General Assembly: 80 (2003 Regular GA) - Chapter 125 - New capital investment program


Published: 2003-05-12

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299 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 125

CH. 125CH. 125

CHAPTER 125

NEW CAPITAL INVESTMENT PROGRAM

H.F. 677

ANACT relating tonewcapital investment for businesses andnew jobsby creating anewcapi- tal investment program, creating tax incentives, and amending the new jobs and income program.

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

Section 1. NEW SECTION. 15.381 SHORT TITLE. This part shall be known as and may be cited as the “New Capital Investment Program”.

Sec. 2. NEW SECTION. 15.382 PURPOSE. It is the purpose of this part to promote new economic development through new capital in-

vestments that upgrade and expand the capabilities of Iowa businesses by allowing the busi- nesses to be more competitive in the world economy.

Sec. 3. NEW SECTION. 15.383 DEFINITIONS. As used in this part, unless the context otherwise requires: 1. “Community” means a city, county, or other entity established pursuant to chapter 28E. 2. “Eligible business” means a business which has been approved to receive incentives by

the department pursuant to section 15.384, subsection 3.

Sec. 4. NEW SECTION. 15.384 ELIGIBLE BUSINESS. 1. To be eligible to receive incentives under this part, a business shall meet all of the follow-

ing requirements: a. The business has not closed or reduced its operation in one area of the state and relocated

substantially the same operation in the community. b. The business is not a retail business or a business where entrance is limited by a cover

charge or membership requirement. c. The business makes a capital investment of at least one million dollars. d. The business creates high-quality jobs due to the capital investment. In determining

whether high-quality jobs are created, the department shall place greater emphasis on jobs that have all the following characteristics: (1) Have a wage equal to at least the average county wage. (2) Are full-time or career-type positions. (3) Provide comprehensive health benefits. (4) Haveother related characteristicswhich could be considered tobehigher in quality than

do other jobs. e. The start-up, location, or expansion of the business occurs within a specified period

which will be negotiated with the department and the community, but which shall be at least a period of three years. f. The business provides the community and the department with an affidavit stating that

the business has not,within the five years prior to the application date, violated state or federal environmental or worker safety statutes, rules, or regulations or, if such violation has oc- curred, that there were mitigating circumstances or such violations did not seriously affect public health or safety or the environment. 2. The community and the department may also consider a variety of factors, including the

following, in determining the eligibility of a business to participate in the program: a. The impact of the proposed project on the community and the state. b. The impact the business will have on other businesses in competition with it.

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c. The potential for future growth in the industry represented by the business. d. The impact the proposed new capital investment will have on the ability of the business

to expand, upgrade, or modernize its capabilities, and the extent to which the new capital in- vestment will result in a more productive and competitive business enterprise and workforce. e. The local funding match to be provided. 3. If the community determines that a business is eligible, the community shall approve by

resolution the application for incentives. Once a business is found to be eligible, the communi- ty shall submit the application to thedepartment. Thedepartmentmay approve, defer, or deny the application.

Sec. 5. NEW SECTION. 15.385 INCENTIVES. For tax years beginning on or after January 1, 2003, an eligible business shall be eligible to

receive some or all of the following incentives: 1. Sales, services, and use tax refund, as provided in section 15.331A. 2. Research activities credit, as provided in section 15.335. 3. a. An eligible businessmay claima tax credit equal to apercentageof thenew investment

directly related to new jobs created by the location or expansion of an eligible business under theprogram. The tax credit shall be allowedagainst taxes imposedunder chapter 422,division II, III, or V. If the business is a partnership, S corporation, limited liability company, cooper- ative organizedunder chapter 501and filingas apartnership for federal taxpurposes, or estate or trust electing to have the income taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust. The percentage shall be equal to the amount provided in paragraph “d”. Any tax credit in excess of the tax liability for the tax year may be credited to the tax liability for the following seven years or until depleted, whichever occurs first. Subject to prior approval by the department of economic development, in consultation with

the department of revenue and finance, an eligible business whose project primarily involves the production of value-added agricultural products or uses biotechnology-related processes may elect to receive a refund of all or a portion of an unused tax credit. For purposes of this subsection, such an eligible business includes a cooperative described in section 521 of the In- ternal Revenue Code which is not required to file an Iowa corporate income tax return, and whoseproject primarily involves theproductionof ethanol. The refundmaybeappliedagainst a tax liability imposed under chapter 422, division II, III, or V. If the business is a partnership, subchapter S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust electing to have the in- come taxed directly to the individual, an individual may claim the tax credit allowed. The amount claimed by the individual shall be based upon the pro rata share of the individual’s earnings of the partnership, subchapter S corporation, limited liability company, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, or estate or trust. b. For purposes of this subsection, “new investment directly related to new jobs created by

