HOUSE REPUBLICAN STAFF ANALYSIS Bill: HF 2455 (Formerly HF 2287) Committee: Economic Growth/Ways & Means Floor Manager: Rep. Jorgensen Date: March 31, 2014 Staff: Dane Schumann (1-3626) Kristi Kielhorn (2-5290)
House Eco. Growth: PASSED on Feb. 18 (21-0) House Ways & Means: PASSED on Mar. 10 (25-0) House Floor: Senate Floor: PASSED on March 26 (48-0) Governor:
Brownfield and Grayfield Redevelopment Tax Credits The bill reforms the current Brownfield-Grayfield Redevelopment program by making improvements to an “abandoned public building” eligible for tax credits, making the credits refundable for non-profits and empowering the Iowa Economic Development Authority (IEDA) to use a merit system when dispensing awards to projects. Fiscal Note – The bill has a $500,000 general fund impact in FY 2017. The impact decreases steadily thereafter to $100,000 by 2021.
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Section by Section Analysis Section 1—“Abandoned public building” Section 1 adds “abandoned public building” to the existing definition of “grayfield site”, which makes any such building eligible for the same credits available to existing grayfields. An “abandoned” building includes property primarily used by a political subdivision that is vacant, blighted, obsolete or otherwise underutilized property. The building must furthermore undergo a “vertical improvement” to promote better or more efficient use of the property. The section goes on to define new terms in conformance with the codes new focus on public buildings. Section 2—Conforming Changes The section adds the phrase “abandoned public building” to the existing code that houses the Grayfield program. Section 3—Previous Grayfield Projects Not Eligible Section 3 prohibits previously remediated Grayfield sites from being a “qualified redevelopment project”. Sections 4 through 6—Expanding Refundability of Tax Credits This portion of the bill creates new code and makes the programs’ tax credits refundable under certain conditions. Currently, credits that would exceed a taxpayer’s tax liability can be carried forward only into the 1
next five tax years. The bill would make the tax credits refundable when the entity is organized as an Iowa non-profit and qualifies as a federal 501(c)(3). The entity must establish its eligibility during the application process. Section 7—Discretion for IEDA in Making Credit Awards Section 7 empowers the IEDA board and council to determine the amount of the tax credits for projects, moving away from the current award criteria that are based upon project expenditures. However, the total amount of credits issued would not exceed what is currently allowed under law. Section 8—Conforming Changes The section eliminates an outdated portion of the code and makes conforming changes to the credit award portion of the program to reflect earlier changes in the bill. Section 9 and 11—Empowering the IEDA to Create a Scoring Process for Awards; Administration of Awards Section 9 strikes the current portion of the code that governs IEDA’s dispensation of tax credits, while the new language in Section 10 replaces the current code. Under the bill, the IEDA is obligated to develop a system to judge project credit applications. The IEDA and its council would make a preliminary determination regarding the amount of tax credits that should be awarded to each project. The awards would be made on a “competitive basis”, with the board using a merit system to make awards on a last-dollar-necessary approach that would allow smaller credit to be spread to more projects. After an amendment at the committee level, the bill defines the terms “feasibility”, “financial need” and “quality”, thereby limiting some of the authority’s discretion in scoring applications. A registered project must be completed within 30 months of the registration date unless the IEDA provides an extension. Completed projects must undergo an independent audit, and the IEDA may issue the actual tax credit certificate only after receiving an audit that verifies the entity undertook valid expenditures in redeveloping the site. Section 12—Applicability This section removes the current sunset of the program, and applies the bill to qualifying projects that are awarded credits on or after the bill’s effective date. Prior issued credits would remain governed under the prior program.
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Amendment Analysis Amendment H-8185 by Rep. Upmeyer: The conforming amendment sunsets the bill’s Section 9 and Section 10 changes for June 30, 2021. It also provides that someone appointed by the Professional Developers of Iowa will sit on the Brownfield Redevelopment Advisory Council. The law currently provides that the director of transportation or the director’s designee sits on the council.
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