Print
Senate Study Bill 3200 - IntroducedA Bill ForAn Act 1relating to the workforce housing tax incentives
2program.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 15.352, subsection 10, Code 2018, is
2amended to read as follows:
310. “Small city” means any city or township located in this
4state, except those located wholly within one or more of the
5eleven most populous counties in the state, as determined by
6the most recent federal decennial census population estimates
7issued by the United States bureau of census. For the purposes
8of this part, a small city that is located in more than one
9county shall be considered to be located in the county having
10the greatest taxable base within the small city.
11 Sec. 2. Section 15.354, subsection 1, paragraph a, Code
122018, is amended to read as follows:
13a. A housing business seeking workforce housing tax
14incentives provided in section 15.355 shall make application to
15the authority in the manner prescribed by the authority. The
16authority may accept applications on a continuous basis during
17one or more annual application periods to be determined by the
18authority by rule.
19 Sec. 3. Section 15.354, subsection 2, Code 2018, is amended
20to read as follows:
212. Registration. Application review — tax incentive award.
22a. All completed applications shall be reviewed and scored
23on a competitive basis by the authority pursuant to rules
24adopted by the authority.
25a. b. Upon review of the application, the authority
26may register the housing project under the program. If the
27authority registers the housing project, the authority shall
28make a preliminary determination as to the amount of tax
29incentives for which the housing project qualifies reviewing
30and scoring all applications received during an application
31period, the authority may make a tax incentive award to the
32housing project, which tax incentive award shall represent
33the maximum amount of tax incentives the housing project may
34qualify for under the program. In determining a tax incentive
35award, the authority shall not use an amount of project costs
-1-1that exceeds the amount included in the application of the
2housing business. Tax incentive awards shall be approved by
3the director of the authority.
4b. c. After registering the housing project making a
5tax incentive award, the authority shall notify the housing
6business of successful registration under the program its tax
7incentive award. The notification shall include the amount
8of tax incentives under section 15.355 for which the housing
9business has received preliminary approval an award and a
10statement that the amount is a preliminary determination only
11 housing business has no right to receive a tax incentive
12certificate or claim a tax incentive until all requirements
13of the program, including the agreement entered into pursuant
14to subsection 3, are satisfied. The amount of tax credits
15included on a tax credit certificate issued pursuant to this
16section, or a claim for refund of sales and use taxes, shall be
17contingent upon completion of the requirements in subsection 3.
18d. An applicant that is unsuccessful in receiving a
19tax incentive award during an application period may make
20additional applications during subsequent application periods.
21Such applicants shall be required to submit a new application
22and shall be competitively reviewed and scored in the same
23manner as other applicants in that application period.
24 Sec. 4. Section 15.354, subsection 3, paragraphs a, c, and
25e, Code 2018, are amended to read as follows:
26a. Upon successful registration of receipt of a tax
27incentive award by the housing project, the housing business
28shall enter into an agreement with the authority for the
29successful completion of all requirements of the program. The
30agreement shall identify the tax incentive award amount, the
31tax incentive award date, the project completion deadline, and
32the total costs of the housing project.
33c. (1) A Except as provided in subparagraph (2), a housing
34business shall complete its housing project within three
35years from the date the housing project is registered by the
-2-1authority in the case of a housing project registered prior to
2July 1, 2018, or within three years from the date the housing
3project receives its tax incentive award from the authority in
4the case of all other housing projects.
5(2) Notwithstanding subparagraph (1), the authority
6may for good cause within the discretion of the authority
7extend a housing project’s completion deadline once by up
8to twelve months upon application by the housing business,
9which application shall be made prior to the expiration of
10the three-year completion deadline in subparagraph (1) in the
11manner and form prescribed by the authority.
12e. (1) Upon review of the examination and verification
13of the amount of the qualifying new investment, the authority
14may issue a tax credit incentive certificate to the housing
15business, which tax incentive certificate shall contain, as
16applicable, a certificate stating the amount of sales and use
17tax refunds under section 15.355, subsection 2, the housing
18business may apply for, and a tax credit certificate stating
19the amount of workforce housing investment tax credits under
20section 15.355, subsection 3, the eligible housing business
21may claim. The amount of tax incentives for a housing project
22issued on a tax incentive certificate shall not exceed the
23amount of the tax incentive award.
24(2) If upon review of the examination in subparagraph
25(1) the authority determines that a housing project has
26incurred project costs in excess of the amount submitted in the
27application made pursuant to subsection 1 and identified in the
28agreement, the authority shall do one of the following:
29(a) If the project costs do not cause the housing project’s
30average dwelling unit cost to exceed the applicable maximum
31amount authorized in section 15.353, subsection 3, the
32authority may consider the agreement fulfilled and may issue a
33tax credit incentive certificate.
