Bill Text: IA HSB135 | 2017-2018 | 87th General Assembly | Introduced

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Bill Title: A bill for an act relating to water quality by providing for appropriations from the rebuild Iowa infrastructure fund, creating a water quality infrastructure fund, establishing new water quality programs, providing for cost-share programs for infrastructure on agricultural land under the water quality initiative, creating a state water service excise tax and a related sales tax exemption, making appropriations and other changes properly related to water quality, and including retroactive applicability provisions.

Spectrum: Committee Bill

Status: (N/A - Dead) 2017-03-01 - Committee report, recommending amendment and passage. H.J. 491. [HSB135 Detail]

Download: Iowa-2017-HSB135-Introduced.html

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House Study Bill 135 - Introduced
HOUSE FILE _____
BY (PROPOSED COMMITTEE ON
AGRICULTURE BILL BY
CHAIRPERSON HEIN)
A BILL FOR
An Act relating to water quality by providing for
appropriations from the rebuild Iowa infrastructure fund,
creating a water quality infrastructure fund, establishing
new water quality programs, providing for cost-share
programs for infrastructure on agricultural land under the
water quality initiative, creating a state water service
excise tax and a related sales tax exemption, making
appropriations and other changes properly related to water
quality, and including retroactive applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 8.57, subsection 5, Code 2017, is amended
by adding the following new paragraph:
NEW PARAGRAPH . 0h. (1) Notwithstanding paragraph “c” of
this subsection, there is appropriated from the rebuild Iowa
infrastructure fund to the water quality infrastructure fund
created in section 8.57B the following amounts:
(a) For the fiscal year beginning July 1, 2017, and ending
June 30, 2018, five million dollars.
(b) For the fiscal year beginning July 1, 2018, and ending
June 30, 2019, six million five hundred thousand dollars.
(c) For the fiscal year beginning July 1, 2019, and ending
June 30, 2020, eleven million five hundred thousand dollars.
(d) For the fiscal year beginning July 1, 2020, and ending
June 30, 2021, sixteen million five hundred thousand dollars.
(e) For the fiscal year beginning July 1, 2021, and ending
June 30, 2022, sixteen million five hundred thousand dollars.
(f) For the fiscal year beginning July 1, 2022, and ending
June 30, 2023, twenty-two million dollars.
(g) For the fiscal year beginning July 1, 2023, and ending
June 30, 2024, twenty-two million dollars.
(h) For the fiscal year beginning July 1, 2024, and ending
June 30, 2025, twenty-two million dollars.
(i) For the fiscal year beginning July 1, 2025, and ending
June 30, 2026, twenty-two million dollars.
(j) For the fiscal year beginning July 1, 2026, and ending
June 30, 2027, twenty-two million dollars.
(k) For the fiscal year beginning July 1, 2027, and ending
June 30, 2028, twenty-two million dollars.
(l) For the fiscal year beginning July 1, 2028, and ending
June 30, 2029, twenty-two million dollars.
(m) For the fiscal year beginning July 1, 2029, and ending
June 30, 2030, twenty-two million dollars.
(2) This paragraph “0h” is repealed on January 1, 2031.
Sec. 2. NEW SECTION . 8.57B Water quality infrastructure
fund —— creation —— appropriations.
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1. A water quality infrastructure fund is created within
the division of soil conservation and water quality of the
department of agriculture and land stewardship. The fund
shall consist of moneys appropriated from the rebuild Iowa
infrastructure fund pursuant to section 8.57, subsection 5,
paragraph “0h” .
2. The fund shall be separate from the general fund of the
state and the balance in the fund shall not be considered part
of the balance of the general fund of the state. However, the
fund shall be considered a special account for the purposes
of section 8.53, relating to generally accepted accounting
principles.
3. Moneys in the fund are appropriated to the division
of soil conservation and water quality of the department of
agriculture and land stewardship for the exclusive purpose of
supporting water quality agriculture infrastructure programs
created in section 466B.43.
4. Notwithstanding section 8.33, moneys in the fund
that remain unencumbered or unobligated at the close of a
fiscal year shall not revert but shall remain available for
expenditure for the purposes designated. Notwithstanding
section 12C.7, subsection 2, interest or earnings on moneys in
the fund shall be credited to the fund.
5. This section is repealed on the date that all moneys
transferred to the water quality infrastructure fund from
the rebuild Iowa infrastructure fund pursuant to section
8.57, subsection 5, paragraph “0h” , including any interest
or earnings on such moneys credited to the water quality
infrastructure fund, are expended by the division of soil
conservation and water quality of the department of agriculture
and land stewardship, and the balance of the water quality
infrastructure fund is zero. The director of the division
of soil conservation and water quality of the department of
agriculture and land stewardship shall notify the Iowa Code
editor of this occurrence.
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Sec. 3. NEW SECTION . 16.140 Water quality protection and
wastewater treatment grant program —— fund.
1. As used in this section, unless the context otherwise
requires:
a. “Clean Water Act” means the same as defined in section
16.131A.
b. “Eligible entity” means either of the following:
(1) An entity engaged in an industry identified in the Iowa
nutrient reduction strategy, as determined by the authority,
which industry is or will be required pursuant to the Iowa
nutrient reduction strategy to collect data on the source,
concentration, and mass of total nitrogen or total phosphorus
in its effluent, and to evaluate alternatives for reducing the
amount of nutrients in its discharge.
(2) An entity implementing technology improvements to
reduce nutrients in its discharge.
c. “Iowa nutrient reduction strategy” means a water
quality initiative developed and updated by the department of
agriculture and land stewardship, the department of natural
resources, and the college of agriculture and life sciences at
Iowa state university of science and technology in order to
assess and reduce nutrients in this state’s watersheds that
utilizes a pragmatic, strategic, and coordinated approach with
the goal of accomplishing reductions over time.
d. “Municipality” means a city or a rural water district or
association empowered by law to provide sewage collection and
treatment services or drinking water.
e. “Program” means the water quality protection and
wastewater treatment grant program created in this section.
f. “Safe Drinking Water Act” means the same as defined in
section 16.131A.
g. “Source water protection project” means a project or
activity designed to prevent pollutants from entering public
drinking water sources.
h. “Wastewater infrastructure improvement” includes
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the acquisition, construction, reconstruction, extension,
equipping, improvement, or rehabilitation of any works or
facilities useful for the collection, treatment, and disposal
of sewage or industrial waste in a sanitary manner, including
treatment works as defined in section 212 of the Clean Water
Act, and including the implementation and development of
sponsor projects under section 455B.199.
i. “Water infrastructure improvement” includes the
acquisition, construction, reconstruction, extending,
remodeling, improving, repairing, or equipping of waterworks,
water mains, extensions, or treatment facilities useful for
providing potable water to residents served by a water system,
including the acquisition of real property needed for such
purposes, and such other purposes and programs as may be
authorized under the Safe Drinking Water Act.
2. The Iowa finance authority shall establish and
administer a water quality protection and wastewater treatment
grant program for the purpose of providing financial assistance
in the form of grants to enhance water quality, upgrade water
and wastewater infrastructure, and to implement the Iowa
nutrient reduction strategy. The program shall be administered
in accordance with rules adopted by the authority pursuant to
chapter 17A.
3. a. A water quality protection and wastewater treatment
grant fund is created in the state treasury and shall consist
of appropriations made to the fund, transfers of interest,
earnings, moneys from other funds as provided by law, and
moneys accepted by the authority for deposit in the fund
from other public or private sources. Moneys credited
or transferred to the fund pursuant to section 16.198 are
appropriated to the authority for purposes of the program.
Moneys in the fund shall be used exclusively for purposes of
the program.
b. Notwithstanding section 8.33, moneys in the fund
that remain unencumbered or unobligated at the close of a
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fiscal year shall not revert but shall remain available for
expenditure for the purposes designated. Notwithstanding
section 12C.7, subsection 2, interest or earnings on moneys in
the fund shall be credited to the fund.
