Text: SF204            Text: SF206
Complete Bill History


Senate File 205

SENATE FILE BY COMMITTEE ON ECONOMIC GROWTH (SUCCESSOR TO SF 122) A BILL FOR 1 An Act relating to the targeted jobs withholding credit pilot 2 project and including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 1661SV (4) 85 md/sc PAG LIN 1 1 Section 1. Section 403.19A, subsection 1, paragraphs c, e, 1 2 f, and g, Code 2013, are amended to read as follows: 1 3 c. "Employer" means a business creating or retaining 1 4 targeted jobs in an urban renewal area of a pilot project city 1 5 pursuant to a withholding agreement. 1 6 e. "Qualifying investment" means a capital investment 1 7 in real property including the purchase price of land and 1 8 existing buildings, site preparation, building construction, 1 9 and long=term lease costs. "Qualifying investment" also means a 1 10 capital investment in depreciable assets. For purposes of this 1 11 paragraph, "long=term lease costs" means those costs incurred or 1 12 expected to be incurred under a lease during the duration of a 1 13 withholding agreement. 1 14 f. "Targeted job" means a job in a business which is or 1 15 will be located in an urban renewal area of a pilot project 1 16 city that pays a wage at least equal to the countywide average 1 17 wage. "Targeted job" includes new or retained jobs from Iowa 1 18 business expansions or retentions within the city limits of the 1 19 pilot project city and those jobs resulting from established 1 20 out=of=state businesses, as defined by the economic development 1 21 authority, moving to or expanding in Iowa. 1 22 g. "Withholding agreement" means the agreement between a 1 23 pilot project city, the economic development authority, and 1 24 an employer concerning the targeted jobs withholding credit 1 25 authorized in subsection 3. 1 26 Sec. 2. Section 403.19A, subsection 1, Code 2013, is amended 1 27 by adding the following new paragraph: 1 28 NEW PARAGRAPH. 0f. "Retained job" means a full=time 1 29 equivalent position in existence at the time an employer enters 1 30 into a withholding agreement that remains continuously filled 1 31 or authorized to be filled as soon as possible and that is at 1 32 risk of elimination or relocation to an out=of=state location 1 33 if the project for which the employer receives assistance under 1 34 the withholding agreement does not proceed. 1 35 Sec. 3. Section 403.19A, subsection 3, paragraphs a, b, c, 2 1 and f, Code 2013, are amended to read as follows: 2 2 a. A pilot project city may provide by ordinance resolution 2 3 for the deposit into a designated account in the special 2 4 withholding project fund described in section 403.19, 2 5 subsection 2, of the targeted jobs withholding credit described 2 6 in this section. The targeted jobs withholding credit shall 2 7 be based upon the wages paid to employees pursuant to a 2 8 withholding agreement. 2 9 b. An amount equal to three percent of the gross wages paid 2 10 by an employer to each employee under a withholding agreement 2 11 shall be credited from the payment made by the employer 2 12 pursuant to section 422.16. If the amount of the withholding 2 13 by the employer is less than three percent of the gross wages 2 14 paid to the employees covered by the withholding agreement, 2 15 the employer shall receive a credit against other withholding 2 16 taxes due by the employer or may carry the credit forward for 2 17 up to ten years or until depleted, whichever is the earlier. 2 18 The employer shall remit the amount of the credit quarterly, 2 19 in the same manner as withholding payments are reported to 2 20 the department of revenue, to the pilot project city to be 2 21 allocated to and when collected paid into a designated account 2 22 in the special withholding project fund for the urban renewal 2 23 area in which the targeted jobs are located project. All 2 24 amounts so deposited shall be used or pledged by the pilot 2 25 project city for an urban renewal a project related to the 2 26 employer pursuant to the withholding agreement. 2 27 c. (1) The pilot project city and the economic development 2 28 authority shall enter into a withholding agreement with each 2 29 employer concerning the targeted jobs withholding credit. The 2 30 withholding agreement shall provide for the total amount of 2 31 withholding credits awarded, as negotiated by the economic 2 32 development authority, the pilot project city, and the 2 33 employer. An agreement shall not provide for an amount of 2 34 withholding credits that exceeds the amount of the qualifying 2 35 investment made in the project. An agreement shall not be 3 1 entered into by a pilot project city with a business currently 3 2 located in this state unless the business either creates or 3 3 retains ten new jobs or makes a qualifying investment of at 3 4 least five hundred thousand dollars within the urban renewal 3 5 area pilot project city. The withholding agreement may 3 6 have a term of years negotiated by the economic development 3 7 authority, the pilot project city, and the employer, of up 3 8 to ten years. A withholding agreement specifying a terms of 3 9 years or a total amount of withholding credits shall terminate 3 10 upon the expiration of the term of years specified in the 3 11 agreement or upon the award of the total amount of withholding 3 12 credits specified in the agreement, whichever occurs first. An 3 13 employer shall not be obligated to enter into a withholding 3 14 agreement. An agreement shall not be entered into with an 3 15 employer not already located in a pilot project city when 3 16 another Iowa community is competing for the same project and 3 17 both the pilot project city and the other Iowa community are 3 18 seeking assistance from the authority. 