34(b) If the project costs cause the housing project’s
35average dwelling unit cost to exceed the applicable maximum
-3-1amount authorized in section 15.353, subsection 3, but does not
2cause the average dwelling unit cost to exceed one hundred ten
3percent of such applicable maximum amount, the authority may
4consider the agreement fulfilled and may issue a tax credit
5 incentive certificate. In such case, the authority shall
6reduce the tax incentive award and the corresponding amount of
7tax incentives the eligible housing project may claim under
8section 15.355, subsections 2 and 3, by the same percentage
9that the housing project’s average dwelling unit cost exceeds
10the applicable maximum amount under section 15.353, subsection
113, and such tax incentive reduction shall be reflected on
12the tax credit incentive certificate. If the authority
13issues a certificate pursuant to this subparagraph division,
14the department of revenue shall accept the certificate
15notwithstanding that the housing project’s average dwelling
16unit costs exceeds the maximum amount specified in section
1715.353, subsection 3.
18(c) If the project costs cause the housing project’s
19average dwelling unit cost to exceed one hundred ten percent
20of the applicable maximum amount authorized in section 15.353,
21subsection 3, the authority shall determine the eligible
22housing business to be in default under the agreement, shall
23revoke the tax incentive award, and shall not issue a tax
24credit incentive certificate.
25 Sec. 5. Section 15.354, subsection 4, Code 2018, is amended
26by striking the subsection and inserting in lieu thereof the
27following:
284. Maximum tax incentives amount.
29a. (1) For fiscal years beginning on or after July 1, 2018,
30the authority shall not award in any fiscal year an amount of
31tax incentives for housing projects located in small cities, or
32for other housing projects, in excess of the amounts allocated
33for each category in section 15.119, subsection 2, paragraph
34“g”. This paragraph applies to housing projects awarded tax
35incentives pursuant to subsection 2 on or after July 1, 2018,
-4-1and to housing projects registered prior to July 1, 2018, under
2section 15.354, subsection 2, Code 2018.
3(2) Notwithstanding subparagraph (1), and section 15.119,
4subsection 2, paragraph “g”, if the sum of the amount of tax
5incentives applied for in valid applications submitted in a
6given fiscal year beginning on or after July 1, 2018, for
7housing projects located in small cities, plus the amount
8of tax incentives eligible for issuance to housing projects
9located in small cities that were registered prior to July
101, 2018, under section 15.254, subsection 2, Code 2018, does
11not exceed the amount reserved for housing projects located
12in small cities pursuant to section 15.119, subsection 2,
13paragraph “g”, the authority may award the remaining amount of
14tax incentives reserved for housing projects located in small
15cities to other housing projects during that same fiscal year.
16(3) Notwithstanding subparagraph (1), and section 15.119,
17subsection 2, paragraph “g”, the authority may award during a
18fiscal year an aggregate amount of tax incentives to housing
19projects located in small cities that is less than the amount
20reserved for allocation to small cities under section 15.119,
21subsection 2, paragraph “g”, provided the difference between
22the amount of the small city reservation and the aggregate
23amount actually awarded to small cities during that fiscal year
24is awarded during that same fiscal year to housing projects
25registered prior to July 1, 2017.
26b. With regard to a housing project registered prior to
27July 1, 2018, a tax incentive shall be considered awarded for
28purposes of paragraph “a” when the authority enters into an
29agreement with the housing business for that housing project
30as provided under section 15.354, subsection 3, Code 2018.
31Notwithstanding any provision of law to the contrary, a housing
32business shall have no right to enter into an agreement with
33the authority for a housing project registered prior to July 1,
342018, until the authority allocates an amount of tax incentives
35to the housing project and notifies the housing business
-5-1that the authority is prepared to execute the agreement
2and make a tax incentive award for the housing project. A
3housing business shall have no right to receive a tax credit
4certificate or claim a tax incentive for a housing project
5registered prior to July 1, 2018, until the housing business
6enters into an agreement with the authority.
7c. In making tax incentive awards during any fiscal year
8in which there are housing projects registered prior to July
91, 2018, which are eligible to receive tax incentives under
10the program, the authority shall give priority in making tax
11incentive awards to housing projects registered prior to July
121, 2018. The authority shall create and maintain a wait list
13of housing projects registered prior to July 1, 2018, and such
14housing projects shall be placed on the wait list in the order
15the housing projects were registered.
16d. The maximum aggregate amount of tax incentives that
17may be awarded and issued under section 15.355 to a housing
18business for a housing project shall not exceed one million
19dollars.
20e. If a housing business qualifies for a higher amount
21of tax incentives under section 15.355 than is allowed by
22the limitation imposed in paragraph “d”, the authority and
23the housing business may negotiate an apportionment of the
24reduction in tax incentives between the sales tax refund
25provided in section 15.355, subsection 2, and the workforce
26housing investment tax credits provided in section 15.355,
27subsection 3, provided the total aggregate amount of tax
28incentives after the apportioned reduction does not exceed the
29amount in paragraph “d”.