4. Grants may be awarded under the program for any of the
following:
a. To a municipality or an eligible entity participating in
a nutrient reduction exchange, for the purpose of purchasing
nutrient reduction credits or for implementing water quality
practices as described in the Iowa nutrient reduction strategy
in order to comply with technology-based effluent nutrient
limits at a facility. For purposes of this paragraph, “nutrient
reduction credit” and “nutrient reduction exchange” both mean the
same as defined in section 16.206, section 1, paragraph “d” .
b. To a municipality or an eligible entity for up to fifty
percent of the costs associated with conducting economic and
technical feasibility studies or developing implementation
plans and reports required by the Iowa nutrient reduction
strategy.
c. To a municipality for a source water protection project.
d. To a municipality or an eligible entity for water
infrastructure improvements or for wastewater infrastructure
improvements.
5. Priority for grants shall be given to projects or
activities that will provide improvement to water quality in
the relevant watershed.
6. Priority for grants shall be given to projects or
activities that also have private financing, or financing
pursuant to section 16.131 under the water pollution control
works and drinking water facilities financing program created
pursuant to section 455B.294, or other federal or state
financing.
7. Grants awarded under the program shall not exceed five
hundred thousand dollars per recipient.
8. By October 1 of each year, the authority shall submit
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a report to the governor and the general assembly itemizing
expenditures under the program during the previous fiscal year.
9. a. Beginning September 1, 2027, and every ten years
thereafter, a program review committee is established for
purposes of reviewing the program. By December 1 of the
same year, the review committee shall file a report with
the governor and the general assembly that reviews the
effectiveness of the program during the previous ten fiscal
years.
b. The program review committee shall consist of the
following members:
(1) The governor or the governor’s designee.
(2) The secretary of agriculture or the secretary’s
designee.
(3) The executive director of the authority or the executive
director’s designee.
(4) The director of the department of natural resources or
the director’s designee.
(5) Four members of the general assembly, with two from the
senate and two from the house of representatives and not more
than one member from each chamber being from the same political
party. The two senators shall be designated one member each
by the president of the senate, after consultation with the
majority leader of the senate, and by the minority leader of
the senate. The two representatives shall be designated one
member each by the speaker of the house of representatives,
after consultation with the majority leader of the house of
representatives, and by the minority leader of the house of
representatives.
c. Staffing services shall be provided by the authority.
Sec. 4. NEW SECTION . 16.198 Water quality financial
assistance fund.
1. A water quality financial assistance fund is created in
the state treasury.
2. The fund shall consist of all of the following:
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a. (1) Moneys transferred to the fund pursuant to section
423G.6.
(2) This paragraph “a” is repealed upon the date on which
chapter 423G is repealed pursuant to section 423G.7.
b. Appropriations made to the fund and transfers of
interest, earnings, and moneys from other funds as provided by
law.
3. For each fiscal year in the period beginning July 1,
2017, and ending when chapter 423G is repealed pursuant to
section 423G.7, there is appropriated the following amounts of
the balance of the fund for the following purposes:
a. One-sixth of the balance of the fund to the Iowa finance
authority to be credited to the water quality protection and
wastewater treatment grant fund created pursuant to section
16.140, subsection 3.
b. Five-sixths of the balance of the fund to the Iowa
finance authority to be credited to the water quality project
financial assistance fund created pursuant to section 16.204.
4. Moneys in the fund are not subject to section 8.33.
Notwithstanding section 12C.7, subsection 2, interest or
earnings on moneys in the fund shall be credited to the fund.
Sec. 5. NEW SECTION . 16.201 Definitions.
As used in this part, unless the context otherwise requires:
1. “Committee” means the water quality project financing
committee created in section 16.205, subsection 4.
2. “Eligible entity” means a financing entity meeting the
requirements of section 16.206, as determined by the committee.
3. “Financing entity” means two or more persons that have
entered into an agreement for purposes of joint financing of a
project under the program. A financing entity may include but
is not limited to a governmental body such as a state agency or
a political subdivision of the state, a city or a city utility,
a public utility as defined in section 476.1 that furnishes
drinking water, sanitary sewage, or storm water services to the
public for compensation, a county, a rural water district or
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association, a soil and water conservation district, a sanitary
district, a subdistrict of any of the foregoing districts, a
governmental body or corporation empowered to provide sewage
collection and treatment services or drinking water, an entity
jointly exercising governmental powers pursuant to chapter 28E
or 28F, or any other combination of two or more public agencies
or private agencies as defined in section 28E.2, acting jointly
under Iowa law in connection with a project.
4. “Iowa nutrient reduction strategy” means a water
quality initiative developed and updated by the department of
agriculture and land stewardship, the department of natural
resources, and the college of agriculture and life sciences at
Iowa state university of science and technology in order to
assess and reduce nutrients in this state’s watersheds that
utilizes a pragmatic, strategic, and coordinated approach with
the goal of accomplishing reductions over time.
5. “Loan recipient” means an eligible entity that has
received a loan under the program.
6. “Program” means the water quality project financial
assistance program created in this part.
7. “Project” means any combination of works, facilities,
improvements, structures, developments, tasks, activities,
constructions, modifications, operations, or practices designed
to improve water quality or water resource management that are
proposed by an eligible entity and approved by the committee.
“Project” includes but is not limited to the following:
a. A project meeting the requirements of part 2 of this
subchapter.
b. A project, operation, or practice undertaken or carried
out pursuant to chapter 161A, 161C, 161E, or 161F.
c. A project meeting the requirements of a sponsor project
under section 455B.199.
d. Other water resource restoration projects as defined in
section 384.80, including ones financed pursuant to section
28F.1.
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e. An agricultural nonpoint source project eligible for a
water quality agriculture infrastructure program under section
466B.43.
8. “Revolving fund” means the fund created in section
16.204.
Sec. 6. NEW SECTION . 16.202 Water quality project financial
assistance program —— funding —— bonds and notes.
1. The authority shall cooperate with the department of
natural resources and the department of agriculture and land
stewardship in the creation, administration, and financing of
the program established in this part.
2. The authority may issue its bonds and notes until June
30, 2042, for the purposes of this part, including for the
purposes of funding the program established under section
16.205 and of funding any fund or account created under section
16.204.
3. The authority may enter into one or more loan agreements
or purchase agreements with one or more bondholders or
noteholders containing the terms and conditions of the
repayment of and the security for the bonds or notes. The
authority and the bondholders or noteholders or a trustee
agent designated by the authority may enter into agreements to
provide for any of the following:
a. That the proceeds of the bonds and notes and the
investments of the proceeds may be received, held, and
disbursed by the authority or by a trustee or agent designated
by the authority.
b. That the bondholders or noteholders or a trustee or
agent designated by the authority may collect, invest, and
apply the amount payable under the loan agreements or any
other instruments securing the debt obligations under the loan
agreements.
c. That the bondholders or noteholders may enforce the
remedies provided in the loan agreements or other instruments
on their own behalf without the appointment or designation of a
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trustee. If there is a default in the principal of or interest
on the bonds or notes or in the performance of any agreement
contained in the loan agreements or other instruments, the
payment or performance may be enforced in accordance with the
loan agreement or other instrument.
d. Other terms and conditions as deemed necessary or
appropriate by the authority.
4. The powers granted the authority under this section
are in addition to other powers contained in this chapter.
All other provisions of this chapter, except section 16.28,
subsection 4, apply to bonds or notes issued and powers granted
to the authority under this section except to the extent they
are inconsistent with this section.
5. All bonds or notes issued by the authority in connection
with the program are exempt from taxation by this state and the
interest on the bonds or notes is exempt from state income tax.
Sec. 7. NEW SECTION . 16.203 Security —— reserve funds ——
pledges —— nonliability —— irrevocable contracts.
