Bill Text: IA HSB540 | 2013-2014 | 85th General Assembly | Introduced

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Bill Title: A study bill relating to the administration of the redevelopment tax credits program by the economic development authority and including applicability provisions.

Spectrum: Unknown

Status: (N/A - Dead) 2014-01-23 - In Economic Growth [HSB540 Detail]

Download: Iowa-2013-HSB540-Introduced.html

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House Study Bill 540 - Introduced
SENATE/HOUSE FILE _____
BY (PROPOSED ECONOMIC
DEVELOPMENT AUTHORITY BILL)
A BILL FOR
An Act relating to the administration of the redevelopment tax
credits program by the economic development authority and
including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 15.291, Code 2014, is amended by adding
the following new subsections:
NEW SUBSECTION . 01. “Abandoned public building” means a
vertical improvement, as defined in section 15J.1, constructed
for use primarily by a political subdivision of the state for a
public purpose and whose current use is outdated or prevents
a better or more efficient use of the property by the current
owner. “Abandoned public building” includes vacant, blighted,
obsolete, or otherwise underutilized property.
NEW SUBSECTION . 4A. “Political subdivision” means a city,
county, township, or school district.
NEW SUBSECTION . 4B. “Previously remediated or redeveloped”
means any prior remediation or redevelopment, including
development for which an award of tax credits under this part
has been made.
NEW SUBSECTION . 6A. “Redevelopment tax credits program”
means the tax credits program administered pursuant to sections
15.293A and 15.293B.
Sec. 2. Section 15.291, subsection 3, unnumbered paragraph
1, Code 2014, is amended to read as follows:
“Grayfield site” means an abandoned public building or an
industrial or commercial property meeting that meets all of the
following requirements:
Sec. 3. Section 15.291, subsection 6, Code 2014, is amended
to read as follows:
6. “Qualifying redevelopment project” means a brownfield or
a grayfield site being redeveloped or improved by the property
owner. “Qualifying redevelopment project” does not include a
previously remediated or redeveloped brownfield or grayfield
site.
Sec. 4. Section 15.293A, subsection 1, paragraph c, Code
2014, is amended to read as follows:
c. (1) Any Except as provided in subparagraph (2), any
tax credit in excess of the taxpayer’s liability for the tax
year is not refundable but may be credited to the tax liability
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for the following five years or until depleted, whichever is
earlier.
(2) A tax credit in excess of the taxpayer’s liability for
the tax year is refundable if all of the following conditions
are met:
(a) The taxpayer is an investor making application for tax
credits provided in this section and is an entity organized
under chapter 504 and qualifying under section 501(c)(3) of the
Internal Revenue Code as an organization exempt from federal
income tax under section 501(a) of the Internal Revenue Code.
(b) The taxpayer establishes during the application
process described in section 15.293B that the requirement in
subparagraph division (a) is satisfied. The authority, when
issuing a certificate to a taxpayer that meets the requirements
in this subparagraph (2), shall indicate on the certificate
that such requirements have been satisfied.
(3) A tax credit shall not be carried back to a tax year
prior to the tax year in which the taxpayer first receives the
tax credit.
Sec. 5. Section 15.293A, subsection 2, paragraph a, Code
2014, is amended by striking the paragraph.
Sec. 6. Section 15.293A, subsection 2, paragraph b,
subparagraph (1), Code 2014, is amended to read as follows:
(1) To claim a redevelopment tax credit under this
section , a taxpayer must attach include one or more tax credit
certificates to with the taxpayer’s tax return. A tax credit
certificate shall not be used or attached to included with a
return filed for a taxable year beginning prior to July 1, 2009
the tax year listed on the certificate .
Sec. 7. Section 15.293A, subsection 3, unnumbered paragraph
1, Code 2014, is amended to read as follows:
The amount of the tax credit shall equal one of be determined
by the board in conjunction with the council. However, the tax
credit shall not exceed the following amount, as applicable :
Sec. 8. Section 15.293A, subsection 6, Code 2014, is amended
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to read as follows:
6. For the fiscal year beginning July 1, 2009, the maximum
amount of tax credits issued by the authority shall not exceed
one million dollars. For each subsequent fiscal year, the
The amount of tax credits that may be issued awarded by the
authority board shall be subject to the limitation in section
15.119 .
Sec. 9. Section 15.293A, subsections 8, 9, 10, 11, 12, and
13, Code 2014, are amended by striking the subsections.
Sec. 10. Section 15.293B, Code 2014, is amended to read as
follows:
15.293B Approval —— requirements —— repayment Application ——
registration —— agreement .
1. a. The authority shall develop a system for the
application, review, registration, and authorization of
projects awarded tax credits pursuant to this part and
shall control the issuance of all tax credit certificates to
investors pursuant to this part.
b. The authority shall accept and , in conjunction with
the council, review applications for tax credits pursuant to
provided in section 15.293A and, with the approval of the
council, make tax credit award recommendations regarding the
applications to the board.
c. Applications for redevelopment tax credits shall be
accepted during an annual application period established by the
authority.
d. Upon review of an application, the authority may
register the project with the redevelopment tax credits
program. If the authority registers the project, the authority
may, in conjunction with the council, make a preliminary
determination as to the amount of tax credit for which an award
recommendation will be made to the board.
e. After registering the project, the authority shall notify
the investor of successful registration under the redevelopment
tax credits program. The notification may include the amount
