Fiscal Note
Fiscal Services Division
SF 295 – Economic Assistance, Housing (LSB1978SV)
Staff Contact: Eric Richardson (515.281.6767) eric.richardson@legis.iowa.gov
Jeff Robinson (515.281.4614) jeff.robinson@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 295 expands upon and creates new tax credit, loan, and grant programs to
incentivize housing options. A brief description by division is below and the following pages
include assumptions and fiscal impact where it can be estimated.
DIVISION I — Creates an Iowa Housing Tax Credit Program to be administered by the Iowa
Finance Authority (IFA). The new credit is subject to award by the IFA and is available to
developers of qualified low-income housing projects under Internal Revenue Code section 42(g)
that are financed with tax-exempt bonds. The transferable tax credits may be applied to
corporate income tax, individual income tax, bank franchise tax, insurance premium tax, or
credit union moneys and credits tax. The maximum amount of credits that may be issued is
$15.0 million per calendar year, plus an amount equal to any unused or otherwise returned
credits from previous award years. The Division takes effect January 1, 2022.
DIVISION II — Removes the $3.0 million cap placed on the transfer of the real estate transfer
tax receipts to the Housing Trust Fund effective July 1, 2022.
DIVISION III — Increases the annual limit on awarded Workforce Housing Tax Credits from
$25.0 million to $50.0 million and increases the amount reserved for projects in small cities from
$10.0 million to $20.0 million. The credit limit and reservation changes are effective for FY 2022
through FY 2024.
DIVISION IV — Creates a Downtown Loan Guarantee Program to be administered by the Iowa
Economic Development Authority (IEDA) and the IFA. The Program is to encourage downtown
businesses and banks to reinvest and reopen following the COVID-19 pandemic. The loan
must finance an eligible downtown resources center Community Catalyst Building Remediation
Program grant project or Main Street Iowa Challenge Grant within a designated district, and at
least 25.0% of the project cost must be used for construction on the project or renovation. The
loan must also contain a housing component. The Bill allows loan guarantee limits of 50.0% or
less for a loan amount less than or equal to $500,000, or a maximum guarantee of $250,000 if a
loan is more than $500,000. The program can be funded through an appropriation or a transfer
from any fund created and controlled by IEDA through Iowa Code section 15.106A.
Division IV is effective July 1, 2022.
DIVISION V — Creates a Disaster Recovery Housing Assistance Program and related Fund to
be administered by the IFA. The program is for a forgivable loan and grant program for
homeowners and renters with disaster-affected homes that are destroyed or damaged due to a
natural disaster in a county that is the subject of a state of disaster emergency proclamation by
the Governor. The Program also includes major disasters in Iowa recognized by the United
States President after March 12, 2019, but before the effective date of the legislation.
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Administrative rules will determine the amount of assistance for eligible applicants.
The Disaster Recovery Housing Assistance Program can be funded through an appropriation, a
transfer of unobligated moneys from any fund created and controlled by IFA through Iowa Code
section 16.5(1)(s), a transfer from any fund created and controlled by IEDA through Iowa Code
section 15.106A, and from the Senior Living Revolving Loan Program Fund, the Home and
Community-Based Services Revolving Loan Program Fund, the Transitional Housing Revolving
Loan Program Fund, and the Community Housing and Services for Persons with Disabilities
Revolving Loan Program Fund.
The Disaster Recovery Housing Assistance Fund administered by the IFA may also allocate
grants to the Eviction Prevention Program, created in the Bill, which can make rental assistance
grants.
Division V is effective upon enactment.
DIVISION VI — Extends the Redevelopment Tax Credit Program (Brownfields and Grayfields)
for 10 years and increases the annual award maximum from the current level of $10.0 million to
$20.0 million. The changes also allow the Authority to award credits in excess of the
$20.0 million limit under certain circumstances. The program extension and the authority to
exceed the annual award limit are effective upon enactment. The Bill extends the repeal date of
the program from June 30, 2021, to June 30, 2031.
