Bill Text: IA HF362 | 2021-2022 | 89th General Assembly | Introduced


Bill Title: A bill for an act relating to the construction of child care facilities by providing developers with sales and use tax refunds and income, franchise, moneys and credits, and gross premiums tax credits, providing for a fee, and including applicability provisions.(Formerly HF 2; See HF 712.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2021-03-09 - Withdrawn. H.J. 679. [HF362 Detail]

Download: Iowa-2021-HF362-Introduced.html
House File 362 - Introduced HOUSE FILE 362 BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO HF 2) A BILL FOR An Act relating to the construction of child care facilities 1 by providing developers with sales and use tax refunds 2 and income, franchise, moneys and credits, and gross 3 premiums tax credits, providing for a fee, and including 4 applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1170HV (1) 89 jm/jh
H.F. 362 Section 1. NEW SECTION . 15.361 Short title. 1 This part shall be known as the “Workforce Child Care 2 Facility Tax Incentives Program” . 3 Sec. 2. NEW SECTION . 15.362 Definitions. 4 As used in this part, unless the context otherwise requires: 5 1. “Child care facility” means the same as defined in 6 section 237A.1. 7 2. “Child care facility project” means a project located in 8 this state meeting the requirements of section 15.363. 9 3. “Developer” means either of the following: 10 a. A business that constructs a new child care facility 11 structure, or rehabilitates, repairs, or redevelops an existing 12 structure for use as a child care facility. 13 b. The legal or equitable titleholder of record who 14 furnishes material for or performs labor upon, or who contracts 15 with a subcontractor to furnish material for or perform labor 16 upon a new child care facility structure, or upon an existing 17 structure for use as a child care facility, and who proposes 18 to lease the structure for use as a child care facility, or 19 intends to offer to sell the structure to a child care facility 20 operator without occupying or using the structures as a child 21 care facility. 22 4. “Program” means the workforce child care facility tax 23 credit program administered pursuant to this part. 24 5. “Qualifying new investment” means costs that are directly 25 related to the construction, repair, rehabilitation, or 26 redevelopment of a child care facility project. 27 6. “Small city” means any city or township located in this 28 state, except those located wholly within one or more of the 29 eleven most populous counties in the state, as determined by 30 the most recent population estimates issued by the United 31 States bureau of the census. 32 Sec. 3. NEW SECTION . 15.363 Child care facility project 33 requirements. 34 To receive workforce child care facility tax incentives 35 -1- LSB 1170HV (1) 89 jm/jh 1/ 12
H.F. 362 pursuant to the program, a proposed child care facility project 1 must meet all of the following requirements: 2 1. The project includes at least one of the following: 3 a. The construction of a new structure to be used as a child 4 care facility. 5 b. The rehabilitation, repair, or redevelopment of an 6 existing structure to be used as a child care facility. 7 2. The child care facility, when completed, meets all 8 applicable safety standards under chapter 237A. 9 Sec. 4. NEW SECTION . 15.364 Application and agreement. 10 1. Application. 11 a. A developer seeking workforce child care facility 12 tax incentives shall apply to the authority in the manner 13 prescribed by the authority. The authority may accept 14 applications during one or more annual application periods to 15 be determined by the authority by rule. 16 b. The application must include all of the following: 17 (1) The following information establishing local 18 participation for the child care facility project: 19 (a) A resolution in support of the child care facility 20 project by the community where the child care facility project 21 will be located, except in a project where the developer is 22 constructing a new structure, or rehabilitating, repairing, or 23 redeveloping an existing structure on the grounds of a business 24 for exclusive use by the business. 25 (b) Documentation of local matching funds pledged for the 26 child care facility project in an amount equal to at least 27 fifty thousand dollars, or in the case of a small city in an 28 amount equal to at least twenty-five thousand dollars, and 29 including but not limited to a funding agreement between the 30 developer and the community where the child care facility 31 project will be located. For purposes of this paragraph, 32 local matching funds shall be in the form of cash or cash 33 equivalents, or in the form of a local property tax exemption, 34 rebate, refund, or reimbursement. 35 -2- LSB 1170HV (1) 89 jm/jh 2/ 12
