.35, 423.37 through 423.42, and 423.47, consistent with the
11provisions of this chapter, shall apply with respect to the tax
12authorized under this chapter, in the same manner and with the
13same effect as if the excise taxes on the sale or furnishing of
14a water service were retail sales taxes within the meaning of
15those statutes. Notwithstanding this subsection, the director
16shall provide for quarterly filing of returns and for other
17than quarterly filing of returns both as prescribed in section
18423.31. All taxes collected under this chapter by a retailer
19or any user are deemed to be held in trust for the state of
20Iowa.
21 Sec. 15. NEW SECTION. 423G.6 Deposit of revenues.
221. All moneys received and all refunds shall be deposited in
23or withdrawn from the general fund of the state.
242. Subsequent to the deposit in the general fund of the
25state, the department shall transfer the following amounts to
26the water quality financial assistance fund created in section
2716.134A:
28a. For revenues collected on or after July 1, 2017, but
29before August 1, 2018, one-sixth of the revenues.
30b. For revenues collected on or after August 1, 2018, but
31before August 1, 2019, one-third of the revenues.
32c. For revenues collected on or after August 1, 2019, but
33before August 1, 2020, one-half of the revenues.
34d. For revenues collected on or after August 1, 2020, but
35before August 1, 2021, two-thirds of the revenues.
-13- 1e. For revenues collected on or after August 1, 2021, but
2before August 1, 2022, five-sixths of the revenues.
3f. For revenues collected on or after August 1, 2022, one
4hundred percent of the revenues.
5 Sec. 16. NEW SECTION. 423G.7 Future repeal.
6This chapter is repealed upon the occurrence of one of the
7following, whichever is earlier:
81. The enactment date that the tax rate for the sales
9tax imposed upon the retail sales price of tangible personal
10property and the furnishing of enumerated services sold in this
11state in effect on July 1, 2016, is increased.
122. July 1, 2029.
13 Sec. 17. NEW SECTION. 466B.43 Water quality agriculture
14infrastructure programs.
151. As part of the water quality initiative established
16pursuant to section 466B.42, the division shall administer
17water quality agriculture infrastructure programs created in
18this section.
192. The purpose of the programs is to support projects for
20the installation of infrastructure, including conservation
21structures, practices, or other measures that reduce
22contributing nutrient loads, associated sediment, or
23contaminants from sources to surface waters. The programs
24shall be administered in a manner that is consistent with
25the latest version of the “Iowa Nutrient Reduction Strategy”
26initially presented in November 2012 by the department of
27agriculture and land stewardship, the department of natural
28resources, and Iowa state university of science and technology.
293. An edge-of-field infrastructure program is created.
30The program shall support projects located on agricultural
31land, which may include demonstration projects, that capture
32or filter nutrients entering into a surface water. The
33program’s projects shall be limited to infrastructure designed
34and installed for use over multiple years, including but not
35limited to wetlands, bioreactor systems, saturated buffers,
-14-1or land use changes. The program shall be financed on a
2cost-share basis.
34. An in-field infrastructure program is created. The
4program shall support projects located on agricultural land,
5which may include demonstration projects, that decrease erosion
6and precipitation-induced surface runoff, increase water
7infiltration rates, and increase soil sustainability. The
8program’s projects shall be limited to infrastructure designed
9and installed for use over multiple years, including but not
10limited to structures, terraces, and waterways located on
11cropland or pastureland, and including but not limited to soil
12conservation or erosion control structures or managed drainage
13systems. The program shall be financed on a cost-share basis.
145. Any state moneys used to finance a project under a
15water quality agriculture infrastructure program shall be
16administered according to an agreement entered into by the
17division and the owner of the land where the infrastructure
18is to be installed. The agreement shall include standard
19terms and conditions for the receipt of program moneys and
20any other terms and conditions the division deems necessary
21or convenient for the efficient administration of the project
22or program. The division may support multiple installations
23of infrastructure on a single parcel of land. The division
24may also combine programs if cost effective. The division
25may annually use an amount of not more than four percent of
26the moneys used to support each program for administrative
27purposes.
286. By October 1, 2018, and each October 1, thereafter, the
29division shall submit a report to the governor and the general
30assembly itemizing expenditures, by hydrologic unit code 8
31watershed, under the programs during the previous fiscal year.
327. Any information obtained by the division identifying
33a person holding a legal interest in agricultural land or
34specific agricultural land shall be a confidential record under
35section 22.7.
-15-1 Sec. 18. NEW SECTION. 466B.44 Water quality urban
2infrastructure program.
31. As part of the water quality initiative established
4pursuant to section 466B.42, the division shall administer a
5water quality urban infrastructure program.
62. The purpose of the program is to support watershed
7projects and advance implementation of the latest version of
8the “Iowa Nutrient Reduction Strategy” initially presented
9in November 2012 by the department of agriculture and land
10stewardship, the department of natural resources, and Iowa
11state university of science and technology, which program
12support may include demonstration projects that decrease
13erosion, precipitation-induced surface runoff, and storm
14water discharges and that increase water infiltration rates.
15The program’s projects shall be based on Iowa’s storm water
16management manual published by the department of natural
17resources.
183. The program shall be financed on a cost-share basis or
19through cooperative agreements with watershed projects funded
20through section 455B.199 whose project activities fall outside
21the territorial boundaries of a city.
224. Any state moneys used to finance a project under a water
23quality urban infrastructure program shall be administered
24according to an agreement entered into by the division and the
25owner of the land where the infrastructure is to be installed.
26The agreement shall include standard terms and conditions
27for the receipt of program moneys and any other terms and
28conditions the division deems necessary or convenient for
29the efficient administration of the project or program. The
30division may support multiple installations of infrastructure
31on a single parcel of land. The division may annually use an
32amount of not more than four percent of the moneys used to
33support the program for administrative purposes.
345. Notwithstanding any other provision in this section
35to the contrary, beginning on July 1, 2019, the division may
-16-1use any amount available to support the water quality urban
2infrastructure program to instead support the three-year data
3collection of in-field agricultural practices project as
4enacted in 2015 Iowa Acts, ch.132, §18.
56. Notwithstanding any other provision of this section
6to the contrary, the division may use any amount available
7to support the water quality urban infrastructure program to
8develop and maintain an online resource displaying measurable
9indicators of desirable change in water quality within the
10state’s watersheds. These measurable indicators may include
11but are not limited to public and private funding inputs,
12involvement in water quality projects, and improvements, land
13use, practice adoption, calculated load reduction, and measured
14loads at existing monitoring stations.
157. By October 1, 2018, and by October 1 of each year
16thereafter, the division shall submit a report to the governor
17and the general assembly itemizing expenditures under the
18program during the previous fiscal year.
