General Assembly: 81 (2006 Regular GA) - Chapter 1141 - Urban renewal — targeted jobs withholding tax credit


Published: 2006-05-30

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348LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSIONCH. 1140

Sec. 9. Section 633.266, Code 2005, is amended to read as follows: 633.266 ADJUSTED GROSS ESTATE. Unless otherwisedefined, “adjustedgross estate” in awillmeans theentire valueof thegross

estate as determined under the federal estate tax less the aggregate amount of the deductions allowed by sections 2053 and 2054 of the Internal Revenue Code as amended to and including January 1, 1982 defined in section 422.3.

Sec. 10. RETROACTIVE APPLICABILITY. This Act applies retroactively to January 1, 2005, for tax years beginning on or after that date.

Sec. 11. EFFECTIVE DATE. This Act, being deemed of immediate importance, takes ef- fect upon enactment.

Approved May 30, 2006

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CH. 1141CH. 1141

CHAPTER 1141

URBAN RENEWAL — TARGETED JOBS WITHHOLDING TAX CREDIT

H.F. 2731

ANACT relating to a targeted jobswithholding tax credit to be used for funding improvements in certain urban renewal areas.

Be It Enacted by the General Assembly of the State of Iowa:

Section 1. NEW SECTION. 403.19A WITHHOLDING AGREEMENT — TAX CREDIT. 1. For purposes of this section, unless the context otherwise requires: a. “Business” means any professional services, or industrial enterprise, including medical

treatment facilities, manufacturing facilities, corporate headquarters, and research facilities. “Business” does not include a retail operation or a business which closes or substantially re- duces its operation in one area of this state and relocates substantially the same operation to another area of this state. b. “Employee”means the individual employed in a targeted job that is subject to awithhold-

ing agreement. c. “Employer” means a business creating targeted jobs in an urban renewal area of a pilot

project city pursuant to a withholding agreement. d. “Pilot project city” means a city that has applied and been approved as a pilot project city

pursuant to subsection 2. e. “Qualifying investment” means a capital investment in real property including the pur-

chase price of land and existing buildings, site preparation, building construction, and long- term lease costs. “Qualifying investment” also means a capital investment in depreciable as- sets. f. “Targeted job” means a job in a business which is or will be located in an urban renewal

area of a pilot project city that pays a wage at least equal to the countywide average wage. “Targeted job” includes new jobs from Iowa business expansions or retentions within the city limits of the pilot project city and those jobs resulting fromestablished out-of-state businesses, as defined by the department of economic development, moving to or expanding in Iowa. g. “Withholding agreement” means the agreement between a pilot project city and an em-

ployer concerning the targeted jobs withholding credit authorized in subsection 3.

349 LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSION CH. 1141

2. An eligible city may apply to the department of economic development to be designated as a pilot project city. An eligible city is a city that contains three or more census tracts and is located in a county meeting one of the following requirements: a. A county that borders Nebraska. b. A county that borders South Dakota. c. A county that borders a state other than Nebraska or South Dakota. The department of economic development shall approve four eligible cities as pilot project

cities, onepursuant toparagraph“a”, onepursuant toparagraph “b”, and twopursuant topara- graph “c”. Ifmore than two citiesmeeting the requirements of paragraph “c” apply to bedesig- nated as a pilot project city, the department of management, in consultation with the depart- ment of economic development, shall determine which two cities hold the most potential to create new jobs or generate the greatest capital within their areas. Applications from eligible cities filed on or after October 1, 2006, shall not be considered. If a pilot project city does not enter into a withholding agreement within one year of its ap-

proval as apilot project city, the city shall lose its status as apilot project city. Upon suchoccur- rence, the department of economic development shall take applications fromother eligible cit- ies to replace that city. Another city shall be designated within six months. 3. a. A pilot project citymay provide by ordinance for the deposit into a designated account

in the special fund described in section 403.19, subsection 2, of the targeted jobs withholding credit described in this section. The targeted jobs withholding credit shall be based upon the wages paid to employees pursuant to a withholding agreement. b. An amount equal to three percent of the grosswages paid by an employer to eachemploy-

ee under a withholding agreement shall be credited from the payment made by the employer pursuant to section 422.16. If the amount of thewithholding by the employer is less than three percent of the gross wages paid to the employees covered by the withholding agreement, the employer shall receive a credit against other withholding taxes due by the employer or may carry the credit forward for up to ten years or until depleted, whichever is the earlier. The em- ployer shall remit the amount of the credit quarterly, in the samemanner as withholding pay- ments are reported to the department of revenue, to the pilot project city to be allocated to and when collected paid into a designated account in the special fund for the urban renewal area in which the targeted jobs are located. All amounts so deposited shall be used or pledged by the pilot project city for an urban renewal project related to the employer pursuant to thewith- holding agreement. c. (1) The pilot project city shall enter into a withholding agreement with each employer