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of tax credit for which an award recommendation will be made
to the board. If an award recommendation is included in the
notification, such notification shall include a statement that
the award recommendation is a recommendation only. The amount
of tax credit included on a tax credit certificate issued
pursuant to this section shall be contingent upon an award
by the board and upon completion of the requirements in this
section.
f. All completed applications shall be reviewed and scored
on a competitive basis by the council and the board. In
reviewing and scoring applications, the council and the board
may consider any factors the council and board deem appropriate
for a competitive application process, including but not
limited to the financial need, quality, and feasibility of a
qualifying redevelopment project.
g. Upon reviewing and scoring all applications that are
part of an annual application period, the board may award tax
credits provided in section 15.293A.
h. If the applicant for a tax credit provided in section
15.293A has also applied to an agency of the federal government
or to the authority, the board, or any other agency of state
government for additional financial assistance, the authority,
the council, and the board shall consider the amount of funding
to be received from such public sources when making a tax
credit award pursuant to this section.
i. An applicant that is unsuccessful in receiving a tax
credit award during an annual application period may make
additional applications during subsequent annual application
periods. Such applicants shall be required to submit a new
application and shall be competitively reviewed and scored in
the same manner as other applicants in that annual application
period.
2. An investor applying for a tax credit shall provide the
authority with all of the following:
a. Information showing the total costs of the qualifying
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redevelopment project, including the costs of land acquisition,
cleanup, and redevelopment.
b. Information about the financing sources of the investment
which are directly related to the qualifying redevelopment
project for which the taxpayer investor is seeking approval for
a tax credit , as provided in section 15.293A .
c. Any other information deemed necessary by the board and
the council to review and score the application pursuant to
subsection 1.
3. If a taxpayer receives an investor is awarded a tax
credit pursuant to section 15.293A , but this section, the
authority and the investor shall enter into an agreement
concerning the qualifying redevelopment project. If the
investor fails to comply with any of the requirements of the
agreement , the taxpayer loses any right to the tax credit,
and the authority may find the investor in default under the
agreement and may revoke all or a portion of the tax credit
award. The department of revenue , upon notification by the
authority of an event of default, shall seek recovery repayment
of the value of the any such tax credit received already
claimed in the same manner as provided in section 15.330,
subsection 2 .
4. This section is repealed on June 30, 2021. A registered
project shall be completed within thirty months of the date the
project was registered unless the authority provides additional
time to complete the project. A project shall not be provided
more than twelve months of additional time. If the registered
project is not completed within the time required, the project
is not eligible to claim a tax credit provided in section
15.293A.
5. a. Upon completion of a registered project, an audit
of the project, completed by an independent certified public
accountant licensed in this state, shall be submitted to the
authority.
b. Upon review of the audit and verification of the amount
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of the qualifying investment, the authority may issue a tax
credit certificate to the investor stating the amount of tax
credit under section 15.293A the investor may claim.
6. The authority, in conjunction with the department of
revenue, shall adopt rules to administer the redevelopment tax
credits program.
Sec. 11. Section 15.294, subsection 4, Code 2014, is amended
to read as follows:
4. The council, in conjunction with the authority, shall
consider applications for redevelopment tax credits as
described provided in sections section 15.293A and 15.293B ,
and may recommend to the authority which applications to
approve and the amount of such tax credits that each project is
eligible to receive should be awarded by the board .
Sec. 12. APPLICABILITY. This Act applies to qualifying
redevelopment projects for which a redevelopment tax credit
is awarded on or after the effective date of this Act, and
qualifying redevelopment projects for which a redevelopment
tax credit was awarded prior to the effective date of this Act
shall be governed by sections 15.291, 15.293A, and 15.293B,
Code 2014.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill makes several changes to the redevelopment tax
credits program administered by the economic development
authority (EDA).
The bill defines the “redevelopment tax credits program”
to be the tax credits program administered pursuant to Code
sections 15.293A and 15.293B.
The bill affects the qualification of redevelopment projects
under the redevelopment tax credits program (program) by
amending the definition of “grayfield site” to include an
abandoned public building, and by specifying that a previously
remediated or redeveloped brownfield site, which does not
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qualify for the program, means any prior remediation or
redevelopment, including redevelopment for which an award of
tax credits has been made under the program. “Abandoned public
building” and related terms are defined in the bill.
The bill amends the tax credit application and award
process. The bill provides that tax credit applications shall
be accepted by the EDA during an annual application period
established by the EDA. After an application is received, the
EDA may register the project under the program and may make a
preliminary determination as to the amount of tax credit for
