House File 38 - Introduced HOUSE FILE 38 BY LOHSE A BILL FOR An Act authorizing cities to establish self-supported 1 entertainment areas. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1315YH (4) 91 jm/jh
H.F. 38 Section 1. NEW SECTION . 386A.1 Definitions. 1 As used in this chapter, unless the context requires 2 otherwise: 3 1. Alcoholic beverage means the same as defined in section 4 123.3. 5 2. Council means the governing body of a city. 6 3. Cultural or entertainment establishment means a sporting 7 or concert event venue, performing arts theater, movie theater, 8 museum, convention hall, or enclosed shopping mall. 9 4. Department means the department of revenue. 10 5. Director means the director of the department of 11 revenue. 12 6. Entertainment area or area means an area designated 13 by ordinance under this chapter and the cultural or 14 entertainment establishments, food establishments, liquor 15 establishments, and lodging providers therein that are subject 16 to the entertainment surcharge in accordance with section 17 386A.3. 18 7. Entertainment tickets means all tickets or admissions 19 subject to taxation pursuant to section 423.2, subsection 3. 20 8. Food means the same as defined in section 137F.1. 21 9. Food establishment means a food establishment licensed 22 pursuant to chapter 137F, at which food is served or sold at 23 retail. Food establishment also includes a temporary food 24 establishment defined in section 137F.1. 25 10. Licensed premises means the same as defined in section 26 123.3. 27 11. Liquor establishment means a licensed premises in or 28 at which alcoholic beverages are sold at retail. 29 12. Lodging means the same as defined in section 423A.2. 30 Lodging does not include lodging exempted from tax pursuant 31 to section 423A.5. 32 13. Lodging provider means the same as defined in section 33 423A.2. 34 14. Property owner or owner means the owner of property, 35 -1- LSB 1315YH (4) 91 jm/jh 1/ 13
H.F. 38 as shown by the transfer books in the office of the county 1 auditor of the county in which the property is located. 2 15. Retail sale means the same as defined in section 3 423.1. 4 16. Surcharge means an entertainment surcharge imposed 5 pursuant to this chapter. 6 Sec. 2. NEW SECTION . 386A.2 Authorization. 7 A city that proposes to create an entertainment area and 8 impose an entertainment surcharge must do so in accordance with 9 the provisions of this chapter. 10 Sec. 3. NEW SECTION . 386A.3 Establishment of an 11 entertainment area entertainment surcharge use of revenues. 12 1. An entertainment area may be created by ordinance of the 13 council in accordance with the provisions of this section. A 14 proposed entertainment area shall meet all of the following 15 requirements: 16 a. The combined attendance at cultural or entertainment 17 establishments, food establishments, liquor establishments, 18 and lodging providers within the proposed entertainment area 19 is reasonably expected to exceed two hundred fifty thousand 20 persons per calendar year within two years of the establishment 21 of the entertainment area. 22 b. The proposed entertainment area consists of contiguous 23 parcels wholly within the boundaries of the city and does not 24 exceed seventy-five acres in total. 25 c. The proposed entertainment area does not include the 26 entire incorporated area of the city. 27 d. The proposed entertainment area consists only of 28 properties zoned for commercial uses or properties within a 29 duly designated historic district, and at least seventy-five 30 percent of the properties must be cultural or entertainment 31 establishments, food establishments, liquor establishments, or 32 lodging providers. 33 e. The proposed entertainment area must be comprised of 34 property related in some manner, including but not limited 35 -2- LSB 1315YH (4) 91 jm/jh 2/ 13
H.F. 38 to present or potential use, physical location, condition, 1 relationship to the area, or relationship to present or 2 potential commercial or other activity in the area, so as 3 to be benefited in any manner, including but not limited to 4 a benefit from present or potential use or enjoyment of the 5 property, by the condition, development, or maintenance of 6 the area or of any improvement or services provided to the 7 area or be comprised of property the owners of which have a 8 present or potential benefit from the condition, development, 9 or maintenance of the area or of any improvement or services 10 provided to the area. 11 f. The entertainment area shall be given a descriptive name 12 containing the words entertainment area. 13 2. The council shall initiate proceedings for the adoption 14 of an ordinance under subsection 6 upon the filing of a 15 petition containing all of the following: 16 a. The signatures of at least twenty-five percent of all 17 owners of property within the proposed entertainment area. 18 b. A description of the boundaries of the proposed 19 entertainment area, or a consolidated description of the 20 property within the proposed area, along with a map depicting 21 the existing parcels of real estate located in the proposed 22 entertainment area. 23 c. The name of the proposed entertainment area. 24 d. Subject to the limitations of subsection 4, paragraph 25 e , a statement of the maximum surcharge rate that may be 26 imposed upon retail sales within the entertainment area. 27 e. The purpose of the establishment of the entertainment 28 area, which may be stated generally, or in terms of the 29 relationship of the property within the entertainment 30 area or the interests of the owners of property within the 31 entertainment area, or in terms of the specific or general 32 categories of improvements proposed to be developed for the 33 purposes of the entertainment area, or in terms of the services 34 to be provided within the entertainment area and supported 35 -3- LSB 1315YH (4) 91 jm/jh 3/ 13