198. Any information obtained by the division identifying a
20person holding a legal interest in land or specific land shall
21be a confidential record under section 22.7.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25This bill relates to water quality by modifying an existing
26wastewater treatment program, establishing new water quality
27programs, providing for appropriations from the rebuild Iowa
28infrastructure fund and making other appropriations, and
29creating a water service excise tax and related sales tax
30exemption.
31REBUILD IOWA INFRASTRUCTURE FUND APPROPRIATIONS FOR WATER
32QUALITY AGRICULTURE INFRASTRUCTURE PROGRAMS.
33RIIF appropriations — The bill provides for a total of
34$229.1 million of appropriations over 13 fiscal years from
35the rebuild Iowa infrastructure fund in Code section 8.57 to
-17-1a water quality infrastructure fund created in the bill (Code
2section 8.57B) to be used by the division of soil conservation
3and water quality of the department of agriculture and land
4stewardship (soil and water division) in administering
5two new water quality agriculture infrastructure programs,
6described below. The appropriations shall be as follows: $4.3
7million for fiscal year 2017-2018; $4.3 million for fiscal
8year 2018-2019; $11.5 million for fiscal year 2019-2020;
9$16.5 million per fiscal year for the two-year fiscal period
10beginning July 1, 2020, and ending June 30, 2022; and $22
11million per fiscal year for the eight-year fiscal period
12beginning July 1, 2022, and ending June 30, 2030. The water
13quality infrastructure fund is repealed on the date that
14all moneys transferred to the fund from the rebuild Iowa
15infrastructure fund as provided in the bill, including any
16interest or earnings on such moneys credited to the fund, are
17expended by the soil and water division, and the balance of the
18fund is zero.
19Water quality agriculture infrastructure programs — As
20part of the existing water quality initiative of the soil and
21water division in Code section 466B.42, the bill establishes
22two water quality agriculture infrastructure programs (Code
23section 466B.43), consisting of an edge-of-field infrastructure
24program and an in-field infrastructure program, that will
25provide financing on a cost-share basis to certain agriculture
26infrastructure projects, including demonstration projects.
27The edge-of-field program will support projects that capture
28or filter nutrients entering into surface water. The bill
29includes wetlands, bioreactor systems, saturated buffers, and
30land use changes as examples of projects that may qualify.
31The in-field infrastructure program will support projects
32that decrease erosion and precipitation-induced surface
33runoff, increase water infiltration rates, and increase soil
34sustainability. The bill includes structures, terraces,
35waterways located on cropland or pastureland, and soil
-18-1conservation or erosion control structures or managed drainage
2systems as examples of projects that may qualify.
3The bill provides for the purpose of the programs and
4requires that the programs be administered in a manner that
5is consistent with the latest version of the Iowa nutrient
6reduction strategy initially presented in November 2012 by the
7department of agriculture and land stewardship, the department
8of natural resources, and Iowa state university of science
9and technology (nutrient reduction strategy). Both programs
10require that projects be located on agricultural land and limit
11projects to infrastructure designed and installed for use over
12multiple years. The bill requires that the soil and water
13division and landowners enter into agreements for financing
14projects under the programs, provides that the soil and water
15division may support multiple installations of infrastructure
16on a single parcel of land, and provides that the two programs
17may be combined by the soil and water division if it is cost
18effective to do so. The soil and water division is allowed
19to annually use up to 4 percent of the programs’ moneys for
20administrative purposes. Beginning in 2018, the soil and
21water division is required to submit a report by October 1 of
22each year to the general assembly and the governor detailing
23expenditures for the previous fiscal year under the programs
24by hydrologic unit code 8 watershed. The bill provides that
25certain information related to agricultural land and obtained
26by the soil and water division under the programs shall be
27considered a confidential record under Code section 22.7.
28WATER SERVICE EXCISE TAX FOR CERTAIN WATER QUALITY PROGRAMS.
29Water service excise tax and related sales tax exemption —
30The bill exempts from the state sales tax the sales price from
31the sale or furnishing by a water utility of a water service in
32the state to consumers or users. “Water service” and “water
33utility” are defined in the bill.
34By operation of Code section 423.6, an item exempt from the
35imposition of the sales tax is also exempt from the use tax
-19-1imposed in Code section 423.5.
2The bill creates an excise tax at the rate of 6 percent
3on the sales price from the sale or furnishing by a water
4utility of a water service in the state to consumers or users
5(Code chapter 423G). The director of revenue is required
6to administer the water service tax as nearly as possible
7in conjunction with the administration of the state sales
8and use tax laws, and, to that end, the bill incorporates by
9reference numerous Code sections that relate to general tax
10administration and the sales and use tax laws.
11Water service tax revenues are deposited in the general
12fund of the state, and the bill then requires an increasing
13portion of the water service tax revenues collected each year
14to be transferred to a water quality financial assistance fund
15created in the bill (Code section 16.134A) to support various
16water quality programs, described below. Transfers to the
17water quality financial assistance fund equal one-sixth of
18the water service tax revenues collected on or after July 1,
192017, but before August 1, 2018, and increases to one-third,
20one-half, two-thirds, and five-sixths over the next four years.
21All water service tax revenues collected on or after August
221, 2022, will be transferred to the water quality financial
23assistance fund.
24The water service tax is repealed on the enactment date
25that the state sales tax rate in effect on July 1, 2016, is
26increased, or on July 1, 2029, whichever occurs earlier.
27Water service tax revenues transferred to the water quality
28financial assistance fund are then appropriated from the
29fund as follows: 40 percent is appropriated to the Iowa
30finance authority (IFA) to support the wastewater and drinking
31water treatment financial assistance program in Code section
3216.134, 45 percent is appropriated to IFA to support the water
33quality financing program created in the bill (Code sections
3416.142 through 16.145), and 15 percent is appropriated to the
35soil and water division to support the water quality urban
-20-1infrastructure program created in the bill (Code section
2466B.44).
3Wastewater and drinking water treatment financial assistance
4program — The bill amends the wastewater treatment financial
5assistance program administered by IFA in Code section 16.134.
6Currently, the program provides financial assistance in the
7form of grants from IFA to disadvantaged communities to install
8or upgrade wastewater treatment facilities and systems, and
9for engineering or technical assistance for facility planning
10and design. The bill adds drinking water treatment facilities
11and systems, including source water protection projects, to
12the program. The bill also removes the requirement that a
13community qualify as a disadvantaged community in order to
14receive financial assistance, instead providing that such
15disadvantaged communities shall receive priority under the
16program. The bill also modifies other priority designations
17under the program and modifies goals of the program, and
18provides that a utility management organization formed under
19Code chapter 28E or operated by a rural water system organized
20under Code chapter 357A or 504 shall be considered eligible for
21financial assistance under the program. The bill also adds
22reporting and review requirements to the program, modifies the
23permitted use of fund moneys for administrative purposes, and
24creates a water quality financing review committee consisting
25of three members, as provided in the bill, to review and
26approve applications for financial assistance under the
27program. Finally, the bill requires IFA to submit a report by
28October 1 of each year to the governor and general assembly
29detailing expenditures for the previous year under the program,
30and creates a program review committee consisting of eight
31members, as provided in the bill, to review the effectiveness
32of the program every 10 years, beginning in 2027.