the locationor expansionof an eligiblebusinessunder theprogram”means the cost ofmachin- ery and equipment, as defined in section 427A.1, subsection 1, paragraphs “e” and “j”, pur- chased for use in the operation of the eligible business, the purchase price of which has been depreciated in accordance with generally accepted accounting principles, the purchase price of real property and any buildings and structures located on the real property, and the cost of improvements made to real property which is used in the operation of the eligible business. If, however, within five years of purchase, the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other existing structures for which tax creditwas claimedunder this section, the income tax liability of the eligible business for the year in which all or part of the property is sold, disposed of, razed, or otherwise ren- dered unusable shall be increased by one of the following amounts:

301 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 125

(1) One hundred percent of the tax credit claimed under this subsection if the property ceases to be eligible for the tax credit within one full year after being placed in service. (2) Eighty percent of the tax credit claimed under this subsection if the property ceases to

be eligible for the tax credit within two full years after being placed in service. (3) Sixty percent of the tax credit claimed under this subsection if the property ceases to be

eligible for the tax credit within three full years after being placed in service. (4) Forty percent of the tax credit claimed under this subsection if the property ceases to be

eligible for the tax credit within four full years after being placed in service. (5) Twenty percent of the tax credit claimed under this subsection if the property ceases to

be eligible for the tax credit within five full years after being placed in service. c. (1) An eligible business whose project primarily involves the production of value-added

agricultural products orusesbiotechnology-relatedprocesses,whichelects to receive a refund of all or a portion of an unused tax credit, shall apply to the department of economic develop- ment for tax credit certificates. Such an eligible business shall not claim a tax credit refund under this subsection unless a tax credit certificate issued by the department of economic de- velopment is attached to the taxpayer’s tax return for the tax year for which the tax credit re- fund is claimed. For purposes of this subsection, an eligible business includes a cooperative described in section 521 of the Internal Revenue Codewhich is not required to file an Iowa cor- porate income tax return, andwhose project primarily involves the production of ethanol. For purposes of this subsection, an eligible business also includes a cooperative described in sec- tion 521 of the Internal Revenue Code which is required to file an Iowa corporate income tax return andwhose project primarily involves the production of ethanol. Such cooperativemay elect to transfer all or a portion of its tax credit to itsmembers. The amount of tax credit trans- ferred and claimed by amember shall be based upon the pro rata share of the member’s earn- ings of the cooperative. (2) A tax credit certificate shall not bevalid until the tax year following thedateof the capital

investment project completion. A tax credit certificate shall contain the taxpayer’s name, ad- dress, tax identification number, the date of project completion, the amount of the tax credit, and other information required by the department of revenue and finance. The department of economic development shall not issue tax credit certificates under this subsection and sec- tion 15.333, subsection 2, which total more than fourmillion dollars during a fiscal year. If the department receives andapproves applications for tax credit certificatesunder this subsection and section 15.333, subsection 2, in excess of four million dollars, the applicants shall receive certificates for a prorated amount. The tax credit certificates shall not be transferred except as provided in this subsection for a cooperative described in section 521 of the Internal Reve- nue Codewhich is required to file an Iowa corporate income tax return andwhose project pri- marily involves the production of ethanol. For a cooperative described in section 521 of the Internal Revenue Code, the department of economic development shall require that the co- operative submit a list of its members and the share of each member’s interest in the cooper- ative. The department shall issue a tax credit certificate to eachmember contained on the sub- mitted list. d. The amount of a tax credit claimed under this subsection shall be determined as follows: (1) If the department determines, based on the application of the eligible business, that

high-quality jobs arenot createdbut economic activitywithin the state is advanced, the eligible business may claim a tax credit of up to one percent of the new investment. (2) If the department determines, based on the application of the eligible business, that one

to five high-quality jobs are created, the eligible business may claim a tax credit of up to two percent of the new investment. (3) If the department determines, based on the application of the eligible business, that six

to ten high-quality jobs are created, the eligible business may claim a tax credit of up to three percent of the new investment. (4) If thedepartment determines, basedon the application of the eligible business, that elev-

en to fifteen high-quality jobs are created, the eligible business may claim a tax credit of up to four percent of the new investment.