which an award recommendation will be made to the economic
development authority board (board). The EDA then notifies
the investor of successful registration and, if applicable,
the amount of tax credit for which an award recommendation
will be made to the board. All applications that are part of
that annual application period are required to be reviewed and
scored on a competitive basis by the brownfield redevelopment
advisory council (council) and the board. In reviewing and
scoring applications, the council and the board are allowed to
consider any factors they deem appropriate for a competitive
application process, including but not limited to the financial
need, quality, and feasibility of a project.
The bill provides that if an applicant is unsuccessful in
receiving a tax credit award from the board during one annual
application period, the applicant may apply in a subsequent
annual application period provided the applicant submits a new
application and is competitively reviewed and scored in the
same manner as other applicants in that annual application
period.
The bill requires a tax credit application to include any
information deemed necessary by the board and the council to
appropriately review and score the application, in addition to
the information already required under Iowa law relating to the
project’s total costs and financing sources. The bill strikes
language requiring the EDA to maintain a wait list for tax
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credits.
The bill strikes the provision requiring that if a
redevelopment tax credit recipient has also applied to the
state for additional financial assistance, the state shall not
consider the receipt of the tax credit when considering the
application for additional financial assistance and instead
provides that if a redevelopment tax credit applicant also
applies to a federal or state agency for additional financial
assistance, the EDA and the board shall consider the amount
of funding from these public sources when making a tax credit
award.
The bill amends the amount of the tax credit. Under
current law, the amount of the tax credit is equal to a certain
percentage of the investor’s qualifying investment depending
on whether the project is located on a grayfield site or a
brownfield site and whether or not the project meets green
development requirements. The bill provides that the amount
of the tax credit shall be an amount determined by the board
in conjunction with the council, but shall not exceed those
percentages already provided under current law. The bill
provides that the amount of tax credit included on a tax credit
certificate shall be contingent on an award by the board, and
on the completion of an audit of the project which audit is
already required under Iowa law.
The bill requires agreements under the program. An investor
awarded tax credits is required to enter into an agreement
with the EDA concerning the qualifying redevelopment project.
The bill amends language relating to a taxpayer’s loss of
any right to a tax credit for failure to comply with any
requirements, to specify that if an investor fails to comply
with any requirements of the agreement, the authority may find
the investor in default and revoke all or a portion of the
tax credit award. If recovery of a claimed tax credit by the
department of revenue (DOR), as required under current law,
is necessary for failure to maintain the requirements of an
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agreement, the bill provides that such recovery shall be in
the same manner as provided in Code section 15.330, subsection
2, which relates to the recovery of incentives under the high
quality jobs program.
The bill amends the process of claiming the tax credits
by allowing the currently nonrefundable tax credits to be
refundable, but only to nonprofit organizations under certain
conditions. In order for tax credits to qualify as refundable,
a nonprofit organization must be an investor applying for
the tax credits, must be organized under Code chapter 504,
must qualify as a tax-exempt organization under section
501(c)(3) of the Internal Revenue Code, and must establish
these requirements during the tax credit application process.
The EDA will be required to indicate on the tax credit
certificate issued to these nonprofit organizations that such
requirements have been met. The bill requires that a taxpayer
include, rather than attach, a tax credit certificate with the
taxpayer’s tax return. The bill amends the requirement that
tax credits shall not be claimed for taxable years beginning
prior to July 1, 2009, to require that tax credits shall not
be claimed prior to the tax year listed on the tax credit
certificate.
The bill strikes Code section 15.293A, subsections 10 and
11, relating to the adoption of administrative rules by the
EDA and the DOR, and the EDA’s cooperation with the department
of natural resources and local governments regarding the
dissemination of information about the program. The bill
requires the authority, in conjunction with the department
of revenue, to adopt rules to administer the program. The
bill transfers to Code section 15.293B the language from
Code section 15.293A, subsection 8, relating to the deadline
for completing registered projects, and amends part of that
language referencing the project’s approval date to instead
reference the date upon which the project was registered.
The bill amends the duties and powers of the council to
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provide that it may recommend to the EDA the amount of tax
credits that a redevelopment project should be awarded, instead
of the amount of tax credits that a redevelopment project is
eligible to receive.
Finally, the bill removes the automatic repeal date of the
program, which under current law is set to expire on June 30,
2021.
The bill applies to qualifying redevelopment projects for
which a redevelopment tax credit is awarded on or after the
effective date of the bill. The bill provides that qualifying
redevelopment projects for which a redevelopment tax credit
was awarded prior to the effective date of the bill shall be
governed by current law.
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