1. The authority may provide in the resolution, trust
agreement, or other instrument authorizing the issuance of its
bonds or notes pursuant to section 16.202 that the principal
of, premium, and interest on the bonds or notes are payable
from any of the following and may pledge the same to its bonds
and notes:
a. The income and receipts or other moneys derived from the
projects financed with the proceeds of the bonds or notes.
b. The income and receipts or other moneys derived from
designated projects whether or not the projects are financed in
whole or in part with the proceeds of the bonds or notes.
c. The amounts on deposit in the revolving fund.
d. The amounts payable to the authority by eligible entities
pursuant to loan agreements with eligible entities.
e. Any other funds or accounts established by the authority
in connection with the program or the sale and issuance of its
bonds or notes.
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2. The authority may establish reserve funds to secure
one or more issues of its bonds or notes. The authority may
deposit in a reserve fund established under this subsection the
proceeds of the sale of its bonds or notes and other moneys
that are made available from any other source.
3. It is the intention of the general assembly that a pledge
made in respect of bonds or notes issued under this part shall
be valid and binding from the time the pledge is made, that the
moneys or property so pledged and received after the pledge
by the authority shall immediately be subject to the lien of
the pledge without physical delivery or further act, and that
the lien of the pledge shall be valid and binding as against
all parties having claims of any kind in tort, contract, or
otherwise against the authority whether or not the parties have
notice of the lien. Neither the resolution, trust agreement,
nor any other instrument by which a pledge is created needs to
be recorded or filed under the Iowa uniform commercial code,
chapter 554, to be valid, binding, or effective against the
parties.
4. Neither the members of the authority nor persons
executing the bonds or notes are liable personally on the bonds
or notes or are subject to personal liability or accountability
by reason of the issuance of the bonds or notes.
5. The bonds or notes issued by the authority are not
an indebtedness or other liability of the state or of a
political subdivision of the state within the meaning of
any constitutional or statutory debt limitations but are
special obligations of the authority, and are payable solely
from the income and receipts or other funds or property of
the authority, and the amounts on deposit in the revolving
fund, and the amounts payable to the authority under its loan
agreements with eligible entities to the extent that the
amounts are designated in the resolution, trust agreement, or
other instrument of the authority authorizing the issuance of
the bonds or notes as being available as security for such
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bonds or notes. The authority shall not pledge the faith or
credit of the state or of a political subdivision of the state
to the payment of any bonds or notes. The issuance of any bonds
or notes by the authority does not directly, indirectly, or
contingently obligate the state or a political subdivision of
the state to apply moneys from, or levy or pledge any form of
taxation whatever to, the payment of the bonds or notes.
6. It is the intent of the general assembly, and the state
hereby pledges to the holders of bonds or notes issued under
this part, that the state will not limit or alter the rights
and powers vested in the authority to fulfill the terms of a
contract made by the authority with respect to the bonds or
notes, or in any way impair the rights and remedies of the
holders until the bonds or notes, together with the interest on
the bonds or notes, including interest on unpaid installments
of interest, and all costs and expenses in connection with an
action or proceeding by or on behalf of the holders, are fully
met and discharged. The authority is authorized to include
this pledge and agreement of the state, as it refers to holders
of bonds or notes of the authority, in a contract with the
holders.
Sec. 8. NEW SECTION . 16.204 Water quality project financial
assistance fund —— other funds and accounts.
1. a. A water quality project financial assistance
fund is created in the state treasury and shall consist of
appropriations made to the fund, moneys credited or transferred
to the fund pursuant to section 16.198, and transfers of
interest, earnings, and moneys from other funds as provided
by law. The fund shall be administered by the authority as a
revolving fund.
b. Moneys in the fund are not subject to section 8.33.
Notwithstanding section 12C.7, subsection 2, interest or
earnings on moneys in the fund shall be credited to the fund.
c. The authority shall use the moneys in the fund to provide
financial assistance to eligible entities under the program
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pursuant to section 16.205.
d. The authority may use an amount of not more than one
percent of the moneys in the fund for administrative purposes.
2. The authority may establish and maintain other funds
and accounts determined to be necessary to carry out the
purposes of the program and shall provide for the funding,
administration, investment, restrictions, and disposition of
the funds and accounts.
3. Moneys appropriated to and used by the authority for
purposes of paying the costs and expenses associated with
the administration of the program shall be administered as
determined by the authority.
4. The funds or accounts held by the authority, or a trustee
acting on behalf of the authority pursuant to a trust agreement
related to the program, shall not be considered part of the
general fund of the state, are not subject to appropriation for
any other purpose by the general assembly, and in determining
a general fund balance shall not be included in the general
fund of the state, but shall remain in the funds and accounts
maintained by the authority or trustee pursuant to a trust
agreement. Funds and accounts held by the authority, or a
trustee acting on behalf of the authority pursuant to a trust
agreement related to the program, are separate dedicated funds
and accounts under the administration and control of the
authority and subject to section 16.31.
Sec. 9. NEW SECTION . 16.205 Water quality project financial
assistance program —— committee created —— rules —— use of funds.
1. The authority, in cooperation with the department of
natural resources and the department of agriculture and land
stewardship, shall establish and administer a water quality
project financial assistance program. The purpose of the
program shall be to provide financial assistance to enhance
the quality of surface water and groundwater, particularly
by providing financial assistance for projects designed to
improve water quality through collaboration between point
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and nonpoint sources. The authority may provide financial
assistance in the form deemed most convenient for the efficient
financing of projects, including loans, forgivable loans, and
grants. However, the authority shall administer the fund and
the program in such a manner as to provide a permanent source
of water quality project financial assistance to eligible
entities.
2. The program shall be administered by the authority
in accordance with rules adopted by the authority pursuant
to chapter 17A. In adopting such rules, the authority shall
consult with the department of natural resources and the
department of agriculture and land stewardship.
3. The authority shall process and review financial
assistance applications and make recommendations to the
committee.
4. a. A water quality project financing committee is
created to consider applications for financial assistance from
eligible entities and approve awards of financial assistance
under the program. The committee shall consist of three
members, one appointed by the executive director of the
authority, one appointed by the director of the department
of natural resources, and one appointed by the secretary of
agriculture.
b. The committee shall review project plans submitted
pursuant to section 16.206, negotiate project details with
eligible entities, and make financial assistance awards. The
provision of financial assistance under the program shall take
into account the number of persons comprising an eligible
entity and the eligible entity’s financing capacity as well as
the extent to which the proposed projects will improve water
quality.
c. The committee shall score applications for financial
assistance according to rules adopted pursuant to this part.
The committee shall only provide financial assistance to
eligible entities that have sufficient financing capacity and
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that propose a plan likely to make progress toward achieving
the goals for agricultural and nonpoint sources described in
the Iowa nutrient reduction strategy.
5. The authority shall determine the interest rate
and repayment terms for loans made under the program, in
cooperation with the department of natural resources and
the department of agriculture and land stewardship, and the
authority shall enter into loan agreements with eligible
entities in compliance with and subject to the terms and
conditions of the program.
6. If a drainage district is a party to a chapter 28E
agreement that creates a financing entity, the chapter 28E
agreement shall provide that the drainage district shall not
be required to be a signatory on any loan agreement entered
into under the program, and the authority shall not require
the drainage district to be a signatory on any loan agreement
entered into under the program. This subsection shall not be
construed to eliminate or in any way restrict any existing
liability protection afforded to a drainage district under any
provision of law.
7. The authority shall adopt rules relating to the
proportional liability, if any, of members of an eligible
entity when such eligible entity enters into a loan agreement
under the program.
8. The authority may charge loan recipients fees and assess
costs against such recipients necessary for the continued
operation of the program. Such fees and costs shall not exceed
the costs directly associated with the administration of the
program. Fees and costs collected pursuant to this subsection
shall be deposited in the appropriate fund or account created
in section 16.204.
9. Financial assistance under the program shall be used by
eligible entities to fund projects designed to improve water
quality.
