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Senate File 512 - IntroducedA Bill ForAn Act 1relating to water quality by amending the wastewater
2treatment financial assistance program, creating a water
3quality infrastructure fund, establishing a water quality
4financing program, providing for cost-share programs for
5infrastructure on agricultural and urban land under the
6water quality initiative, creating a water service excise
7tax and a related sales tax exemption, making transfers and
8appropriations and other changes properly related to water
9quality, and including effective date provisions.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8.57, subsection 5, paragraph f,
2subparagraph (1), Code 2017, is amended by adding the following
3new subparagraph division:
4 NEW SUBPARAGRAPH DIVISION. (0c) For the fiscal year
5beginning July 1, 2020, and for each fiscal year thereafter, of
6the wagering tax receipts received pursuant to sections 99D.17
7and 99F.11, the next fifteen million dollars shall be deposited
8in the water quality infrastructure fund created in section
98.57B.
10 Sec. 2. Section 8.57, subsection 5, paragraph f,
11subparagraph (1), subparagraph division (d), Code 2017, is
12amended to read as follows:
13(d) For the fiscal year beginning July 1, 2013, and for
14each fiscal year thereafter, the total moneys in excess of the
15moneys deposited under this paragraph “f” in the revenue bonds
16debt service fund, the revenue bonds federal subsidy holdback
17fund, the vision Iowa fund, the water quality infrastructure
18fund, and the Iowa skilled worker and job creation fund shall
19be deposited in the rebuild Iowa infrastructure fund and shall
20be used as provided in this section, notwithstanding section
218.60.
22 Sec. 3. NEW SECTION. 8.57B Water quality infrastructure
23fund — creation — appropriations.
241. A water quality infrastructure fund is created within
25the division of soil conservation and water quality of the
26department of agriculture and land stewardship. The fund
27shall consist of moneys transferred pursuant to section 8.57,
28subsection 5, paragraph “f”, subparagraph (1), subparagraph
29division (0c), moneys transferred to the fund pursuant to
30section 423G.6, and appropriations made to the fund and
31transfers of interest, earnings, and moneys from other funds
32as provided by law.
332. The fund shall be separate from the general fund of the
34state and the balance in the fund shall not be considered part
35of the balance of the general fund of the state. However, the
-1-1fund shall be considered a special account for the purposes
2of section 8.53, relating to generally accepted accounting
3principles.
43. Moneys in the fund are appropriated to the division
5of soil conservation and water quality of the department of
6agriculture and land stewardship for the exclusive purpose of
7supporting water quality agriculture infrastructure programs
8created in section 466B.43.
94. Notwithstanding section 8.33, moneys in the fund
10that remain unencumbered or unobligated at the close of a
11fiscal year shall not revert but shall remain available for
12expenditure for the purposes designated. Notwithstanding
13section 12C.7, subsection 2, interest or earnings on moneys in
14the fund shall be credited to the fund.
15 Sec. 4. Section 16.134, Code 2017, is amended to read as
16follows:
1716.134 Wastewater and drinking water treatment financial
18assistance program.
191. The Iowa finance authority shall establish and
20administer a wastewater and drinking water treatment financial
21assistance program. The purpose of the program shall be to
22provide financial assistance to enhance water quality. The
23program shall be administered in accordance with rules adopted
24by the authority pursuant to chapter 17A. For purposes of
25this section, “program” means the wastewater and drinking water
26 treatment financial assistance program and “committee” means the
27water quality financing review committee created in subsection
289.
292. A wastewater and drinking water treatment financial
30assistance fund is created and shall consist of appropriations
31made to the fund and transfers of interest, earnings, and
32moneys from other funds as provided by law. Moneys transferred
33to the fund pursuant to section 16.134A are appropriated to the
34authority for purposes of the program. Moneys in the fund are
35not subject to section 8.33. Notwithstanding section 12C.7,
-2-1subsection 2, interest or earnings on moneys in the fund shall
2be credited to the fund.
33. Financial assistance under the program shall be used
4to install or upgrade wastewater treatment facilities and
5systems and drinking water treatment facilities and systems,
6including source water protection projects, and for engineering
7or technical assistance for facility planning and design.
84. The authority committee shall distribute approve
9 financial assistance in from the fund in accordance with the
10following:
11a. The goal of the program shall be to base awards on the
12impact of the grant combined with other sources of financing to
13ensure that sewer rates do not exceed one and one-half percent
14of a community’s median household income.
15b. a. Communities shall be eligible for financial
16assistance by qualifying as Priority shall be given for
17projects in which a disadvantaged community and is seeking
18financial assistance for the installation or upgrade of
19wastewater treatment facilities due to regulatory activity
20by the department of natural resources and drinking water
21treatment facilities. For purposes of this section, the term
22“disadvantaged community” means the same as defined by the
23department.
24c. b. Priority shall be given to projects in which the
25 meeting criteria established in section 455B.199B in which the
26applicant seeks financial assistance is to be used to obtain
27 with financing under the water pollution control works and
28drinking water facilities financing program pursuant to section
2916.131 or other federal, or state, or private financing.
30d. c. Priority shall also be given to projects whose
31completion will provide significant improvement to water
32quality in the relevant watershed.
33e. d. Priority shall also be given to communities that
34employ an alternative wastewater treatment technology pursuant
35to section 455B.199C.
-3- 1f. e. Priority shall be also be given to those communities
2where sewer or water rates are the highest as a percentage of
3that community’s median household income.
4f. Priority shall also be given to communities that employ
5technology to address 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 and
9technology.
10g. Financial assistance in the form of grants shall be
11issued on an annual basis.
12h. An applicant shall not receive a grant that exceeds five
13hundred thousand dollars.
144A. A utility management organization formed under chapter
1528E or operated by a rural water system organized under chapter
16357A or chapter 504 shall be considered eligible for financial
17assistance under the program.
185. The authority in cooperation with the department of
19natural resources shall share provide information and resources
20to the committee when the committee is determining the
21qualifications of a community for financial assistance from the
22fund.
236. The authority shall enter into agreements with financial
24assistance recipients and distribute moneys under the program
25pursuant to financial assistance determinations made by the
26committee.The authority may use an amount of not more than
27four one percent of any moneys appropriated for deposit in the
28fund for administration purposes.
297. By October 1 of each year, the authority shall submit
30a report to the governor and the general assembly itemizing
31expenditures under the program during the previous fiscal year,
32if any.
338. a. Beginning September 1, 2027, and every ten years
34thereafter, a program review committee is established for
35purposes of reviewing the wastewater and drinking water
-4-1treatment financial assistance program. By December 1 of the
2same year, the program review committee shall file a report
3with the governor and the general assembly that reviews the
4effectiveness of the program during the prior ten fiscal years.
5b. The program review committee shall consist of the
6following members:
7(1) The governor or the governor’s designee.
8(2) The secretary of agriculture or the secretary’s
9designee.
10(3) The executive director of the authority or the executive
11director’s designee.
12(4) The director of the department of natural resources or
13the director’s designee.
14(5) Four members of the general assembly, with two from the
15senate and two from the house of representatives and not more
16than one member from each chamber being from the same political
17party. The two senators shall be designated one member each
18by the president of the senate, after consultation with the
19majority leader of the senate, and by the minority leader of
20the senate. The two representatives shall be designated one
21member each by the speaker of the house of representatives,
22after consultation with the majority leader of the house of
23representatives, and by the minority leader of the house of
24representatives.
25c. Staffing services shall be provided by the authority.
269. a. A water quality financing review committee is
27created consisting of the secretary of agriculture or the
28secretary’s designee, the executive director of the authority
29or the executive director’s designee, and the director of the
30department of natural resources or the director’s designee.
31b. The committee shall review and approve or deny
32applications for financial assistance under the wastewater
33and drinking water treatment financial assistance program
34established in this section.
35 Sec. 5. NEW SECTION. 16.134A Water quality financial
-5-1assistance fund.
21. A water quality financial assistance fund is created in
3the state treasury as a revolving fund.
42. The fund shall consist of all of the following:
5a. (1) Moneys transferred to the fund pursuant to section
6423G.6.
7(2) This paragraph “a” is repealed on January 1, 2030.
8b. Appropriations made to the fund and transfers of
9interest, earnings, and moneys from other funds as provided by
10law.
113. For each fiscal year in the fiscal period beginning
12July 1, 2018, and ending June 30, 2029, there is appropriated
13the following percentages of the balance of the fund for the
14following purposes:
15a. Forty percent to the Iowa finance authority to support
16the wastewater and drinking water treatment financial
17assistance program created in section 16.134.
18b. Forty-five percent to the Iowa finance authority to be
19credited to the water quality financing program fund created
20pursuant to section 16.144.
21c. Fifteen percent to the division of soil conservation
22and water quality of the department of agriculture and land
23stewardship to support the water quality urban infrastructure
24program created in section 466B.44.
254. Moneys in the fund are not subject to section 8.33.
26Notwithstanding section 12C.7, subsection 2, interest or
27earnings on moneys in the fund shall be credited to the fund.
28 Sec. 6. NEW SECTION. 16.142 Definitions.
29As used in this part, unless the context otherwise requires:
301. “Cost” means all costs, charges, expenses, or other
31indebtedness incurred by a loan recipient and determined by
32the authority as reasonable and necessary for carrying out
33all works and undertakings necessary or incidental to the
34accomplishment of any project.
352. “Eligible entity” means a municipality or a landowner,
-6-1as determined by the authority, a public utility as defined
2in section 476.1, or a rural water district or rural water
3association as defined in section 357A.1.
43. “Loan recipient” means an eligible entity that has
5received a loan under the program.
64. “Municipality” means a governmental body such as a state
7agency or a political subdivision of the state. Municipality
8includes but is not limited to a city, city utility, county,
9soil and water conservation district, sanitary district, a
10subdistrict of any of the foregoing districts, a state agency,
11or other governmental body or corporation empowered to provide
12sewage collection and treatment services or drinking water, or
13any entity jointly exercising governmental powers pursuant to
14chapter 28E or 28F, or any other combination of two or more
15governmental bodies or corporations acting jointly under the
16laws of this state in connection with a project.
