(The Center Square) – Tax credits for economic development in Iowa would undergo several adjustments under a bill advanced Thursday by the state Senate’s Ways and Means Committee.
Among its several provisions, the bill establishes a manufacturing 4.0 technology investment program; reduces tax credits the economic development authority can allocate to the high quality jobs program for next fiscal year from $105 million to $70 million; and creates an energy infrastructure revolving loan fund.
For fiscal year 2022, instead of an allocation limit of $25 million and reservation of $10 million for qualified housing projects in small cities, the workforce housing tax credit allocation would be $40 million and $12 million for projects in small cities. In following years, the workforce housing tax credit would be limited to $30 million, which would include $15 million reserved for small cities. Housing businesses would submit statements of qualifying new investments for the housing project in addition to the currently required CPA examination of project. The authority could also establish a disaster recovery application period if the president of the United States declares a major disaster in Iowa counties.
Gov. Kim Reynolds had proposed increasing the workforce housing tax credit from $25 million to $50 million, with $20 million dedicated for small cities for three years. The program has a current backlog of $13.3 million “shovel ready” housing projects, her proposal stated.
Sen. Bill Dotzler, D-Waterloo, said in the committee meeting that he is “a little bit concerned” about the housing tax credit portion of the bill. He said housing is among the “real limiting factors” with some new startups as they request affordable housing for their workforce. Dotzler said Fort Dodge “extensively” used tax credits to build “mid-cost” homes to house “a large workforce” for a chemical facility to find alternative uses for grain. He said the city otherwise wouldn’t have been able to house the workers.
“I think these tax credits are very important, and I’m kind of disappointed on the whole end of it,” Dotzler said. “But as I look through the bill, I’m going to support it. I think there’s a lot of work that yet needs to be done and maybe we can find some agreement with the House.”
Sen. Dan Dawson, R-Council Bluffs, said he doesn’t view the discussion on workforce housing as being complete for the year.
“We know there’s housing monies available in the current American Recovery Act plan that the rules haven’t been written yet, as well as that it’s anticipated there’s going to be more housing monies available in the infrastructure plan by the Administration being put forward … we wanted to wipe out the backlog, provide some additional monies, but then as these rules are made over the summer, this money filters down [from the federal government], maybe we can take a holistic look as to what gaps need to be filled in the next session,” Dawson said.
The bill also extends by 10 years the redevelopment tax credits established in Iowa code for brownfields and grayfields. It also would make tax changes in the 2018 Iowa Acts, chapter 1161, sections 99 through 132, effective beginning in January 2023, regardless of meeting the conditions currently required. Tax rates would be 4.4% for those making up to $6,000, 4.82% for those making $6,000 to $30,000, 5.7% for those making $30,000 to $75,000, and 6.5% for those making more than $75,000.
A plethora of business organizations have lobbied on the bill. About 50 people attended the subcommittee meeting, which was held earlier in the day on April 21.