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:
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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.
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