H.F. 362 (2) A report that meets the requirements and conditions of 1 section 15.330, subsection 9. 2 (3) Information showing the total costs and funding sources 3 of the child care facility project sufficient to allow the 4 authority to adequately determine the financing that will be 5 utilized for the project, and the amount of the qualifying new 6 investment. 7 (4) Any other information deemed necessary by the authority 8 to evaluate the eligibility and financial need of the child 9 care facility project under the program. 10 2. Application review —— tax incentive award. 11 a. All completed applications shall be reviewed and scored 12 on a competitive basis by the authority pursuant to rules 13 adopted by the authority. 14 b. Upon review and scoring of all applications received 15 during an application period, the authority may make a tax 16 incentive award to a child care facility project, which tax 17 incentive award shall represent the maximum amount of tax 18 incentives the child care facility project may qualify for 19 under the program. In determining a tax incentive award, the 20 authority shall not use an amount of project costs that exceeds 21 the amount included in the application of the developer. Tax 22 incentive awards shall be approved by the director of the 23 authority. 24 c. After making a tax incentive award, the authority 25 shall notify the developer of its tax incentive award. The 26 notification shall include the amount of tax incentives under 27 section 15.365 for which the developer has received an award 28 and a statement that the developer has no right to receive 29 a tax incentive certificate or claim a tax incentive until 30 all requirements of the program, including all requirements 31 imposed by the agreement entered into pursuant to subsection 32 3, are satisfied. The amount of tax credits included on a tax 33 credit certificate issued pursuant to this section, or a claim 34 for refund of sales and use taxes, shall be contingent upon 35 -3- LSB 1170HV (1) 89 jm/jh 3/ 12
H.F. 362 completion of all requirements in subsection 3. 1 d. An applicant that does not receive a tax incentive award 2 during an application period may make additional applications 3 during subsequent application periods. Such applicant shall be 4 required to submit a new application and shall be competitively 5 reviewed and scored in the same manner as other applicants in 6 that application period. 7 3. Agreement and fees. 8 a. Upon receipt of a tax incentive award by the child care 9 facility project, the developer shall enter into an agreement 10 with the authority for the successful completion of all 11 requirements of the program. The agreement shall identify the 12 tax incentive award amount, the tax incentive award date, the 13 project completion deadline, and the total costs of the child 14 care facility project. 15 b. The compliance cost fees imposed in section 15.330, 16 subsection 12, shall apply to all agreements entered into 17 under this program and shall be collected by the authority in 18 the same manner and to the same extent as described in that 19 subsection. 20 c. (1) Except as provided in subparagraph (2), a developer 21 shall complete its child care facility project within three 22 years from the date the project is registered by the authority. 23 (2) The authority may for good cause within the discretion 24 of the authority extend a child care facility project’s 25 completion deadline once by up to twelve months upon 26 application by the developer, which application shall be made 27 prior to the expiration of the three-year completion deadline 28 in subparagraph (1) in the manner and form prescribed by the 29 authority. 30 d. Upon completion of a project, an examination of the 31 project in accordance with the American institute of certified 32 public accountants’ statements on standards for attestation 33 engagements, completed by a certified public accountant 34 authorized to practice in this state, shall be submitted to the 35 -4- LSB 1170HV (1) 89 jm/jh 4/ 12