30 Sec. 6. Section 15.354, subsection 5, Code 2018, is amended
31to read as follows:
325. Termination and repayment. The failure by a housing
33business in completing a housing project to comply with any
34requirement of this program or any of the terms and obligations
35of an agreement entered into pursuant to this section may
-6-1result in the revocation, reduction, termination, or rescission
2of the tax incentive award or the approved tax incentives and
3may subject the housing business to the repayment or recapture
4of tax incentives claimed under section 15.355. The repayment
5or recapture of tax incentives pursuant to this section shall
6be accomplished in the same manner as provided in section
715.330, subsection 2.
8 Sec. 7. Section 15.355, subsection 2, Code 2018, is amended
9to read as follows:
102. A housing business may claim a refund of the sales and
11use taxes paid under chapter 423 that are directly related to
12a housing project and specified in the agreement. The refund
13available pursuant to this subsection shall be as provided in
14section 15.331A, excluding subsection 2, paragraph “c”, of
15that section. For purposes of the program, the term “project
16completion”, as used in section 15.331A, shall mean the date on
17which the authority notifies the department of revenue that all
18applicable requirements of an agreement entered into pursuant
19to section 15.354 are satisfied.
20 Sec. 8. Section 15.355, subsection 3, paragraph a,
21subparagraphs (1) and (2), Code 2018, are amended to read as
22follows:
23(1) For a housing project not located in a small city,ten
24percent of the qualifying new investment of a housing project
25specified in the agreement.
26(2) For a housing project located in a small city, twenty
27percent of the qualifying new investment of a housing project
28specified in the agreement.
29 Sec. 9. APPLICABILITY.
301. Except as provided in subsection 2, this Act applies to
31housing projects awarded tax incentives by the authority under
32the program on or after July 1, 2018, and housing projects
33registered by the authority under the program prior to July 1,
342018, shall be governed by sections 15.352, 15.354, and 15.355,
35Code 2018.
-7- 12. The provisions of this Act amending section 15.354,
2subsection 3, paragraph “c”, and section 15.354, subsection 4,
3apply to housing projects registered by the authority under the
4program prior to July 1, 2018, and to housing projects awarded
5tax incentives by the authority under the program on or after
6July 1, 2018.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10This bill modifies the workforce housing tax incentives
11program.
12BACKGROUND. The workforce housing tax incentive program
13(program) administered by the economic development authority
14(authority) provides tax incentives in the form of investment
15tax credits and sales and use tax refunds to housing businesses
16that complete certain housing projects in Iowa. In order
17to receive tax incentives, a housing business must apply to
18the authority and have its housing project registered by
19the authority, and then must enter into an agreement with
20the authority (tax incentive agreement) for the successful
21completion of all requirements of the program. If the housing
22project is completed and properly examined by a certified
23public accountant, and all other requirements of the tax
24incentive agreement and the program are satisfied, the
25authority may issue a tax credit certificate and the housing
26business may claim the tax incentives for which it qualifies
27under the program. The total tax incentives issued under
28the program per fiscal year cannot exceed $20 million. Of
29that $20 million annual cap, $5 million must be reserved for
30tax incentives issued to housing projects located in small
31cities, as defined under the program. The program also limits
32the maximum amount of tax incentives that may be issued per
33housing project to $1 million. The authority is required
34to issue tax incentives under the program on a first-come,
35first-served basis, and in the event the total tax incentives
-8-1for all registered housing projects completed in a fiscal year
2exceeds an annual cap, the authority is required to maintain a
3wait list of completed housing projects and give those housing
4projects priority for being issued tax incentives in subsequent
5fiscal years.
6BILL CHANGES. The bill amends language relating to the
7acceptance of housing project applications by the authority.
8Current law states that the authority may accept applications
9on a continuous basis. The bill states that the authority may
10accept applications during one or more application periods, and
11provides that housing project applications shall be reviewed
12and scored on a competitive basis by the authority pursuant to
13rules adopted by the authority.
14The bill removes registration of housing projects from the
15program, and provides that the authority may make tax incentive
16awards to housing projects. Tax incentive awards shall be
17subject to the approval of the director of the authority.
18Applicants who are unsuccessful in receiving a tax incentive
19award are authorized under the bill to make additional
20applications for that housing project during subsequent
21application periods. In determining the tax incentive award
22of a particular housing project, the authority shall not use
23an amount of housing project costs that exceeds the amount
24included in the housing project application.
