§ 403.19A — Targeted jobs withholding credit — pilot project

Iowa § 403.19A

• Jurisdiction: Iowa
• Title IX: LOCAL GOVERNMENT
• Ch. 403: URBAN RENEWAL

Text

1. For purposes of this section, unless the context otherwise requires:
a. “Business” means an enterprise that is located in this state and that is operated
for profit and under a single management. “Business” includes professional services
and industrial enterprises, including but not limited to medical treatment facilities,
manufacturing facilities, corporate headquarters, and research facilities. “Business” does not
include a retail operation, a government entity, or a business which closes or substantially
reduces 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 a
withholding agreement.
c. “Employer” means a business creating or retaining targeted jobs in 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
purchase price of land and existing buildings, site preparation, building construction, and
long-termleasecosts. “Qualifyinginvestment”alsomeansacapitalinvestmentindepreciable
assets. For purposes of this paragraph, “long-term lease costs” means those costs incurred
or expected to be incurred under a lease during the duration of a withholding agreement.
f. “Retained job” means a full-time equivalent position in existence at the time an
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employer applies to the authority for approval of a withholding agreement and which
remains continuously filled and which is at risk of elimination if the project for which the
employer is seeking assistance under the withholding agreement does not proceed.
g. “Targeted job” means a job in a business which is or will be located in a pilot project
city that pays a wage at least equal to the countywide average wage. “Targeted job” includes
new or retained jobs from Iowa business expansions or retentions within the city limits of the
pilot project city and those jobs resulting from established out-of-state businesses, as defined
by the economic development authority, moving to or expanding in Iowa.
h. “Withholding agreement” means the agreement between a pilot project city, the
economic development authority, and an employer concerning the targeted jobs withholding
credit authorized in subsection 3.
2. a. An eligible city may apply for designation as a pilot project city pursuant to this
subsection. 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:
(1) A county that borders Nebraska.
(2) A county that borders South Dakota.
(3) A county that borders a state other than Nebraska or South Dakota.
b. (1) The economic development authority shall approve four eligible cities as pilot
project cities, one pursuant to paragraph “a”, subparagraph (1), one pursuant to paragraph
“a”, subparagraph (2), and two pursuant to paragraph “a”, subparagraph (3). If two eligible
cities are approved which are located in the same county and the county has a population
of less than forty-five thousand, the two approved eligible cities shall be considered one
pilot project city. If more than two cities meeting the requirements of paragraph “a”,
subparagraph (3), apply to be designated as a pilot project city, the economic development
authority 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.
(2) If a pilot project city does not enter into a withholding agreement within one year of
its approval as a pilot project city, the city shall lose its status as a pilot project city. If two
pilot project cities are located in the same county, the loss of status by one pilot project city
shall not cause the second pilot project city in the county to lose its status as a pilot project
city. Uponsuchoccurrence, theeconomicdevelopmentauthorityshalltakeapplicationsfrom
other eligible cities to replace that city. Another city shall be designated within six months.
3. a. A pilot project city may provide by resolution for the deposit into a designated
withholding project fund 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 gross wages paid by an employer to each
employee under a withholding agreement shall be credited from the payment made by the
employer pursuant to section 422.16. If the amount of the withholding 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 employer shall remit the amount of the credit quarterly, in the same manner
as withholding payments are reported to the department of revenue, to the pilot project city
to be allocated to and when collected paid into a designated withholding project fund for
the project. All amounts so deposited shall be used or pledged by the pilot project city for a
project related to the employer pursuant to the withholding agreement.
c. (1) The pilot project city and the economic development authority shall enter into
a withholding agreement with each employer concerning the targeted jobs withholding
credit. The withholding agreement shall provide for the total amount of withholding credits
awarded, as negotiated by the economic development authority, the pilot project city, and the
employer. An agreement shall not provide for an amount of withholding credits that exceeds
the amount of the qualifying investment made in the project. An agreement shall not be
entered into with a business currently located in this state unless the business either creates
or retains ten jobs or makes a qualifying investment of at least one million dollars within the
§403.19A, URBAN RENEWAL 24
pilot project city. The withholding agreement may have a term of years negotiated by the
economic development authority, the pilot project city, and the employer, of up to ten years.
A withholding agreement specifying a term of years or a total amount of withholding credits
shall terminate upon the expiration of the term of years specified in the agreement or upon
the award of the total amount of withholding credits specified in the agreement, whichever
occurs first. An employer shall not be obligated to enter into a withholding agreement. An
agreement shall not be entered into with an employer not already located in a pilot project
city when another Iowa community is competing for the same project and both the pilot
project city and the other Iowa community are seeking assistance from the authority.
(2) The pilot project city and the economic development authority shall not enter into a
withholding agreement after June 30, 2027.
(3) The employer, in conjunction with the pilot project city, shall provide on an annual
basis to the economic development authority information documenting the total amount of
payments and receipts under a withholding agreement, including all agreements with an
employer to suspend, abate, exempt, rebate, refund, or reimburse property taxes, to provide
a grant for property taxes paid or a grant not related to property taxes, or to make a direct
payment of taxes, with moneys in the withholding project fund. The economic development