H.F. 362 authority. 1 e. Upon review of the examination and verification of the 2 amount of the qualifying new investment, the authority may 3 notify the developer of the amount that the developer may claim 4 as a refund of the sales and use tax under section 15.365, 5 subsection 2, and may issue a tax credit certificate to the 6 developer stating the amount of workforce child care facility 7 tax credits under section 15.365, subsection 3, the developer 8 may claim. The sum of the amount that the developer may claim 9 as a refund of the sales and use tax and the amount of the 10 tax credit certificate shall not exceed the amount of the tax 11 incentive award. 12 f. (1) If the authority determines the developer to be in 13 default under the agreement, the authority shall revoke the tax 14 incentive award, and shall not issue a tax credit certificate. 15 The developer shall not be allowed a refund of sales and use 16 tax under section 15.365, subsection 2. 17 (2) The authority shall adopt rules pursuant to chapter 17A 18 to specify what constitutes a default of the agreement. 19 4. Maximum tax incentives amount. 20 a. For fiscal years beginning on or after July 1, 2022, the 21 authority shall not award in any fiscal year an amount of tax 22 incentives for child care facility projects in excess of three 23 million dollars in the aggregate. 24 b. (1) Of the maximum tax incentive amounts available each 25 fiscal year in paragraph “a” , sixty percent shall be awarded to 26 small cities. 27 (2) If by May 1 of a calendar year the entire sixty 28 percent of the reserved tax credits is not distributed, the 29 remaining tax credits shall be available to any other eligible 30 applicants. 31 Sec. 5. NEW SECTION . 15.365 Workforce child care facility 32 tax incentives. 33 1. A developer that has entered into an agreement pursuant 34 to section 15.364 is eligible to receive the tax incentives 35 -5- LSB 1170HV (1) 89 jm/jh 5/ 12
H.F. 362 described in subsections 2 and 3, not to exceed two hundred 1 thousand dollars in the aggregate per child care facility 2 project. 3 2. A developer may claim a refund of the sales and use 4 taxes paid under chapter 423 that are directly related to a 5 child care facility project and specified in the agreement. 6 The refund available pursuant to this subsection shall be as 7 provided in section 15.331A, excluding subsection 2, paragraph 8 “c” , of that section. For purposes of the program, the term 9 “project completion” , as used in section 15.331A, shall mean the 10 date on which the authority notifies the department of revenue 11 that all applicable requirements of an agreement entered into 12 pursuant to section 15.364 are satisfied. 13 3. a. A developer may claim a tax credit in an amount not 14 to exceed the following: 15 (1) For a child care facility project not located in a small 16 city, ten percent of the qualifying new investment of a child 17 care facility project specified in the agreement. 18 (2) For a child care facility project located in a small 19 city, twenty percent of the qualifying new investment of a 20 child care facility project specified in the agreement. 21 b. The tax credit shall be allowed against the taxes imposed 22 in chapter 422, subchapters II, III, and V, and in chapter 23 432, and against the moneys and credits tax imposed in section 24 533.329. 25 c. An individual may claim a tax credit under this 26 subsection of a partnership, limited liability company, 27 S corporation, estate, or trust electing to have income 28 taxed directly to the individual. The amount claimed by the 29 individual shall be based upon the pro rata share of the 30 individual’s earnings from the partnership, limited liability 31 company, S corporation, estate, or trust. 32 d. Any tax credit in excess of the taxpayer’s liability 33 for the tax year is not refundable but may be credited to the 34 tax liability for the following five years or until depleted, 35 -6- LSB 1170HV (1) 89 jm/jh 6/ 12
H.F. 362 whichever is earlier. 1 e. (1) To claim a tax credit under this subsection, a 2 taxpayer shall include one or more tax credit certificates with 3 the taxpayer’s tax return. 4 (2) The tax credit certificate shall contain the taxpayer’s 5 name, address, tax identification number, the amount of 6 the credit, the name of the eligible developer, any other 7 information required by the department of revenue, and a place 8 for the name and tax identification number of a transferee and 9 the amount of the tax credit being transferred. 10 (3) The tax credit certificate, unless rescinded by the 11 authority, shall be accepted by the department of revenue as 12 payment for taxes imposed pursuant to chapter 422, subchapters 13 II, III, and V, and in chapter 432, and for the moneys and 14 credits tax imposed in section 533.329, subject to any 15 conditions or restrictions placed by the authority upon 16 the face of the tax credit certificate and subject to the 17 limitations of this program. 18 (4) Tax credit certificates issued under section 15.364, 19 subsection 3, paragraph “e” , may be transferred to any person. 