33Water quality financing program (Code sections 16.142
34through 16.145) — This program provides financial assistance
35in the form of loans, forgivable loans, and grants to enhance
-21-1the quality of surface water and groundwater, particularly
2by providing financial assistance for projects designed
3to improve water quality by addressing point and nonpoint
4sources. The program is administered by IFA in cooperation
5with the department of natural resources and the department of
6agriculture and land stewardship. The bill creates a water
7quality financing program fund administered by IFA to provide
8financial assistance under the program. The bill allows IFA
9to establish and maintain other funds and accounts necessary
10to carry out the purposes of the program. Under the program,
11an eligible entity is a municipality, as defined in the bill,
12or a landowner, public utility, or rural water district or
13rural water association. The bill provides certain application
14requirements regarding a plan for water quality improvement and
15financing and requires loan recipients to enter into agreements
16with IFA for terms of the financial assistance.
17In order to be eligible for financial assistance, a proposed
18project must improve water quality in the local area or
19watershed using practices identified in the Iowa nutrient
20reduction strategy. Drainage and levee districts are required
21to utilize installations described in the edge-of-field
22infrastructure program (Code section 466B.43), discussed above.
23IFA reviews proposed projects, negotiates project details, and
24approves or denies applications.
25Beginning in 2018, IFA is required to submit a report by
26October 1 of each year to the general assembly and the governor
27detailing expenditures from the fund for the previous fiscal
28year.
29Water quality urban infrastructure program (Code section
30466B.44) — As part of the existing water quality initiative
31of the soil and water division in Code section 466B.42, the
32bill creates a water quality urban infrastructure program
33to support watershed projects and advance implementation
34of the Iowa nutrient reduction strategy. Program support
35may include demonstration projects that decrease erosion,
-22-1precipitation-induced surface runoff, and storm water
2discharges and that increase water infiltration rates.
3Projects shall be based on Iowa’s storm water management manual
4published by the department of natural resources. Financial
5assistance is provided on a cost-share basis or through
6cooperative agreements with certain watersheds as described
7in the bill. The bill requires the soil and water division
8and landowners to enter into agreements for financing projects
9under the program, and provides that the soil and water
10division may support multiple installations of infrastructure
11on a single parcel of land. The soil and water division is
12allowed to annually use up to 4 percent of the program’s moneys
13for administrative purposes.
14The soil and water division may use any amount available
15under the program to develop and maintain an online resource
16displaying measurable indicators of desirable change in water
17quality within the state’s watersheds, and beginning July 1,
182019, may use any amount available under the program to support
19the three-year data collection of the in-field agricultural
20practices project as enacted in 2015 Iowa Acts, ch.132, §18.
21Beginning in 2018, the soil and water division is required
22to submit a report by October 1 of each year to the general
23assembly and the governor detailing expenditures for the
24previous fiscal year under the program. The bill provides that
25certain information related to the land and obtained by the
26soil and water division under the program shall be considered a
27confidential record under Code section 22.7.
-23-mm/sc
2treatment financial assistance program, making
3appropriations from the rebuild Iowa infrastructure fund,
4creating a water quality infrastructure fund, establishing
5a water quality financing program, providing for cost-share
6programs for infrastructure on agricultural and urban land
7under the water quality initiative, creating a water service
8excise tax and a related sales tax exemption, and making
9appropriations.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8.57, subsection 5, Code 2017, is amended
2by adding the following new paragraph:
3 NEW PARAGRAPH. 0h. (1) Notwithstanding paragraph “c” of
4this subsection, there is appropriated from the rebuild Iowa
5infrastructure fund to the water quality infrastructure fund
6created in section 8.57B the following amounts:
7(a) For the fiscal year beginning July 1, 2017, and ending
8June 30, 2018, four million three hundred thousand dollars.
9(b) For the fiscal year beginning July 1, 2018, and ending
10June 30, 2019, four million three hundred thousand dollars.
11(c) For the fiscal year beginning July 1, 2019, and ending
12June 30, 2020, eleven million five hundred thousand dollars.
13(d) For the fiscal year beginning July 1, 2020, and ending
14June 30, 2021, sixteen million five hundred thousand dollars.
15(e) For the fiscal year beginning July 1, 2021, and ending
16June 30, 2022, sixteen million five hundred thousand dollars.
17(f) For the fiscal year beginning July 1, 2022, and ending
18June 30, 2023, twenty-two million dollars.
19(g) For the fiscal year beginning July 1, 2023, and ending
20June 30, 2024, twenty-two million dollars.
21(h) For the fiscal year beginning July 1, 2024, and ending
22June 30, 2025, twenty-two million dollars.
23(i) For the fiscal year beginning July 1, 2025, and ending
24June 30, 2026, twenty-two million dollars.
25(j) For the fiscal year beginning July 1, 2026, and ending
26June 30, 2027, twenty-two million dollars.
27(k) For the fiscal year beginning July 1, 2027, and ending
28June 30, 2028, twenty-two million dollars.
29(l) For the fiscal year beginning July 1, 2028, and ending
30June 30, 2029, twenty-two million dollars.
31(m) For the fiscal year beginning July 1, 2029, and ending
32June 30, 2030, twenty-two million dollars.
33(2) This paragraph “0h” is repealed on January 1, 2031.
34 Sec. 2. NEW SECTION. 8.57B Water quality infrastructure
35fund — creation — appropriations.
-1- 11. A water quality infrastructure fund is created within
2the division of soil conservation and water quality of the
3department of agriculture and land stewardship. The fund
4shall consist of moneys appropriated from the rebuild Iowa
5infrastructure fund pursuant to section 8.57, subsection 5,
6paragraph “0h”.
72. The fund shall be separate from the general fund of the
8state and the balance in the fund shall not be considered part
9of the balance of the general fund of the state. However, the
10fund shall be considered a special account for the purposes
11of section 8.53, relating to generally accepted accounting
12principles.
133. Moneys in the fund are appropriated to the division
14of soil conservation and water quality of the department of
15agriculture and land stewardship for the exclusive purpose of
16supporting water quality agriculture infrastructure programs
17created in section 466B.43.