25The bill requires the authority to notify the housing
26business of its tax incentive award. The notification must
27include a statement that the housing business has no right to
28receive a tax incentive certificate or claim a tax incentive
29until all requirements of the program and the tax incentive
30agreement are satisfied.
31The bill amends the requirements related to the tax
32incentive agreement entered into by the authority and a
33housing business to provide that such agreement shall identify
34the tax incentive award, the tax incentive award date, the
35project completion deadline, and the total costs of the housing
-9-1project.
2The bill provides that, upon verification by the authority
3of the project costs and qualifying new investment as required
4by current law, the authority may issue a tax incentive
5certificate which contains the amount of sales and use tax
6refund the housing business may apply for and a tax credit
7certificate stating the amount of investment tax credits the
8housing business may claim. The amount of tax incentives
9issued on a tax incentive certificate shall not exceed the
10amount of the tax incentive award.
11The bill also amends the definition of “small city” for
12purposes of the program. Under current law, the definition
13of “small city” includes any city or township not located
14within the 11 most populous counties in the state. When a
15city is located in more than one county, it is considered
16to be located in the county having the greatest taxable base
17within the city. The bill amends “small city” to include any
18city or township not located wholly within one or more of the
1911 most populous counties in the state. In other words, any
20city or township located in whole or in part in one of the 88
21least populated counties in Iowa will qualify as a small city
22under the program. The definition is also amended to provide
23that population is computed using the most recent population
24estimates issued by the United States census bureau, instead of
25the most recent federal decennial census.
26The bill amends requirements relating to the termination
27and repayment of tax incentives for failure to comply with the
28requirements of the program to provide that such failures to
29comply with the program may also result in the revocation of
30the tax incentive award.
31The bill amends language relating to the calculation of the
32amount of tax incentives for which a housing project qualifies.
33Under current law, the amount of the sales and use tax refunds
34is calculated using the taxes directly related to a housing
35project, and the amount of the investment tax credits is
-10-1calculated using a percentage of the qualifying new investment
2of the housing project. The bill provides that these amounts
3of taxes or qualifying new investment will only be used in the
4tax incentive calculation to the extent they were specified in
5the tax incentive agreement entered into by the authority and
6the housing business.
7These program changes described above apply to housing
8projects that receive a tax incentive award on or after July 1,
92018, and housing projects registered prior to July 1, 2018,
10shall be governed by current law.
11The bill provides that the authority shall not award more
12than $20 million in tax incentives each fiscal year beginning
13on or after July 1, 2018, and $5 million of that total cap
14shall be reserved each fiscal year for tax incentive awards
15made to housing projects located in small cities. With regard
16to housing projects registered prior to July 1, 2018, the bill
17states that a tax incentive will be considered awarded when
18the authority enters into a tax incentive agreement for that
19housing project as provided under current law, and the bill
20states that a housing business has no right to enter into a
21tax incentive agreement for such a housing project until the
22authority allocates tax incentives to that housing project and
23notifies the housing business that the authority is prepared to
24execute a tax incentive agreement. The bill also provides that
25a housing business shall have no right to receive a tax credit
26certificate or claim a tax incentive for a housing project
27registered prior to July 1, 2018, until it enters into a tax
28incentive agreement with the authority.
29The bill provides two exceptions to the $5 million per year
30tax incentive reservation for housing projects in small cities.
31First, if the sum of the amount of tax incentive applications
32received for housing projects in small cities during a fiscal
33year, plus the amount of tax incentives eligible for issuance
34during that same fiscal year to housing projects in small
35cities registered prior to July 1, 2018, does not exceed $5
-11-1million, the authority may award the difference to other
2housing projects during that same fiscal year. Second, the
3authority may award less than $5 million of tax incentives to
4housing projects in small cities during a fiscal year if the
5difference between the $5 million cap and the amount actually
6awarded to housing projects in small cities is awarded during
7the same fiscal year to housing projects registered prior to
8July 1, 2017.
9The bill provides that the authority shall give priority
10in making tax incentive awards to housing projects registered
11prior to July 1, 2018, and shall create a wait list of housing
12projects registered prior to July 1, 2018, and place those
13housing projects on the list in the order the projects were
14registered.
15The bill modifies the three-year project completion deadline
16in current law to specify that the deadline is measured from
17the registration date for housing projects registered prior to
18July 1, 2018, and from the date the housing project receives
19its tax incentive award for all other projects. The bill
20further modifies the project completion deadline by providing
21that the authority may for good cause extend this three-year
22deadline once by up to 12 months. To be eligible for such
23an extension, a housing business must apply to the authority
24before the expiration of the three-year project completion
25deadline.
26These changes described above to the awarding and issuance
27of tax incentives and to the project completion deadline under
28the program apply to housing projects registered prior to July
291, 2018, and to housing projects that receive a tax incentive
30award on or after July 1, 2018.