20 Within ninety days of transfer, the transferee shall submit the 21 transferred tax credit certificate to the department of revenue 22 along with a statement containing the transferee’s name, tax 23 identification number, and address, the denomination that each 24 replacement tax credit certificate is to carry, and any other 25 information required by the department of revenue. However, 26 tax credit certificate amounts of less than the minimum amount 27 established by rule of the authority shall not be transferable. 28 (5) Within thirty days of receiving the transferred 29 tax credit certificate and the transferee’s statement, the 30 department of revenue shall issue one or more replacement tax 31 credit certificates to the transferee. Each replacement tax 32 credit certificate must contain the information required for 33 the original tax credit certificate and must have the same 34 expiration date that appeared on the transferred tax credit 35 -7- LSB 1170HV (1) 89 jm/jh 7/ 12
H.F. 362 certificate. 1 (6) A tax credit shall not be claimed by a transferee 2 under this section until a replacement tax credit certificate 3 identifying the transferee as the proper holder has been 4 issued. The transferee may use the amount of the tax credit 5 transferred against the taxes imposed in chapter 422, 6 subchapters II, III, and V, and in chapter 432, and against the 7 moneys and credits tax imposed in section 533.329, for any tax 8 year the original transferor could have claimed the tax credit. 9 Any consideration received for the transfer of the tax credit 10 shall not be included as income under chapter 422, subchapters 11 II, III, and V. Any consideration paid for the transfer of the 12 tax credit shall not be deducted from income under chapter 422, 13 subchapters II, III, and V. 14 f. For purposes of the individual and corporate income 15 taxes and the franchise tax, the increase in the basis of the 16 property that would otherwise result from the qualifying new 17 investment shall be reduced by the amount of the tax credit 18 computed under this subsection. 19 Sec. 6. NEW SECTION . 422.12O Workforce child care facility 20 tax credit. 21 The taxes imposed under this subchapter, less the credits 22 allowed under section 422.12, shall be reduced by a workforce 23 child care facility tax credit received pursuant to section 24 15.365. 25 Sec. 7. Section 422.33, Code 2021, is amended by adding the 26 following new subsection: 27 NEW SUBSECTION . 31. The taxes imposed under this subchapter 28 shall be reduced by a workforce child care facility tax credit 29 received pursuant to section 15.365. 30 Sec. 8. Section 422.60, Code 2021, is amended by adding the 31 following new subsection: 32 NEW SUBSECTION . 14. The taxes imposed under this subchapter 33 shall be reduced by a workforce child care facility tax credit 34 received pursuant to section 15.365. 35 -8- LSB 1170HV (1) 89 jm/jh 8/ 12
H.F. 362 Sec. 9. NEW SECTION . 432.12N Workforce child care facility 1 tax credit. 2 The taxes imposed under this chapter shall be reduced by a 3 workforce child care facility tax credit received pursuant to 4 section 15.365. 5 Sec. 10. Section 533.329, subsection 2, Code 2021, is 6 amended by adding the following new paragraph: 7 NEW PARAGRAPH . l. The moneys and credits tax imposed 8 under this section shall be reduced by a workforce child care 9 facility tax credit received pursuant to section 15.365. 10 Sec. 11. APPLICABILITY. This Act applies to tax years 11 beginning on or after January 1, 2022, for qualifying new 12 investment costs occurring on or after that date. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill creates a workforce child care facility incentives 17 program (program) that will be administered by the economic 18 development authority (EDA) and that will provide tax 19 incentives to developers that complete child care facility 20 projects in the state. A “developer” is defined in the bill. 21 In order to qualify for the tax incentives under the program, a 22 child care facility project must meet certain requirements. 23 First, the project includes at least one of the following: 24 the construction of a new structure to be used as a child care 25 facility; or the rehabilitation, repair, or redevelopment of 26 an existing structure to be used as a child care facility. 27 Second, the child care facility, when completed, meets all 28 applicable safety standards under Code chapter 237A. 29 A developer seeking tax incentives for a child care facility 30 project under the bill is required to apply to the EDA. The 31 application must include a resolution in support of the child 32 care facility project by the community where the project will 33 be located, except in situations where the child care facility 34 will be exclusively used by the employees of a business, and 35 -9- LSB 1170HV (1) 89 jm/jh 9/ 12