H.F. 38 from the revenues of the surcharge, or a combination of such 1 purposes. 2 f. A statement of the specified length of time the surcharge 3 shall be imposed for the purposes of the entertainment area, 4 along with any option to renew the surcharge. 5 3. Upon receiving a valid petition for establishment of 6 an entertainment area, the council shall set a time and place 7 for a public hearing on the establishment of the entertainment 8 area, and shall publish notice of the public hearing as 9 provided in section 362.3, and the clerk shall send a copy of 10 the notice by certified mail not less than fifteen days before 11 the hearing to each owner of property within the proposed 12 entertainment area at the owners address as shown by the 13 records of the county auditor. 14 4. In addition to the time and place of the public hearing 15 on the petition, the notice must state all of the following: 16 a. That a petition has been filed with the council asking 17 that an entertainment area be established. 18 b. The name of the entertainment area. 19 c. The purpose of the entertainment area. 20 d. The property proposed to be included in the entertainment 21 area. 22 e. The maximum surcharge, not to exceed three percent, which 23 may be imposed upon any of the following retail sales within 24 the entertainment area: 25 (1) The retail sales price of food or alcoholic beverages 26 sold at a cultural or entertainment establishment, food 27 establishment, or liquor establishment. 28 (2) The retail sales price of entertainment tickets sold at 29 a cultural or entertainment establishment. 30 (3) The retail sales price for the renting of any lodging. 31 5. At the time and place set in the notice the council 32 shall hear all owners of property in the proposed entertainment 33 area or residents of the city desiring to express their 34 views. The council must wait at least thirty days after the 35 -4- LSB 1315YH (4) 91 jm/jh 4/ 13
H.F. 38 public hearing has been held before the council may adopt an 1 ordinance establishing the entertainment area. The established 2 entertainment area must be comprised of all the property in 3 the proposed entertainment area that the council finds has the 4 relationship or whose owners have the interest described in 5 subsection 1, paragraph e . Property included in the proposed 6 entertainment area need not be included in the established 7 entertainment area. However, no property may be included in 8 the entertainment area that was not included in the proposed 9 entertainment area until the council has held another hearing 10 after the council has published and mailed the same notice as 11 required in subsections 3 and 4 on the original petition to 12 the owners of the additional property, or has caused a notice 13 of the inclusion of the property to be personally serviced 14 upon each owner of the additional property, or has received 15 a written waiver of notice from each owner of the additional 16 property. 17 6. Adoption of the ordinance establishing the entertainment 18 area requires the affirmative vote of three-fourths of all the 19 members of the council, or in cities having three members of 20 the council, the affirmative vote of two members. However, 21 if a remonstrance has been filed with the clerk signed by at 22 least twenty-five percent of all owners of property within 23 the proposed entertainment area representing ownership of 24 at least twenty-five percent or more of the total number of 25 cultural or entertainment establishments, food establishments, 26 liquor establishments, and lodging providers in the proposed 27 entertainment area, the adoption of the ordinance requires a 28 unanimous vote of the council. 29 7. The clerk shall cause a copy of the ordinance to be filed 30 in the office of the county recorder of each county in which 31 any property within the entertainment area is located. 32 8. At any time prior to the final adoption of an ordinance 33 establishing an entertainment area, the entire matter of 34 establishing such entertainment area shall be withdrawn from 35 -5- LSB 1315YH (4) 91 jm/jh 5/ 13