3 19 (2) The pilot project city and the economic development 3 20 authority shall not enter into a withholding agreement after 3 21 June 30, 2013 2018. 3 22 (3) The employer, in conjunction with the pilot project 3 23 city, shall provide on an annual basis to the economic 3 24 development authority information documenting the total 3 25 amount of payments and receipts under a withholding agreement, 3 26 including all agreements with an employer to suspend, abate, 3 27 exempt, rebate, refund, or reimburse property taxes, to provide 3 28 a grant for property taxes paid or a grant not related to 3 29 property taxes, or to make a direct payment of taxes, with 3 30 moneys in the special withholding project fund. The economic 3 31 development authority shall verify the information provided by 3 32 the pilot project city and determine whether the pilot project 3 33 city and the employer are in compliance with this section and 3 34 the rules adopted by the economic development authority to 3 35 implement this section. 4 1 (4) The economic development authority board, on behalf of 4 2 the authority, shall have the authority to approve or deny a 4 3 withholding agreement and according to the provisions of this 4 4 section. Each withholding agreement, and the total amount of 4 5 withholding credits allowed under the withholding agreement, 4 6 shall be approved by the economic development authority board 4 7 after taking into account the incentives or assistance received 4 8 by or to be received by the employer under other economic 4 9 development programs. The economic development authority 4 10 board shall only deny an agreement if the agreement fails to 4 11 meet the requirements of this paragraph "c" or the local match 4 12 requirements in paragraph "j", or if an employer is not in good 4 13 standing as to prior or existing agreements with the economic 4 14 development authority. The authority shall have the authority 4 15 to negotiate a withholding agreement and may suggest changes to 4 16 an any of the terms of the agreement. 4 17 f. If the economic development authority, following an 4 18 eighteen=month performance period beginning on the date the 4 19 withholding agreement is approved by the authority board, 4 20 determines that the employer ceases to meet the requirements 4 21 of the withholding agreement relating to retaining jobs, if 4 22 applicable, the agreement shall be terminated by the economic 4 23 development authority and the pilot project city and any 4 24 withholding credits for the benefit of the employer shall 4 25 cease. However, in regard to the number of jobs that are to 4 26 be created or retained, if the employer has met the number of 4 27 jobs to be created or retained pursuant to the withholding 4 28 agreement and subsequently the number of jobs falls below the 4 29 required level, the employer shall not be considered as not 4 30 meeting the job requirement until eighteen months after the 4 31 date of the decrease in the number of jobs created or retained. 4 32 If the economic development authority, following a three=year 4 33 performance period beginning on the date the withholding 4 34 agreement is approved by the authority board, determines 4 35 that the employer has not or is incapable of meeting the 5 1 requirements of the withholding agreement relating to creating 5 2 jobs, if applicable, or the requirement of the withholding 5 3 agreement relating to the qualifying investment prior to the 5 4 end of the withholding agreement, the economic development 5 5 authority may reduce the future benefits to the employer under 5 6 the agreement or negotiate with the other parties to terminate 5 7 the agreement early. Notice shall be provided promptly by 5 8 the pilot project city to the department of revenue following 5 9 termination of a withholding agreement. 5 10 Sec. 4. Section 403.19A, subsection 3, paragraph d, 5 11 subparagraph (1), Code 2013, is amended to read as follows: 5 12 (1) A copy of the adopted local development agreement 5 13 plan of between the pilot project city and the employer 5 14 that outlines local incentives or assistance for the project 5 15 using urban renewal or urban revitalization incentives, if 5 16 applicable. 5 17 Sec. 5. Section 403.19A, subsection 3, Code 2013, is amended 5 18 by adding the following new paragraph: 5 19 NEW PARAGRAPH. 0f. Pursuant to rules adopted by the 5 20 economic development authority, the pilot project city 5 21 shall provide on an annual basis to the economic development 5 22 authority information documenting the compliance of each 5 23 employer with each requirement of the withholding agreement, 5 24 including but not limited to the number of jobs created or 5 25 retained and the amount of investment made by the employer. 