184. Notwithstanding section 8.33, moneys in the fund
19that remain unencumbered or unobligated at the close of a
20fiscal year shall not revert but shall remain available for
21expenditure for the purposes designated. Notwithstanding
22section 12C.7, subsection 2, interest or earnings on moneys in
23the fund shall be credited to the fund.
245. This section is repealed on the date that all moneys
25transferred to the water quality infrastructure fund from
26the rebuild Iowa infrastructure fund pursuant to section
278.57, subsection 5, paragraph “0h”, including any interest
28or earnings on such moneys credited to the water quality
29infrastructure fund, are expended by the division of soil
30conservation and water quality of the department of agriculture
31and land stewardship, and the balance of the water quality
32infrastructure fund is zero. The director of the division
33of soil conservation and water quality of the department of
34agriculture and land stewardship shall notify the Code editor
35of this occurrence.
-2-1 Sec. 3. Section 16.134, Code 2017, is amended to read as
2follows:
316.134 Wastewater and drinking water treatment financial
4assistance program.
51. The Iowa finance authority shall establish and
6administer a wastewater and drinking water treatment financial
7assistance program. The purpose of the program shall be to
8provide financial assistance to enhance water quality. The
9program shall be administered in accordance with rules adopted
10by the authority pursuant to chapter 17A. For purposes of
11this section, “program” means the wastewater and drinking water
12 treatment financial assistance program and “committee” means the
13water quality financing review committee created in subsection
149.
152. A wastewater and drinking water treatment financial
16assistance fund is created and shall consist of appropriations
17made to the fund and transfers of interest, earnings, and
18moneys from other funds as provided by law. Moneys transferred
19to the fund pursuant to section 16.134A are appropriated to the
20authority for purposes of the program. Moneys in the fund are
21not subject to section 8.33. Notwithstanding section 12C.7,
22subsection 2, interest or earnings on moneys in the fund shall
23be credited to the fund.
243. Financial assistance under the program shall be used
25to install or upgrade wastewater treatment facilities and
26systems and drinking water treatment facilities and systems,
27including source water protection projects, and for engineering
28or technical assistance for facility planning and design.
294. The authority committee shall distribute approve
30 financial assistance in from the fund in accordance with the
31following:
32a. The goal of the program shall be to base awards on the
33impact of the grant combined with other sources of financing to
34ensure that sewer rates do not exceed one and one-half percent
35of a community’s median household income.
-3- 1b. a. Communities shall be eligible for financial
2assistance by qualifying as Priority shall be given for
3projects in which a disadvantaged community and is seeking
4financial assistance for the installation or upgrade of
5wastewater treatment facilities due to regulatory activity
6by the department of natural resources and drinking water
7treatment facilities. For purposes of this section, the term
8“disadvantaged community” means the same as defined by the
9department.
10c. b. Priority shall be given to projects in which the
11 meeting criteria established in section 455B.199B in which the
12applicant seeks financial assistance is to be used to obtain
13 with financing under the water pollution control works and
14drinking water facilities financing program pursuant to section
1516.131 or other federal, or state, or private financing.
16d. c. Priority shall also be given to projects whose
17completion will provide significant improvement to water
18quality in the relevant watershed.
19e. d. Priority shall also be given to communities that
20employ an alternative wastewater treatment technology pursuant
21to section 455B.199C.
22f. e. Priority shall be also be given to those communities
23where sewer or water rates are the highest as a percentage of
24that community’s median household income.
25f. Priority shall also be given to communities that employ
26technology to address the latest version of the “Iowa Nutrient
27Reduction Strategy” initially presented in November 2012 by the
28department of agriculture and land stewardship, the department
29of natural resources, and Iowa state university of science and
30technology.
31g. Financial assistance in the form of grants shall be
32issued on an annual basis.
33h. An applicant shall not receive a grant that exceeds five
34hundred thousand dollars.
354A. A utility management organization formed under chapter
-4-128E or operated by a rural water system organized under chapter
2357A or chapter 504 shall be considered eligible for financial
3assistance under the program.
45. The authority in cooperation with the department of
5natural resources shall share provide information and resources
6to the committee when the committee is determining the
7qualifications of a community for financial assistance from the
8fund.
96. The authority shall enter into agreements with financial
10assistance recipients and distribute moneys under the program
11pursuant to financial assistance determinations made by the
12committee.The authority may use an amount of not more than
13four one percent of any moneys appropriated for deposit in the
14fund for administration purposes.
157. By October 1 of each year, the authority shall submit
16a report to the governor and the general assembly itemizing
17expenditures under the program during the previous fiscal year.
188. a. Beginning September 1, 2027, and every ten years
19thereafter, a program review committee is established for
20purposes of reviewing the wastewater and drinking water
21treatment financial assistance program. By December 1 of the
22same year, the program review committee shall file a report
23with the governor and the general assembly that reviews the
24effectiveness of the program during the prior ten fiscal years.
25b. The program review committee shall consist of the
26following members:
27(1) The governor or the governor’s designee.
28(2) The secretary of agriculture or the secretary’s
29designee.
30(3) The executive director of the authority or the executive
31director’s designee.
32(4) The director of the department of natural resources or
33the director’s designee.
34(5) Four members of the general assembly, with two from the
35senate and two from the house of representatives and not more
-5-1than one member from each chamber being from the same political
2party. The two senators shall be designated one member each
3by the president of the senate, after consultation with the
4majority leader of the senate, and by the minority leader of
5the senate. The two representatives shall be designated one
6member each by the speaker of the house of representatives,
7after consultation with the majority leader of the house of
8representatives, and by the minority leader of the house of
9representatives.
10c. Staffing services shall be provided by the authority.
119. a. A water quality financing review committee is
12created consisting of the secretary of agriculture or the
13secretary’s designee, the executive director of the authority
14or the executive director’s designee, and the director of the
15department of natural resources or the director’s designee.
16b. The committee shall review and approve or deny
17applications for financial assistance under the wastewater
18and drinking water treatment financial assistance program
19established in this section.
20 Sec. 4. NEW SECTION. 16.134A Water quality financial
21assistance fund.
221. A water quality financial assistance fund is created in
23the state treasury as a revolving fund.
242. The fund shall consist of all of the following:
25a. (1) Moneys transferred to the fund pursuant to section
26423G.6.
27(2) This paragraph “a” is repealed on January 1, 2030.
28b. Appropriations made to the fund and transfers of
29interest, earnings, and moneys from other funds as provided by
30law.
313. For each fiscal year in the fiscal period beginning
32July 1, 2017, and ending June 30, 2029, there is appropriated
33the following percentages of the balance of the fund for the
34following purposes:
35a. Forty percent to the Iowa finance authority to support
-6-1the wastewater and drinking water treatment financial
2assistance program created in section 16.134.