Sec. 10. NEW SECTION . 16.206 Eligible entities —— project
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plans —— agreements required.
1. A financing entity may apply to the authority for
financial assistance under the program. To be eligible, a
financing entity shall meet the following requirements:
a. The financing entity shall include two or more entities
acting jointly to propose a project plan designed to improve
water quality in a local area or watershed.
b. The plan shall include one or more projects that
substantially improve water quality in the local area or
watershed. Preference shall be given to projects that will
have the greatest impact on achieving the goals of the Iowa
nutrient reduction strategy, and plans designed to achieve
those goals shall be presumed to substantially improve water
quality in the local area or watershed.
c. The plan shall describe in detail the manner in which
the projects will be financed and undertaken, including the
sources of financing for the projects as well as the public or
private entities that will be receiving the revenues and how
such revenues will be spent on the projects. In describing the
projects and financing, the plan should attempt to quantify
the amount of nutrient reduction to be achieved under the
plan and should provide a reasonable means for verification
of the amount of nutrient reduction after the projects have
been financed and completed. Preference shall be given to
a financing entity that has had its plan evaluated by the
Iowa nutrient research center established in section 466B.47.
Preference shall also be given to a financing entity that has
contracted with the Iowa nutrient research center to verify
the amount of nutrient reduction achieved by the project upon
project completion.
d. (1) The plan may include a nutrient reduction exchange
between two or more members of the financing entity. A plan
that includes a nutrient reduction exchange shall be presumed
to substantially improve water quality in the local area or
watershed.
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(2) For purposes of this paragraph:
(a) “Nutrient reduction” means a reduction in nitrogen or
phosphorus as measured against standards or goals established
or adopted by the committee.
(b) “Nutrient reduction credit” means an amount of nutrient
reduction expressed as a unit of measurement that is calculated
using research-based modeling or other methods established or
adopted by the committee.
(c) “Nutrient reduction exchange” means an agreement between
one or more point source or nonpoint source contributors
and one or more other parties whereby nutrient reduction
credits are purchased, sold, traded, or exchanged for legal
consideration.
2. Any eligible entity receiving financial assistance under
the program shall enter into an agreement with the authority.
The agreement shall include standard terms for the receipt of
program funds and any other terms the authority deems necessary
and convenient for the efficient administration of the program.
Sec. 11. Section 28F.1, subsection 1, Code 2017, is amended
to read as follows:
1. This chapter provides a means for the joint financing
by public agencies of works or facilities useful and necessary
for the collection, treatment, purification, and disposal
in a sanitary manner of liquid and solid waste, sewage, and
industrial waste, facilities used for the conversion of solid
waste to energy, facilities, improvements, or projects in a
watershed useful for flood control, erosion control, or water
quality restoration by a water utility, wastewater utility,
or storm water utility, whether located within or without the
corporate boundaries of a municipal corporation, and also
electric power facilities constructed within the state of
Iowa, except that hydroelectric power facilities may also be
located in the waters and on the dams of or on land adjacent
to either side of the Mississippi or Missouri river bordering
the state of Iowa, water supply systems, swimming pools
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or golf courses. This chapter applies to the acquisition,
construction, reconstruction, ownership, operation, repair,
extension, or improvement of such works or facilities, by a
separate administrative or legal entity created pursuant to
chapter 28E or chapter 389 . When the legal entity created
under this chapter is comprised solely of cities, counties,
and sanitary districts established under chapter 358 , or any
combination thereof or any combination of the foregoing with
other public agencies, the entity shall be both a corporation
and a political subdivision with the name under which it was
organized. The legal entity may sue and be sued, contract,
acquire and hold real and personal property necessary for
corporate purposes, adopt a corporate seal and alter the seal
at pleasure, and execute all the powers conferred in this
chapter .
Sec. 12. Section 161A.7, subsection 1, paragraph d, Code
2017, is amended to read as follows:
d. To cooperate, or enter into agreements with, and within
the limits of appropriations duly made available to it by law,
to furnish financial or other aid to any agency, governmental
or otherwise, or any owner or occupier of lands within the
district, in the carrying on of erosion-control and watershed
protection and flood prevention operations , or in the carrying
out of projects or operations pursuant to paragraph “q” , within
the district, subject to such conditions as the commissioners
may deem necessary to advance the purposes of this chapter .
Sec. 13. Section 161A.7, subsection 1, Code 2017, is amended
by adding the following new paragraphs:
NEW PARAGRAPH . p. To apply for financial assistance under
the water quality project financial assistance program under
sections 16.201 through 16.206.
NEW PARAGRAPH . q. To carry out soil erosion control,
watershed protection or improvement, flood prevention, and
water quality protection projects and operations within the
district, including but not limited to projects and operations
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to support water protection practices, to protect this
state’s groundwater and surface water from point and nonpoint
sources of pollution, including but not limited to pollution
by agricultural drainage wells, sinkholes, sedimentation,
or chemical pollutants, to reduce or remove nutrients and
pollution in or from surface water and groundwater, to reduce
or eliminate nutrient reduction loads to surface water
and groundwater from both point and nonpoint sources, to
maintain, protect, and improve the quality of surface water and
groundwater, and to achieve or further any of the goals and
targets described in the Iowa nutrient reduction strategy as
defined in section 16.201.
Sec. 14. Section 161C.1, Code 2017, is amended by adding the
following new subsection:
NEW SUBSECTION . 4A. “Financing entity” means the same as
defined in section 16.201.
Sec. 15. Section 161C.2, subsection 1, paragraph a, Code
2017, is amended to read as follows:
a. Each soil and water conservation district, alone and
whenever practical in conjunction with other districts, shall
financing entities, or political subdivisions of the state,
or other local agencies, may carry out district-wide and
multiple-district projects to support soil erosion control,
water resource restoration projects, watershed protection,
flood prevention, and water quality protection practices ,
projects, and operations in the district or districts,
including but not limited to projects carried out in order to
protect this state’s groundwater and surface water from point
and nonpoint sources of contamination pollution , including but
not limited to contamination pollution by agricultural drainage
wells, sinkholes, sedimentation, or chemical pollutants , as
described in the Iowa nutrient reduction strategy as defined
in section 16.201 .
Sec. 16. Section 161C.3, Code 2017, is amended to read as
follows:
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161C.3 Cooperation with other agencies.
Soil and water conservation districts may enter into
agreements with the United States, as provided by state law,
or with the state of Iowa or any agency of the state, any
other soil and water conservation district, or other political
subdivision of this state, or any financing entity, or other
local agency, for cooperation in preventing, controlling, or
attempting to prevent or control contamination pollution of
groundwater or surface water by point and nonpoint sources
of pollution. Soil and water conservation districts may
accept, as provided by state law, any money disbursed for water
quality preservation purposes by the federal government or any
agency of the federal government, and expend the money for the
purposes for which it was received.
Sec. 17. Section 161E.1, Code 2017, is amended to read as
follows:
161E.1 Authority of board.
1. If a county, soil and water conservation district,
subdistrict of a soil and water conservation district,
financing entity, or political subdivision of the state, or
other local agency engages or participates in or carries out
a project for flood or soil erosion control, a water resource
restoration project, watershed protection or improvement
project, flood prevention, water quality protection project or
operation, including but not limited to a project or operation
described in the Iowa nutrient reduction strategy as defined
in section 16.201, within a county, or engages or participates
in the conservation, development, utilization, and disposal
of water, in cooperation with the federal government, or a
department or agency of the federal government, in cooperation
with other districts, subdistricts, financing entities,
political subdivisions, or other local agencies, the counties
in which the project is carried on may, through the board of
supervisors or through an intergovernmental agreement under
chapter 28E or chapter 28F , construct, operate, and maintain
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the project on lands under the control or jurisdiction of the
county dedicated to county use, or furnish financial and other
assistance in connection with the projects or operations .