175. “Program” means the water quality financing program
18created in this part.
196. “Project” means any combination of improvements,
20structures, developments, tasks, actions, constructions,
21modifications, operations, or practices designed to improve
22water quality that are proposed by an eligible entity and
23approved by the authority. “Project” includes but is not
24limited to any of the following:
25a. A project meeting the requirements of part 2 of this
26subchapter.
27b. A project, operation, or practice undertaken or carried
28out to address watershed protection, flood prevention, or water
29quality improvement.
30c. A project meeting the requirements of a sponsor project
31under section 455B.199.
32 Sec. 7. NEW SECTION. 16.143 Water quality financing
33program.
341. The authority, in cooperation with the department of
35natural resources and the department of agriculture and land
-7-1stewardship, shall establish and administer a water quality
2financing program. The purpose of the program shall be to
3provide financial assistance to enhance the quality of surface
4water and groundwater, particularly by providing financial
5assistance for projects designed to improve water quality
6by addressing point and nonpoint sources, with a higher
7prioritization provided to collaborative efforts.
82. The authority shall determine the interest rate
9and repayment terms for loans made under the program, in
10cooperation with the department of natural resources and
11the department of agriculture and land stewardship, and the
12authority shall enter into loan agreements with eligible
13entities in compliance with and subject to the terms and
14conditions of the program as described in this part.
153. The authority may charge loan recipients fees and assess
16costs against such recipients necessary for the continued
17operation of the program. Such fees and costs shall not exceed
18the costs directly associated with the administration of the
19program. Fees and costs collected pursuant to this subsection
20shall be deposited in the appropriate fund or account created
21in section 16.144.
224. The program shall be administered by the authority in
23accordance with rules adopted by the authority pursuant to
24chapter 17A.
25 Sec. 8. NEW SECTION. 16.144 Water quality financing program
26fund — appropriation — other funds.
271. a. A water quality financing program fund is created
28and shall consist of appropriations made to the fund, moneys
29credited to the fund pursuant to section 16.134A, and transfers
30of interest, earnings, and moneys from other funds as provided
31by law. The fund shall be administered by the authority as
32a revolving fund. Moneys in the fund are appropriated to
33the authority for purposes of the program. Notwithstanding
34section 8.33, moneys in the fund that remain unencumbered or
35unobligated at the close of a fiscal year shall not revert
-8-1but shall remain available for expenditure for the purposes
2designated. Notwithstanding section 12C.7, subsection 2,
3interest or earnings on moneys in the fund shall be credited
4to the fund.
5b. The authority shall use the moneys in the fund to provide
6financial assistance to eligible entities under the program.
7The authority may provide financial assistance in the form
8deemed most convenient for the efficient financing of projects,
9including loans, forgivable loans, or grants. The authority
10shall administer the fund and the program in such a manner
11as to provide a permanent source of water quality project
12financial assistance to eligible entities.
13c. The authority may annually use an amount of not more
14than one percent of the moneys in the fund for administrative
15purposes.
162. a. The authority may establish and maintain other
17funds and accounts determined to be necessary to carry out the
18purposes of the program and shall provide for the funding,
19administration, investment, restrictions, and disposition of
20the funds and accounts.
21b. Moneys appropriated to and used by the authority for
22purposes of paying the costs and expenses associated with
23the administration of the program shall be administered as
24determined by the authority.
25c. All moneys transferred to the authority for purposes of
26the program shall be deposited and held in a fund or account
27established and maintained pursuant to this section.
283. The funds or accounts held by the authority, or a trustee
29acting on behalf of the authority pursuant to a trust agreement
30related to the program, shall not be considered part of the
31general fund of the state, are not subject to appropriation for
32any other purpose by the general assembly, and in determining
33a general fund balance shall not be included in the general
34fund of the state, but shall remain in the funds and accounts
35maintained by the authority or trustee pursuant to a trust
-9-1agreement. Funds and accounts held by the authority, or a
2trustee acting on behalf of the authority pursuant to a trust
3agreement related to the program, are separate dedicated funds
4and accounts under the administration and control of the
5authority and subject to section 16.31.
64. By October 1, 2018, and by October 1 of each year
7thereafter, the authority shall submit a report to the governor
8and the general assembly itemizing expenditures from the fund,
9if any, during the previous fiscal year.
10 Sec. 9. NEW SECTION. 16.145 Eligible entities — agreements
11required.
121. An eligible entity may apply to the authority for
13financial assistance under the program by submitting a plan
14that meets the following requirements:
15a. The plan includes one or more projects that improve
16water quality in the local area or watershed. Projects shall
17use practices identified in the latest version of the document
18entitled “Iowa Nutrient Reduction Strategy” initially presented
19in November 2012 by the department of agriculture and land
20stewardship, the department of natural resources, and Iowa
21state university of science and technology. A drainage or
22levee district established under chapter 468 shall utilize the
23installation of edge-of-field infrastructure as described in
24section 466B.43.
25b. The plan describes in detail the manner in which the
26projects will be financed and undertaken, including, as
27applicable, the sources of revenue directed to financing the
28improvements as well as the eligible entities that will be
29receiving the revenues and how such revenues will be spent on
30the projects.
312. The authority shall review and approve or deny
32applications for financial assistance. The provision of
33financial assistance under the program shall take into account,
34as applicable, the number of municipalities, landowners, public
35utilities, rural water districts, or rural water associations
-10-1comprising an eligible entity and the eligible entity’s
2financing capacity. The authority shall score applications
3for financial assistance according to rules adopted pursuant
4to this part. The authority shall only provide financial
5assistance to eligible entities that have sufficient financing
6capacity and that submit an appropriate plan designed to
7improve water quality.
83. An approved eligible entity shall enter into an agreement
9with the authority for the provision of financial assistance.
10The agreement shall include standard terms for the receipt
11of program moneys and any other terms the authority deems
12necessary or convenient for the efficient administration of the
13program.
14 Sec. 10. Section 423.3, Code 2017, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 103. a. The sales price from the sale or
17furnishing by a water utility of a water service in the state
18to consumers or users.
19b. For purposes of this subsection:
20(1) “Water service” means the delivery of water by piped
21distribution system.
22(2) “Water utility” means a public utility as defined in
23section 476.1 that furnishes water by piped distribution system
24to the public for compensation.
25 Sec. 11. NEW SECTION. 423G.1 Short title.
26This chapter may be cited as the “Water Service Tax Act”.
27 Sec. 12. NEW SECTION. 423G.2 Definitions.
281. All words and phrases used in this chapter and defined in
29section 423.1 have the same meaning given them by section 423.1
30for purposes of this chapter.
312. As used in this chapter, “water service” and “water
32utility” mean the same as defined in section 423.3, subsection
33103.
34 Sec. 13. NEW SECTION. 423G.3 Water service tax.
35An excise tax at the rate of six percent is imposed on the
-11-1sales price from the sale or furnishing by a water utility of a
2water service in the state to consumers or users.
3 Sec. 14. NEW SECTION. 423G.4 Exemptions.
4The sales price from transactions exempt from state sales
5tax under section 423.3, except section 423.3, subsection 103,
6is also exempt from the tax imposed by this chapter.
7 Sec. 15. NEW SECTION. 423G.5 Administration by director.
81. The director of revenue shall administer the water
9service tax as nearly as possible in conjunction with the
10administration of the state sales and use tax law, except that
11portion of the law that implements the streamlined sales and
12use tax agreement. The director shall provide appropriate
13forms, or provide on the regular state tax forms, for reporting
14water service tax liability.
152. The director may require all persons who are engaged
16in the business of deriving any sales price or purchase
17price subject to tax under this chapter to register with
18the department. The director may also require a tax permit
19applicable only to this chapter for any retailer not
20collecting, or any user not paying, taxes under chapter 423.
213. Section 422.25, subsection 4, sections 422.30, 422.67,
22and 422.68, section 422.69, subsection 1, sections 422.70,
23422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
241, and sections 423.23, 423.24, 423.25, 423.31 through
25423.35, 423.37 through 423.42, and 423.47, consistent with the
26provisions of this chapter, shall apply with respect to the tax
27authorized under this chapter, in the same manner and with the
28same effect as if the excise taxes on the sale or furnishing of
29a water service were retail sales taxes within the meaning of
30those statutes. Notwithstanding this subsection, the director
31shall provide for quarterly filing of returns and for other
32than quarterly filing of returns both as prescribed in section
33423.31. All taxes collected under this chapter by a retailer
34or any user are deemed to be held in trust for the state of
35Iowa.
-12-1 Sec. 16. NEW SECTION. 423G.6 Deposit of revenues.
21. All moneys received and all refunds shall be deposited in
3or withdrawn from the general fund of the state.
42. Subsequent to the deposit in the general fund of the
5state, the department shall transfer the following amounts to
6the following funds:
7a. For revenues collected on or after July 1, 2018, but
8before August 1, 2019, one-twelfth of the revenues to the
9water quality infrastructure fund created in section 8.57B,
10and one-twelfth of the revenues to the water quality financial
11assistance fund created in section 16.134A.
12b. For revenues collected on or after August 1, 2019,
13but before August 1, 2020, one-sixth of the revenues to the
14water quality infrastructure fund created in section 8.57B,
15and one-sixth of the revenues to the water quality financial
16assistance fund created in section 16.134A.
17c. For revenues collected on or after August 1, 2020,
18one-half of the revenues to the water quality financial
19assistance fund created in section 16.134A.
20 Sec. 17. NEW SECTION. 423G.7 Future repeal.
21This chapter is repealed upon the occurrence of one of the
22following, whichever is earlier:
231. The enactment date that the tax rate for the sales
24tax imposed upon the retail sales price of tangible personal
25property and the furnishing of enumerated services sold in this
26state in effect on July 1, 2016, is increased.
272. July 1, 2029.
28 Sec. 18. Section 455B.171, Code 2017, is amended by adding
29the following new subsections:
30 NEW SUBSECTION. 10A. “Iowa nutrient reduction strategy”
31means a water quality initiative developed and updated by the
32department of agriculture and land stewardship, the department
33of natural resources, and the college of agriculture and life
34sciences at Iowa state university of science and technology in
35order to assess and reduce nutrients in this state’s watersheds
-13-1that utilize a pragmatic, strategic, and coordinated approach
2with the goal of accomplishing reductions over time.