302LAWS OF THE EIGHTIETH G.A., 2003 SESSIONCH. 125

(5) If the department determines, based on the application of the eligible business, that more than fifteen high-quality jobs are created, the eligible business may claim a tax credit of up to five percent of the new investment. 4. a. An eligible businessmay claim an insurance premium tax credit equal to a percentage

of the new investment directly related to new jobs created by the location or expansion of an eligible business under the program. The tax credit shall be allowed against taxes imposed in chapter 432. A tax credit in excess of the tax liability for the tax yearmay be credited to the tax liability for the following seven years or until depleted, whichever occurs first. The per- centage shall be equal to the amount provided in paragraph “c”. b. For purposes of this subsection, “new investment directly related to new jobs created by

the locationor expansionof an eligiblebusinessunder theprogram”means the cost ofmachin- ery and equipment, as defined in section 427A.1, subsection 1, paragraphs “e” and “j”, pur- chased for use in the operation of the eligible business, the purchase price of which has been depreciated in accordance with generally accepted accounting principles, the purchase price of real property and any buildings and structures located on the real property, and the cost of improvements made to real property which is used in the operation of the eligible business. If, however, within five years of purchase, the eligible business sells, disposes of, razes, or otherwise renders unusable all or a part of the land, buildings, or other existing structures for which tax creditwas claimedunder this section, the income tax liability of the eligible business for the year in which all or part of the property is sold, disposed of, razed, or otherwise ren- dered unusable shall be increased by one of the following amounts: (1) One hundred percent of the tax credit claimed under this subsection if the property

ceases to be eligible for the tax credit within one full year after being placed in service. (2) Eighty percent of the tax credit claimed under this subsection if the property ceases to

be eligible for the tax credit within two full years after being placed in service. (3) Sixty percent of the tax credit claimed under this subsection if the property ceases to be

eligible for the tax credit within three full years after being placed in service. (4) Forty percent of the tax credit claimed under this subsection if the property ceases to be

eligible for the tax credit within four full years after being placed in service. (5) Twenty percent of the tax credit claimed under this subsection if the property ceases to

be eligible for the tax credit within five full years after being placed in service. c. The amount of the tax credit claimed under this subsection shall be determined as fol-

lows: (1) If the department determines, based on the application of the eligible business, that

high-quality jobs arenot createdbut economic activitywithin the state is advanced, the eligible business may claim an insurance premium tax credit of up to one percent of the new invest- ment. (2) If the department determines, based on the application of the eligible business, that one

to five high-quality jobs are created, the eligible businessmay claiman insurance premium tax credit of up to two percent of the new investment. (3) If the department determines, based on the application of the eligible business, that six

to ten high-quality jobs are created, the eligible businessmay claim an insurance premium tax credit of up to three percent of the new investment. (4) If thedepartment determines, basedon the application of the eligible business, that elev-

en to fifteen high-quality jobs are created, the eligible business may claim an insurance pre- mium tax credit of up to four percent of the new investment. (5) If the department determines, based on the application of the eligible business, that

more than fifteen high-quality jobs are created, the eligible business may claim an insurance premium tax credit of up to five percent of the new investment.

Sec. 6. NEW SECTION. 15.386 AGREEMENT. A business shall enter into an agreement with the department specifying the requirements

that must be met to confirm eligibility pursuant to section 15.384. The department shall con- sult with the community during negotiations relating to the agreement. The agreement shall contain, at a minimum, the following provisions:

303 LAWS OF THE EIGHTIETH G.A., 2003 SESSION CH. 125

1. A business that is approved to receive incentives shall, for the length of the agreement, certify annually to the community and the department the compliance of the businesswith the requirements of the agreement. 2. The repayment of incentivesby thebusiness if thebusinesshasnotmet anyof the require-

ments of this part or the resulting agreement. 3. If a business that is approved to receive incentives under this part experiences a layoff

within the state or closes any of its facilitieswithin the state, the department shall have the dis- cretion to reduce or eliminate some or all of the incentives. If a business has received incen- tives under this part and experiences a layoffwithin the state or closes any of its facilitieswith- in the state, the business may be subject to repayment of all or a portion of the incentives that it has received.

Sec. 7. NEW SECTION. 15.387 OTHER INCENTIVES. An eligible businessmay receive other applicable federal, state, and local incentives and tax

credits in addition to those provided in this part. However, a business which participates in the program under this part shall not receive any funds, tax credits, or incentives under chap- ter 15, subchapter II, part 13, or chapter 15E, division XVIII.