-12-mm/rn
2program.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 15.352, subsection 10, Code 2018, is
2amended to read as follows:
310. “Small city” means any city or township located in this
4state, except those located wholly within one or more of the
5eleven most populous counties in the state, as determined by
6the most recent federal decennial census population estimates
7issued by the United States bureau of census. For the purposes
8of this part, a small city that is located in more than one
9county shall be considered to be located in the county having
10the greatest taxable base within the small city.
11 Sec. 2. Section 15.354, subsection 1, paragraph a, Code
122018, is amended to read as follows:
13a. A housing business seeking workforce housing tax
14incentives provided in section 15.355 shall make application to
15the authority in the manner prescribed by the authority. The
16authority may accept applications on a continuous basis during
17one or more annual application periods to be determined by the
18authority by rule.
19 Sec. 3. Section 15.354, subsection 2, Code 2018, is amended
20to read as follows:
212. Registration. Application review — tax incentive award.
22a. All completed applications shall be reviewed and scored
23on a competitive basis by the authority pursuant to rules
24adopted by the authority.
25a. b. Upon review of the application, the authority
26may register the housing project under the program. If the
27authority registers the housing project, the authority shall
28make a preliminary determination as to the amount of tax
29incentives for which the housing project qualifies reviewing
30and scoring all applications received during an application
31period, the authority may make a tax incentive award to the
32housing project, which tax incentive award shall represent
33the maximum amount of tax incentives the housing project may
34qualify for under the program. In determining a tax incentive
35award, the authority shall not use an amount of project costs
-1-1that exceeds the amount included in the application of the
2housing business. Tax incentive awards shall be approved by
3the director of the authority.
4b. c. After registering the housing project making a
5tax incentive award, the authority shall notify the housing
6business of successful registration under the program its tax
7incentive award. The notification shall include the amount
8of tax incentives under section 15.355 for which the housing
9business has received preliminary approval an award and a
10statement that the amount is a preliminary determination only
11 housing business has no right to receive a tax incentive
12certificate or claim a tax incentive until all requirements
13of the program, including the agreement entered into pursuant
14to subsection 3, are satisfied. The amount of tax credits
15included on a tax credit certificate issued pursuant to this
16section, or a claim for refund of sales and use taxes, shall be
17contingent upon completion of the requirements in subsection 3.
18d. An applicant that is unsuccessful in receiving a
19tax incentive award during an application period may make
20additional applications during subsequent application periods.
21Such applicants shall be required to submit a new application
22and shall be competitively reviewed and scored in the same
23manner as other applicants in that application period.
24 Sec. 4. Section 15.354, subsection 3, paragraphs a, c, and
25e, Code 2018, are amended to read as follows:
26a. Upon successful registration of receipt of a tax
27incentive award by the housing project, the housing business
28shall enter into an agreement with the authority for the
29successful completion of all requirements of the program. The
30agreement shall identify the tax incentive award amount, the
31tax incentive award date, the project completion deadline, and
32the total costs of the housing project.
33c. (1) A Except as provided in subparagraph (2), a housing
34business shall complete its housing project within three
35years from the date the housing project is registered by the
-2-1authority in the case of a housing project registered prior to
2July 1, 2018, or within three years from the date the housing
3project receives its tax incentive award from the authority in
4the case of all other housing projects.
5(2) Notwithstanding subparagraph (1), the authority
6may for good cause within the discretion of the authority
7extend a housing project’s completion deadline once by up
8to twelve months upon application by the housing business,
9which application shall be made prior to the expiration of
10the three-year completion deadline in subparagraph (1) in the
11manner and form prescribed by the authority.
12e. (1) Upon review of the examination and verification
13of the amount of the qualifying new investment, the authority
14may issue a tax credit incentive certificate to the housing
15business, which tax incentive certificate shall contain, as
16applicable, a certificate stating the amount of sales and use
17tax refunds under section 15.355, subsection 2, the housing
18business may apply for, and a tax credit certificate stating
19the amount of workforce housing investment tax credits under
20section 15.355, subsection 3, the eligible housing business
21may claim. The amount of tax incentives for a housing project
22issued on a tax incentive certificate shall not exceed the
23amount of the tax incentive award.
24(2) If upon review of the examination in subparagraph
25(1) the authority determines that a housing project has
26incurred project costs in excess of the amount submitted in the
27application made pursuant to subsection 1 and identified in the
28agreement, the authority shall do one of the following:
29(a) If the project costs do not cause the housing project’s
30average dwelling unit cost to exceed the applicable maximum
31amount authorized in section 15.353, subsection 3, the
32authority may consider the agreement fulfilled and may issue a
33tax credit incentive certificate.