3 NEW SUBSECTION. 15A. “Nutrient” means total nitrogen and
4total phosphorus.
5 Sec. 19. Section 455B.171, subsection 19, Code 2017, is
6amended to read as follows:
719. “Point source” means any discernible, confined, and
8discrete conveyance, including but not limited to any pipe,
9ditch, channel, tunnel, conduit, well, discrete fissure,
10container, rolling stock, concentrated animal feeding
11operation, or vessel or other floating craft, from which
12pollutants are or may be discharged. “Point source” does not
13include agricultural storm water discharge and return flows
14from irrigated agriculture.
15 Sec. 20. Section 455B.177, Code 2017, is amended by adding
16the following new subsection:
17 NEW SUBSECTION. 3. The general assembly further finds
18and declares that it is in the interest of the people of Iowa
19to assess and reduce nutrients in surface waters over time by
20implementing the Iowa nutrient reduction strategy. To evaluate
21the progress achieved over time toward the goals of the Iowa
22nutrient reduction strategy and the United States environmental
23protection agency gulf hypoxia action plan, the baseline
24condition shall be calculated for the time period from 1980 to
251996.
26 Sec. 21. Section 466B.3, subsection 3, paragraph c, Code
272017, is amended to read as follows:
28c. Whether the funds, programs, and regulatory efforts
29coordinated by the council eventually result in a long-term
30improvement to the quality of surface water in Iowa. To
31evaluate the progress achieved over time toward the goals of
32the Iowa nutrient reduction strategy, as defined in section
33455B.171, and the United States environmental protection agency
34gulf hypoxia action plan, the baseline condition shall be
35calculated for the time period from 1980 to 1996.
-14-1 Sec. 22. Section 466B.42, Code 2017, is amended to read as
2follows:
3466B.42 Water quality initiative.
4The division shall establish a water quality initiative
5in order to assess and reduce nutrients in this state’s
6watersheds, including subwatersheds, and regional watersheds,
7and for implementing its responsibilities under the Iowa
8nutrient reduction strategy as defined in section 455B.171.
9The division shall establish and administer projects to
10reduce nutrients in surface waters from nonpoint sources in
11a scientific, reasonable, and cost-effective manner. The
12division shall utilize a pragmatic, strategic, and coordinated
13approach with the goal of accomplishing reductions over time.
14To evaluate the progress achieved over time toward the goals
15of the Iowa nutrient reduction strategy and the United States
16environmental protection agency gulf hypoxia action plan, the
17baseline condition shall be calculated for the time period from
181980 to 1996.
19 Sec. 23. NEW SECTION. 466B.43 Water quality agriculture
20infrastructure programs.
211. As part of the water quality initiative established
22pursuant to section 466B.42, the division shall administer
23water quality agriculture infrastructure programs created in
24this section.
252. The purpose of the programs is to support projects for
26the installation of infrastructure, including conservation
27structures, practices, or other measures that reduce
28contributing nutrient loads, associated sediment, or
29contaminants from sources to surface waters. The programs
30shall be administered in a manner that is consistent with
31the latest version of the “Iowa Nutrient Reduction Strategy”
32initially presented in November 2012 by the department of
33agriculture and land stewardship, the department of natural
34resources, and Iowa state university of science and technology.
353. An edge-of-field infrastructure program is created.
-15-1The program shall support projects located on agricultural
2land, which may include demonstration projects, that capture
3or filter nutrients entering into a surface water. The
4program’s projects shall be limited to infrastructure designed
5and installed for use over multiple years, including but not
6limited to wetlands, bioreactor systems, saturated buffers,
7or land use changes. The program shall be financed on a
8cost-share basis.
94. An in-field infrastructure program is created. The
10program shall support projects located on agricultural land,
11which may include demonstration projects, that decrease erosion
12and precipitation-induced surface runoff, increase water
13infiltration rates, and increase soil sustainability. The
14program’s projects shall be limited to infrastructure designed
15and installed for use over multiple years, including but not
16limited to structures, terraces, and waterways located on
17cropland or pastureland, and including but not limited to soil
18conservation or erosion control structures or managed drainage
19systems. The program shall be financed on a cost-share basis.
205. Any state moneys used to finance a project under a
21water quality agriculture infrastructure program shall be
22administered according to an agreement entered into by the
23division and the owner of the land where the infrastructure
24is to be installed. The agreement shall include standard
25terms and conditions for the receipt of program moneys and
26any other terms and conditions the division deems necessary
27or convenient for the efficient administration of the project
28or program. The division may support multiple installations
29of infrastructure on a single parcel of land. The division
30may also combine programs if cost effective. The division
31may annually use an amount of not more than four percent of
32the moneys used to support each program for administrative
33purposes.
346. By October 1, 2018, and each October 1, thereafter, the
35division shall submit a report to the governor and the general
-16-1assembly itemizing expenditures, by hydrologic unit code 8
2watershed, under the programs during the previous fiscal year,
3if any.
47. Any information obtained by the division identifying
5a person holding a legal interest in agricultural land or
6specific agricultural land shall be a confidential record under
7section 22.7.
8 Sec. 24. NEW SECTION. 466B.44 Water quality urban
9infrastructure program.
101. As part of the water quality initiative established
11pursuant to section 466B.42, the division shall administer a
12water quality urban infrastructure program.
132. The purpose of the program is to support watershed
14projects and advance implementation of the latest version of
15the “Iowa Nutrient Reduction Strategy” initially presented
16in November 2012 by the department of agriculture and land
17stewardship, the department of natural resources, and Iowa
18state university of science and technology, which program
19support may include demonstration projects that decrease
20erosion, precipitation-induced surface runoff, and storm
21water discharges and that increase water infiltration rates.
22The program’s projects shall be based on Iowa’s storm water
23management manual published by the department of natural
24resources.
253. The program shall be financed on a cost-share basis or
26through cooperative agreements with watershed projects funded
27through section 455B.199 whose project activities fall outside
28the territorial boundaries of a city.
294. Any state moneys used to finance a project under a water
30quality urban infrastructure program shall be administered
31according to an agreement entered into by the division and the
32owner of the land where the infrastructure is to be installed.
33The agreement shall include standard terms and conditions
34for the receipt of program moneys and any other terms and
35conditions the division deems necessary or convenient for
-17-1the efficient administration of the project or program. The
2division may support multiple installations of infrastructure
3on a single parcel of land. The division may annually use an
4amount of not more than four percent of the moneys used to
5support the program for administrative purposes.
65. Notwithstanding any other provision in this section
7to the contrary, beginning on July 1, 2018, the division may
8use any amount available to support the water quality urban
9infrastructure program to instead extend and support the
10three-year data collection of in-field agricultural practices
11project as enacted in 2015 Iowa Acts, ch.132, §18.
126. Notwithstanding any other provision of this section
13to the contrary, the division may use any amount available
14to support the water quality urban infrastructure program to
15develop and maintain an online resource displaying measurable
16indicators of desirable change in water quality within the
17state’s watersheds. These measurable indicators may include
18but are not limited to public and private funding inputs,
19involvement in water quality projects, and improvements, land
20use, practice adoption, calculated load reduction, and measured
21loads at existing monitoring stations.
227. By October 1, 2018, and by October 1 of each year
23thereafter, the division shall submit a report to the governor
24and the general assembly itemizing expenditures under the
25program, if any, during the previous fiscal year.
268. Any information obtained by the division identifying a
27person holding a legal interest in land or specific land shall
28be a confidential record under section 22.7.
29 Sec. 25. LEGISLATIVE INTENT. It is the intent of the
30general assembly that the amendment in this Act to the
31definition of point source in section 455B.171, subsection
3219, is a conforming amendment consistent with current state
33and federal law, and that the amendment does not change the
34application of current law but instead reflects current law
35both before and after the enactment of this Act.
-18-1 Sec. 26. EFFECTIVE DATE. The following provision or
2provisions of this Act take effect July 1, 2018:
31. The section of this Act enacting section 423.3,
4subsection 103.
52. The sections of this Act enacting sections 423G.1,
6423G.2, 423G.3, 423G.4, 423G.5, 423G.6, and 423G.7.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10This bill relates to water quality by modifying an existing
11wastewater treatment program, establishing new water quality
12programs, providing for transfers and appropriations related to
13water quality, creating a water service excise tax and related
14sales tax exemption, and providing for other changes properly
15related to water quality.
16WATER QUALITY PROGRAMS.
17Water quality agriculture infrastructure programs — As part
18of the existing water quality initiative of the department of
19agriculture and land stewardship (soil and water division) in
20Code section 466B.42, the bill establishes two water quality
21agriculture infrastructure programs (Code section 466B.43),
22consisting of an edge-of-field infrastructure program and an
23in-field infrastructure program, that will provide financing
24on a cost-share basis to certain agriculture infrastructure
25projects, including demonstration projects. The edge-of-field
26program will support projects that capture or filter nutrients
27entering into surface water. The bill includes wetlands,
28bioreactor systems, saturated buffers, and land use changes
29as examples of projects that may qualify. The in-field
30infrastructure program will support projects that decrease
31erosion and precipitation-induced surface runoff, increase
32water infiltration rates, and increase soil sustainability.
33The bill includes structures, terraces, waterways located on
34cropland or pastureland, and soil conservation or erosion
35control structures or managed drainage systems as examples of
-19-1projects that may qualify.
2The bill provides for the purpose of the programs and
3requires that the programs be administered in a manner that
4is consistent with the latest version of the Iowa nutrient
5reduction strategy initially presented in November 2012 by the
6department of agriculture and land stewardship, the department
7of natural resources, and Iowa state university of science
8and technology (nutrient reduction strategy). Both programs
9require that projects be located on agricultural land and limit
10projects to infrastructure designed and installed for use over
11multiple years. The bill requires that the soil and water
12division and landowners enter into agreements for financing
13projects under the programs, provides that the soil and water
14division may support multiple installations of infrastructure
15on a single parcel of land, and provides that the two programs
16may be combined by the soil and water division if it is cost
17effective to do so. The soil and water division is allowed
18to annually use up to 4 percent of the programs’ moneys for
19administrative purposes. Beginning in 2018, the soil and
20water division is required to submit a report by October 1 of
21each year to the general assembly and the governor detailing
22expenditures for the previous fiscal year under the programs by
23hydrologic unit code 8 watershed, if any. The bill provides
24that certain information related to agricultural land and
25obtained by the soil and water division under the programs
26shall be considered a confidential record under Code section
2722.7.