Division I
Background
The Iowa Finance Authority currently administers a federal low-income housing program
pursuant to 26 U.S.C. § 42. Projects approved for the Iowa Housing Tax Credit must meet the
requirements of the federal program. The Authority is required to submit a report to the General
Assembly by January 31 of each year that includes the number of qualified developments for
which the Authority issued tax certificates the prior year, along with a description and relevant
statistics for each qualified development.
Assumptions
Iowa Housing Tax Credit Program:
• The IEDA will award $15.0 million in Iowa Housing Tax Credits each calendar year (CY),
beginning with CY 2022.
• The IEDA is not required to award tax credits to every project in equal increments over the
10-year credit period. However, for this projection, it is assumed that the IEDA will choose
to do so.
• Tax certificates are issued after projects are complete. It is assumed that 50.0% of projects
will be completed in the fiscal year after the award and 50.0% will be completed in the
following fiscal year.
• Since the tax credit amounts for a completed project are assumed to be divided into 10
annual allotments, the annual amounts for a project are assumed to be relatively small and
therefore should be redeemed in a shorter time frame than other investment tax credits. It is
assumed that once issued, the tax credits will be redeemed 40.0% in the year of issuance,
40.0% in the year after issuance, and 20.0% in the second year after issuance.
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Fiscal Impact
Iowa Housing Tax Credit Program — The creation of a new Iowa Housing Tax Credit is
projected to reduce net General Fund revenue by the following amounts:
• FY 2023 = $0.3 million
• FY 2024 = $1.2 million
• FY 2025 = $2.6 million
• FY 2026 = $4.1 million
• FY 2027 = $5.6 million
The projected revenue reduction is estimated to continue to increase, reaching $15.0 million for
FY 2035 and after.
The IFA currently administers a similar federal housing tax incentive program. The IFA expects
the administrative costs associated with administering awards under this new program to be
covered by application fees.
Division II
Background
Real Estate Transfer Tax — The real estate transfer tax is imposed on the transfer of real estate
in the State. The tax is equal to $0.80 per $500 (or any fractional part of $500) of consideration
paid as part of or a condition of the property transfer. As examples, the transfer of a $1,200
property would incur a tax of $2.40, while the transfer of a $1.0 million property would incur a tax
of $1,600.
The tax is paid to the county. Iowa Code section 428A.8 controls the division of the tax
revenue. The county retains 17.25% of the tax revenue for deposit in the county general fund.
The county remits the remaining 82.75% to the State. The State portion is deposited as follows:
• 30.0% to the Housing Trust Fund up to a limit of $3.0 million each fiscal year.
• 5.0% to the Shelter Assistance Fund.
• 65.0% to the State General Fund plus any Housing Trust Fund revenue in excess of $3.0
million.
The following table provides a history of real estate transfer tax deposits to State funds for the
past four fiscal years.
Real Estate Transfer Tax Revenue, State Portion
In Millions
Fund FY 2017 FY 2018 FY 2019 FY 2020
Housing Trust Fund $ 3.0 $ 3.0 $ 3.0 $ 3.0
Shelter Assistance Fund 1.1 1.2 1.2 1.2
State General Fund 18.6 19.2 19.1 20.3
Total $ 22.7 $ 23.4 $ 23.3 $ 24.5
Assumptions
Real Estate Transfer Tax — Over the past 13 fiscal years (FY 2007 through FY 2020), the
average annual rate of growth in real estate transfer tax has equaled 2.3%. That rate of growth
is assumed for FY 2021 and future fiscal years.