3b. Forty-five percent to the Iowa finance authority to be
4credited to the water quality financing program fund created
5pursuant to section 16.144.
6c. Fifteen percent to the division of soil conservation
7and water quality of the department of agriculture and land
8stewardship to support the water quality urban infrastructure
9program created in section 466B.44.
104. Moneys in the fund are not subject to section 8.33.
11Notwithstanding section 12C.7, subsection 2, interest or
12earnings on moneys in the fund shall be credited to the fund.
13 Sec. 5. NEW SECTION. 16.142 Definitions.
14As used in this part, unless the context otherwise requires:
151. “Cost” means all costs, charges, expenses, or other
16indebtedness incurred by a loan recipient and determined by
17the authority as reasonable and necessary for carrying out
18all works and undertakings necessary or incidental to the
19accomplishment of any project.
202. “Eligible entity” means a municipality or a landowner,
21as determined by the authority, a public utility as defined
22in section 476.1, or a rural water district or rural water
23association as defined in section 357A.1.
243. “Loan recipient” means an eligible entity that has
25received a loan under the program.
264. “Municipality” means a governmental body such as a state
27agency or a political subdivision of the state. Municipality
28includes but is not limited to a city, city utility, county,
29soil and water conservation district, sanitary district, a
30subdistrict of any of the foregoing districts, a state agency,
31or other governmental body or corporation empowered to provide
32sewage collection and treatment services or drinking water, or
33any entity jointly exercising governmental powers pursuant to
34chapter 28E or 28F, or any other combination of two or more
35governmental bodies or corporations acting jointly under the
-7-1laws of this state in connection with a project.
25. “Program” means the water quality financing program
3created in this part.
46. “Project” means any combination of improvements,
5structures, developments, tasks, actions, constructions,
6modifications, operations, or practices designed to improve
7water quality that are proposed by an eligible entity and
8approved by the authority. “Project” includes but is not
9limited to any of the following:
10a. A project meeting the requirements of part 2 of this
11subchapter.
12b. A project, operation, or practice undertaken or carried
13out to address watershed protection, flood prevention, or water
14quality improvement.
15c. A project meeting the requirements of a sponsor project
16under section 455B.199.
17 Sec. 6. NEW SECTION. 16.143 Water quality financing
18program.
191. The authority, in cooperation with the department of
20natural resources and the department of agriculture and land
21stewardship, shall establish and administer a water quality
22financing program. The purpose of the program shall be to
23provide financial assistance to enhance the quality of surface
24water and groundwater, particularly by providing financial
25assistance for projects designed to improve water quality
26by addressing point and nonpoint sources, with a higher
27prioritization provided to collaborative efforts.
282. The authority shall determine the interest rate
29and repayment terms for loans made under the program, in
30cooperation with the department of natural resources and
31the department of agriculture and land stewardship, and the
32authority shall enter into loan agreements with eligible
33entities in compliance with and subject to the terms and
34conditions of the program as described in this part.
353. The authority may charge loan recipients fees and assess
-8-1costs against such recipients necessary for the continued
2operation of the program. Such fees and costs shall not exceed
3the costs directly associated with the administration of the
4program. Fees and costs collected pursuant to this subsection
5shall be deposited in the appropriate fund or account created
6in section 16.144.
74. The program shall be administered by the authority in
8accordance with rules adopted by the authority pursuant to
9chapter 17A.
10 Sec. 7. NEW SECTION. 16.144 Water quality financing program
11fund — appropriation — other funds.
121. a. A water quality financing program fund is created
13and shall consist of appropriations made to the fund, moneys
14credited to the fund pursuant to section 16.134A, and transfers
15of interest, earnings, and moneys from other funds as provided
16by law. The fund shall be administered by the authority as
17a revolving fund. Moneys in the fund are appropriated to
18the authority for purposes of the program. Notwithstanding
19section 8.33, moneys in the fund that remain unencumbered or
20unobligated at the close of a fiscal year shall not revert
21but shall remain available for expenditure for the purposes
22designated. Notwithstanding section 12C.7, subsection 2,
23interest or earnings on moneys in the fund shall be credited
24to the fund.
25b. The authority shall use the moneys in the fund to provide
26financial assistance to eligible entities under the program.
27The authority may provide financial assistance in the form
28deemed most convenient for the efficient financing of projects,
29including loans, forgivable loans, or grants. The authority
30shall administer the fund and the program in such a manner
31as to provide a permanent source of water quality project
32financial assistance to eligible entities.
33c. The authority may annually use an amount of not more
34than one percent of the moneys in the fund for administrative
35purposes.
-9- 12. a. The authority may establish and maintain other
2funds and accounts determined to be necessary to carry out the
3purposes of the program and shall provide for the funding,
4administration, investment, restrictions, and disposition of
5the funds and accounts.
6b. Moneys appropriated to and used by the authority for
7purposes of paying the costs and expenses associated with
8the administration of the program shall be administered as
9determined by the authority.
10c. All moneys transferred to the authority for purposes of
11the program shall be deposited and held in a fund or account
12established and maintained pursuant to this section.
133. The funds or accounts held by the authority, or a trustee
14acting on behalf of the authority pursuant to a trust agreement
15related to the program, shall not be considered part of the
16general fund of the state, are not subject to appropriation for
17any other purpose by the general assembly, and in determining
18a general fund balance shall not be included in the general
19fund of the state, but shall remain in the funds and accounts
20maintained by the authority or trustee pursuant to a trust
21agreement. Funds and accounts held by the authority, or a
22trustee acting on behalf of the authority pursuant to a trust
23agreement related to the program, are separate dedicated funds
24and accounts under the administration and control of the
25authority and subject to section 16.31.
264. By October 1, 2018, and by October 1 of each year
27thereafter, the authority shall submit a report to the governor
28and the general assembly itemizing expenditures from the fund
29during the previous fiscal year.
30 Sec. 8. NEW SECTION. 16.145 Eligible entities — agreements
31required.
321. An eligible entity may apply to the authority for
33financial assistance under the program by submitting a plan
34that meets the following requirements:
35a. The plan includes one or more projects that improve
-10-1water quality in the local area or watershed. Projects shall
2use practices identified in the latest version of the document
3entitled “Iowa Nutrient Reduction Strategy” initially presented
4in November 2012 by the department of agriculture and land
5stewardship, the department of natural resources, and Iowa
6state university of science and technology. A drainage or
7levee district established under chapter 468 shall utilize the
8installation of edge-of-field infrastructure as described in
9section 466B.43.
10b. The plan describes in detail the manner in which the
11projects will be financed and undertaken, including, as
12applicable, the sources of revenue directed to financing the
13improvements as well as the eligible entities that will be
14receiving the revenues and how such revenues will be spent on
15the projects.