5 26 The economic development authority shall, in response to 5 27 receiving such information from the pilot project city, assess 5 28 the level of compliance by each employer and provide to the 5 29 pilot project city recommendations for either maintaining 5 30 employer compliance with the withholding agreement or 5 31 terminating the agreement for noncompliance under paragraph 5 32 "f". The economic development authority shall also provide each 5 33 such assessment and recommendation report to the department of 5 34 revenue. 5 35 Sec. 6. APPLICABILITY. 6 1 1. Except as provided in subsection 2, this Act applies to 6 2 withholding agreements entered into on or after the effective 6 3 date of this Act and withholding agreements entered into by 6 4 a pilot project city prior to the effective date of this Act 6 5 shall be governed by section 403.19A, Code 2013. 6 6 2. The section of this Act enacting section 403.19A, 6 7 subsection 3, paragraph "0f", applies to withholding agreements 6 8 entered into prior to the effective date of this Act or entered 6 9 into on or after the effective date of this Act. 6 10 EXPLANATION 6 11 This bill modifies the targeted jobs withholding tax credit 6 12 program, which is a pilot program enacted in 2006 to allow 6 13 the diversion of withholding funds paid by an employer to be 6 14 matched by a designated pilot project city to create economic 6 15 incentives that can be directed toward businesses located 6 16 within urban renewal areas in the city pursuant to the terms of 6 17 a withholding agreement with a business and after approval of 6 18 the agreement by the Iowa economic development authority. 6 19 The bill removes the requirement that an employer that is a 6 20 party to a withholding agreement with a pilot project city be 6 21 located in an urban renewal area. The bill removes a similar 6 22 requirement relating to the definition of targeted job. The 6 23 bill makes corresponding changes to Code section 403.19A to 6 24 reflect the removal of the urban renewal area requirement, 6 25 including providing that the targeted jobs withholding credits 6 26 be deposited in a withholding project fund rather than the 6 27 special fund established for urban renewal purposes. 6 28 The bill allows a pilot project city to provide for the 6 29 deposit of the amount of the targeted jobs withholding credit 6 30 into the city's withholding project fund by resolution, rather 6 31 than by ordinance. 6 32 The bill provides a definition of long=term lease costs as 6 33 part of the definition of qualifying investment under the pilot 6 34 program and provides a definition of retained job. 6 35 Under current law, a pilot project city may not enter into a 7 1 withholding agreement after June 30, 2013. The bill adds the 7 2 economic development authority to the list of required parties 7 3 to a withholding agreement and prohibits a pilot project city 7 4 and the economic development authority from entering into a 7 5 withholding agreement after June 30, 2018. The bill specifies 7 6 subject areas of a withholding agreement that may be negotiated 7 7 by the parties and provides that a withholding agreement that 7 8 specifies a term of years or a total amount of withholding 7 9 credits shall terminate upon expiration of the term of years 7 10 or upon the award of the total amount of withholding credits, 7 11 whichever occurs first. 7 12 The bill requires the reporting of certain withholding 7 13 agreement payment and receipt information by the employer, 7 14 in conjunction with the pilot project city, and requires the 7 15 economic development authority to verify such information and 7 16 determine whether the pilot project city and the employer are 7 17 in compliance with Code section 403.19A and rules adopted to 7 18 implement that Code section. 7 19 The bill provides that the economic development authority 7 20 board approves or denies a withholding agreement on behalf of 7 21 the authority and specifies considerations to be made by the 7 22 board in deciding whether to approve or deny a withholding 7 23 agreement. 7 24 The bill establishes an 18=month performance period 7 25 following which the economic development authority determines 7 26 compliance with the job retention requirements of the 7 27 withholding agreement, if applicable, establishes a three=year 7 28 performance period following which the authority determines 7 29 compliance with the job creation and investment requirements 7 30 of the withholding agreement, and specifies the actions to 7 31 be taken by the authority and the pilot project city after a 7 32 determination of noncompliance. 7 33 Except as otherwise provided in the bill, the bill applies 7 34 to withholding agreements entered into by a pilot project city 7 35 on or after the effective date of the bill. The bill provides 8 1 that withholding agreements entered into by a pilot project 8 2 city prior to the effective date of the bill shall be governed 8 3 by Code section 403.19A, Code 2013. However, the section of 8 4 the bill enacting Code section 403.19A(3)(0f), relating to 8 5 compliance reporting, applies to withholding agreements entered 8 6 into prior to, on, or after the effective date of the bill. LSB 1661SV (4) 85 md/sc
Text: SF204            Text: SF206 Complete Bill History