authority shall verify the information provided and determine whether the pilot project city
and the employer are in compliance with this section and the rules adopted by the economic
development authority to implement this section.
(4) The economic development authority board, on behalf of the authority, shall have the
authority to approve or deny a withholding agreement according to the provisions of this
section. Each withholding agreement, and the total amount of withholding credits allowed
under the withholding agreement, shall be approved by the economic development authority
board after taking into account the incentives or assistance received by or to be received
by the employer under other economic development programs. The economic development
authority board shall only deny an agreement if the agreement fails to meet the requirements
of this paragraph “c” or the local match requirements in paragraph “k”, or if an employer
is not in good standing as to prior or existing agreements with the economic development
authority. The authority shall have the authority to negotiate a withholding agreement and
may suggest changes to any of the terms of the agreement.
d. A withholding agreement shall be disclosed to the public and shall contain but is not
limited to all of the following:
(1) A copy of the adopted local development agreement between the pilot project city and
the employer that outlines local incentives or assistance for the project using urban renewal
or urban revitalization incentives, if applicable.
(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
withholding credit is in accordance with the withholding agreement and shall provide other
information the department may require. Notice of any withholding agreement shall be
provided promptly to the department of revenue following execution of the agreement by
the pilot project city and the employer.
(2) Following termination of the withholding agreement, the employer credits shall cease
and any money received by the pilot project city after termination shall be remitted to the
treasurer 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. Pursuant to rules adopted by the economic development authority, the employer shall
provide on an annual basis to the economic development authority information documenting
the employer’s compliance with each requirement of the withholding agreement, including
but not limited to the number of jobs created or retained and the amount of investment made
by the employer. The economic development authority shall, in response to receiving such
information from the employer, assess the level of compliance by each employer and provide
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to the pilot project city recommendations for either maintaining employer compliance
with the withholding agreement or terminating the agreement for noncompliance under
paragraph“g”. Theeconomicdevelopmentauthorityshallalsoprovideeachsuchassessment
and recommendation report to the department of revenue.
g. If the economic development authority, following an eighteen-month performance
period beginning on the date the withholding agreement is approved by the authority board,
determines that the employer ceases to meet the requirements of the withholding agreement
relating to retaining jobs, if applicable, the agreement shall be terminated by the economic
development authority and the pilot project city and any withholding credits for the benefit
of the employer shall cease. If the economic development authority, following a three-year
performance period beginning on the date the withholding agreement is approved by
the authority board, determines that the employer has not or is incapable of meeting the
requirements of the withholding agreement relating to creating jobs, if applicable, or the
requirement of the withholding agreement relating to the qualifying investment prior to the
end of the withholding agreement, the economic development authority may reduce the
future benefits to the employer under the agreement or negotiate with the other parties to
terminate the agreement early. Notice shall be provided promptly by the pilot project city to
the department of revenue following termination of a withholding agreement.
h. 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
information the department may require.
i. An employee whose wages are subject to a withholding agreement shall receive full
credit for the amount withheld as provided in section 422.16.
j. 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, Code
2014, or under 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 from withholding under section 15E.197, Code 2014, or under section 15.331,
Code 2005, shall be collected and disbursed prior to the withholding credit under this section.
k. (1) A pilot project city entering into a withholding agreement shall arrange for
matching local financial support for the project. The local match required under this
paragraph “k” shall be in an amount equal to one dollar for every dollar of withholding
credit received by the pilot project city.
(2) For purposes of this paragraph “k”, “local financial support” means cash or in-kind
contributions to the project from a private donor, a business, or the pilot project city.
(3) If the project, when completed, will increase the amount of an employer’s taxable
capital investment by an amount equal to at least ten percent of the amount of withholding
credit dollars received by the pilot project city, then the pilot project city shall itself contribute
at least ten percent of the local match amount computed under subparagraph (1).
(4) If the project, when completed, will not increase the amount of an employer’s taxable
capital investment by an amount at least equal to ten percent of the amount of withholding
credit dollars received by the pilot project city, then the pilot project city shall not be required
to make a contribution to the local match.
(5) A pilot project city’s contribution, if any, to the local match may include the dollar
value of any tax abatement provided by the city to the business for new construction.
l. 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 economic development authority
a description of the activities involving the use of withholding agreements. The description
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) The number of withholding agreements and the amount of withholding credits
involved.
§403.19A, URBAN RENEWAL 26
(3) The types of businesses that entered into agreements, and the types of businesses that
declined the city’s proposal to enter into an agreement.
m. The economic development authority in consultation with the department of revenue
shall coordinate the pilot project program with the pilot project cities under this section.
The economic development authority is authorized to adopt, amend, and repeal rules to
implement the pilot project program under this section.

Legislative History

[C81, §403.20]