H.F. 38 council consideration if a petition objecting to establishing 1 such entertainment area is filed with the clerk containing 2 signatures of at least forty percent or more of all owners of 3 property in the proposed entertainment area. 4 9. The adoption of an ordinance establishing an 5 entertainment area is a legislative determination that the 6 property within the entertainment area has the relationship 7 or its owners have the interest required under subsection 1, 8 paragraph e , and includes all of the property within the 9 entertainment area which has that relationship or the ownership 10 of which has that interest in the entertainment area. 11 10. Any resident or property owner of the city may appeal 12 the action and the decisions of the council, including 13 the creation of the entertainment area and imposition of a 14 surcharge for the entertainment area, to the district court 15 of the county in which any part of the entertainment area 16 is located, within thirty days after the date upon which the 17 ordinance creating the entertainment area becomes effective, 18 but the action and decision of the council are final and 19 conclusive unless the court finds that the council exceeded 20 its authority. An action shall not be brought questioning the 21 regularity of the proceedings pertaining to the establishment 22 of the entertainment area or the validity of the entertainment 23 area, or the propriety of the inclusion or exclusion of 24 any property within or from the entertainment area, or the 25 ability of the city to impose the surcharge in accordance 26 with the ordinance establishing the entertainment area, after 27 thirty days from the date on which the ordinance creating the 28 entertainment area becomes effective. 29 11. The surcharge imposed by the ordinance establishing 30 the entertainment area shall be in addition to the state 31 sales tax imposed pursuant to chapter 423, subchapter II, the 32 state-imposed and locally imposed hotel and motel tax pursuant 33 to chapter 423A, and the local sales and services tax imposed 34 pursuant to chapter 423B. 35 -6- LSB 1315YH (4) 91 jm/jh 6/ 13
H.F. 38 12. a. Within ten days of the effective date of the 1 ordinance establishing the area and imposing the surcharge, the 2 county auditor of the county with the largest parcel in the 3 entertainment area shall give written notice to the director by 4 sending a copy of the ordinance to the director. 5 b. A surcharge shall be imposed either January 1 or July 6 1 following the notification of the director but not sooner 7 than ninety days following the effective date of the ordinance 8 imposing the surcharge and not sooner than sixty days following 9 notice to sellers with a place of business, as defined in 10 section 423.1, in the entertainment area and to lodging 11 providers operating lodging in the entertainment area. 12 c. A surcharge shall be repealed only on June 30 or December 13 31 but not sooner than ninety days following repeal of the 14 ordinance. At least forty days before the repeal of the 15 surcharge, the council shall provide notice of the action by 16 certified mail to the director. 17 13. a. An entertainment area may be dissolved and 18 terminated by action of the council rescinding the ordinance 19 creating the area and any subsequent ordinances amending the 20 area by an affirmative vote of three-fourths of all members 21 of the council, or in cities having three members of the 22 council, the affirmative vote of two members. However, if 23 a remonstrance has been filed with the clerk signed by at 24 least twenty-five percent of all owners of property within the 25 area representing ownership of at least twenty-five percent 26 or more of the total number of cultural or entertainment 27 establishments, food establishments, liquor establishments, and 28 lodging providers in the area, the rescission of the ordinance 29 creating the area, and any subsequent ordinances amending the 30 area, requires a unanimous vote of the council. 31 b. At any time prior to action of the council rescinding the 32 ordinance creating the entertainment area, and any subsequent 33 ordinances amending the area, the entire matter of dissolving 34 an area shall be withdrawn from council consideration if a 35 -7- LSB 1315YH (4) 91 jm/jh 7/ 13
H.F. 38 petition is filed with its clerk containing the signatures of 1 at least forty percent of all owners of property within the 2 area or signatures which together represent ownership of at 3 least forty percent or more of the total number of cultural 4 or entertainment establishments, food establishments, liquor 5 establishments, and lodging providers within the area. 6 14. The ordinance creating an entertainment area may be 7 amended, including to add property to the area, remove property 8 from the area, extend the duration of the area, or alter the 9 amount of the entertainment surcharge, by the same procedure as 10 for the establishment of the entertainment area and imposition 11 of the surcharge. 12 15. a. Upon the adoption of an ordinance establishing an 13 entertainment area, the city shall establish an entertainment 14 area fund, and upon remittance of the revenues from the state 15 surcharge revenue fund to the city under section 386A.5, the 16 revenues shall be deposited into the citys entertainment area 17 fund. 18 b. Surcharge revenues deposited into an entertainment area 19 fund of the city shall only be used for the following, as 20 applicable: 21 (1) For deposit into the debt service fund in section 384.4. 22 (2) For deposit into the capital improvements fund in 23 section 384.7. 24 (3) For the purposes described in section 384.3A, 25 subsection 3, paragraph b , c , e , f , or g , including 26 city operational expenses for public safety services within the 27 entertainment area. 28 Sec. 4. NEW SECTION . 386A.4 Administration of surcharge. 29 1. The director shall administer the surcharge imposed 30 pursuant to this chapter as nearly as possible in conjunction 31 with the administration of state sales tax laws. The director 32 shall provide appropriate forms, or provide space on the 33 regular state tax forms, for reporting surcharge liability. 34 2. a. Section 422.25, subsection 4, sections 422.30, 35 -8- LSB 1315YH (4) 91 jm/jh 8/ 13