H.F. 362 include documentation of local matching funds in an amount 1 equal to at least $50,000, or in the case of a small city in an 2 amount equal to at least $25,000, and other information for the 3 EDA to evaluate the eligibility and financial need of the child 4 care facility project under the program. The bill defines 5 “small city” to mean any city or township located in this 6 state, except those located wholly within one or more of the 11 7 most populous counties in the state, as determined by the most 8 recent population estimates issued by the United States bureau 9 of the census. 10 The bill requires the EDA to review and score each 11 application on a competitive basis based upon the rules of the 12 EDA. The EDA is required to notify a developer of a successful 13 application and the amount of tax incentives for which the EDA 14 preliminarily determines it qualifies for under the bill. A 15 developer is then required to enter into an agreement with the 16 EDA for the successful completion of its child care facility 17 project within three years from the date it was registered by 18 the EDA. The bill also assesses a compliance cost fee in the 19 amount of $500. 20 If the EDA determines the developer to be in default under 21 the agreement, the bill requires the EDA to revoke the tax 22 incentive award, and to not issue the tax credit certificate or 23 a sales and use tax refund. The bill requires the EDA to adopt 24 rules pursuant to Code chapter 17A to specify what constitutes 25 a default of the agreement. 26 Upon completion of a child care facility project, the 27 bill requires the developer to have its project audited by 28 an independent certified public accountant licensed in this 29 state. The EDA will then review the audit, verify the amount 30 of workforce child care facility tax credits the developer may 31 claim, and issue a tax credit certificate for that amount. 32 The bill limits the amount of tax incentives for child care 33 facility projects at $3 million in the aggregate per fiscal 34 year. 35 -10- LSB 1170HV (1) 89 jm/jh 10/ 12
H.F. 362 The bill specifies that of the maximum tax incentive amounts 1 available each fiscal year, 60 percent shall be awarded to 2 small cities. If the amount of tax credits reserved for small 3 cities has not been distributed by May 1 of any calendar year, 4 the remaining reserved tax credits shall be available to any 5 other eligible applicants. 6 The maximum amount of tax incentives that may be awarded by 7 the EDA to a developer for a child care facility project shall 8 not exceed $200,000. 9 The bill provides two different tax incentives. The first 10 is a refund of the sales and use taxes paid that are directly 11 related to the child care facility project. The second is 12 a workforce child care facility investment tax credit in 13 an amount not to exceed 20 percent of the qualifying new 14 investment of the child care facility project in a small 15 city, and 10 percent of the qualifying new investment of the 16 child care facility project in any other area. “Qualifying 17 new investment” means the costs directly related to the 18 construction, repair, rehabilitation, or redevelopment of the 19 child care facility. 20 The workforce child care facility investment tax credit may 21 be claimed against the individual income tax, the corporate 22 income tax, the franchise tax, the insurance companies tax, and 23 the moneys and credits tax. To claim a tax credit, a taxpayer 24 must include a tax credit certificate with the taxpayer’s 25 tax return. The credit is nonrefundable but may be credited 26 to the tax liability for five years. The tax credit may be 27 transferred to any person or entity, and the bill establishes 28 procedures for the proper transfer of the tax credit. For 29 purposes of the individual and corporate income taxes and the 30 franchise tax, when the tax basis of property is increased as 31 a result of qualifying new investment, that tax basis shall 32 be reduced by the amount of the workforce child care facility 33 investment tax credit issued under the program. 34 The bill applies to tax years beginning on or after January 35 -11- LSB 1170HV (1) 89 jm/jh 11/ 12
H.F. 362 1, 2022, for qualifying new investments occurring on or after 1 that date. 2 -12- LSB 1170HV (1) 89 jm/jh 12/ 12
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