15E.193B - ELIGIBLE HOUSING BUSINESS.
15E.193B ELIGIBLE HOUSING BUSINESS.
1. A housing business qualifying under this section is eligible
to receive incentives and assistance only as provided in this
section. An eligible housing business shall not receive incentives
or assistance for a home or multiple dwelling unit built or
rehabilitated in an enterprise zone designated pursuant to section
15E.194, subsection 3 or 5. Sections 15E.193 and 15E.196 do not
apply to an eligible housing business qualifying under this section.
2. An eligible housing business under this section includes a
housing developer, housing contractor, or nonprofit organization that
builds or rehabilitates a minimum of four single-family homes located
in that part of a city or county in which there is a designated
enterprise zone or one multiple dwelling unit building containing
three or more individual dwelling units located in that part of a
city or county in which there is a designated enterprise zone.
3. The single-family homes and dwelling units which are
rehabilitated or constructed by the eligible housing business shall
include the necessary amenities. When completed and made available
for occupancy, the single-family homes and dwelling units shall meet
the United States department of housing and urban development's
housing quality standards and local safety standards.
4. The eligible housing business shall complete its building or
rehabilitation within two years from the time the business begins
construction on the single-family homes and dwelling units. The
failure to complete construction or rehabilitation within two years
shall result in the eligible housing business becoming ineligible and
subject to the repayment requirements and penalties enumerated in
subsection 7. The department may extend the prescribed two-year
completion period for any current or future project which has not
been completed if the department determines that completion within
the two-year period is impossible or impractical as a result of a
substantial loss caused by flood, fire, earthquake, storm, or other
catastrophe. For purposes of this subsection, "substantial loss"
means damage or destruction in an amount in excess of thirty percent
of the project's expected eligible basis as set forth in the eligible
housing business's application.
5. An eligible housing business shall provide the enterprise zone
commission with all of the following information:
a. The long-term strategic plan for the housing business
which shall include labor and infrastructure needs.
b. Information dealing with the benefits the housing business
will bring to the area.
c. Examples of why the housing business should be considered
or would be considered a good business enterprise.
d. An affidavit that it has not, within the last five years,
violated state or federal environmental and worker safety statutes,
rules, and regulations or if such violation has occurred that there
were mitigating circumstances or such violations did not seriously
affect public health or safety or the environment.
e. Information showing the total costs and sources of project
financing that will be utilized for the new investment directly
related to housing for which the business is seeking approval for a
tax credit provided in subsection 6, paragraph "a".
f. If the eligible housing business is a partnership, S
corporation, or limited liability company using low-income housing
tax credits authorized under section 42 of the Internal Revenue Code
to assist in the financing of the housing development, the name of
any partner if the business is a partnership, a shareholder if the
business is an S corporation, or a member if the business is a
limited liability company and the amount designated as allowed under
subsection 8.
6. An eligible housing business which has been approved to
receive incentives and assistance by the department of economic
development pursuant to application as provided in section 15E.195
shall receive all of the following incentives and assistance for a
period not to exceed ten years:
a. An eligible housing business may claim a tax credit up to
a maximum of ten percent of the new investment which is directly
related to the building or rehabilitating of a minimum of four
single-family homes located in that part of a city or county in which
there is a designated enterprise zone or one multiple dwelling unit
building containing three or more individual dwelling units located
in that part of a city or county in which there is a designated
enterprise zone. The new investment that may be used to compute the
tax credit shall not exceed the new investment used for the first one
hundred forty thousand dollars of value for each single-family home
or for each unit of a multiple dwelling unit building containing
three or more units. The tax credit may be used to reduce the tax
liability imposed under chapter 422, division II, III, or V, or
chapter 432. Any credit in excess of the tax liability for the tax
year may be credited to the tax liability for the following seven
years or until depleted, whichever occurs earlier. If the business
is a partnership, S corporation, limited liability company, or estate
or trust electing to have the income taxed directly to the
individual, an individual may claim the tax credit allowed. The
amount claimed by the individual shall be based upon the pro rata
share of the individual's earnings of the partnership, S corporation,
limited liability company, or estate or trust except as allowed for
under subsection 8 when low-income housing tax credits authorized
under section 42 of the Internal Revenue Code are used to assist in
the financing of the housing development.
b. Sales, services, and use tax refund for taxes paid by an
eligible business including an eligible business acting as a
contractor or subcontractor, as provided in section 15.331A.
7. If a business has received incentives or assistance under this
section and fails to maintain the requirements of this section to be
an eligible housing business, the business is subject to repayment of
all or a portion of the incentives and assistance that it has
received. The department of revenue shall have the authority to
recover the value of state taxes or incentives provided under this
section. The value of state incentives provided under this section
includes applicable interest and penalties. The department of
economic development and the city and county, as applicable, shall
enter into agreement with the business specifying the method for
determining the amount of incentives or assistance paid which will be
repaid in the event of failure to maintain the requirements of this
section. In addition, a business that fails to maintain the
requirements of this section shall not receive incentives or
assistance for each year during which the business is not in
compliance.
