Bill > HF642

Introduced Session

This bill establishes a major economic growth attraction program (program) to be administered by the economic development authority (authority). To be eligible to receive tax incentives (incentives) under the program, a business’s proposed project (project) must be located on a certified site greater than 250 acres that the authority has determined is suitable for the project, and the business’s qualifying investment in the project must exceed $1 billion. Other requirements for a business to be eligible for the program are detailed in the bill. “Qualifying investment” is defined in the bill as a capital investment in real property located on a certified site, including the purchase price of the land, site preparation, infrastructure, and building construction. “Qualifying investment” also means a capital investment in depreciable assets. “Certified site” is defined as a site that has been issued a certificate of readiness by the authority pursuant to Code section 15E.18. “Tax incentives” and “project” are also defined in the bill. In determining if a business is eligible to participate in the program, the authority shall consider a variety of factors, including but not limited to whether the jobs created by the business’s project are high wage, low turnover, provide comprehensive benefits, and expose employees to minimal occupational hazards; the impact of the project on businesses that compete with the business applying to the program; and the project’s economic impact on the state. The bill requires the authority to place greater emphasis on businesses that have a high proportion of in-state suppliers and few in-state competitors; and on projects that diversify the state economy and have the potential to create jobs on an ongoing basis. Applications for the program shall be submitted in the form and manner prescribed by the authority by rule and be accompanied by an application fee in an amount determined by the authority by rule. In determining a business’s eligibility for the program, the authority may engage outside experts to complete a technical, financial, or other review of an application if such review is outside the expertise of the authority. The authority and the authority’s board (board) may negotiate with an eligible business regarding the terms of, and the aggregate value of, the incentives the eligible business may receive under the program. The board may authorize any combination of incentives available under the program for an eligible business. The board may authorize an exemption to restrictions on agricultural land holdings for a foreign business that qualifies for the program pursuant to the requirements detailed in the bill. “Foreign business” is defined in the bill. The bill requires an eligible business that is approved to participate in the program to enter into an agreement with the authority that specifies the criteria for the successful completion of all requirements of the program. The agreement shall contain, at a minimum, the provisions as detailed in the bill. The business shall satisfy all applicable terms of the agreement by the project completion date; however, the board may for good cause extend the project completion date or otherwise amend the terms of the agreement. The board shall not amend the agreement to allow an increase in the maximum aggregate value of the incentives originally authorized by the board. “Project completion date” is defined in the bill. The bill permits the authority to enforce the terms of the agreement as necessary and appropriate. An eligible business that has been issued a certificate under the program shall be entitled to a refund of the sales and use taxes (refund) paid under Code chapter 423 for gas, electricity, water, and sewer utility services, tangible personal property, or on services rendered, furnished, or performed to or for a contractor or subcontractor and used in the fulfillment of the contract relating to the construction or equipping of a facility that is part of the eligible business’s project. Taxes attributable to intangible property and furniture and furnishings shall not be refunded. The procedure for the business to receive the refund is detailed in the bill. The refund shall be remitted by the department to the eligible business equally over five tax years. A contractor or subcontractor that willfully makes a false report of tax paid is guilty of an aggravated misdemeanor, and shall be liable for payment of the tax and any applicable penalty and interest. An aggravated misdemeanor is punishable by confinement for no more than two years and a fine of at least $855 but not more than $8,540. The authority may authorize a tax credit for an eligible business that is up to 5 percent of the business’s qualifying investment in a certified site. The eligible business shall not claim the tax credit until the eligible business’s project has been placed in service, and at least 50 percent of the created jobs the eligible business agreed to in the agreement, and that pay at least 140 percent of the qualifying wage threshold, have been added to the eligible business’s payroll. The department shall remit the tax credit to the eligible business equally over five tax years. The tax credit shall be allowed against taxes imposed under Code chapter 422, subchapter II, III, or V, and against the moneys and credits tax imposed in Code section 533.329. Any tax credit in excess of the eligible business’s tax liability for the tax year may be refunded or, at the eligible business’s election, credited to the eligible business’s tax liability in each of the following five consecutive tax years or until depleted, whichever occurs first. A tax credit shall not be carried back to a tax year prior to the tax year in which the tax credit is first claimed by the eligible business. If within five years of the date the authority issues an eligible business a qualifying investment tax credit the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other structures for which the tax credit was claimed, the tax liability of the eligible business for the year in which all or part of the land, buildings, or other existing structures are sold, disposed of, razed, or otherwise rendered unusable shall be increased by an amount as detailed in the bill. From the remittance due to the department of revenue pursuant to Code section 422.16(2), an eligible business may withhold an amount not to exceed 3 percent of the gross wages paid to each employee in a created job that pays at least the qualifying wage threshold specified in the agreement the business entered into with the authority. “Created job” and “qualifying wage threshold” are defined in the bill. If the amount withheld is less than 3 percent of the gross wages paid to each employee in a created job that pays at least 140 percent of the qualifying wage threshold, the eligible business shall receive a credit against the remaining withholding taxes due from the business, or the business may carry the credit forward up to five consecutive tax years or until depleted, whichever is earlier. In any tax year, the aggregate amount of withholding tax credit under this program, and any other program for which an eligible business is receiving a withholding tax credit, shall not exceed the amount the eligible business is required to deduct and remit to the department of revenue under Code section 422.16(2) for that tax year. If a foreign business’s proposed project is located on a mega site that includes agricultural land, the requirements as detailed in the bill must be satisfied for the foreign business to be eligible for the program. “Mega site” is defined in the bill as a certified site greater than 1,000 acres. A foreign business that is approved by the authority to participate in the program shall enter into an agreement with the authority that includes a provision that requires the foreign business to comply with Code chapter 9I, and specifies that failure to do so may result in revocation of incentives issued by the authority to the foreign business. The authority may grant the foreign business one or more one-year extensions in which the foreign business must come into compliance with Code section 9I.4. The authority shall not grant a business more than five one-year extensions. The community in which the agricultural land is located must approve each extension by ordinance or resolution prior to the authority granting each extension. Except for the high quality jobs program, and the targeted jobs withholding credit, an eligible business may apply for and be eligible to receive other federal, state, and local incentives in addition to the incentives the authority issues to the business under the program. The authority, in its discretion, may prohibit an eligible business that has been issued incentives under the program from receiving any additional tax incentive, tax credit, grant, loan, or other financial assistance under any program administered by the authority. The bill allows a community in which an eligible business’s project is located to grant the eligible business a property tax exemption (exemption) for all of, or a portion of, the actual value added by improvements to real property directly related to the eligible business’s created jobs. The community may allow an exemption for a period not to exceed 20 years beginning the year that the improvements are first assessed for taxation. “Improvements” is defined as new construction, and rehabilitation of and additions to existing structures. An exemption granted by a community shall apply to all taxing districts, except for school districts, in which the real property is located.

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Fiscal note. (on 03/30/2023)

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