Flood control , soil erosion control, watershed protection
projects, flood prevention, water quality improvement projects,
water resource restoration projects, and watershed improvement
projects and operations, including but not limited to projects
or operations described in the Iowa nutrient reduction strategy
as defined in section 16.201, are presumed to be for the
protection of the tax base of the county, for the protection of
public roads and lands, and for the protection of the public
health, sanitation, safety, and general welfare.
2. For purposes of this chapter, “financing entity” means
the same as defined in section 16.201.
Sec. 18. Section 161E.2, Code 2017, is amended to read as
follows:
161E.2 Federal aid.
A county may, in accordance with this chapter , accept
federal funds for aid in a project for flood or soil erosion
control, flood prevention, or the conservation, development,
utilization, and disposal of water, and may cooperate with
the federal government or a department or agency of the
federal government, a soil and water conservation district,
subdistrict of a soil and water conservation district,
political subdivision of the state, or other local agency, or
a financing entity, and the county may assume a proportion of
the cost of the project as deemed appropriate, and may assume
the maintenance cost of the project on lands under the control
or jurisdiction of the county which will not be discharged by
federal aid or grant.
Sec. 19. Section 161E.3, Code 2017, is amended to read as
follows:
161E.3 Cooperation.
The counties, soil and water conservation districts,
and subdistricts of soil and water conservation districts
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concerned , shall advise and consult with each other , upon the
request of any of them or any affected landowners , and may
cooperate with each other or with other state subdivisions or
instrumentalities , and affected landowners, as well as with the
federal government or a department or agency of the federal
government, or a financing entity or other local agency, to
construct, operate, and maintain suitable projects for flood
or soil erosion control, water resource restoration projects,
watershed protection or improvement projects, flood prevention,
water quality protection or improvement projects, or the
conservation, development, utilization, and disposal of water
on public roads or other public lands or other land granted
county use.
Sec. 20. Section 161E.5, Code 2017, is amended to read as
follows:
161E.5 Maintenance cost.
If construction of projects has been completed by the soil
and water conservation district, subdistricts of soil and
water conservation districts, political subdivisions of the
state, or other local agencies, or the federal government, or a
department or agency of the federal government, or a financing
entity on private lands under the easement granted to the
county, only the cost of maintenance may be assumed by the
county.
Sec. 21. Section 161E.9, Code 2017, is amended to read as
follows:
161E.9 Tax levy.
The county board of supervisors may annually levy a tax not
to exceed six and three-fourths cents per thousand dollars of
assessed value of all agricultural lands in the county, to
be used for flood and soil erosion control, water resource
restoration projects, watershed protection or improvement
projects, flood prevention and water quality protection
projects and operations within a county, including but not
limited to projects or operations described in the Iowa
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nutrient reduction strategy as defined in section 16.201, and
including acquisition of land or interests in land, and repair,
alteration, maintenance, and operation of works of improvement
on lands under the control or jurisdiction of the county as
provided in this chapter , or to furnish financial assistance in
connection with such projects and operations .
Sec. 22. Section 161E.10, Code 2017, is amended to read as
follows:
161E.10 Assumption of obligations.
This chapter contemplates that actual direction of the
project, or projects, and the actual work done in connection
with them the projects , will be assumed by the soil and water
conservation district, a subdistrict of a soil and water
conservation district, or the federal government, and that the
county or other state subdivisions or instrumentalities or
financing entities jointly will meet the obligation required
for federal cooperation and may make proper commitment for
the care and maintenance of the project after its completion
for the general welfare of the public and residents of the
respective counties.
Sec. 23. Section 161F.1, Code 2017, is amended to read as
follows:
161F.1 Presumption of benefit —— definitions .
1. The conservation of the soil resources of the state
of Iowa, the improvement of water quality through projects,
the proper control of water resources of the state and the
prevention of damage to property and lands through the control
of floods, the drainage of surface waters or the protection of
lands from overflow shall be presumed to be a public benefit
and conducive to the public health, convenience and welfare and
essential to the economic well-being of the state.
2. For purposes of this chapter, “financing entity” and
“project” both mean the same as defined in section 16.201.
Sec. 24. Section 161F.2, Code 2017, is amended to read as
follows:
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161F.2 Board of supervisors to establish districts —— strip
coal mining.
1. The board of supervisors of any county shall have
jurisdiction, power and authority at any regular, special or
adjourned session to establish, subject to the provisions
of this chapter , districts having for their purpose soil
conservation and the control of flood waters , or the
improvement of water quality, and to cause to be constructed
as hereinafter provided, such improvements , projects, and
facilities as shall be deemed essential for the accomplishment
of the purpose of soil conservation and flood control , or of
water quality improvement .
2. Such The board of supervisors shall also have
jurisdiction, power , and authority at any regular, special ,
or adjourned session to establish, in the same manner that
the districts hereinabove referred to in subsection 1
are established, districts having for their purpose soil
conservation in mining areas within the county, and provide
that anyone engaged in removing the surface soil over any
bed or strata of coal in such district for the purpose of
obtaining such coal shall replace the surface soil as nearly
as practicable to its original position, and provide that,
upon abandonment of such removal operation, all surface soil
shall be so replaced. This section subsection shall apply only
to surface soil so removed after July 4, 1949, and then only
if it is essential for the accomplishment of the purpose of
soil conservation and flood control within the purview of this
chapter .
Sec. 25. Section 161F.3, Code 2017, is amended to read as
follows:
161F.3 Combination of functions.
Such districts shall have the power to combine in their
functions activities affecting soil conservation, flood control
and drainage, water quality improvement, or any of these
objects, singly or in combination with another district or
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financing entity under the provisions of an intergovernmental
agreement pursuant to chapter 28E or 28F .
Sec. 26. Section 161F.6, subsection 1, Code 2017, is amended
to read as follows:
1. In the organization, operation, and financing of
districts established under this chapter , the provisions of
chapter 468 shall apply and any procedure provided under
chapter 468 in connection with the organization, financing,
and operation of any drainage district shall apply to the
organization, financing, and operation of districts organized
under this chapter . However, a district established under this
chapter shall not be considered a drainage district established
pursuant to chapter 468.
Sec. 27. Section 384.80, subsection 15, Code 2017, is
amended to read as follows:
15. “Water resource restoration project” means the
acquisition of real property or improvements , a project as
defined in section 16.201, or any other activity or undertaking
that will assist in improving flood control, erosion control,
or the quality of the water in the watershed where a city
water , storm water, or wastewater utility is located.
Sec. 28. Section 384.84, subsection 2, Code 2017, is amended
to read as follows:
2. The governing body of a city water or wastewater utility
may enter into an agreement with a qualified entity to use
proceeds from revenue bonds for a water resource restoration
project if the rate imposed is no greater than if there was not
a water resource restoration project agreement. For purposes
of this subsection , “qualified entity” is an entity created
pursuant to chapter 28E or chapter 28F or two entities that
have entered into an agreement pursuant to chapter 28E or
chapter 28F , whose purpose is to undertake a watershed project
that has been approved for water quality improvements in the
watershed.
Sec. 29. Section 422.7, subsection 2, Code 2017, is amended
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by adding the following new paragraph:
NEW PARAGRAPH . 0h. Iowa finance authority water quality
project financial assistance program bonds or notes pursuant to
section 16.202, subsection 5.
Sec. 30. Section 423.3, Code 2017, is amended by adding the
following new subsection:
NEW SUBSECTION . 103. a. The sales price from the sale or
furnishing by a water utility of a water service in the state
to consumers or users.
b. For purposes of this subsection:
(1) “Water service” means the delivery of water by piped
distribution system.
(2) “Water utility” means a public utility as defined in
section 476.1 that furnishes water by piped distribution system
to the public for compensation.
Sec. 31. NEW SECTION . 423G.1 Short title.
This chapter may be cited as the “Water Service Tax Act” .
Sec. 32. NEW SECTION . 423G.2 Definitions.