162. The authority shall review and approve or deny
17applications for financial assistance. The provision of
18financial assistance under the program shall take into account,
19as applicable, the number of municipalities, landowners, public
20utilities, rural water districts, or rural water associations
21comprising an eligible entity and the eligible entity’s
22financing capacity. The authority shall score applications
23for financial assistance according to rules adopted pursuant
24to this part. The authority shall only provide financial
25assistance to eligible entities that have sufficient financing
26capacity and that submit an appropriate plan designed to
27improve water quality.
283. An approved eligible entity shall enter into an agreement
29with the authority for the provision of financial assistance.
30The agreement shall include standard terms for the receipt
31of program moneys and any other terms the authority deems
32necessary or convenient for the efficient administration of the
33program.
34 Sec. 9. Section 423.3, Code 2017, is amended by adding the
35following new subsection:
-11-1 NEW SUBSECTION. 103. a. The sales price from the sale or
2furnishing by a water utility of a water service in the state
3to consumers or users.
4b. For purposes of this subsection:
5(1) “Water service” means the delivery of water by piped
6distribution system.
7(2) “Water utility” means a public utility as defined in
8section 476.1 that furnishes water by piped distribution system
9to the public for compensation.
10 Sec. 10. NEW SECTION. 423G.1 Short title.
11This chapter may be cited as the “Water Service Tax Act”.
12 Sec. 11. NEW SECTION. 423G.2 Definitions.
131. All words and phrases used in this chapter and defined in
14section 423.1 have the same meaning given them by section 423.1
15for purposes of this chapter.
162. As used in this chapter, “water service” and “water
17utility” mean the same as defined in section 423.3, subsection
18103.
19 Sec. 12. NEW SECTION. 423G.3 Water service tax.
20An excise tax at the rate of six percent is imposed on the
21sales price from the sale or furnishing by a water utility of a
22water service in the state to consumers or users.
23 Sec. 13. NEW SECTION. 423G.4 Exemptions.
24The sales price from transactions exempt from state sales
25tax under section 423.3, except section 423.3, subsection 103,
26is also exempt from the tax imposed by this chapter.
27 Sec. 14. NEW SECTION. 423G.5 Administration by director.
281. The director of revenue shall administer the water
29service tax as nearly as possible in conjunction with the
30administration of the state sales and use tax law, except that
31portion of the law that implements the streamlined sales and
32use tax agreement. The director shall provide appropriate
33forms, or provide on the regular state tax forms, for reporting
34water service tax liability.
352. The director may require all persons who are engaged
-12-1in the business of deriving any sales price or purchase
2price subject to tax under this chapter to register with
3the department. The director may also require a tax permit
4applicable only to this chapter for any retailer not
5collecting, or any user not paying, taxes under chapter 423.
63. Section 422.25, subsection 4, sections 422.30, 422.67,
7and 422.68, section 422.69, subsection 1, sections 422.70,
8422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
91, and sections 423.23, 423.24, 423.25, 423.31 through
10423.35, 423.37 through 423.42, and 423.47, consistent with the
11provisions of this chapter, shall apply with respect to the tax
12authorized under this chapter, in the same manner and with the
13same effect as if the excise taxes on the sale or furnishing of
14a water service were retail sales taxes within the meaning of
15those statutes. Notwithstanding this subsection, the director
16shall provide for quarterly filing of returns and for other
17than quarterly filing of returns both as prescribed in section
18423.31. All taxes collected under this chapter by a retailer
19or any user are deemed to be held in trust for the state of
20Iowa.
21 Sec. 15. NEW SECTION. 423G.6 Deposit of revenues.
221. All moneys received and all refunds shall be deposited in
23or withdrawn from the general fund of the state.
242. Subsequent to the deposit in the general fund of the
25state, the department shall transfer the following amounts to
26the water quality financial assistance fund created in section
2716.134A:
28a. For revenues collected on or after July 1, 2017, but
29before August 1, 2018, one-sixth of the revenues.
30b. For revenues collected on or after August 1, 2018, but
31before August 1, 2019, one-third of the revenues.
32c. For revenues collected on or after August 1, 2019, but
33before August 1, 2020, one-half of the revenues.
34d. For revenues collected on or after August 1, 2020, but
35before August 1, 2021, two-thirds of the revenues.
-13- 1e. For revenues collected on or after August 1, 2021, but
2before August 1, 2022, five-sixths of the revenues.
3f. For revenues collected on or after August 1, 2022, one
4hundred percent of the revenues.
5 Sec. 16. NEW SECTION. 423G.7 Future repeal.
6This chapter is repealed upon the occurrence of one of the
7following, whichever is earlier:
81. The enactment date that the tax rate for the sales
9tax imposed upon the retail sales price of tangible personal
10property and the furnishing of enumerated services sold in this
11state in effect on July 1, 2016, is increased.
122. July 1, 2029.
13 Sec. 17. NEW SECTION. 466B.43 Water quality agriculture
14infrastructure programs.
151. As part of the water quality initiative established
16pursuant to section 466B.42, the division shall administer
17water quality agriculture infrastructure programs created in
18this section.
192. The purpose of the programs is to support projects for
20the installation of infrastructure, including conservation
21structures, practices, or other measures that reduce
22contributing nutrient loads, associated sediment, or
23contaminants from sources to surface waters. The programs
24shall be administered in a manner that is consistent with
25the latest version of the “Iowa Nutrient Reduction Strategy”
26initially presented in November 2012 by the department of
27agriculture and land stewardship, the department of natural
28resources, and Iowa state university of science and technology.
293. An edge-of-field infrastructure program is created.
30The program shall support projects located on agricultural
31land, which may include demonstration projects, that capture
32or filter nutrients entering into a surface water. The
33program’s projects shall be limited to infrastructure designed
34and installed for use over multiple years, including but not
35limited to wetlands, bioreactor systems, saturated buffers,
-14-1or land use changes. The program shall be financed on a
2cost-share basis.
34. An in-field infrastructure program is created. The
4program shall support projects located on agricultural land,
5which may include demonstration projects, that decrease erosion
6and precipitation-induced surface runoff, increase water
7infiltration rates, and increase soil sustainability. The
8program’s projects shall be limited to infrastructure designed
9and installed for use over multiple years, including but not
10limited to structures, terraces, and waterways located on
11cropland or pastureland, and including but not limited to soil
12conservation or erosion control structures or managed drainage
13systems. The program shall be financed on a cost-share basis.