34(b) If the project costs cause the housing project’s
35average dwelling unit cost to exceed the applicable maximum
-3-1amount authorized in section 15.353, subsection 3, but does not
2cause the average dwelling unit cost to exceed one hundred ten
3percent of such applicable maximum amount, the authority may
4consider the agreement fulfilled and may issue a tax credit
5 incentive certificate. In such case, the authority shall
6reduce the tax incentive award and the corresponding amount of
7tax incentives the eligible housing project may claim under
8section 15.355, subsections 2 and 3, by the same percentage
9that the housing project’s average dwelling unit cost exceeds
10the applicable maximum amount under section 15.353, subsection
113, and such tax incentive reduction shall be reflected on
12the tax credit incentive certificate. If the authority
13issues a certificate pursuant to this subparagraph division,
14the department of revenue shall accept the certificate
15notwithstanding that the housing project’s average dwelling
16unit costs exceeds the maximum amount specified in section
1715.353, subsection 3.
18(c) If the project costs cause the housing project’s
19average dwelling unit cost to exceed one hundred ten percent
20of the applicable maximum amount authorized in section 15.353,
21subsection 3, the authority shall determine the eligible
22housing business to be in default under the agreement, shall
23revoke the tax incentive award, and shall not issue a tax
24credit incentive certificate.
25 Sec. 5. Section 15.354, subsection 4, Code 2018, is amended
26by striking the subsection and inserting in lieu thereof the
27following:
284. Maximum tax incentives amount.
29a. (1) For fiscal years beginning on or after July 1, 2018,
30the authority shall not award in any fiscal year an amount of
31tax incentives for housing projects located in small cities, or
32for other housing projects, in excess of the amounts allocated
33for each category in section 15.119, subsection 2, paragraph
34“g”. This paragraph applies to housing projects awarded tax
35incentives pursuant to subsection 2 on or after July 1, 2018,
-4-1and to housing projects registered prior to July 1, 2018, under
2section 15.354, subsection 2, Code 2018.
3(2) Notwithstanding subparagraph (1), and section 15.119,
4subsection 2, paragraph “g”, if the sum of the amount of tax
5incentives applied for in valid applications submitted in a
6given fiscal year beginning on or after July 1, 2018, for
7housing projects located in small cities, plus the amount
8of tax incentives eligible for issuance to housing projects
9located in small cities that were registered prior to July
101, 2018, under section 15.254, subsection 2, Code 2018, does
11not exceed the amount reserved for housing projects located
12in small cities pursuant to section 15.119, subsection 2,
13paragraph “g”, the authority may award the remaining amount of
14tax incentives reserved for housing projects located in small
15cities to other housing projects during that same fiscal year.
16(3) Notwithstanding subparagraph (1), and section 15.119,
17subsection 2, paragraph “g”, the authority may award during a
18fiscal year an aggregate amount of tax incentives to housing
19projects located in small cities that is less than the amount
20reserved for allocation to small cities under section 15.119,
21subsection 2, paragraph “g”, provided the difference between
22the amount of the small city reservation and the aggregate
23amount actually awarded to small cities during that fiscal year
24is awarded during that same fiscal year to housing projects
25registered prior to July 1, 2017.
26b. With regard to a housing project registered prior to
27July 1, 2018, a tax incentive shall be considered awarded for
28purposes of paragraph “a” when the authority enters into an
29agreement with the housing business for that housing project
30as provided under section 15.354, subsection 3, Code 2018.
31Notwithstanding any provision of law to the contrary, a housing
32business shall have no right to enter into an agreement with
33the authority for a housing project registered prior to July 1,
342018, until the authority allocates an amount of tax incentives
35to the housing project and notifies the housing business
-5-1that the authority is prepared to execute the agreement
2and make a tax incentive award for the housing project. A
3housing business shall have no right to receive a tax credit
4certificate or claim a tax incentive for a housing project
5registered prior to July 1, 2018, until the housing business
6enters into an agreement with the authority.
7c. In making tax incentive awards during any fiscal year
8in which there are housing projects registered prior to July
91, 2018, which are eligible to receive tax incentives under
10the program, the authority shall give priority in making tax
11incentive awards to housing projects registered prior to July
121, 2018. The authority shall create and maintain a wait list
13of housing projects registered prior to July 1, 2018, and such
14housing projects shall be placed on the wait list in the order
15the housing projects were registered.
16d. The maximum aggregate amount of tax incentives that
17may be awarded and issued under section 15.355 to a housing
18business for a housing project shall not exceed one million
19dollars.
20e. If a housing business qualifies for a higher amount
21of tax incentives under section 15.355 than is allowed by
22the limitation imposed in paragraph “d”, the authority and
23the housing business may negotiate an apportionment of the
24reduction in tax incentives between the sales tax refund
25provided in section 15.355, subsection 2, and the workforce
26housing investment tax credits provided in section 15.355,
27subsection 3, provided the total aggregate amount of tax
28incentives after the apportioned reduction does not exceed the
29amount in paragraph “d”.