concerning the targeted jobs withholding credit. However, an agreement shall not be entered into by a pilot project city with a business currently located in this state unless the business either creates ten new jobs ormakes a qualifying investment of at least five hundred thousand dollars within the urban renewal area. The withholding agreement may have a term of up to ten years. An employer shall not be obligated to enter into a withholding agreement. (2) The pilot project city shall not enter into a withholding agreement after June 30, 2010. d. Awithholdingagreement shall bedisclosed to thepublic and shall contain but is not limit-

ed to all of the following: (1) A copy of the adopted development agreement plan of the employer. (2) A list of any other amounts of incentives or assistance the employer may be receiving

from other economic development programs, including grants, loans, forgivable loans, and tax credits. (3) The approval of local participating authorities. (4) The amount of local incentives or assistance received for each project of the employer. e. (1) The employer shall certify to the department of revenue that the targeted jobs with-

holding credit is in accordance with the withholding agreement and shall provide other infor- mation the department may require. Notice of any withholding agreement shall be provided promptly to the department of revenue following its execution by the pilot project city and the employer. (2) Following termination of the withholding agreement, the employer credits shall cease

350LAWS OF THE EIGHTY-FIRST G.A., 2006 SESSIONCH. 1141

and anymoney received by the pilot project city after termination shall be remitted to the trea- surer of state to be deposited into the general fund of the state. Notice shall be provided promptly to the department of revenue following termination. f. If the employer ceases tomeet the requirements of thewithholding agreement, the agree-

ment shall be terminated and any withholding tax credits for the benefit of the employer shall cease. However, in regard to the number of new jobs that are to be created if the employer has met the number of new jobs to be created pursuant to the withholding agreement and subse- quently thenumberof new jobs falls below the required level, the employer shall not be consid- ered as not meeting the new job requirement until eighteen months after the date of the de- crease in the number of new jobs employed.1

g. A pilot project city shall certify to the department of revenue the amount of the targeted jobs withholding credit an employer has remitted to the city and shall provide other informa- tion the department may require. h. Anemployeewhosewagesare subject to awithholdingagreement shall receive full credit

for the amount withheld as provided in section 422.16. i. An employer may participate in a new jobs credit from withholding under section 260E.5

or a supplemental new jobs credit from withholding under section 15E.197 or section 15.331, Code 2005, at the same time as the employer is participating in the withholding credit under this section. Notwithstanding any other provision in this section, the new jobs credit from withholding under section 260E.5 and the supplemental new jobs credit fromwithholding un- der section 15E.197 or section 15.331, Code 2005, shall be collected and disbursed prior to the withholding credit under this section. j. A pilot project city that enters into a withholding agreement shall arrange for a match of

at least one dollar for eachwithholding credit dollar received by the city. The local matchmay come from the pilot project city, a private donor, or the business, or a combination of all three. The local match may be in cash or in kind to be used for the business project. k. At the time of submitting its budget to the department of management, the pilot project

city shall submit to the department of management and the department of economic develop- ment a description of the activities involving the use of withholding agreements. The descrip- tion shall include, but is not limited to, the following: (1) The total number of targeted jobs and a breakdown as to those that are Iowa business

expansions or retentions within the city limits of the pilot project city and those that are jobs resulting from established out-of-state businesses moving to or expanding in Iowa. (2) Thenumber ofwithholding agreements and the amount ofwithholding credits involved. (3) The types of businesses that entered into the agreements, and the types of businesses

that declined the city’s proposal to enter into the agreement. l. Thedepartment of economic development in consultationwith thedepartment of revenue

shall coordinate the pilot project program with the pilot project cities under this section. The department of economic development is authorized to adopt, amend, and repeal rules to im- plement the pilot project program under this section. The department of economic develop- ment shall prepare an annual report for the governor, the general assembly, and the legislative services agency on the pilot project program. The pilot project program annual report shall include but not be limited to all of the following: (1) The amount each project received fromeach state economic development and tax credit

program. (2) The number of new jobs resulting from the pilot program. (3) The average wage resulting from the pilot project. (4) An evaluation of the investment made by the state of Iowa, including but not limited to

the terms in subparagraphs (1) through (3).

Approved May 30, 2006

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1 According to enrolled Act