28Wastewater and drinking water treatment financial assistance
29program — The bill amends the wastewater treatment financial
30assistance program administered by the Iowa finance authority
31(IFA) in Code section 16.134. Currently, the program provides
32financial assistance in the form of grants from IFA to
33disadvantaged communities to install or upgrade wastewater
34treatment facilities and systems, and for engineering or
35technical assistance for facility planning and design. The
-20-1bill adds drinking water treatment facilities and systems,
2including source water protection projects, to the program.
3The bill also removes the requirement that a community
4qualify as a disadvantaged community in order to receive
5financial assistance, instead providing that such disadvantaged
6communities shall receive priority under the program. The
7bill also modifies other priority designations under the
8program and modifies goals of the program, and provides that
9a utility management organization formed under Code chapter
1028E or operated by a rural water system organized under Code
11chapter 357A or 504 shall be considered eligible for financial
12assistance under the program. The bill also adds reporting and
13review requirements to the program, modifies the permitted use
14of fund moneys for administrative purposes, and creates a water
15quality financing review committee consisting of three members,
16as provided in the bill, to review and approve applications
17for financial assistance under the program. Finally, the bill
18requires IFA to submit a report by October 1 of each year to the
19governor and general assembly detailing expenditures for the
20previous year under the program, if any, and creates a program
21review committee consisting of eight members, as provided in
22the bill, to review the effectiveness of the program every 10
23years, beginning in 2027.
24Water quality financing program (Code sections 16.142
25through 16.145) — This program provides financial assistance
26in the form of loans, forgivable loans, and grants to enhance
27the quality of surface water and groundwater, particularly
28by providing financial assistance for projects designed
29to improve water quality by addressing point and nonpoint
30sources. The program is administered by IFA in cooperation
31with the department of natural resources and the department of
32agriculture and land stewardship. The bill creates a water
33quality financing program fund administered by IFA to provide
34financial assistance under the program. The bill allows IFA
35to establish and maintain other funds and accounts necessary
-21-1to carry out the purposes of the program. Under the program,
2an eligible entity is a municipality, as defined in the bill,
3or a landowner, public utility, or rural water district or
4rural water association. The bill provides certain application
5requirements regarding a plan for water quality improvement and
6financing and requires loan recipients to enter into agreements
7with IFA for terms of the financial assistance.
8In order to be eligible for financial assistance, a proposed
9project must improve water quality in the local area or
10watershed using practices identified in the Iowa nutrient
11reduction strategy. Drainage and levee districts are required
12to utilize installations described in the edge-of-field
13infrastructure program (Code section 466B.43), discussed above.
14IFA reviews proposed projects, negotiates project details, and
15approves or denies applications.
16Beginning in 2018, IFA is required to submit a report by
17October 1 of each year to the general assembly and the governor
18detailing expenditures from the fund, if any, for the previous
19fiscal year.
20Water quality urban infrastructure program (Code section
21466b.44) — As part of the existing water quality initiative
22of the soil and water division in Code section 466B.42, the
23bill creates a water quality urban infrastructure program
24to support watershed projects and advance implementation
25of the Iowa nutrient reduction strategy. Program support
26may include demonstration projects that decrease erosion,
27precipitation-induced surface runoff, and storm water
28discharges and that increase water infiltration rates.
29Projects shall be based on Iowa’s storm water management manual
30published by the department of natural resources. Financial
31assistance is provided on a cost-share basis or through
32cooperative agreements with certain watersheds as described
33in the bill. The bill requires the soil and water division
34and landowners to enter into agreements for financing projects
35under the program, and provides that the soil and water
-22-1division may support multiple installations of infrastructure
2on a single parcel of land. The soil and water division is
3allowed to annually use up to 4 percent of the program’s moneys
4for administrative purposes.
5The soil and water division may use any amount available
6under the program to develop and maintain an online resource
7displaying measurable indicators of desirable change in water
8quality within the state’s watersheds, and beginning July 1,
92018, may use any amount available under the program to extend
10and support the three-year data collection of the in-field
11agricultural practices project as enacted in 2015 Iowa Acts,
12ch.132, §18.
13Beginning in 2018, the soil and water division is required
14to submit a report by October 1 of each year to the general
15assembly and the governor detailing expenditures for the
16previous fiscal year under the program, if any. The bill
17provides that certain information related to the land and
18obtained by the soil and water division under the program shall
19be considered a confidential record under Code section 22.7.
20WATER SERVICE EXCISE TAX AND OTHER WATER QUALITY FUNDING.
21Water service excise tax and related sales tax exemption —
22The bill exempts from the state sales tax the sales price from
23the sale or furnishing by a water utility of a water service in
24the state to consumers or users. “Water service” and “water
25utility” are defined in the bill.
26By operation of Code section 423.6, an item exempt from the
27imposition of the sales tax is also exempt from the use tax
28imposed in Code section 423.5.
29The bill creates an excise tax at the rate of 6 percent
30on the sales price from the sale or furnishing by a water
31utility of a water service in the state to consumers or users
32(Code chapter 423G). The director of revenue is required
33to administer the water service tax as nearly as possible
34in conjunction with the administration of the state sales
35and use tax laws, and, to that end, the bill incorporates by
-23-1reference numerous Code sections that relate to general tax
2administration and the sales and use tax laws.
3The water service excise tax and related sales tax exemption
4both take effect July 1, 2018.
5Water service tax revenues are deposited in the general
6fund of the state, and the bill then requires a specified
7portion of the water service tax revenues collected each year
8to be transferred to a water quality financial assistance
9fund created in the bill (Code section 16.134A) to support
10various water quality programs, or to the water quality
11infrastructure fund created in the bill (Code section 8.57B) to
12support the water quality agriculture infrastructure programs
13created in the bill (Code section 466B.43). For revenues
14collected on or after July 1, 2018, but before August 1, 2019,
15one-twelfth of the revenues are transferred to the water
16quality financial assistance fund, and one-twelfth of the
17revenues are transferred to the water quality infrastructure
18fund. For revenues collected on or after August 1, 2019,
19but before August 1, 2020, one-sixth of the revenues are
20transferred to the water quality financial assistance fund, and
21one-sixth of the revenues are transferred to the water quality
22infrastructure fund. For revenues collected on or after August
231, 2020, one-half of the revenues are transferred to the water
24quality financial assistance fund.
25The water service tax is repealed on the enactment date
26that the state sales tax rate in effect on July 1, 2016, is
27increased, or on July 1, 2029, whichever occurs earlier.
28Water service tax revenues transferred to the water quality
29financial assistance fund are then appropriated from the fund
30for the following programs beginning July 1, 2018: 40 percent
31is appropriated to the IFA to support the wastewater and
32drinking water treatment financial assistance program in Code
33section 16.134, 45 percent is appropriated to IFA to support
34the water quality financing program created in the bill (Code
35sections 16.142 through 16.145), and 15 percent is appropriated
-24-1to the soil and water division to support the water quality
2urban infrastructure program created in the bill (Code section
3466B.44).
4Water service tax revenues transferred to the water quality
5infrastructure fund are appropriated to the soil and water
6division for administering the water quality agriculture
7infrastructure programs (Code section 466B.43) created in the
8bill and described above.
9Transfer of wagering tax receipts — The bill also
10transfers certain wagering tax receipts to the water quality
11infrastructure fund beginning July 1, 2020. Under current
12law, $15 million of the wagering tax receipts received by
13the state each fiscal year are deposited in the vision Iowa
14fund for the repayment of certain vision Iowa bonds. Those
15transfers are set to expire June 30, 2020. For the fiscal year
16beginning July 1, 2020, and for each fiscal year thereafter,
17the bill provides that $15 million of the wagering tax receipts
18shall be deposited in the water quality infrastructure fund
19(Code section 8.57B) to support the water quality agriculture
20infrastructure programs (Code section 466B.43).
21MISCELLANEOUS CHANGES. The bill defines “Iowa nutrient
22reduction strategy” and “nutrient” in Code section 455B.171,
23which contains definitions for terms used in provisions of
24the Code that concern the jurisdiction of the department of
25natural resources related to water quality, and also amends
26the definition of “point source” in that Code section to
27exclude agricultural storm water discharges and return flows
28from irrigated agriculture. The bill provides that it is the
29legislative intent of the general assembly that this amendment
30to the definition of “point source” is a conforming amendment
31consistent with current state and federal law, and that the
32amendment does not change the application of current law but
33instead reflects current law both before and after enactment
34of the bill.
35The bill amends the declaration of policy for the department
-25-1of natural resources’ water quality jurisdiction in Code
2section 455B.177 to include in such policy the assessment
3and reduction of nutrients in surface waters over time by
4implementing the Iowa nutrient reduction strategy, and further
5adds that progress under the Iowa nutrient reduction strategy
6and the United States environmental protection agency gulf
7hypoxia action plan shall be evaluated using a baseline
8condition calculated for the time period between 1980 and 1996.
9The bill amends Code section 466B.3, relating to the water
10resources coordinating council, to provide that when the
11council is measuring the success of its efforts, progress under
12the Iowa nutrient reduction strategy and the United States
13environmental protection agency gulf hypoxia action plan shall
14be evaluated using a baseline condition calculated for the time
15period between 1980 and 1996.
16The bill amends Code section 466B.42, relating to the water
17quality initiative of the soil and water division, to provide
18that the goal of the water quality initiative is to implement
19the soil and water division’s responsibilities under the Iowa
20nutrient reduction strategy, and to provide that progress under
21the Iowa nutrient reduction strategy and the United States
22environmental protection agency gulf hypoxia action plan shall
23be evaluated using a baseline condition calculated for the time
24period between 1980 and 1996.