8. The amount of the tax credits determined pursuant to
subsection 6, paragraph "a", for each project shall be approved
by the department of economic development. The department shall
utilize the financial information required to be provided under
subsection 5, paragraph "e", to determine the tax credits allowed
for each project. In determining the amount of tax credits to be
allowed for a project, the department shall not include the portion
of the project cost financed through federal, state, and local
government tax credits, grants, and forgivable loans. Upon approving
the amount of the tax credit, the department of economic development
shall issue a tax credit certificate to the eligible housing business
except when low-income housing tax credits authorized under section
42 of the Internal Revenue Code are used to assist in the financing
of the housing development in which case the tax credit certificate
may be issued to a partner if the business is a partnership, a
shareholder if the business is an S corporation, or a member if the
business is a limited liability company in the amounts designated by
the eligible partnership, S corporation, or limited liability
company. An eligible housing business or the designated partner if
the business is a partnership, designated shareholder if the business
is an S corporation, or designated member if the business is a
limited liability company, or transferee shall not claim the tax
credit unless a tax credit certificate is attached to the taxpayer's
return for the tax year for which the tax credit is claimed. The tax
credit certificate shall contain the taxpayer's name, address, tax
identification number, the amount of the tax credit, and other
information required by the department of revenue. The tax credit
certificate shall be transferable if the housing development is
located in a brownfield site as defined in section 15.291, if the
housing development is located in a blighted area as defined in
section 403.17, or if low-income housing tax credits authorized under
section 42 of the Internal Revenue Code are used to assist in the
financing of the housing development. Not more than three million
dollars worth of tax credits for housing developments that are
located in a brownfield site as defined in section 15.291 or housing
developments located in a blighted area as defined in section 403.17
shall be transferred in one calendar year. The three million dollar
annual limit does not apply to tax credits awarded to an eligible
housing business having low-income housing tax credits authorized
under section 42 of the Internal Revenue Code to assist in the
financing of the housing development. The department may approve an
application for tax credit certificates for transfer from an eligible
housing business located in a brownfield site as defined in section
15.291 or in a blighted area as defined in section 403.17 that would
result in the issuance of more than three million dollars of tax
credit certificates for transfer, provided the department, through
negotiation with the eligible business, allocates those tax credit
certificates for transfer over more than one calendar year. The
department shall not approve more than one million five hundred
thousand dollars in tax credit certificates for transfer to any one
eligible housing business located in a brownfield site as defined in
section 15.291 or in a blighted area as defined in section 403.17 in
a calendar year. If three million dollars in tax credit certificates
for transfer have not been issued at the end of a calendar year, the
remaining tax credit certificates for transfer may be issued in
advance to an eligible housing business scheduled to receive a tax
credit certificate for transfer in a later calendar year. Any time
the department approves a tax credit certificate for transfer which
has not been allocated at the end of a calendar year, the department
may prorate the remaining certificates to more than one eligible
applicant. If the entire three million dollars of tax credit
certificates for transfer is not issued in a given calendar year, the
remaining amount may be carried over to a succeeding calendar year.
Tax credit certificates issued under this chapter may be transferred
to any person or entity. The department of economic development
shall notify the department of revenue of the tax credit certificates
which have been approved for transfer. Within ninety days of
transfer, the transferee must submit the transferred tax credit
certificate to the department of revenue along with a statement
containing the transferee's name, tax identification number, and
address, and the denomination that each replacement tax credit
certificate is to carry and any other information required by the
department of revenue. Within thirty days of receiving the
transferred tax credit certificate and the transferee's statement,
the department of revenue shall issue one or more replacement tax
credit certificates to the transferee. Each replacement certificate
must contain the information required to receive the original
certificate and must have the same expiration date that appeared in
the transferred tax credit certificate. Tax credit certificate
amounts of less than the minimum amount established by rule of the
department of economic development shall not be transferable. A tax
credit shall not be claimed by a transferee under subsection 6,
paragraph "a", until a replacement tax credit certificate
identifying the transferee as the proper holder has been issued.
The transferee may use the amount of the tax credit transferred
against the taxes imposed under chapter 422, divisions II, III, and
V, and chapter 432 for any tax year the original transferor could
have claimed the tax credit. Any consideration received for the
transfer of the tax credit shall not be included as income under
chapter 422, divisions II, III, and V. Any consideration paid for
the transfer of the tax credit shall not be deducted from income
under chapter 422, divisions II, III, and V.
9. The department of economic development and the department of
revenue shall each adopt rules to jointly administer this section.
Section History: Recent Form
98 Acts, ch 1179, §1; 2000 Acts, ch 1213, §5--8, 10; 2001 Acts, ch
141, §2--4, 8; 2002 Acts, ch 1145, §2, 3; 2003 Acts, ch 129, §3; 2003
Acts, ch 133, §1, 4; 2003 Acts, ch 145, §286; 2003 Acts, ch 179,
§100, 159; 2003 Acts, 1st Ex, ch 2, §15, 209; 2005 Acts, ch 130, §1,
2; 2005 Acts, ch 179, §53--55; 2006 Acts, ch 1133, §5, 10; 2006 Acts,
ch 1158, §1
Referred to in § 15.119, 15E.194, 15E.195, 422.11F, 422.33,
422.60, 432.12C
For aggregate limitations on amount of tax credits, see §15.119 Footnotes
2005 amendments pertaining to the transfer of tax credit
certificates for projects in brownfield sites or blighted areas apply
to projects beginning on or after July 1, 2005; 2005 Acts, ch 130, §2
2006 amendment to subsection 1 takes effect May 30, 2006, and
applies retroactively to March 1, 2006; 2006 Acts, ch 1133, §10