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Fiscal Impact
Real Estate Transfer Tax — Removing the Housing Trust Fund annual $3.0 million real estate
tax revenue limit is estimated to increase Housing Trust Fund revenue and reduce net General
Fund revenue by the following amounts:
• FY 2022 = $4.7 million
• FY 2023 = $4.9 million
• FY 2024 = $5.1 million
• FY 2025 = $5.3 million
• FY 2026 = $5.4 million
• FY 2027 = $5.4 million
Division III
Background
Workforce Housing Tax Credits — The Workforce Housing Tax Credit provides tax incentives
for the development of housing projects in Iowa. The credit was first available beginning July 1,
2014. The program has been expanded several times. The credit is administered and awarded
by the IEDA. Tax credits under the program take the form of sales tax refunds and transferable
investment tax credits.
Assumptions
Workforce Housing Tax Credits:
• The IEDA will award the $50.0 million in allowed Workforce Housing Tax Credits for
FY 2022 through FY 2024 (three years).
• Based on program history with previous projects, the additional $25.0 million in credits for
each of the three years is assumed to be distributed as $5.5 million (22.0%) of sales tax
refunds and $19.5 million of investment tax credits. Of the credits awarded, 72.0% of the
sales tax refunds is assumed to be redeemed, while 100.0% of the investment tax credits is
assumed to be redeemed.
• The first fiscal year of tax redemptions will be FY 2022.
• 50.0% of the sales tax refund redemptions will occur in the year of award and 50.0% in the
following year.
• For the transferable investment tax credit portion of awards, 30.0% will be redeemed in the
year of award and 30.0% in each of the next two years. The remaining 10.0% is assumed
to be redeemed in the third year after the year of award.
Fiscal Impact
Workforce Housing Tax Credits — The three-year increase in the annual award amount under
the Workforce Housing Tax Credit program is projected to reduce net General Fund revenue by
the following amounts:
• FY 2022 = $7.8 million
• FY 2023 = $15.7 million
• FY 2024 = $21.5 million
• FY 2025 = $15.6 million
• FY 2026 = $7.8 million
• FY 2027 = $2.0 million
The increase in the program limit will be repealed July 1, 2024. The projected revenue
reduction is not projected to continue past FY 2027. The changes double the dollar amount of
projects that can qualify under the program for the next three years. This can be expected to
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increase the administrative workload of the IEDA.
Division IV
Background
Downtown Loan Guarantee Program — The Community Catalyst Building Remediation
Program awards grants to cities to redevelop, rehabilitate, or deconstruct buildings to stimulate
economic growth or reinvestment in a downtown community. The Program had a budget of
$4.9 million in FY 2020 and has a $4.3 million budget in FY 2021, funded from internal
discretionary sources.
The Main Street Iowa Challenge Grant Program funds local improvement projects, including
upper story renovations, critical building stabilization, and façade restoration and upgrades. The
Program is funded through a transfer from the High Quality Jobs Program within IEDA, which is
funded through the Skilled Worker and Job Creation Fund. In FY 2021, up to $1.0 million was
designated to be transferred to the Main Street Iowa Challenge Grant Program.
Assumptions
Downtown Loan Guarantee Program — There are no General Fund appropriations into the
Downtown Loan Guarantee Program for FY 2022 or FY 2023.
Fiscal Impact
Downtown Loan Guarantee Program — Costs from the creation of a Downtown Loan
Guarantee Program cannot be estimated, as no appropriation or transfer has been made to the
Program. If appropriations or transfers are made to the Program, IEDA is expected to receive
annual fee revenue from mortgage lenders as a result of the Downtown Loan Guarantee
Program. This fee revenue cannot be estimated.
Division V
Background
Disaster Recovery Housing Assistance Program — Beginning March 13, 2019, historic flooding
impacted the State of Iowa. Thousands of homes were destroyed, causing hundreds of millions
of dollars in damages. On March 23, 2019, the President declared a major disaster in the State
of Iowa and signed the presidential declaration FEMA-4421-DR-IA. With the declaration, the
President authorized federal funds from Public Assistance Programs for 56 Iowa counties (see
Map 1 below). FEMA-4421-DR-IA also authorized federal funds from Individual Assistance
grants in Fremont, Harrison, Mills, Monona, and Woodbury Counties. A total of 1,735 individual
assistance applications from the Federal Emergency Management Agency (FEMA) were
approved for reimbursement, totaling $15.3 million. Funding from federal public assistance
totaled $194.8 million and was allocated to debris removal, infrastructure, and recreational
facilities. State appropriations for flood mitigation from 2019 Iowa Acts, SF 638 (Standing
Appropriations Act), and 2020 Iowa Acts, SF 2144 (Supplemental Appropriations Act), totaled
$36.0 million.