1. All words and phrases used in this chapter and defined in
section 423.1 have the same meaning given them by section 423.1
for purposes of this chapter.
2. As used in this chapter, “water service” and “water
utility” mean the same as defined in section 423.3, subsection
103.
Sec. 33. NEW SECTION . 423G.3 Water service tax.
An excise tax at the rate of six percent is imposed on the
sales price from the sale or furnishing by a water utility of a
water service in the state to consumers or users.
Sec. 34. NEW SECTION . 423G.4 Exemptions.
The sales price from transactions exempt from state sales
tax under section 423.3, except section 423.3, subsection 103,
is also exempt from the tax imposed by this chapter.
Sec. 35. NEW SECTION . 423G.5 Administration by director.
1. The director of revenue shall administer the state
water service tax as nearly as possible in conjunction with
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the administration of the state sales and use tax law, except
that portion of the law that implements the streamlined sales
and use tax agreement. The director shall provide appropriate
forms, or provide on the regular state tax forms, for reporting
state water service tax liability.
2. The director may require all persons who are engaged
in the business of deriving any sales price or purchase
price subject to tax under this chapter to register with
the department. The director may also require a tax permit
applicable only to this chapter for any retailer not
collecting, or any user not paying, taxes under chapter 423.
3. Section 422.25, subsection 4, sections 422.30, 422.67,
and 422.68, section 422.69, subsection 1, sections 422.70,
422.71, 422.72, 422.74, and 422.75, section 423.14, subsection
1, and sections 423.23, 423.24, 423.25, 423.31 through
423.35, 423.37 through 423.42, and 423.47, consistent with the
provisions of this chapter, shall apply with respect to the tax
authorized under this chapter in the same manner and with the
same effect as if the excise taxes on the sale or furnishing of
a water service were retail sales taxes within the meaning of
those statutes. Notwithstanding this subsection, the director
shall provide for quarterly filing of returns and for other
than quarterly filing of returns both as prescribed in section
423.31. All taxes collected under this chapter by a retailer
or any user are deemed to be held in trust for the state of
Iowa.
Sec. 36. NEW SECTION . 423G.6 Deposit of revenues.
1. All moneys received and all refunds shall be deposited in
or withdrawn from the general fund of the state.
2. Subsequent to the deposit in the general fund of the
state, the department shall transfer the following amounts of
revenues collected to the water quality financial assistance
fund created in section 16.198:
a. For revenues collected on or after July 1, 2017, but
before August 1, 2018, one-sixth of the revenues.
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b. For revenues collected on or after August 1, 2018, but
before August 1, 2019, one-third of the revenues.
c. For revenues collected on or after August 1, 2019, but
before August 1, 2020, one-half of the revenues.
d. For revenues collected on or after August 1, 2020, but
before August 1, 2021, two-thirds of the revenues.
e. For revenues collected on or after August 1, 2021, but
before August 1, 2022, five-sixths of the revenues.
f. For revenues collected on or after August 1, 2022, one
hundred percent of the revenues.
Sec. 37. NEW SECTION . 423G.7 Future repeal.
This chapter is repealed on the date on which all bonds,
notes, or other debt instruments issued on or before June
30, 2042, pursuant to section 16.202, are fully paid. The
executive director of the Iowa finance authority shall notify
the Iowa Code editor upon the occurrence of this condition.
Sec. 38. Section 455B.171, subsection 19, Code 2017, is
amended to read as follows:
19. “Point source” means any discernible, confined, and
discrete conveyance, including but not limited to any pipe,
ditch, channel, tunnel, conduit, well, discrete fissure,
container, rolling stock, concentrated animal feeding
operation, or vessel or other floating craft, from which
pollutants are or may be discharged. “Point source” does not
include agricultural storm water discharges and return flows
from irrigated agriculture.
Sec. 39. Section 455B.176A, subsection 1, Code 2017, is
amended by adding the following new paragraphs:
NEW PARAGRAPH . 0d. “Iowa nutrient reduction strategy” means
the same as defined in section 16.201.
NEW PARAGRAPH . 00d. “Nutrient” means total nitrogen and
total phosphorus.
Sec. 40. Section 455B.176A, subsection 5, Code 2017, is
amended to read as follows:
5. a. The commission shall adopt rules designating water
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quality standards which shall be specific to each designated
use adopted pursuant to subsection 4 . The standards shall take
into account the different characteristics of each designated
use and shall provide for only the appropriate level of
protection based upon that particular use. The standards shall
not be identical for each designated use unless required for
the appropriate level of protection. The appropriate level of
protection and standards shall be determined on a scientific
basis.
b. In the development process for the water quality
standards, input shall be received from a water quality
standards advisory committee convened by the department. The
water quality standards advisory committee shall be comprised
of experts in the scientific fields relating to water quality,
such as environmental engineering, aquatic toxicology,
fisheries biology, and other life sciences and experts in
the development of the appropriate levels of aquatic life
protection and standards. The water quality standards shall be
reviewed and revised by the department as new scientific data
becomes available to support revision.
c. The department shall provide support to the department of
agriculture and land stewardship in their efforts to implement
their responsibilities under the Iowa nutrient reduction
strategy. To evaluate the progress achieved over time toward
the goals of the Iowa nutrient reduction strategy and the
United States environmental protection agency gulf hypoxia
action plan, the baseline condition shall be calculated for the
time period from 1980 to 1996.
Sec. 41. Section 455B.195, subsection 1, paragraph i, Code
2017, is amended to read as follows:
i. If the department has obtained credible data for a
water of the state, the department may also use historical
data for that particular water of the state for the purpose
of determining whether any trends exist for that water of the
state. To evaluate the progress achieved over time toward
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the goals of the Iowa nutrient reduction strategy, as defined
in section 455B.176A, and the United States environmental
protection agency gulf hypoxia action plan, the baseline
condition shall be calculated for the time period from 1980 to
1996.
Sec. 42. Section 466B.3, subsection 3, paragraph c, Code
2017, is amended to read as follows:
c. Whether the funds, programs, and regulatory efforts
coordinated by the council eventually result in a long-term
improvement to the quality of surface water in Iowa. To
evaluate the progress achieved over time toward the goals of
the Iowa nutrient reduction strategy, as defined in section
455B.176A, and the United States environmental protection
agency gulf hypoxia action plan, the baseline condition shall
be calculated for the time period from 1980 to 1996.
Sec. 43. Section 466B.42, Code 2017, is amended to read as
follows:
466B.42 Water quality initiative.
The division shall establish a water quality initiative
in order to assess and reduce nutrients in this state’s
watersheds, including subwatersheds , and regional watersheds ,
and for implementing its responsibilities under the Iowa
nutrient reduction strategy as defined in section 455B.176A .
The division shall establish and administer projects to
reduce nutrients in surface waters from nonpoint sources in
a scientific, reasonable, and cost-effective manner. The
division shall utilize a pragmatic, strategic, and coordinated
approach with the goal of accomplishing reductions over time.
To evaluate the progress achieved over time toward the goals
of the Iowa nutrient reduction strategy and the United States
environmental protection agency gulf hypoxia action plan, the
baseline condition shall be calculated for the time period from
1980 to 1996.
Sec. 44. NEW SECTION . 466B.43 Water quality agriculture
infrastructure programs.
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1. As part of the water quality initiative established
pursuant to section 466B.42, the division shall administer
water quality agriculture infrastructure programs created in
this section.
2. a. The purpose of the programs is to support projects
for the installation of infrastructure, including conservation
structures, practices, or other measures that reduce
contributing nutrient loads, associated sediment, or pollutants
from point and nonpoint sources to surface waters. The
programs shall be administered in a manner that is consistent
with the Iowa nutrient reduction strategy, as defined in
section 16.201.
b. In making awards of financial assistance under the
programs, the division shall attempt to complement the purposes
of the water quality project financial assistance program
under sections 16.201 through 16.206 and the water quality
protection and wastewater treatment grant program under section
16.140. Preference shall be given to landowners that are
part of a financing entity participating in the water quality
project financial assistance program and to landowners that are
participating in the water quality protection and wastewater
treatment grant program. The division, the Iowa finance
authority, landowners, and financing entities shall, when
possible, coordinate financing between the programs created in
this section, the water quality project financial assistance
program, and the water quality protection and wastewater
treatment grant program, in order to promote the most effective
use of resources.