145. Any state moneys used to finance a project under a
15water quality agriculture infrastructure program shall be
16administered according to an agreement entered into by the
17division and the owner of the land where the infrastructure
18is to be installed. The agreement shall include standard
19terms and conditions for the receipt of program moneys and
20any other terms and conditions the division deems necessary
21or convenient for the efficient administration of the project
22or program. The division may support multiple installations
23of infrastructure on a single parcel of land. The division
24may also combine programs if cost effective. The division
25may annually use an amount of not more than four percent of
26the moneys used to support each program for administrative
27purposes.
286. By October 1, 2018, and each October 1, thereafter, the
29division shall submit a report to the governor and the general
30assembly itemizing expenditures, by hydrologic unit code 8
31watershed, under the programs during the previous fiscal year.
327. Any information obtained by the division identifying
33a person holding a legal interest in agricultural land or
34specific agricultural land shall be a confidential record under
35section 22.7.
-15-1 Sec. 18. NEW SECTION. 466B.44 Water quality urban
2infrastructure program.
31. As part of the water quality initiative established
4pursuant to section 466B.42, the division shall administer a
5water quality urban infrastructure program.
62. The purpose of the program is to support watershed
7projects and advance implementation of the latest version of
8the “Iowa Nutrient Reduction Strategy” initially presented
9in November 2012 by the department of agriculture and land
10stewardship, the department of natural resources, and Iowa
11state university of science and technology, which program
12support may include demonstration projects that decrease
13erosion, precipitation-induced surface runoff, and storm
14water discharges and that increase water infiltration rates.
15The program’s projects shall be based on Iowa’s storm water
16management manual published by the department of natural
17resources.
183. The program shall be financed on a cost-share basis or
19through cooperative agreements with watershed projects funded
20through section 455B.199 whose project activities fall outside
21the territorial boundaries of a city.
224. Any state moneys used to finance a project under a water
23quality urban infrastructure program shall be administered
24according to an agreement entered into by the division and the
25owner of the land where the infrastructure is to be installed.
26The agreement shall include standard terms and conditions
27for the receipt of program moneys and any other terms and
28conditions the division deems necessary or convenient for
29the efficient administration of the project or program. The
30division may support multiple installations of infrastructure
31on a single parcel of land. The division may annually use an
32amount of not more than four percent of the moneys used to
33support the program for administrative purposes.
345. Notwithstanding any other provision in this section
35to the contrary, beginning on July 1, 2019, the division may
-16-1use any amount available to support the water quality urban
2infrastructure program to instead support the three-year data
3collection of in-field agricultural practices project as
4enacted in 2015 Iowa Acts, ch.132, §18.
56. Notwithstanding any other provision of this section
6to the contrary, the division may use any amount available
7to support the water quality urban infrastructure program to
8develop and maintain an online resource displaying measurable
9indicators of desirable change in water quality within the
10state’s watersheds. These measurable indicators may include
11but are not limited to public and private funding inputs,
12involvement in water quality projects, and improvements, land
13use, practice adoption, calculated load reduction, and measured
14loads at existing monitoring stations.
157. By October 1, 2018, and by October 1 of each year
16thereafter, the division shall submit a report to the governor
17and the general assembly itemizing expenditures under the
18program during the previous fiscal year.
198. Any information obtained by the division identifying a
20person holding a legal interest in land or specific land shall
21be a confidential record under section 22.7.
22EXPLANATION
23The inclusion of this explanation does not constitute agreement with
24the explanation’s substance by the members of the general assembly.
25This bill relates to water quality by modifying an existing
26wastewater treatment program, establishing new water quality
27programs, providing for appropriations from the rebuild Iowa
28infrastructure fund and making other appropriations, and
29creating a water service excise tax and related sales tax
30exemption.
31REBUILD IOWA INFRASTRUCTURE FUND APPROPRIATIONS FOR WATER
32QUALITY AGRICULTURE INFRASTRUCTURE PROGRAMS.
33RIIF appropriations — The bill provides for a total of
34$229.1 million of appropriations over 13 fiscal years from
35the rebuild Iowa infrastructure fund in Code section 8.57 to
-17-1a water quality infrastructure fund created in the bill (Code
2section 8.57B) to be used by the division of soil conservation
3and water quality of the department of agriculture and land
4stewardship (soil and water division) in administering
5two new water quality agriculture infrastructure programs,
6described below. The appropriations shall be as follows: $4.3
7million for fiscal year 2017-2018; $4.3 million for fiscal
8year 2018-2019; $11.5 million for fiscal year 2019-2020;
9$16.5 million per fiscal year for the two-year fiscal period
10beginning July 1, 2020, and ending June 30, 2022; and $22
11million per fiscal year for the eight-year fiscal period
12beginning July 1, 2022, and ending June 30, 2030. The water
13quality infrastructure fund is repealed on the date that
14all moneys transferred to the fund from the rebuild Iowa
15infrastructure fund as provided in the bill, including any
16interest or earnings on such moneys credited to the fund, are
17expended by the soil and water division, and the balance of the
18fund is zero.
19Water quality agriculture infrastructure programs — As
20part of the existing water quality initiative of the soil and
21water division in Code section 466B.42, the bill establishes
22two water quality agriculture infrastructure programs (Code
23section 466B.43), consisting of an edge-of-field infrastructure
24program and an in-field infrastructure program, that will
25provide financing on a cost-share basis to certain agriculture
26infrastructure projects, including demonstration projects.
27The edge-of-field program will support projects that capture
28or filter nutrients entering into surface water. The bill
29includes wetlands, bioreactor systems, saturated buffers, and
30land use changes as examples of projects that may qualify.
31The in-field infrastructure program will support projects
32that decrease erosion and precipitation-induced surface
33runoff, increase water infiltration rates, and increase soil
34sustainability. The bill includes structures, terraces,
35waterways located on cropland or pastureland, and soil
-18-1conservation or erosion control structures or managed drainage
2systems as examples of projects that may qualify.
3The bill provides for the purpose of the programs and
4requires that the programs be administered in a manner that
5is consistent with the latest version of the Iowa nutrient
6reduction strategy initially presented in November 2012 by the
7department of agriculture and land stewardship, the department
8of natural resources, and Iowa state university of science
9and technology (nutrient reduction strategy). Both programs
10require that projects be located on agricultural land and limit
11projects to infrastructure designed and installed for use over
12multiple years. The bill requires that the soil and water
13division and landowners enter into agreements for financing
14projects under the programs, provides that the soil and water
15division may support multiple installations of infrastructure
16on a single parcel of land, and provides that the two programs
17may be combined by the soil and water division if it is cost
18effective to do so. The soil and water division is allowed
19to annually use up to 4 percent of the programs’ moneys for
20administrative purposes. Beginning in 2018, the soil and
21water division is required to submit a report by October 1 of
22each year to the general assembly and the governor detailing
23expenditures for the previous fiscal year under the programs
24by hydrologic unit code 8 watershed. The bill provides that
25certain information related to agricultural land and obtained
26by the soil and water division under the programs shall be
27considered a confidential record under Code section 22.7.