30 Sec. 6. Section 15.354, subsection 5, Code 2018, is amended
31to read as follows:
325. Termination and repayment. The failure by a housing
33business in completing a housing project to comply with any
34requirement of this program or any of the terms and obligations
35of an agreement entered into pursuant to this section may
-6-1result in the revocation, reduction, termination, or rescission
2of the tax incentive award or the approved tax incentives and
3may subject the housing business to the repayment or recapture
4of tax incentives claimed under section 15.355. The repayment
5or recapture of tax incentives pursuant to this section shall
6be accomplished in the same manner as provided in section
715.330, subsection 2.
8 Sec. 7. Section 15.355, subsection 2, Code 2018, is amended
9to read as follows:
102. A housing business may claim a refund of the sales and
11use taxes paid under chapter 423 that are directly related to
12a housing project and specified in the agreement. The refund
13available pursuant to this subsection shall be as provided in
14section 15.331A, excluding subsection 2, paragraph “c”, of
15that section. For purposes of the program, the term “project
16completion”, as used in section 15.331A, shall mean the date on
17which the authority notifies the department of revenue that all
18applicable requirements of an agreement entered into pursuant
19to section 15.354 are satisfied.
20 Sec. 8. Section 15.355, subsection 3, paragraph a,
21subparagraphs (1) and (2), Code 2018, are amended to read as
22follows:
23(1) For a housing project not located in a small city,ten
24percent of the qualifying new investment of a housing project
25specified in the agreement.
26(2) For a housing project located in a small city, twenty
27percent of the qualifying new investment of a housing project
28specified in the agreement.
29 Sec. 9. APPLICABILITY.
301. Except as provided in subsection 2, this Act applies to
31housing projects awarded tax incentives by the authority under
32the program on or after July 1, 2018, and housing projects
33registered by the authority under the program prior to July 1,
342018, shall be governed by sections 15.352, 15.354, and 15.355,
35Code 2018.
-7- 12. The provisions of this Act amending section 15.354,
2subsection 3, paragraph “c”, and section 15.354, subsection 4,
3apply to housing projects registered by the authority under the
4program prior to July 1, 2018, and to housing projects awarded
5tax incentives by the authority under the program on or after
6July 1, 2018.
7EXPLANATION
8The inclusion of this explanation does not constitute agreement with
9the explanation’s substance by the members of the general assembly.
10This bill modifies the workforce housing tax incentives
11program.
12BACKGROUND. The workforce housing tax incentive program
13(program) administered by the economic development authority
14(authority) provides tax incentives in the form of investment
15tax credits and sales and use tax refunds to housing businesses
16that complete certain housing projects in Iowa. In order
17to receive tax incentives, a housing business must apply to
18the authority and have its housing project registered by
19the authority, and then must enter into an agreement with
20the authority (tax incentive agreement) for the successful
21completion of all requirements of the program. If the housing
22project is completed and properly examined by a certified
23public accountant, and all other requirements of the tax
24incentive agreement and the program are satisfied, the
25authority may issue a tax credit certificate and the housing
26business may claim the tax incentives for which it qualifies
27under the program. The total tax incentives issued under
28the program per fiscal year cannot exceed $20 million. Of
29that $20 million annual cap, $5 million must be reserved for
30tax incentives issued to housing projects located in small
31cities, as defined under the program. The program also limits
32the maximum amount of tax incentives that may be issued per
33housing project to $1 million. The authority is required
34to issue tax incentives under the program on a first-come,
35first-served basis, and in the event the total tax incentives
-8-1for all registered housing projects completed in a fiscal year
2exceeds an annual cap, the authority is required to maintain a
3wait list of completed housing projects and give those housing
4projects priority for being issued tax incentives in subsequent
5fiscal years.
6BILL CHANGES. The bill amends language relating to the
7acceptance of housing project applications by the authority.
8Current law states that the authority may accept applications
9on a continuous basis. The bill states that the authority may
10accept applications during one or more application periods, and
11provides that housing project applications shall be reviewed
12and scored on a competitive basis by the authority pursuant to
13rules adopted by the authority.
14The bill removes registration of housing projects from the
15program, and provides that the authority may make tax incentive
16awards to housing projects. Tax incentive awards shall be
17subject to the approval of the director of the authority.
18Applicants who are unsuccessful in receiving a tax incentive
19award are authorized under the bill to make additional
20applications for that housing project during subsequent
21application periods. In determining the tax incentive award
22of a particular housing project, the authority shall not use
23an amount of housing project costs that exceeds the amount
24included in the housing project application.