3. An edge-of-field infrastructure program is created.
The program shall support projects located on agricultural
land, which may include demonstration projects, that capture
or filter nutrients entering into a surface water. The
program’s projects shall be limited to infrastructure designed
and installed for use over multiple years, including but not
limited to wetlands, bioreactor systems, saturated buffers,
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edge-of-stream buffers, or land use changes. The program shall
be financed on a cost-share basis.
4. An in-field infrastructure program is created. The
program shall support projects located on agricultural land,
which may include demonstration projects, that decrease erosion
and precipitation-induced surface runoff, increase water
infiltration rates, and increase soil sustainability. The
program’s projects shall be limited to infrastructure designed
and installed for use over multiple years, including but not
limited to structures, terraces, and waterways located on
cropland or pastureland, and including but not limited to soil
conservation or erosion control structures, managed drainage
systems, or edge-of-stream buffers. The program shall be
financed on a cost-share basis.
5. Any state moneys used to finance a project under a
water quality agriculture infrastructure program shall be
administered according to an agreement entered into by the
division and the owner of the land where the infrastructure
is to be installed. The agreement shall include standard
terms and conditions for the receipt of program moneys and
any other terms and conditions the division deems necessary
or convenient for the efficient administration of the project
or program. The division may support multiple installations
of infrastructure on a single parcel of land. The division
may also combine programs if cost effective. The division
may annually use an amount of not more than four percent of
the moneys used to support each program for administrative
purposes.
6. By October 1, 2018, and each October 1, thereafter, the
division shall submit a report to the governor and the general
assembly itemizing expenditures, by hydrologic unit code 8
watershed, under the programs during the previous fiscal year.
7. Any information obtained by the division identifying
a person holding a legal interest in agricultural land or
specific agricultural land shall be a confidential record under
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section 22.7.
Sec. 45. LEGISLATIVE INTENT. It is the intent of the
general assembly that the amendment in this Act to the
definition of “point source” in section 455B.171, subsection
19, is a conforming amendment consistent with current state
and federal law, and that the amendment does not change the
application of current law but instead reflects current law
both before and after the enactment of this Act.
Sec. 46. RETROACTIVE APPLICABILITY. The following
provision or provisions of this Act apply retroactively to
January 1, 2017, for tax years beginning on or after that date:
1. The section of this Act enacting section 422.7,
subsection 2, paragraph “0h”.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to water quality by establishing new water
quality programs, providing for appropriations from the rebuild
Iowa infrastructure fund and making other appropriations and
changes related to water quality, and creating a state water
service excise tax and a related sales tax exemption.
REBUILD IOWA INFRASTRUCTURE FUND APPROPRIATIONS FOR WATER
QUALITY AGRICULTURE INFRASTRUCTURE PROGRAMS.
RIIF appropriations —— The bill provides for a total of
$232 million of appropriations over 13 fiscal years from the
rebuild Iowa infrastructure fund in Code section 8.57 to a
water quality infrastructure fund created in the bill (Code
section 8.57B) to be used by the division of soil conservation
and water quality of the department of agriculture and land
stewardship (soil and water division) in administering two new
water quality agriculture infrastructure programs, described
below. The appropriations shall be as follows: $5 million for
fiscal year 2017-2018; $6.5 million for fiscal year 2018-2019;
$11.5 million for fiscal year 2019-2020; $16.5 million per
fiscal year for the two-year fiscal period beginning July 1,
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2020, and ending June 30, 2022; and $22 million per fiscal year
for the eight-year fiscal period beginning July 1, 2022, and
ending June 30, 2030. The water quality infrastructure fund
is repealed on the date that all moneys transferred to the
fund from the rebuild Iowa infrastructure fund as provided in
the bill, including any interest or earnings on such moneys
credited to the fund, are expended by the soil and water
division, and the balance of the fund is zero.
Water quality agriculture infrastructure programs —— As
part of the existing water quality initiative of the soil and
water division in Code section 466B.42, the bill establishes
two water quality agriculture infrastructure programs (Code
section 466B.43), consisting of an edge-of-field infrastructure
program and an in-field infrastructure program, that will
provide financing on a cost-share basis to certain agriculture
infrastructure projects, including demonstration projects.
The edge-of-field program will support projects that capture
or filter nutrients entering into surface water. The bill
includes wetlands, bioreactor systems, saturated buffers,
edge-of-field buffers, and land use changes as examples
of projects that may qualify. The in-field infrastructure
program will support projects that decrease erosion and
precipitation-induced surface runoff, increase water
infiltration rates, and increase soil sustainability. The bill
includes structures, terraces, waterways located on cropland
or pastureland, and soil conservation or erosion control
structures or managed drainage systems, and edge-of-field
buffers as examples of projects that may qualify.
The bill provides for the purpose of the programs and
requires that the programs be administered in a manner that
is consistent with the Iowa nutrient reduction strategy, as
defined in the bill. Both programs are to be administered
in a way that coordinates with, and attempts to complement
the purposes of, the water quality project financial
assistance program and the water quality protection and
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wastewater treatment grant program created in the bill
and described below, and preference is to be given to
landowners participating in those programs. Both water
quality agriculture infrastructure programs require that
projects be located on agricultural land and limit projects to
infrastructure designed and installed for use over multiple
years. The bill requires that the soil and water division and
landowners enter into agreements for financing projects under
the programs, provides that the soil and water division may
support multiple installations of infrastructure on a single
parcel of land, and provides that the two programs may be
combined by the soil and water division if it is cost effective
to do so. The soil and water division is allowed to annually
use up to 4 percent of the programs’ moneys for administrative
purposes. Beginning in 2018, the soil and water division is
required to submit a report by October 1 of each year to the
general assembly and the governor detailing expenditures for
the previous fiscal year under the programs by hydrologic unit
code 8 watershed. The bill provides that certain information
related to agricultural land and obtained by the soil and water
division under the programs shall be considered a confidential
record under Code section 22.7.
WATER SERVICE EXCISE TAX FOR CERTAIN WATER QUALITY PROGRAMS.
Water service excise tax and related sales tax exemption ——
The bill exempts from the state sales tax the sales price from
the sale or furnishing by a water utility of a water service in
the state to consumers or users. “Water service” and “water
utility” are defined in the bill.
By operation of Code section 423.6, an item exempt from the
imposition of the sales tax is also exempt from the use tax
imposed in Code section 423.5.
The bill creates a state excise tax at the rate of 6 percent
on the sales price from the sale or furnishing by a water
utility of a water service in the state to consumers or users
(Code chapter 423G). The director of revenue is required
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to administer the water service tax as nearly as possible
in conjunction with the administration of the state sales
and use tax laws, and, to that end, the bill incorporates by
reference numerous Code sections that relate to general tax
administration and the sales and use tax laws.
State water service tax revenues are deposited in the
general fund of the state. The bill requires an increasing
portion of the state water service tax revenues collected each
year to be transferred to a water quality financial assistance
fund created in the bill (Code section 16.198) to support
various water quality programs, described below. Transfers to
the water quality financial assistance fund equal one-sixth of
the water service tax revenues collected on or after July 1,
2017, but before August 1, 2018, and increases to one-third,
one-half, two-thirds, and five-sixths over the next four years.
All water service tax revenues collected on or after August
1, 2022, will be transferred to the water quality financial
assistance fund.
The state and local water service tax is repealed on the date
on which all bonds, notes, or other debt instruments issued by
the Iowa finance authority (IFA) on or before June 30, 2042,
under the water quality project financial assistance program,
described below, are fully paid.