28WATER SERVICE EXCISE TAX FOR CERTAIN WATER QUALITY PROGRAMS.
29Water service excise tax and related sales tax exemption —
30The bill exempts from the state sales tax the sales price from
31the sale or furnishing by a water utility of a water service in
32the state to consumers or users. “Water service” and “water
33utility” are defined in the bill.
34By operation of Code section 423.6, an item exempt from the
35imposition of the sales tax is also exempt from the use tax
-19-1imposed in Code section 423.5.
2The bill creates an excise tax at the rate of 6 percent
3on the sales price from the sale or furnishing by a water
4utility of a water service in the state to consumers or users
5(Code chapter 423G). The director of revenue is required
6to administer the water service tax as nearly as possible
7in conjunction with the administration of the state sales
8and use tax laws, and, to that end, the bill incorporates by
9reference numerous Code sections that relate to general tax
10administration and the sales and use tax laws.
11Water service tax revenues are deposited in the general
12fund of the state, and the bill then requires an increasing
13portion of the water service tax revenues collected each year
14to be transferred to a water quality financial assistance fund
15created in the bill (Code section 16.134A) to support various
16water quality programs, described below. Transfers to the
17water quality financial assistance fund equal one-sixth of
18the water service tax revenues collected on or after July 1,
192017, but before August 1, 2018, and increases to one-third,
20one-half, two-thirds, and five-sixths over the next four years.
21All water service tax revenues collected on or after August
221, 2022, will be transferred to the water quality financial
23assistance fund.
24The water service tax is repealed on the enactment date
25that the state sales tax rate in effect on July 1, 2016, is
26increased, or on July 1, 2029, whichever occurs earlier.
27Water service tax revenues transferred to the water quality
28financial assistance fund are then appropriated from the
29fund as follows: 40 percent is appropriated to the Iowa
30finance authority (IFA) to support the wastewater and drinking
31water treatment financial assistance program in Code section
3216.134, 45 percent is appropriated to IFA to support the water
33quality financing program created in the bill (Code sections
3416.142 through 16.145), and 15 percent is appropriated to the
35soil and water division to support the water quality urban
-20-1infrastructure program created in the bill (Code section
2466B.44).
3Wastewater and drinking water treatment financial assistance
4program — The bill amends the wastewater treatment financial
5assistance program administered by IFA in Code section 16.134.
6Currently, the program provides financial assistance in the
7form of grants from IFA to disadvantaged communities to install
8or upgrade wastewater treatment facilities and systems, and
9for engineering or technical assistance for facility planning
10and design. The bill adds drinking water treatment facilities
11and systems, including source water protection projects, to
12the program. The bill also removes the requirement that a
13community qualify as a disadvantaged community in order to
14receive financial assistance, instead providing that such
15disadvantaged communities shall receive priority under the
16program. The bill also modifies other priority designations
17under the program and modifies goals of the program, and
18provides that a utility management organization formed under
19Code chapter 28E or operated by a rural water system organized
20under Code chapter 357A or 504 shall be considered eligible for
21financial assistance under the program. The bill also adds
22reporting and review requirements to the program, modifies the
23permitted use of fund moneys for administrative purposes, and
24creates a water quality financing review committee consisting
25of three members, as provided in the bill, to review and
26approve applications for financial assistance under the
27program. Finally, the bill requires IFA to submit a report by
28October 1 of each year to the governor and general assembly
29detailing expenditures for the previous year under the program,
30and creates a program review committee consisting of eight
31members, as provided in the bill, to review the effectiveness
32of the program every 10 years, beginning in 2027.
33Water quality financing program (Code sections 16.142
34through 16.145) — This program provides financial assistance
35in the form of loans, forgivable loans, and grants to enhance
-21-1the quality of surface water and groundwater, particularly
2by providing financial assistance for projects designed
3to improve water quality by addressing point and nonpoint
4sources. The program is administered by IFA in cooperation
5with the department of natural resources and the department of
6agriculture and land stewardship. The bill creates a water
7quality financing program fund administered by IFA to provide
8financial assistance under the program. The bill allows IFA
9to establish and maintain other funds and accounts necessary
10to carry out the purposes of the program. Under the program,
11an eligible entity is a municipality, as defined in the bill,
12or a landowner, public utility, or rural water district or
13rural water association. The bill provides certain application
14requirements regarding a plan for water quality improvement and
15financing and requires loan recipients to enter into agreements
16with IFA for terms of the financial assistance.
17In order to be eligible for financial assistance, a proposed
18project must improve water quality in the local area or
19watershed using practices identified in the Iowa nutrient
20reduction strategy. Drainage and levee districts are required
21to utilize installations described in the edge-of-field
22infrastructure program (Code section 466B.43), discussed above.
23IFA reviews proposed projects, negotiates project details, and
24approves or denies applications.
25Beginning in 2018, IFA is required to submit a report by
26October 1 of each year to the general assembly and the governor
27detailing expenditures from the fund for the previous fiscal
28year.
29Water quality urban infrastructure program (Code section
30466B.44) — As part of the existing water quality initiative
31of the soil and water division in Code section 466B.42, the
32bill creates a water quality urban infrastructure program
33to support watershed projects and advance implementation
34of the Iowa nutrient reduction strategy. Program support
35may include demonstration projects that decrease erosion,
-22-1precipitation-induced surface runoff, and storm water
2discharges and that increase water infiltration rates.
3Projects shall be based on Iowa’s storm water management manual
4published by the department of natural resources. Financial
5assistance is provided on a cost-share basis or through
6cooperative agreements with certain watersheds as described
7in the bill. The bill requires the soil and water division
8and landowners to enter into agreements for financing projects
9under the program, and provides that the soil and water
10division may support multiple installations of infrastructure
11on a single parcel of land. The soil and water division is
12allowed to annually use up to 4 percent of the program’s moneys
13for administrative purposes.
14The soil and water division may use any amount available
15under the program to develop and maintain an online resource
16displaying measurable indicators of desirable change in water
17quality within the state’s watersheds, and beginning July 1,
182019, may use any amount available under the program to support
19the three-year data collection of the in-field agricultural
20practices project as enacted in 2015 Iowa Acts, ch.132, §18.
21Beginning in 2018, the soil and water division is required
22to submit a report by October 1 of each year to the general
23assembly and the governor detailing expenditures for the
24previous fiscal year under the program. The bill provides that
25certain information related to the land and obtained by the
26soil and water division under the program shall be considered a
27confidential record under Code section 22.7.
-23-mm/sc