25The bill requires the authority to notify the housing
26business of its tax incentive award. The notification must
27include a statement that the housing business has no right to
28receive a tax incentive certificate or claim a tax incentive
29until all requirements of the program and the tax incentive
30agreement are satisfied.
31The bill amends the requirements related to the tax
32incentive agreement entered into by the authority and a
33housing business to provide that such agreement shall identify
34the tax incentive award, the tax incentive award date, the
35project completion deadline, and the total costs of the housing
-9-1project.
2The bill provides that, upon verification by the authority
3of the project costs and qualifying new investment as required
4by current law, the authority may issue a tax incentive
5certificate which contains the amount of sales and use tax
6refund the housing business may apply for and a tax credit
7certificate stating the amount of investment tax credits the
8housing business may claim. The amount of tax incentives
9issued on a tax incentive certificate shall not exceed the
10amount of the tax incentive award.
11The bill also amends the definition of “small city” for
12purposes of the program. Under current law, the definition
13of “small city” includes any city or township not located
14within the 11 most populous counties in the state. When a
15city is located in more than one county, it is considered
16to be located in the county having the greatest taxable base
17within the city. The bill amends “small city” to include any
18city or township not located wholly within one or more of the
1911 most populous counties in the state. In other words, any
20city or township located in whole or in part in one of the 88
21least populated counties in Iowa will qualify as a small city
22under the program. The definition is also amended to provide
23that population is computed using the most recent population
24estimates issued by the United States census bureau, instead of
25the most recent federal decennial census.
26The bill amends requirements relating to the termination
27and repayment of tax incentives for failure to comply with the
28requirements of the program to provide that such failures to
29comply with the program may also result in the revocation of
30the tax incentive award.
31The bill amends language relating to the calculation of the
32amount of tax incentives for which a housing project qualifies.
33Under current law, the amount of the sales and use tax refunds
34is calculated using the taxes directly related to a housing
35project, and the amount of the investment tax credits is
-10-1calculated using a percentage of the qualifying new investment
2of the housing project. The bill provides that these amounts
3of taxes or qualifying new investment will only be used in the
4tax incentive calculation to the extent they were specified in
5the tax incentive agreement entered into by the authority and
6the housing business.
7These program changes described above apply to housing
8projects that receive a tax incentive award on or after July 1,
92018, and housing projects registered prior to July 1, 2018,
10shall be governed by current law.
11The bill provides that the authority shall not award more
12than $20 million in tax incentives each fiscal year beginning
13on or after July 1, 2018, and $5 million of that total cap
14shall be reserved each fiscal year for tax incentive awards
15made to housing projects located in small cities. With regard
16to housing projects registered prior to July 1, 2018, the bill
17states that a tax incentive will be considered awarded when
18the authority enters into a tax incentive agreement for that
19housing project as provided under current law, and the bill
20states that a housing business has no right to enter into a
21tax incentive agreement for such a housing project until the
22authority allocates tax incentives to that housing project and
23notifies the housing business that the authority is prepared to
24execute a tax incentive agreement. The bill also provides that
25a housing business shall have no right to receive a tax credit
26certificate or claim a tax incentive for a housing project
27registered prior to July 1, 2018, until it enters into a tax
28incentive agreement with the authority.
29The bill provides two exceptions to the $5 million per year
30tax incentive reservation for housing projects in small cities.
31First, if the sum of the amount of tax incentive applications
32received for housing projects in small cities during a fiscal
33year, plus the amount of tax incentives eligible for issuance
34during that same fiscal year to housing projects in small
35cities registered prior to July 1, 2018, does not exceed $5
-11-1million, the authority may award the difference to other
2housing projects during that same fiscal year. Second, the
3authority may award less than $5 million of tax incentives to
4housing projects in small cities during a fiscal year if the
5difference between the $5 million cap and the amount actually
6awarded to housing projects in small cities is awarded during
7the same fiscal year to housing projects registered prior to
8July 1, 2017.
9The bill provides that the authority shall give priority
10in making tax incentive awards to housing projects registered
11prior to July 1, 2018, and shall create a wait list of housing
12projects registered prior to July 1, 2018, and place those
13housing projects on the list in the order the projects were
14registered.
15The bill modifies the three-year project completion deadline
16in current law to specify that the deadline is measured from
17the registration date for housing projects registered prior to
18July 1, 2018, and from the date the housing project receives
19its tax incentive award for all other projects. The bill
20further modifies the project completion deadline by providing
21that the authority may for good cause extend this three-year
22deadline once by up to 12 months. To be eligible for such
23an extension, a housing business must apply to the authority
24before the expiration of the three-year project completion
25deadline.
26These changes described above to the awarding and issuance
27of tax incentives and to the project completion deadline under
28the program apply to housing projects registered prior to July
291, 2018, and to housing projects that receive a tax incentive
30award on or after July 1, 2018.
-12-mm/rn