-26-mm/sc
2treatment financial assistance program, creating a water
3quality infrastructure fund, establishing a water quality
4financing program, providing for cost-share programs for
5infrastructure on agricultural and urban land under the
6water quality initiative, creating a water service excise
7tax and a related sales tax exemption, making transfers and
8appropriations and other changes properly related to water
9quality, and including effective date provisions.
10BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 8.57, subsection 5, paragraph f,
2subparagraph (1), Code 2017, is amended by adding the following
3new subparagraph division:
4 NEW SUBPARAGRAPH DIVISION. (0c) For the fiscal year
5beginning July 1, 2020, and for each fiscal year thereafter, of
6the wagering tax receipts received pursuant to sections 99D.17
7and 99F.11, the next fifteen million dollars shall be deposited
8in the water quality infrastructure fund created in section
98.57B.
10 Sec. 2. Section 8.57, subsection 5, paragraph f,
11subparagraph (1), subparagraph division (d), Code 2017, is
12amended to read as follows:
13(d) For the fiscal year beginning July 1, 2013, and for
14each fiscal year thereafter, the total moneys in excess of the
15moneys deposited under this paragraph “f” in the revenue bonds
16debt service fund, the revenue bonds federal subsidy holdback
17fund, the vision Iowa fund, the water quality infrastructure
18fund, and the Iowa skilled worker and job creation fund shall
19be deposited in the rebuild Iowa infrastructure fund and shall
20be used as provided in this section, notwithstanding section
218.60.
22 Sec. 3. NEW SECTION. 8.57B Water quality infrastructure
23fund — creation — appropriations.
241. A water quality infrastructure fund is created within
25the division of soil conservation and water quality of the
26department of agriculture and land stewardship. The fund
27shall consist of moneys transferred pursuant to section 8.57,
28subsection 5, paragraph “f”, subparagraph (1), subparagraph
29division (0c), moneys transferred to the fund pursuant to
30section 423G.6, and appropriations made to the fund and
31transfers of interest, earnings, and moneys from other funds
32as provided by law.
332. The fund shall be separate from the general fund of the
34state and the balance in the fund shall not be considered part
35of the balance of the general fund of the state. However, the
-1-1fund shall be considered a special account for the purposes
2of section 8.53, relating to generally accepted accounting
3principles.
43. Moneys in the fund are appropriated to the division
5of soil conservation and water quality of the department of
6agriculture and land stewardship for the exclusive purpose of
7supporting water quality agriculture infrastructure programs
8created in section 466B.43.
94. Notwithstanding section 8.33, moneys in the fund
10that remain unencumbered or unobligated at the close of a
11fiscal year shall not revert but shall remain available for
12expenditure for the purposes designated. Notwithstanding
13section 12C.7, subsection 2, interest or earnings on moneys in
14the fund shall be credited to the fund.
15 Sec. 4. Section 16.134, Code 2017, is amended to read as
16follows:
1716.134 Wastewater and drinking water treatment financial
18assistance program.
191. The Iowa finance authority shall establish and
20administer a wastewater and drinking water treatment financial
21assistance program. The purpose of the program shall be to
22provide financial assistance to enhance water quality. The
23program shall be administered in accordance with rules adopted
24by the authority pursuant to chapter 17A. For purposes of
25this section, “program” means the wastewater and drinking water
26 treatment financial assistance program and “committee” means the
27water quality financing review committee created in subsection
289.
292. A wastewater and drinking water treatment financial
30assistance fund is created and shall consist of appropriations
31made to the fund and transfers of interest, earnings, and
32moneys from other funds as provided by law. Moneys transferred
33to the fund pursuant to section 16.134A are appropriated to the
34authority for purposes of the program. Moneys in the fund are
35not subject to section 8.33. Notwithstanding section 12C.7,
-2-1subsection 2, interest or earnings on moneys in the fund shall
2be credited to the fund.
33. Financial assistance under the program shall be used
4to install or upgrade wastewater treatment facilities and
5systems and drinking water treatment facilities and systems,
6including source water protection projects, and for engineering
7or technical assistance for facility planning and design.
84. The authority committee shall distribute approve
9 financial assistance in from the fund in accordance with the
10following:
11a. The goal of the program shall be to base awards on the
12impact of the grant combined with other sources of financing to
13ensure that sewer rates do not exceed one and one-half percent
14of a community’s median household income.
15b. a. Communities shall be eligible for financial
16assistance by qualifying as Priority shall be given for
17projects in which a disadvantaged community and is seeking
18financial assistance for the installation or upgrade of
19wastewater treatment facilities due to regulatory activity
20by the department of natural resources and drinking water
21treatment facilities. For purposes of this section, the term
22“disadvantaged community” means the same as defined by the
23department.
24c. b. Priority shall be given to projects in which the
25 meeting criteria established in section 455B.199B in which the
26applicant seeks financial assistance is to be used to obtain
27 with financing under the water pollution control works and
28drinking water facilities financing program pursuant to section
2916.131 or other federal, or state, or private financing.
30d. c. Priority shall also be given to projects whose
31completion will provide significant improvement to water
32quality in the relevant watershed.
33e. d. Priority shall also be given to communities that
34employ an alternative wastewater treatment technology pursuant
35to section 455B.199C.
-3- 1f. e. Priority shall be also be given to those communities
2where sewer or water rates are the highest as a percentage of
3that community’s median household income.
4f. Priority shall also be given to communities that employ
5technology to address 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 and
9technology.
10g. Financial assistance in the form of grants shall be
11issued on an annual basis.
12h. An applicant shall not receive a grant that exceeds five
13hundred thousand dollars.
144A. A utility management organization formed under chapter
1528E or operated by a rural water system organized under chapter
16357A or chapter 504 shall be considered eligible for financial
17assistance under the program.
185. The authority in cooperation with the department of
19natural resources shall share provide information and resources
20to the committee when the committee is determining the
21qualifications of a community for financial assistance from the
22fund.
236. The authority shall enter into agreements with financial
24assistance recipients and distribute moneys under the program
25pursuant to financial assistance determinations made by the
26committee.The authority may use an amount of not more than
27four one percent of any moneys appropriated for deposit in the
28fund for administration purposes.
297. By October 1 of each year, the authority shall submit
30a report to the governor and the general assembly itemizing
31expenditures under the program during the previous fiscal year,
32if any.
338. a. Beginning September 1, 2027, and every ten years
34thereafter, a program review committee is established for
35purposes of reviewing the wastewater and drinking water
-4-1treatment financial assistance program. By December 1 of the
2same year, the program review committee shall file a report
3with the governor and the general assembly that reviews the
4effectiveness of the program during the prior ten fiscal years.
5b. The program review committee shall consist of the
6following members:
7(1) The governor or the governor’s designee.
8(2) The secretary of agriculture or the secretary’s
9designee.
10(3) The executive director of the authority or the executive
11director’s designee.
12(4) The director of the department of natural resources or
13the director’s designee.
14(5) Four members of the general assembly, with two from the
15senate and two from the house of representatives and not more
16than one member from each chamber being from the same political
17party. The two senators shall be designated one member each
18by the president of the senate, after consultation with the
19majority leader of the senate, and by the minority leader of
20the senate. The two representatives shall be designated one
21member each by the speaker of the house of representatives,
22after consultation with the majority leader of the house of
23representatives, and by the minority leader of the house of
24representatives.
25c. Staffing services shall be provided by the authority.
269. a. A water quality financing review committee is
27created consisting of the secretary of agriculture or the
28secretary’s designee, the executive director of the authority
29or the executive director’s designee, and the director of the
30department of natural resources or the director’s designee.
31b. The committee shall review and approve or deny
32applications for financial assistance under the wastewater
33and drinking water treatment financial assistance program
34established in this section.
35 Sec. 5. NEW SECTION. 16.134A Water quality financial
-5-1assistance fund.
21. A water quality financial assistance fund is created in
3the state treasury as a revolving fund.
42. The fund shall consist of all of the following:
5a. (1) Moneys transferred to the fund pursuant to section
6423G.6.
7(2) This paragraph “a” is repealed on January 1, 2030.
8b. Appropriations made to the fund and transfers of
9interest, earnings, and moneys from other funds as provided by
10law.
113. For each fiscal year in the fiscal period beginning
12July 1, 2018, and ending June 30, 2029, there is appropriated
13the following percentages of the balance of the fund for the
14following purposes:
15a. Forty percent to the Iowa finance authority to support
16the wastewater and drinking water treatment financial
17assistance program created in section 16.134.
18b. Forty-five percent to the Iowa finance authority to be
19credited to the water quality financing program fund created
20pursuant to section 16.144.
21c. Fifteen percent to the division of soil conservation
22and water quality of the department of agriculture and land
23stewardship to support the water quality urban infrastructure
24program created in section 466B.44.
254. Moneys in the fund are not subject to section 8.33.
26Notwithstanding section 12C.7, subsection 2, interest or
27earnings on moneys in the fund shall be credited to the fund.
28 Sec. 6. NEW SECTION. 16.142 Definitions.
29As used in this part, unless the context otherwise requires:
301. “Cost” means all costs, charges, expenses, or other
31indebtedness incurred by a loan recipient and determined by
32the authority as reasonable and necessary for carrying out
33all works and undertakings necessary or incidental to the
34accomplishment of any project.
352. “Eligible entity” means a municipality or a landowner,
-6-1as determined by the authority, a public utility as defined
2in section 476.1, or a rural water district or rural water
3association as defined in section 357A.1.
43. “Loan recipient” means an eligible entity that has
5received a loan under the program.
64. “Municipality” means a governmental body such as a state
7agency or a political subdivision of the state. Municipality
8includes but is not limited to a city, city utility, county,
9soil and water conservation district, sanitary district, a
10subdistrict of any of the foregoing districts, a state agency,
11or other governmental body or corporation empowered to provide
12sewage collection and treatment services or drinking water, or
13any entity jointly exercising governmental powers pursuant to
14chapter 28E or 28F, or any other combination of two or more
15governmental bodies or corporations acting jointly under the
16laws of this state in connection with a project.
175. “Program” means the water quality financing program
18created in this part.
