Bill Summary – FastDemocracy

Fiscal Note
                                       Fiscal Services Division
SF 2325 – Economic Development Authority, Technical (LSB5319SV.1)
Staff Contact: Eric Richardson (515.281.6767) eric.richardson@legis.iowa.gov
Fiscal Note Version – Final Action
Description
Senate File 2325 relates to matters under the purview of the Iowa Economic Development
Authority (IEDA). The Bill:
• Extends the authorization of the Iowa Energy Center (IEC) and the IEC Board through the
   end of FY 2027 and requires the IEC to support research and development of strategies for
   carbon management.
• Alters the criteria of the High Quality Jobs Program (HQJP) for brownfield and grayfield
   projects and in counties that qualify as an economically distressed area.
• Updates the definitions of “small city” and “urban area” and creates new caps for the
   average dwelling unit cost on housing projects.
• Allows a second extension for a project’s completion deadline under the Workforce Housing
   Tax Credit program if an extension is warranted due to extenuating circumstances outside
   the control of the housing business.
• Is effective upon enactment.
• Is retroactively effective to July 1, 2021, for all eligible housing businesses if the IEDA has
   not notified the business of the amount that the business may claim as a refund of the sales
   and use tax, and the IEDA has not issued a tax credit certificate stating the amount of tax
   credits the eligible business may claim.
Background
Iowa Code section 15.120 establishes the IEC and establishes a governing board appointed by
the Governor to oversee, approve, and provide direction concerning the programs established
by the IEC, including the Iowa Energy Center Grant Program and the Energy Infrastructure
Revolving Loan Program. Current law repeals the IEC on July 1, 2022.
Iowa Code section 476.10A funds the IEC through an Iowa Utilities Board remittance to the
Treasurer of State of 0.1% of the total gross operating revenues of all gas and electric utilities’
public utility operations in the State during the previous calendar year. Since FY 2019, 85.0% of
this total has been appropriated to the IEC, while the remaining 15.0% has been appropriated to
the Center for Global and Regional Environmental Research established by the Board of
Regents (BOR). Current law repeals these funding sources on July 1, 2022. Since FY 2019,
the following appropriations to the IEC have been made:
• FY 2019: $4.5 million
• FY 2020: $3.5 million
• FY 2021: $6.4 million
Iowa Code section 15.119 specifies tax credit caps for overall IEDA activities. As of FY 2022,
the aggregate tax credit cap for specified IEDA programs is $170.0 million. The tax credit cap
for the HQJP is $70.0 million beginning in FY 2022. The HQJP was created in 1994 Iowa Acts,
chapter 1008, and provides qualifying businesses cash and/or tax credit assistance to offset
some of the costs incurred to locate, expand, or modernize a facility located in the State. Wage
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thresholds apply at 120.0% of the qualifying threshold for retained jobs upon project completion
and through a maintenance period. The qualifying wage threshold is determined by the county
where the job is created and/or maintained. Currently, the IEDA may provide awards for jobs
that pay less than 120.0% of the qualifying wage threshold if the job is located in a brownfield or
grayfield area, as defined in Iowa Code section 15.291, or in an economically distressed area,
which is determined solely through unemployment rates in the county per Iowa Code section
15.335C.
Iowa Code section 15.354 authorizes the Workforce Housing Tax Credit program, which
provides tax benefits to developers to provide housing in Iowa communities, focusing especially
on abandoned, dilapidated, or empty properties. Iowa Code section 15.119 specifies a total
Workforce Housing Tax Credit allocation of not more than $40.0 million in FY 2022 and an
allocation of not more than $35.0 million beginning in FY 2023.
Assumption
Administrative expenditures of the IEC total $250,000 annually, per IEDA data.
Fiscal Impact
• The Bill continues annual administrative expenditures by the IEC totaling $250,000
   beginning in FY 2023 and continuing through FY 2027. The expenditures would cease if the
   IEC authorization were not extended beyond FY 2022, per current law. The revenue for
   these expenditures comes from remittances to the Treasurer of State of operating revenues
   of gas and electric utilities’ public utility operations in the State and would be expected to
   come from other internal IEDA sources of revenue or appropriations if the remittances cease
   after FY 2022, as currently scheduled.
• The Bill’s change to the definition of “economically distressed area,” the Workforce Housing
   Tax Credit Program extension, and the definition changes and cap changes to the HQJP are
   expected to have no or minimal fiscal impact.
Sources
Iowa Economic Development Authority
Iowa Department of Revenue
Iowa Legislative Services Agency
                                                                        /s/ Holly M. Lyons
                                                                          June 22, 2022
Doc ID 1289048
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in
developing this fiscal note is available from the Fiscal Services Division of the Legislative Services
Agency upon request.
                                            www.legis.iowa.gov
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Statutes affected: 
Introduced: 15.108, 15.120, 15.335C, 15.352, 15.353, 404A.1, 15.354
Enrolled: 15.108, 15.120, 15.335C, 15.352, 15.353, 404A.1