Sec. 8. Section 15.333, subsection 2, unnumbered paragraph 2, Code 2003, is amended to read as follows: A tax credit certificate shall not be valid until the tax year following the date of the project

completion. A tax credit certificate shall contain the taxpayer’s name, address, tax identifica- tion number, the date of project completion, the amount of the tax credit, and other informa- tion requiredby thedepartment of revenueand finance. Thedepartmentof economicdevelop- ment shall not issue tax credit certificates under this subsection and section 15.385, subsection 3, paragraph “c”, which total more than four million dollars during a fiscal year. If the depart- ment receives and approves applications for tax credit certificates under this subsection and section 15.385, subsection 3, paragraph “c”, in excess of four million dollars, the applicants shall receive certificates for a prorated amount. The tax credit certificates shall not be trans- ferred except as provided in this subsection for a cooperative described in section 521 of the Internal Revenue Code which is required to file an Iowa corporate income tax return and whoseproject primarily involves theproductionof ethanol. For a cooperativedescribed in sec- tion 521 of the Internal Revenue Code, the department of economic development shall require that the cooperative submit a list of its members and the share of each member’s interest in the cooperative. The department shall issue a tax credit certificate to eachmember contained on the submitted list.

Sec. 9. Section 15.337, Code 2003, is amended to read as follows: 15.337 WAIVER OF PROGRAM QUALIFICATION REQUIREMENTS. A community may request the waiver of the capital investment requirement or the require-

ment for number of positions created under section 15.329. However, in no event shall the minimum number of jobs created be less than fifteen or the minimum capital investment be less than threemillion dollars per application under the program. The department shall devel- op an appropriate formula of minimum jobs created and capital investment required per pro- gram application which can be authorized under the waiver. The department may grant a waiver for good cause shown and approve the program application. As used in this section, “good cause shown” includes but is not limited to a demonstrated

lack of growth in the community, a significant percentage of persons in the community who have incomes at or below the poverty level, community a county family poverty rate higher than the state average, a county unemployment rate higher than the state average, a unique opportunity to use existing unutilized or underutilized facilities in the community, a signifi- cant downsizing or closure by one of the community’s major employers, or an immediate threat posed to the community’s workforce due to business downsizing or closure. “Good cause shown” may also include a proposed project by a business in one of the state’s targeted

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industry clusterswhichwill make a higher than average capital investment andwhichwill pay an average starting wage for all the new jobs created as the result of the project that is signifi- cantly higher than the wage requirement in section 15.329. For purposes of this section, “tar- geted industry clusters” includes the industry clusters of life sciences, information solutions, and advanced manufacturing.

Approved May 12, 2003

_________________________

CH. 126CH. 126

CHAPTER 126

TELECOMMUNICATIONS SERVICES AND PUBLIC UTILITY REGULATION

S.F. 368

AN ACT relating to advanced telecommunications services, including rate provisions.

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

Section 1. Section 476.1D, subsection 1, Code 2003, is amended to read as follows: 1. Except asprovided in this section, the jurisdictionof theboard as to the regulation of com-

munications services is not applicable to a service or facility that is provided or is proposed to be provided by a telephone utility that is or becomes subject to effective competition, as deter- mined by the board. In determiningwhether a service or facility is or becomes subject to effec- tive competition, the board shall consider, among other factors, whether a comparable service or facility is available froma supplier other than the telephone utility in the geographicmarket being considered by the board and whether market forces in that market are sufficient to as- sure just and reasonable rates without regulation.

Sec. 2. Section 476.6, subsection 1, Code 2003, is amended to read as follows: 1. FILINGWITHBOARD. Apublic utility subject to rate regulation shall notmake effective

a new or changed rate, charge, schedule or regulation until the rate, charge, schedule, or regu- lation has been approved by the board, except as provided in subsections 11 and 13. A subscriber of a telephone exchange or service, who is declared to be legally blind under

section 422.12, subsection 1, paragraph “e”, is exempt fromany charges for telephone directo- ry assistance that may be approved by the board.

Sec. 3. Section 476.6, subsections 2 through4,Code2003, are amendedby striking the sub- sections.

Sec. 4. Section 476.51, Code 2003, is amended to read as follows: 476.51 CIVIL PENALTY. 1. A public utility which, after written notice by the board of a specific violation, violates the

same provision of this chapter, the same rule adopted by the board, or the same provision of an order lawfully issued by the board, is subject to a civil penalty, which may be levied by the board, of not less than one hundred dollars nor more than two thousand five hundred dollars per violation. 2. A public utility which willfully, after written notice by the board of a specific violation,

violates the same provision of this chapter, the same rule adopted by the board, or the same