196. “Project” means any combination of improvements,
20structures, developments, tasks, actions, constructions,
21modifications, operations, or practices designed to improve
22water quality that are proposed by an eligible entity and
23approved by the authority. “Project” includes but is not
24limited to any of the following:
25a. A project meeting the requirements of part 2 of this
26subchapter.
27b. A project, operation, or practice undertaken or carried
28out to address watershed protection, flood prevention, or water
29quality improvement.
30c. A project meeting the requirements of a sponsor project
31under section 455B.199.
32 Sec. 7. NEW SECTION. 16.143 Water quality financing
33program.
341. The authority, in cooperation with the department of
35natural resources and the department of agriculture and land
-7-1stewardship, shall establish and administer a water quality
2financing program. The purpose of the program shall be to
3provide financial assistance to enhance the quality of surface
4water and groundwater, particularly by providing financial
5assistance for projects designed to improve water quality
6by addressing point and nonpoint sources, with a higher
7prioritization provided to collaborative efforts.
82. The authority shall determine the interest rate
9and repayment terms for loans made under the program, in
10cooperation with the department of natural resources and
11the department of agriculture and land stewardship, and the
12authority shall enter into loan agreements with eligible
13entities in compliance with and subject to the terms and
14conditions of the program as described in this part.
153. The authority may charge loan recipients fees and assess
16costs against such recipients necessary for the continued
17operation of the program. Such fees and costs shall not exceed
18the costs directly associated with the administration of the
19program. Fees and costs collected pursuant to this subsection
20shall be deposited in the appropriate fund or account created
21in section 16.144.
224. The program shall be administered by the authority in
23accordance with rules adopted by the authority pursuant to
24chapter 17A.
25 Sec. 8. NEW SECTION. 16.144 Water quality financing program
26fund — appropriation — other funds.
271. a. A water quality financing program fund is created
28and shall consist of appropriations made to the fund, moneys
29credited to the fund pursuant to section 16.134A, and transfers
30of interest, earnings, and moneys from other funds as provided
31by law. The fund shall be administered by the authority as
32a revolving fund. Moneys in the fund are appropriated to
33the authority for purposes of the program. Notwithstanding
34section 8.33, moneys in the fund that remain unencumbered or
35unobligated at the close of a fiscal year shall not revert
-8-1but shall remain available for expenditure for the purposes
2designated. Notwithstanding section 12C.7, subsection 2,
3interest or earnings on moneys in the fund shall be credited
4to the fund.
5b. The authority shall use the moneys in the fund to provide
6financial assistance to eligible entities under the program.
7The authority may provide financial assistance in the form
8deemed most convenient for the efficient financing of projects,
9including loans, forgivable loans, or grants. The authority
10shall administer the fund and the program in such a manner
11as to provide a permanent source of water quality project
12financial assistance to eligible entities.
13c. The authority may annually use an amount of not more
14than one percent of the moneys in the fund for administrative
15purposes.
162. a. The authority may establish and maintain other
17funds and accounts determined to be necessary to carry out the
18purposes of the program and shall provide for the funding,
19administration, investment, restrictions, and disposition of
20the funds and accounts.
21b. Moneys appropriated to and used by the authority for
22purposes of paying the costs and expenses associated with
23the administration of the program shall be administered as
24determined by the authority.
25c. All moneys transferred to the authority for purposes of
26the program shall be deposited and held in a fund or account
27established and maintained pursuant to this section.
283. The funds or accounts held by the authority, or a trustee
29acting on behalf of the authority pursuant to a trust agreement
30related to the program, shall not be considered part of the
31general fund of the state, are not subject to appropriation for
32any other purpose by the general assembly, and in determining
33a general fund balance shall not be included in the general
34fund of the state, but shall remain in the funds and accounts
35maintained by the authority or trustee pursuant to a trust
-9-1agreement. Funds and accounts held by the authority, or a
2trustee acting on behalf of the authority pursuant to a trust
3agreement related to the program, are separate dedicated funds
4and accounts under the administration and control of the
5authority and subject to section 16.31.
64. By October 1, 2018, and by October 1 of each year
7thereafter, the authority shall submit a report to the governor
8and the general assembly itemizing expenditures from the fund,
9if any, during the previous fiscal year.
10 Sec. 9. NEW SECTION. 16.145 Eligible entities — agreements
11required.
121. An eligible entity may apply to the authority for
13financial assistance under the program by submitting a plan
14that meets the following requirements:
15a. The plan includes one or more projects that improve
16water quality in the local area or watershed. Projects shall
17use practices identified in the latest version of the document
18entitled “Iowa Nutrient Reduction Strategy” initially presented
19in November 2012 by the department of agriculture and land
20stewardship, the department of natural resources, and Iowa
21state university of science and technology. A drainage or
22levee district established under chapter 468 shall utilize the
23installation of edge-of-field infrastructure as described in
24section 466B.43.
25b. The plan describes in detail the manner in which the
26projects will be financed and undertaken, including, as
27applicable, the sources of revenue directed to financing the
28improvements as well as the eligible entities that will be
29receiving the revenues and how such revenues will be spent on
30the projects.
312. The authority shall review and approve or deny
32applications for financial assistance. The provision of
33financial assistance under the program shall take into account,
34as applicable, the number of municipalities, landowners, public
35utilities, rural water districts, or rural water associations
-10-1comprising an eligible entity and the eligible entity’s
2financing capacity. The authority shall score applications
3for financial assistance according to rules adopted pursuant
4to this part. The authority shall only provide financial
5assistance to eligible entities that have sufficient financing
6capacity and that submit an appropriate plan designed to
7improve water quality.
83. An approved eligible entity shall enter into an agreement
9with the authority for the provision of financial assistance.
10The agreement shall include standard terms for the receipt
11of program moneys and any other terms the authority deems
12necessary or convenient for the efficient administration of the
13program.
14 Sec. 10. Section 423.3, Code 2017, is amended by adding the
15following new subsection:
16 NEW SUBSECTION. 103. a. The sales price from the sale or
17furnishing by a water utility of a water service in the state
18to consumers or users.
19b. For purposes of this subsection:
20(1) “Water service” means the delivery of water by piped
21distribution system.
22(2) “Water utility” means a public utility as defined in
23section 476.1 that furnishes water by piped distribution system
24to the public for compensation.
25 Sec. 11. NEW SECTION. 423G.1 Short title.
26This chapter may be cited as the “Water Service Tax Act”.
27 Sec. 12. NEW SECTION. 423G.2 Definitions.
281. All words and phrases used in this chapter and defined in
29section 423.1 have the same meaning given them by section 423.1
30for purposes of this chapter.
312. As used in this chapter, “water service” and “water
32utility” mean the same as defined in section 423.3, subsection
33103.
34 Sec. 13. NEW SECTION. 423G.3 Water service tax.
35An excise tax at the rate of six percent is imposed on the
-11-1sales price from the sale or furnishing by a water utility of a
2water service in the state to consumers or users.
3 Sec. 14. NEW SECTION. 423G.4 Exemptions.
4The sales price from transactions exempt from state sales
5tax under section 423.3, except section 423.3, subsection 103,
6is also exempt from the tax imposed by this chapter.
7 Sec. 15. NEW SECTION. 423G.5 Administration by director.
81. The director of revenue shall administer the water
9service tax as nearly as possible in conjunction with the
10administration of the state sales and use tax law, except that
11portion of the law that implements the streamlined sales and
12use tax agreement. The director shall provide appropriate
13forms, or provide on the regular state tax forms, for reporting
14water service tax liability.
152. The director may require all persons who are engaged
16in the business of deriving any sales price or purchase
17price subject to tax under this chapter to register with
18the department. The director may also require a tax permit
19applicable only to this chapter for any retailer not
20collecting, or any user not paying, taxes under chapter 423.
213. Section 422.25, subsection 4, sections 422.30, 422.67,
22and 422.68, section 422.69, subsection 1, sections 422.70,
23422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
241, and sections 423.23, 423.24, 423.25, 423.31 through
25423.35, 423.37 through 423.42, and 423.47, consistent with the
26provisions of this chapter, shall apply with respect to the tax
27authorized under this chapter, in the same manner and with the
28same effect as if the excise taxes on the sale or furnishing of
29a water service were retail sales taxes within the meaning of
30those statutes. Notwithstanding this subsection, the director
31shall provide for quarterly filing of returns and for other
32than quarterly filing of returns both as prescribed in section
33423.31. All taxes collected under this chapter by a retailer
34or any user are deemed to be held in trust for the state of
35Iowa.
-12-1 Sec. 16. NEW SECTION. 423G.6 Deposit of revenues.
21. All moneys received and all refunds shall be deposited in
3or withdrawn from the general fund of the state.
42. Subsequent to the deposit in the general fund of the
5state, the department shall transfer the following amounts to
6the following funds:
7a. For revenues collected on or after July 1, 2018, but
8before August 1, 2019, one-twelfth of the revenues to the
9water quality infrastructure fund created in section 8.57B,
10and one-twelfth of the revenues to the water quality financial
11assistance fund created in section 16.134A.
12b. For revenues collected on or after August 1, 2019,
13but before August 1, 2020, one-sixth of the revenues to the
14water quality infrastructure fund created in section 8.57B,
15and one-sixth of the revenues to the water quality financial
16assistance fund created in section 16.134A.
17c. For revenues collected on or after August 1, 2020,
18one-half of the revenues to the water quality financial
19assistance fund created in section 16.134A.
20 Sec. 17. NEW SECTION. 423G.7 Future repeal.
21This chapter is repealed upon the occurrence of one of the
22following, whichever is earlier:
231. The enactment date that the tax rate for the sales
24tax imposed upon the retail sales price of tangible personal
25property and the furnishing of enumerated services sold in this
26state in effect on July 1, 2016, is increased.
272. July 1, 2029.
28 Sec. 18. Section 455B.171, Code 2017, is amended by adding
29the following new subsections:
30 NEW SUBSECTION. 10A. “Iowa nutrient reduction strategy”
31means a water quality initiative developed and updated by the
32department of agriculture and land stewardship, the department
33of natural resources, and the college of agriculture and life
34sciences at Iowa state university of science and technology in
35order to assess and reduce nutrients in this state’s watersheds
-13-1that utilize a pragmatic, strategic, and coordinated approach
2with the goal of accomplishing reductions over time.
