Relating to the construction of child care facilities by providing developers with sales and use tax refunds and income, franchise, moneys and credits, and gross premiums tax credits, providing for a fee, and including applicability provisions

Second, the child care facility, when completed, meets all applicable safety standards under Code chapter 237A. A developer seeking tax incentives for a child care facility project under the bill is required to apply to the EDA. The application must include a resolution in support of the child care facility project by the community where the project will be located, except in situations where the child care facility will be exclusively used by the employees of a business, and include documentation of local matching funds in an amount equal to at least $50,000, or in the case of a small city in an amount equal to at least $25,000, and other information for the EDA to evaluate the eligibility and financial need of the child care facility project under the program. The bill defines “small city” to mean any city or township located in this state, except those located wholly within one or more of the most populous counties in the state, as determined by the most recent population estimates issued by the United States bureau of the census. The bill requires the EDA to review and score each application on a competitive basis based upon the rules of the EDA. The EDA is required to notify a developer of a successful application and the amount of tax incentives for which the EDA preliminarily determines it qualifies for under the bill. A developer is then required to enter into an agreement with the EDA for the successful completion of its child care facility project within three years from the date it was registered by the EDA. The bill also assesses a compliance cost fee in the amount of $500. If the EDA determines the developer to be in default under the agreement, the bill requires the EDA to revoke the tax incentive award, and to not issue the tax credit certificate or a sales and use tax refund. The bill requires the EDA to adopt rules pursuant to Code chapter 17A to specify what constitutes a default of the agreement. Upon completion of a child care facility project, the bill requires the developer to have its project audited by an independent certified public accountant licensed in this state. The EDA will then review the audit, verify the amount of workforce child care facility tax credits the developer may claim, and issue a tax credit certificate for that amount. The bill limits the amount of tax incentives for child care facility projects at $3 million in the aggregate per fiscal year. The bill specifies that of the maximum tax incentive amounts available each fiscal year, percent shall be awarded to small cities. If the amount of tax credits reserved for small cities has not been distributed by May of any calendar year, the remaining reserved tax credits shall be available to any other eligible applicants. The maximum amount of tax incentives that may be awarded by the EDA to a developer for a child care facility project shall not exceed $200,000. The bill provides two different tax incentives. The first is a refund of the sales and use taxes paid that are directly related to the child care facility project. The second is a workforce child care facility investment tax credit in an amount not to exceed percent of the qualifying new investment of the child care facility project in a small city, and percent of the qualifying new investment of the child care facility project in any other area. “Qualifying new investment” means the costs directly related to the construction, repair, rehabilitation, or redevelopment of the child care facility. The workforce child care facility investment tax credit may be claimed against the individual income tax, the corporate income tax, the franchise tax, the insurance companies tax, and the moneys and credits tax. To claim a tax credit, a taxpayer must include a tax credit certificate with the taxpayer’s tax return. The credit is nonrefundable but may be credited to the tax liability for five years. The tax credit may be transferred to any person or entity, and the bill establishes procedures for the proper transfer of the tax credit. For purposes of the individual and corporate income taxes and the franchise tax, when the tax basis of property is increased as a result of qualifying new investment, that tax basis shall be reduced by the amount of the workforce child care facility investment tax credit issued under the program. The bill applies to tax years beginning on or after January 1, 2022, for qualifying new investments occurring on or after that date.