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 Map 1: FEMA-4421-DR, Iowa Disaster Declaration as of 07/18/2019
On August 10, 2020, a derecho hit central and eastern Iowa, causing both significant structural
and crop damage across a large part of the State. President Trump issued a major disaster
declaration for 16 counties on August 17, 2020. The declaration has been amended on multiple
occasions to add additional counties and to make individual assistance available in the counties
most impacted by the storm. Map 2 below shows that, as of October 5, 2020, 23 counties
qualify for public assistance and 12 counties qualify for both public assistance and individual
assistance. As of February 3, 2021, FEMA has approved 3,063 individual assistance
applications totaling $11.1 million to rebuild after the storm.
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 Map 2: Iowa Severe Storms (DR-4557-IA)
The IFA administered the COVID-19 Iowa Eviction and Foreclosure Prevention Program,
funded through $37.4 million in Iowa Coronavirus Relief Fund allocations. The Program
provided up to four months of actual rent or $3,200, whichever was lower, in grants to income-
eligible renters and homeowners who were at risk of eviction or foreclosure due to the
pandemic. As of January 11, 2021, nearly 15,000 applications have received $33.4 million in
assistance from the Program.
Assumptions
Disaster Recovery Housing Assistance Program — There are no General Fund appropriations
into the Disaster Recovery Housing Assistance Fund for FY 2022 or FY 2023. The Program
may be funded from unobligated revenues transferred from other programs administered by the
IFA, which shall be reported monthly to the Legislative Fiscal Committee.
Fiscal Impact
Disaster Recovery Housing Assistance Program — Costs or expenditures from the creation of a
Disaster Recovery Housing Assistance Program and an Eviction Prevention Program cannot be
estimated, as no appropriation or transfer has been made to fund the Program.
In the event a future disaster produces a disaster declaration by the Governor, activating the
Disaster Recovery Housing Assistance Program, 0.25 full-time equivalent (FTE) positions will
be necessary to assist the IFA Housing Program Manager to administer the Program. Costs will
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be funded through an annual 5.0% administrative allowance cap in the Disaster Recovery
Housing Assistance Fund or from other internal resources.
Division VI
Background
Redevelopment Tax Credit Program — This Program provides tax incentives for the
development of contaminated, abandoned, or otherwise underutilized property in Iowa. The
credit was available beginning July 1, 2009. The Program has been expanded several times.
The credit is administered and awarded by the IEDA. Tax credit awards are based on the
amount of qualified redevelopment expenditures from the project.
Assumptions
Redevelopment Tax Credit Program:
• The changes allow the Redevelopment Tax Credit Program to continue at a $20.0 million
annual level past its current statutory end date of July 1, 2021. The changes also allow
credits that were not awarded or were otherwise recovered during the past five years to be
awarded as an addition to the annual limit. It is assumed that the five-year lookback for
unused tax credits will add $2.0 million to the FY 2022 limit, and it is further assumed that all
tax credits will be approved for all future years.
• Tax credit certificates are issued after a project is complete. For each fiscal year of award, it
is assumed that 50.0% of certificates are issued in the fiscal year after project approval and
the remaining certificates are issued in the following fiscal year.
• Once certificates are issued, 8.0% of the redemption value is assumed to occur in the fiscal
year the certificates are issued and 22.0% in each of the succeeding four fiscal years. Four
percent of issued tax certificates are assumed to expire without redemption.
Fiscal Impact
Redevelopment Tax Credit Program — The extensi