Bills › 88th General Assembly
Relating to the transfer of investment tax credits issued to housing businesses under the enterprise zone program, and including effective date and retroactive applicability provisions
Sponsored by the Senate Ways and Means Committee
Topics:Business & economyTaxesTax credits & incentives
Same legislation: SF 103
Where it is now
- Done: IntroducedJanuary 24, 2019
- Done: SubcommitteeJanuary 29, 2019
- Done: Senate committeeMarch 27, 2019
- Done: Passes the SenateApril 15, 201950–0
- Stopped: House committeeDied when the General Assembly ended
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Died when the session ended The 2020 session adjourned on June 14, 2020, the General Assembly’s last regular session. Bills that didn’t pass both chambers died. What’s a funnel?
What’s in it
This bill relates to the transfer of investment tax credits issued to housing businesses under the enterprise zone program. Under current law, the economic development authority can approve a transfer of an investment tax credit awarded to a housing business under the enterprise zone program if an eligible business was awarded the tax credit before May 30, 2014, and notified the authority before July 1, 2014, of its intent to transfer the tax credit. The bill allows the authority to also approve the transfer of tax credits that were awarded to an eligible housing business before July 1, 2015, for a housing development in a blighted area in a county with a population of less than 105,000, if the housing business submitted a request for approval to the authority before June 1, 2019.
Read the full explanation
The bill is effective upon enactment and is retroactive to May 30, 2014.
House subcommittee
Named January 28, 2020. On February 11, 2020 it recommended passage.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
Less revenue: up to $200,000 Compare with other bills
AI summary This bill allows certain housing tax credits from older programs to be transferred to other entities. It is estimated to reduce net General Fund revenue by $200,000 in fiscal year 2021, $200,000 in fiscal year 2022, and $30,000 in fiscal year 2023. The change is not projected to have a fiscal impact beyond fiscal year 2023.2
Read the fiscal note
Requestor: Senator Thomas Greene
Description
Senate File 606 allows additional tax credits for projects approved prior to July 1, 2015, under the former Housing Enterprise Zone (HEZ) Program to qualify as transferable tax credits. The change is retroactive to May 30, 2014. To qualify for the additional transfer criteria created in the Bill, the tax credits must have been awarded:
- Before July 1, 2015.
- For a housing development project located in a blighted area.
- For a project located in a county that has a population of less than 105,000. This requirement excludes projects in Polk, Linn, Scott, Johnson, and Black Hawk counties.
- For a project where the eligible housing business submitted a written request to transfer the credits before July 1, 2019.
Background
Under provisions of previous law governing tax credits issued under the HEZ Program, tax credits could be transferred if specified conditions were met. One specification to allow credits to be transferred required the Iowa Economic Development Authority (Authority) to be notified by June 30, 2014, that the housing project was located within a blighted and/or brownfield area and that the tax credits would be transferred upon project completion. Tax credits that are not transferable have value to the current holder if the current holder has sufficient Iowa income tax liability to benefit from the credits over the course of seven tax years. If the tax credit recipient does not have sufficient Iowa income tax liability, the awarded tax credits have limited or no value to the recipient and have no tax credit redemption cost to the State General Fund.
The provisions of the Bill establish additional criteria under which a holder of these tax credits is allowed to transfer credits that do not meet the current transferability requirements.
Assumptions
- The Department of Revenue and the Authority report that seven projects totaling $430,000 meet the new transfer requirements established in the Bill.
- It is assumed that completed projects will start claiming credits in FY 2021.
- Transferred tax credits under the HEZ Program typically take three years to be fully redeemed. The average tax credit redemption pattern of transferred housing tax credits is:
- First year = 46.5%
- Second year = 46.5%
- Third year = 7.0%
Fiscal Impact
The tax credit change is projected to reduce net General Fund revenue by the following amounts:
- FY 2021 = $200,000
- FY 2022 = $200,000
- FY 2023 = $30,000
The tax credit change is not projected to have a fiscal impact beyond FY 2023.
Sources
- Iowa Department of Revenue
- Iowa Economic Development Authority
- Enterprise Zone, Housing Business, Investment Tax Credit · June 12, 2020 · $200,000
- Enterprise Zone, Housing Business, Investment Tax Credit · April 9, 2019
- Enterprise Zone, Housing Business, Investment Tax Credit · March 19, 2019
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88th General Assembly