3 NEW SUBSECTION. 15A. “Nutrient” means total nitrogen and
4total phosphorus.
5 Sec. 19. Section 455B.171, subsection 19, Code 2017, is
6amended to read as follows:
719. “Point source” means any discernible, confined, and
8discrete conveyance, including but not limited to any pipe,
9ditch, channel, tunnel, conduit, well, discrete fissure,
10container, rolling stock, concentrated animal feeding
11operation, or vessel or other floating craft, from which
12pollutants are or may be discharged. “Point source” does not
13include agricultural storm water discharge and return flows
14from irrigated agriculture.
15 Sec. 20. Section 455B.177, Code 2017, is amended by adding
16the following new subsection:
17 NEW SUBSECTION. 3. The general assembly further finds
18and declares that it is in the interest of the people of Iowa
19to assess and reduce nutrients in surface waters over time by
20implementing the Iowa nutrient reduction strategy. To evaluate
21the progress achieved over time toward the goals of the Iowa
22nutrient reduction strategy and the United States environmental
23protection agency gulf hypoxia action plan, the baseline
24condition shall be calculated for the time period from 1980 to
251996.
26 Sec. 21. Section 466B.3, subsection 3, paragraph c, Code
272017, is amended to read as follows:
28c. Whether the funds, programs, and regulatory efforts
29coordinated by the council eventually result in a long-term
30improvement to the quality of surface water in Iowa. To
31evaluate the progress achieved over time toward the goals of
32the Iowa nutrient reduction strategy, as defined in section
33455B.171, and the United States environmental protection agency
34gulf hypoxia action plan, the baseline condition shall be
35calculated for the time period from 1980 to 1996.
-14-1 Sec. 22. Section 466B.42, Code 2017, is amended to read as
2follows:
3466B.42 Water quality initiative.
4The division shall establish a water quality initiative
5in order to assess and reduce nutrients in this state’s
6watersheds, including subwatersheds, and regional watersheds,
7and for implementing its responsibilities under the Iowa
8nutrient reduction strategy as defined in section 455B.171.
9The division shall establish and administer projects to
10reduce nutrients in surface waters from nonpoint sources in
11a scientific, reasonable, and cost-effective manner. The
12division shall utilize a pragmatic, strategic, and coordinated
13approach with the goal of accomplishing reductions over time.
14To evaluate the progress achieved over time toward the goals
15of the Iowa nutrient reduction strategy and the United States
16environmental protection agency gulf hypoxia action plan, the
17baseline condition shall be calculated for the time period from
181980 to 1996.
19 Sec. 23. NEW SECTION. 466B.43 Water quality agriculture
20infrastructure programs.
211. As part of the water quality initiative established
22pursuant to section 466B.42, the division shall administer
23water quality agriculture infrastructure programs created in
24this section.
252. The purpose of the programs is to support projects for
26the installation of infrastructure, including conservation
27structures, practices, or other measures that reduce
28contributing nutrient loads, associated sediment, or
29contaminants from sources to surface waters. The programs
30shall be administered in a manner that is consistent with
31the latest version of the “Iowa Nutrient Reduction Strategy”
32initially presented in November 2012 by the department of
33agriculture and land stewardship, the department of natural
34resources, and Iowa state university of science and technology.
353. An edge-of-field infrastructure program is created.
-15-1The program shall support projects located on agricultural
2land, which may include demonstration projects, that capture
3or filter nutrients entering into a surface water. The
4program’s projects shall be limited to infrastructure designed
5and installed for use over multiple years, including but not
6limited to wetlands, bioreactor systems, saturated buffers,
7or land use changes. The program shall be financed on a
8cost-share basis.
94. An in-field infrastructure program is created. The
10program shall support projects located on agricultural land,
11which may include demonstration projects, that decrease erosion
12and precipitation-induced surface runoff, increase water
13infiltration rates, and increase soil sustainability. The
14program’s projects shall be limited to infrastructure designed
15and installed for use over multiple years, including but not
16limited to structures, terraces, and waterways located on
17cropland or pastureland, and including but not limited to soil
18conservation or erosion control structures or managed drainage
19systems. The program shall be financed on a cost-share basis.
205. Any state moneys used to finance a project under a
21water quality agriculture infrastructure program shall be
22administered according to an agreement entered into by the
23division and the owner of the land where the infrastructure
24is to be installed. The agreement shall include standard
25terms and conditions for the receipt of program moneys and
26any other terms and conditions the division deems necessary
27or convenient for the efficient administration of the project
28or program. The division may support multiple installations
29of infrastructure on a single parcel of land. The division
30may also combine programs if cost effective. The division
31may annually use an amount of not more than four percent of
32the moneys used to support each program for administrative
33purposes.
346. By October 1, 2018, and each October 1, thereafter, the
35division shall submit a report to the governor and the general
-16-1assembly itemizing expenditures, by hydrologic unit code 8
2watershed, under the programs during the previous fiscal year,
3if any.
47. Any information obtained by the division identifying
5a person holding a legal interest in agricultural land or
6specific agricultural land shall be a confidential record under
7section 22.7.
8 Sec. 24. NEW SECTION. 466B.44 Water quality urban
9infrastructure program.
101. As part of the water quality initiative established
11pursuant to section 466B.42, the division shall administer a
12water quality urban infrastructure program.
132. The purpose of the program is to support watershed
14projects and advance implementation of the latest version of
15the “Iowa Nutrient Reduction Strategy” initially presented
16in November 2012 by the department of agriculture and land
17stewardship, the department of natural resources, and Iowa
18state university of science and technology, which program
19support may include demonstration projects that decrease
20erosion, precipitation-induced surface runoff, and storm
21water discharges and that increase water infiltration rates.
22The program’s projects shall be based on Iowa’s storm water
23management manual published by the department of natural
24resources.
253. The program shall be financed on a cost-share basis or
26through cooperative agreements with watershed projects funded
27through section 455B.199 whose project activities fall outside
28the territorial boundaries of a city.
294. Any state moneys used to finance a project under a water
30quality urban infrastructure program shall be administered
31according to an agreement entered into by the division and the
32owner of the land where the infrastructure is to be installed.
33The agreement shall include standard terms and conditions
34for the receipt of program moneys and any other terms and
35conditions the division deems necessary or convenient for
-17-1the efficient administration of the project or program. The
2division may support multiple installations of infrastructure
3on a single parcel of land. The division may annually use an
4amount of not more than four percent of the moneys used to
5support the program for administrative purposes.
65. Notwithstanding any other provision in this section
7to the contrary, beginning on July 1, 2018, the division may
8use any amount available to support the water quality urban
9infrastructure program to instead extend and support the
10three-year data collection of in-field agricultural practices
11project as enacted in 2015 Iowa Acts, ch.132, §18.
126. Notwithstanding any other provision of this section
13to the contrary, the division may use any amount available
14to support the water quality urban infrastructure program to
15develop and maintain an online resource displaying measurable
16indicators of desirable change in water quality within the
17state’s watersheds. These measurable indicators may include
18but are not limited to public and private funding inputs,
19involvement in water quality projects, and improvements, land
20use, practice adoption, calculated load reduction, and measured
21loads at existing monitoring stations.
227. By October 1, 2018, and by October 1 of each year
23thereafter, the division shall submit a report to the governor
24and the general assembly itemizing expenditures under the
25program, if any, during the previous fiscal year.
268. Any information obtained by the division identifying a
27person holding a legal interest in land or specific land shall
28be a confidential record under section 22.7.
29 Sec. 25. LEGISLATIVE INTENT. It is the intent of the
30general assembly that the amendment in this Act to the
31definition of point source in section 455B.171, subsection
3219, is a conforming amendment consistent with current state
33and federal law, and that the amendment does not change the
34application of current law but instead reflects current law
35both before and after the enactment of this Act.
-18-1 Sec. 26. EFFECTIVE DATE. The following provision or
2provisions of this Act take effect July 1, 2018:
31. The section of this Act enacting section 423.3,
4subsection 103.
52. The sections of this Act enacting sections 423G.1,
6423G.2, 423G.3, 423G.4, 423G.5, 423G.6, and 423G.7.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10This bill relates to water quality by modifying an existing
11wastewater treatment program, establishing new water quality
12programs, providing for transfers and appropriations related to
13water quality, creating a water service excise tax and related
14sales tax exemption, and providing for other changes properly
15related to water quality.
16WATER QUALITY PROGRAMS.
17Water quality agriculture infrastructure programs — As part
18of the existing water quality initiative of the department of
19agriculture and land stewardship (soil and water division) in
20Code section 466B.42, the bill establishes two water quality
21agriculture infrastructure programs (Code section 466B.43),
22consisting of an edge-of-field infrastructure program and an
23in-field infrastructure program, that will provide financing
24on a cost-share basis to certain agriculture infrastructure
25projects, including demonstration projects. The edge-of-field
26program will support projects that capture or filter nutrients
27entering into surface water. The bill includes wetlands,
28bioreactor systems, saturated buffers, and land use changes
29as examples of projects that may qualify. The in-field
30infrastructure program will support projects that decrease
31erosion and precipitation-induced surface runoff, increase
32water infiltration rates, and increase soil sustainability.
33The bill includes structures, terraces, waterways located on
34cropland or pastureland, and soil conservation or erosion
35control structures or managed drainage systems as examples of
-19-1projects that may qualify.
2The bill provides for the purpose of the programs and
3requires that the programs be administered in a manner that
4is consistent with the latest version of the Iowa nutrient
5reduction strategy initially presented in November 2012 by the
6department of agriculture and land stewardship, the department
7of natural resources, and Iowa state university of science
8and technology (nutrient reduction strategy). Both programs
9require that projects be located on agricultural land and limit
10projects to infrastructure designed and installed for use over
11multiple years. The bill requires that the soil and water
12division and landowners enter into agreements for financing
13projects under the programs, provides that the soil and water
14division may support multiple installations of infrastructure
15on a single parcel of land, and provides that the two programs
16may be combined by the soil and water division if it is cost
17effective to do so. The soil and water division is allowed
18to annually use up to 4 percent of the programs’ moneys for
19administrative purposes. Beginning in 2018, the soil and
20water division is required to submit a report by October 1 of
21each year to the general assembly and the governor detailing
22expenditures for the previous fiscal year under the programs by
23hydrologic unit code 8 watershed, if any. The bill provides
24that certain information related to agricultural land and
25obtained by the soil and water division under the programs
26shall be considered a confidential record under Code section
2722.7.