Water service tax revenues transferred to the water quality
financial assistance fund are then appropriated from the
fund as follows: one-sixth of the moneys in the fund is
appropriated to IFA to support the water quality protection and
wastewater treatment grant program created in the bill (Code
section 16.140), and five-sixths of the moneys in the fund
is appropriated to IFA to support the water quality project
financial assistance program created in the bill (Code sections
16.201 through 16.206).
Water quality protection and wastewater treatment grant
program (Code section 16.140) —— This program, administered by
IFA, provides financial assistance in the form of grants to
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municipalities and eligible entities for projects or activities
that enhance water quality, upgrade water and wastewater
infrastructure, or implement the nutrient reduction strategy.
“Municipality”, “eligible entity”, and other related terms are
defined in the bill. The bill describes the types of projects
or activities that qualify for grants under the program.
The program gives priority in awarding grants to projects
or activities that provide improvement to water quality in
the relevant watershed, and that also have private financing
or certain other state or federal financing as described in
the bill. Grants shall not exceed $500,000 per recipient.
The program requires IFA to submit a report by October 1 of
each year to the governor and the general assembly detailing
expenditures for the previous year under the program, and
creates a program review committee consisting of eight members,
as provided in the bill, to review the effectiveness of the
program every 10 years, beginning in 2027.
Water quality project financial assistance program (Code
sections 16.201 through 16.206) —— This program provides
financial assistance to eligible entities that engage in a
project designed to improve water quality or water resource
management for the purpose of enhancing the quality of surface
water and groundwater. “Eligible entity”, “project”, and
other related terms are defined in the bill. The program
is administered by IFA in cooperation with the department of
natural resources (DNR) and the department of agriculture
and land stewardship (IDALS). The program allows IFA to
provide financial assistance in the form it deems most
convenient, including loans, forgivable loans, and grants,
but requires that the program be a permanent source of water
quality financial assistance. The program allows financing
entities, as defined in the bill, to apply to IFA for financial
assistance and submit project plans that substantially improve
water quality in the local area or watershed, and provides
certain application requirements. Preference under the program
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shall be given to projects that will have the greatest impact
on achieving the goals set forth in the nutrient reduction
strategy, and plans designed to achieve those goals shall be
presumed to improve water quality. Also, plans that include a
nutrient reduction exchange, as defined in the bill, between
two or more members of the eligible entity will be presumed to
substantially improve water quality.
Preference under the program is to be given to eligible
entities that have project plans evaluated by the Iowa nutrient
research center (Code section 466B.47), and to eligible
entities that contract with the Iowa nutrient research center
to verify the amount of nutrient reduction achieved by the
project upon project completion.
The bill creates a three-member committee to review project
plans, review and score applications, and make financial
assistance awards. The executive director of IFA, the director
of DNR, and the secretary of agriculture each appoint one
member to the committee. Eligible entities receiving financial
assistance awards are required to enter into agreements with
IFA, and IFA determines the terms of any loan and may charge
fees and costs necessary for the continued operation of the
program. The bill provides that a drainage district that is a
party to a Code chapter 28E agreement that creates a financing
entity is not required to be a signatory on any loan agreement
entered into under the program. The bill further requires
IFA to adopt rules relating to the proportional liability, if
any, of members of an eligible entity that enter into a loan
agreement under the program.
The bill creates a water quality project financial
assistance fund administered by IFA to provide financial
assistance under the program. The bill allows IFA to establish
and maintain other funds and accounts necessary to carry out
the purposes of the program.
The bill allows IFA to issue until June 30, 2042, bonds and
notes for the purpose of funding the program, and the bill
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provides several requirements for the issuance of such bonds
and notes, for loan or purchase agreements with bondholders
or noteholders, for the pledging of certain funds toward the
repayment of the bonds and notes, and for the establishment of
reserve funds to secure the bonds and notes. The bill also
includes other provisions related to the notes and bonds,
including that such bonds and notes are exempt from taxation
by the state.
MISCELLANEOUS PROVISIONS. The bill amends the powers of
a soil and water conservation district under chapter 161A to
include the completion of certain projects as described in the
bill, and to allow a district to apply for financial assistance
under the water quality project financial assistance program.
The bill amends provisions in Code chapter 161C governing
the water protection projects and practices of a soil and water
conservation district by adding to the types of projects the
district may engage in and the type of entities the district
may work with to complete such projects.
The bill amends various provisions of Code chapter 161E
(flood and erosion control) to add to the types of projects a
county may engage in or offer financial assistance for under
that Code chapter, or to levy a property tax for under that
Code chapter, and to add to the types of entities the county
may work with to complete projects.
The bill amends provisions in Code chapter 161F (soil
conservation and flood control districts) to add to the
types of projects a soil conservation and flood control
district established by a county may engage in under that Code
chapter, and the types of entities a district may work with
to complete such projects. The bill also specifies that a
district established pursuant to Code chapter 161F shall not
be considered a drainage district established pursuant to Code
chapter 468.
The bill adds to the types of projects that a public agency
may complete through joint financing with another public agency
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under Code chapter 28F (joint financing of public works and
facilities).
The bill amends provisions governing certain projects
completed and financed by a city under Code chapter 384 (city
finance). The bill adds to the types of projects specified
that meet the definition of a “water resource restoration
project”, which is a type of project a city may engage in
and issue revenue bonds or pledge orders for. The bill also
amends the definition of “qualified entity” to include entities
created under Code chapter 28F (joint financing of public
works and facilities). Under current law, a city may enter
into agreements with a qualified entity relating to the use of
revenue bond proceeds for a water resource restoration project.
The bill amends the definition of “point source” in Code
section 455B.171, which contains definitions for terms used in
provisions of the Code that concern the jurisdiction of DNR
related to water quality, to exclude agricultural storm water
discharges and return flows from irrigated agriculture. The
bill provides that it is the legislative intent of the general
assembly that this amendment to the definition of “point
source” is a conforming amendment consistent with current state
and federal law, and that the amendment does not change the
application of current law but instead reflects current law
both before and after the enactment of the bill.
The bill amends Code section 455B.176A, relating to water
quality standards created by DNR and the environmental
protection commission, to define “Iowa nutrient reduction
strategy” and “nutrient”, and to provide that DNR shall provide
support to IDALS in efforts to implement the Iowa nutrient
reduction strategy, and further provides that progress under
the Iowa nutrient reduction strategy and the United States
environmental protection agency gulf hypoxia action plan shall
be evaluated using a baseline condition calculated for the time
period between 1980 and 1996.
The bill amends Code section 455B.195, relating to
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the required use or analysis of credible data by DNR when
developing or determining certain water quality issues,
to provide that progress under the Iowa nutrient reduction
strategy and the United States environmental protection agency
gulf hypoxia action plan shall be evaluated using a baseline
condition calculated for the time period between 1980 and 1996.
The bill amends Code section 466B.3, relating to the water
resources coordinating council, to provide that when the
council is measuring the success of its efforts, progress under
the Iowa nutrient reduction strategy and the United States
environmental protection agency gulf hypoxia action plan shall
be evaluated using a baseline condition calculated for the time
period between 1980 and 1996.
The bill amends Code section 466B.42, relating to the water
quality initiative of the soil and water division, to provide
that the goal of the water quality initiative is to implement
the soil and water division’s responsibilities under the Iowa
nutrient reduction strategy, and to provide that progress under
the Iowa nutrient reduction strategy and the United States
environmental protection agency gulf hypoxia action plan shall
be evaluated using a baseline condition calculated for the time
period between 1980 and 1996.
Finally, the bill adds the IFA water quality project
financial assistance program bonds and notes authorized in
the bill under new Code section 16.202 to the list of bonds
and notes the income from which is exempt from the individual
income tax under Code section 422.7 (computation of net
income). This provision of the bill applies retroactively to
January 1, 2017, for tax years beginning on or after that date.
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