28Wastewater and drinking water treatment financial assistance
29program — The bill amends the wastewater treatment financial
30assistance program administered by the Iowa finance authority
31(IFA) in Code section 16.134. Currently, the program provides
32financial assistance in the form of grants from IFA to
33disadvantaged communities to install or upgrade wastewater
34treatment facilities and systems, and for engineering or
35technical assistance for facility planning and design. The
-20-1bill adds drinking water treatment facilities and systems,
2including source water protection projects, to the program.
3The bill also removes the requirement that a community
4qualify as a disadvantaged community in order to receive
5financial assistance, instead providing that such disadvantaged
6communities shall receive priority under the program. The
7bill also modifies other priority designations under the
8program and modifies goals of the program, and provides that
9a utility management organization formed under Code chapter
1028E or operated by a rural water system organized under Code
11chapter 357A or 504 shall be considered eligible for financial
12assistance under the program. The bill also adds reporting and
13review requirements to the program, modifies the permitted use
14of fund moneys for administrative purposes, and creates a water
15quality financing review committee consisting of three members,
16as provided in the bill, to review and approve applications
17for financial assistance under the program. Finally, the bill
18requires IFA to submit a report by October 1 of each year to the
19governor and general assembly detailing expenditures for the
20previous year under the program, if any, and creates a program
21review committee consisting of eight members, as provided in
22the bill, to review the effectiveness of the program every 10
23years, beginning in 2027.
24Water quality financing program (Code sections 16.142
25through 16.145) — This program provides financial assistance
26in the form of loans, forgivable loans, and grants to enhance
27the quality of surface water and groundwater, particularly
28by providing financial assistance for projects designed
29to improve water quality by addressing point and nonpoint
30sources. The program is administered by IFA in cooperation
31with the department of natural resources and the department of
32agriculture and land stewardship. The bill creates a water
33quality financing program fund administered by IFA to provide
34financial assistance under the program. The bill allows IFA
35to establish and maintain other funds and accounts necessary
-21-1to carry out the purposes of the program. Under the program,
2an eligible entity is a municipality, as defined in the bill,
3or a landowner, public utility, or rural water district or
4rural water association. The bill provides certain application
5requirements regarding a plan for water quality improvement and
6financing and requires loan recipients to enter into agreements
7with IFA for terms of the financial assistance.
8In order to be eligible for financial assistance, a proposed
9project must improve water quality in the local area or
10watershed using practices identified in the Iowa nutrient
11reduction strategy. Drainage and levee districts are required
12to utilize installations described in the edge-of-field
13infrastructure program (Code section 466B.43), discussed above.
14IFA reviews proposed projects, negotiates project details, and
15approves or denies applications.
16Beginning in 2018, IFA is required to submit a report by
17October 1 of each year to the general assembly and the governor
18detailing expenditures from the fund, if any, for the previous
19fiscal year.
20Water quality urban infrastructure program (Code section
21466b.44) — As part of the existing water quality initiative
22of the soil and water division in Code section 466B.42, the
23bill creates a water quality urban infrastructure program
24to support watershed projects and advance implementation
25of the Iowa nutrient reduction strategy. Program support
26may include demonstration projects that decrease erosion,
27precipitation-induced surface runoff, and storm water
28discharges and that increase water infiltration rates.
29Projects shall be based on Iowa’s storm water management manual
30published by the department of natural resources. Financial
31assistance is provided on a cost-share basis or through
32cooperative agreements with certain watersheds as described
33in the bill. The bill requires the soil and water division
34and landowners to enter into agreements for financing projects
35under the program, and provides that the soil and water
-22-1division may support multiple installations of infrastructure
2on a single parcel of land. The soil and water division is
3allowed to annually use up to 4 percent of the program’s moneys
4for administrative purposes.
5The soil and water division may use any amount available
6under the program to develop and maintain an online resource
7displaying measurable indicators of desirable change in water
8quality within the state’s watersheds, and beginning July 1,
92018, may use any amount available under the program to extend
10and support the three-year data collection of the in-field
11agricultural practices project as enacted in 2015 Iowa Acts,
12ch.132, §18.
13Beginning in 2018, the soil and water division is required
14to submit a report by October 1 of each year to the general
15assembly and the governor detailing expenditures for the
16previous fiscal year under the program, if any. The bill
17provides that certain information related to the land and
18obtained by the soil and water division under the program shall
19be considered a confidential record under Code section 22.7.
20WATER SERVICE EXCISE TAX AND OTHER WATER QUALITY FUNDING.
21Water service excise tax and related sales tax exemption —
22The bill exempts from the state sales tax the sales price from
23the sale or furnishing by a water utility of a water service in
24the state to consumers or users. “Water service” and “water
25utility” are defined in the bill.
26By operation of Code section 423.6, an item exempt from the
27imposition of the sales tax is also exempt from the use tax
28imposed in Code section 423.5.
29The bill creates an excise tax at the rate of 6 percent
30on the sales price from the sale or furnishing by a water
31utility of a water service in the state to consumers or users
32(Code chapter 423G). The director of revenue is required
33to administer the water service tax as nearly as possible
34in conjunction with the administration of the state sales
35and use tax laws, and, to that end, the bill incorporates by
-23-1reference numerous Code sections that relate to general tax
2administration and the sales and use tax laws.
3The water service excise tax and related sales tax exemption
4both take effect July 1, 2018.
5Water service tax revenues are deposited in the general
6fund of the state, and the bill then requires a specified
7portion of the water service tax revenues collected each year
8to be transferred to a water quality financial assistance
9fund created in the bill (Code section 16.134A) to support
10various water quality programs, or to the water quality
11infrastructure fund created in the bill (Code section 8.57B) to
12support the water quality agriculture infrastructure programs
13created in the bill (Code section 466B.43). For revenues
14collected on or after July 1, 2018, but before August 1, 2019,
15one-twelfth of the revenues are transferred to the water
16quality financial assistance fund, and one-twelfth of the
17revenues are transferred to the water quality infrastructure
18fund. For revenues collected on or after August 1, 2019,
19but before August 1, 2020, one-sixth of the revenues are
20transferred to the water quality financial assistance fund, and
21one-sixth of the revenues are transferred to the water quality
22infrastructure fund. For revenues collected on or after August
231, 2020, one-half of the revenues are transferred to the water
24quality financial assistance fund.
25The water service tax is repealed on the enactment date
26that the state sales tax rate in effect on July 1, 2016, is
27increased, or on July 1, 2029, whichever occurs earlier.
28Water service tax revenues transferred to the water quality
29financial assistance fund are then appropriated from the fund
30for the following programs beginning July 1, 2018: 40 percent
31is appropriated to the IFA to support the wastewater and
32drinking water treatment financial assistance program in Code
33section 16.134, 45 percent is appropriated to IFA to support
34the water quality financing program created in the bill (Code
35sections 16.142 through 16.145), and 15 percent is appropriated
-24-1to the soil and water division to support the water quality
2urban infrastructure program created in the bill (Code section
3466B.44).
4Water service tax revenues transferred to the water quality
5infrastructure fund are appropriated to the soil and water
6division for administering the water quality agriculture
7infrastructure programs (Code section 466B.43) created in the
8bill and described above.
9Transfer of wagering tax receipts — The bill also
10transfers certain wagering tax receipts to the water quality
11infrastructure fund beginning July 1, 2020. Under current
12law, $15 million of the wagering tax receipts received by
13the state each fiscal year are deposited in the vision Iowa
14fund for the repayment of certain vision Iowa bonds. Those
15transfers are set to expire June 30, 2020. For the fiscal year
16beginning July 1, 2020, and for each fiscal year thereafter,
17the bill provides that $15 million of the wagering tax receipts
18shall be deposited in the water quality infrastructure fund
19(Code section 8.57B) to support the water quality agriculture
20infrastructure programs (Code section 466B.43).
21MISCELLANEOUS CHANGES. The bill defines “Iowa nutrient
22reduction strategy” and “nutrient” in Code section 455B.171,
23which contains definitions for terms used in provisions of
24the Code that concern the jurisdiction of the department of
25natural resources related to water quality, and also amends
26the definition of “point source” in that Code section to
27exclude agricultural storm water discharges and return flows
28from irrigated agriculture. The bill provides that it is the
29legislative intent of the general assembly that this amendment
30to the definition of “point source” is a conforming amendment
31consistent with current state and federal law, and that the
32amendment does not change the application of current law but
33instead reflects current law both before and after enactment
34of the bill.
35The bill amends the declaration of policy for the department
-25-1of natural resources’ water quality jurisdiction in Code
2section 455B.177 to include in such policy the assessment
3and reduction of nutrients in surface waters over time by
4implementing the Iowa nutrient reduction strategy, and further
5adds that progress under the Iowa nutrient reduction strategy
6and the United States environmental protection agency gulf
7hypoxia action plan shall be evaluated using a baseline
8condition calculated for the time period between 1980 and 1996.
9The bill amends Code section 466B.3, relating to the water
10resources coordinating council, to provide that when the
11council is measuring the success of its efforts, progress under
12the Iowa nutrient reduction strategy and the United States
13environmental protection agency gulf hypoxia action plan shall
14be evaluated using a baseline condition calculated for the time
15period between 1980 and 1996.
16The bill amends Code section 466B.42, relating to the water
17quality initiative of the soil and water division, to provide
18that the goal of the water quality initiative is to implement
19the soil and water division’s responsibilities under the Iowa
20nutrient reduction strategy, and to provide that progress under
21the Iowa nutrient reduction strategy and the United States
22environmental protection agency gulf hypoxia action plan shall
23be evaluated using a baseline condition calculated for the time
24period between 1980 and 1996.
-26-mm/sc