H.F. 38 422.67, and 422.68, section 422.69, subsection 1, sections 1 422.70, 422.71, 422.72, 422.74, and 422.75, section 423.14, 2 subsection 1, and sections 423.23, 423.24, 423.25, 423.31, 3 423.33, 423.35, 423.37 through 423.42, and 423.47, consistent 4 with the provisions of this chapter, apply with respect to the 5 surcharge authorized under this chapter, in the same manner and 6 with the same effect as retail sales taxes within the meaning 7 of those statutes. The director may require all persons 8 who are engaged in the business of deriving any sales price 9 subject to a surcharge under this chapter to register with the 10 department. All surcharges collected under this chapter are 11 deemed to be held in trust for the state of Iowa and the cities 12 imposing the surcharges. Local officials shall confer with the 13 director for assistance in drafting the ordinance imposing the 14 surcharge. A certified copy of the ordinance shall be filed 15 with the director as soon as possible after passage. 16 b. Frequency of deposits and monthly reports of the 17 surcharge with the department of revenue are governed by the 18 provisions in section 423.31. Local surcharge collections 19 shall not be included in computation of the total tax to 20 determine frequency of filing under section 423.31. 21 c. The director shall apply a boundary change of an 22 entertainment area to the imposition or collection of that 23 surcharge only on the first day of a calendar month which 24 occurs sixty days or more after the director has given notice 25 of the boundary change to sellers with a place of business, 26 as defined in section 423.1, in the entertainment area and to 27 lodging providers operating lodging in the entertainment area. 28 3. a. The director, in consultation with local officials, 29 shall collect and account for the surcharge. The director 30 shall certify each month the amount of the surcharge receipts 31 and any interest and penalties to be credited to the city 32 account in the state surcharge revenue fund established in 33 section 386A.5. Local authorities shall not require any permit 34 not required by the director. 35 -9- LSB 1315YH (4) 91 jm/jh 9/ 13
H.F. 38 b. All surcharge revenues and interest and penalties 1 received or refunded one hundred eighty days or more after the 2 date on which the city repeals the surcharge shall be deposited 3 in or withdrawn from the general fund of the state. 4 4. Each city that has established an entertainment area 5 under this chapter shall assist the department in identifying 6 new establishments required to impose the surcharge in the 7 entertainment area. This process shall be ongoing until the 8 surcharge is repealed. 9 Sec. 5. NEW SECTION . 386A.5 State surcharge revenue fund 10 accounts. 11 1. A state surcharge revenue fund is established in the 12 state treasury under the control of the department consisting 13 of the surcharge revenues collected within each entertainment 14 area and deposited in the fund pursuant to section 386A.4. 15 Revenues deposited in the fund are appropriated to the 16 department for the purposes of this section. 17 2. An entertainment area account is created within the 18 fund for each city creating an entertainment area under this 19 chapter. 20 3. The department shall deposit the revenues described 21 in subsection 1 that were collected in a month beginning on 22 or after the entertainment areas commencement date into the 23 appropriate entertainment area account in the fund. 24 4. All revenues in each entertainment area account within 25 the fund shall be remitted monthly by the department to the 26 city that established the entertainment area for deposit in the 27 entertainment area fund of the city. 28 5. The department shall adopt rules pursuant to chapter 17A 29 necessary to administer the departments responsibilities under 30 this chapter. 31 Sec. 6. Section 423A.5A, subsection 3, Code 2025, is amended 32 to read as follows: 33 3. Unless otherwise provided in this section , the 34 state-imposed tax under section 423A.3 and any locally 35 -10- LSB 1315YH (4) 91 jm/jh 10/ 13
H.F. 38 imposed tax under section 423A.4 shall be collected by the 1 lodging provider from the user of that lodging and shall be 2 remitted to the department. The lodging provider shall add 3 the state-imposed tax to the sales price of the lodging and 4 the tax, when collected, shall be stated as a distinct item, 5 separate and apart from the sales price of the lodging and from 6 the locally imposed tax under section 423A.4 or entertainment 7 surcharge under chapter 386A , if any. The lodging provider 8 shall add the locally imposed tax, if any, to the sales price 9 of the lodging and the tax, when collected, shall be stated as 10 a distinct item, separate and apart from the sales price of 11 the lodging and from the state-imposed tax or entertainment 12 surcharge under chapter 386A, if any . 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanations substance by the members of the general assembly. 16 This bill authorizes cities to establish entertainment areas 17 and to impose an entertainment surcharge within the area. 18 Under the bill, following the filing of a petition for the 19 establishment of an entertainment area (area) and holding a 20 public hearing, a city may establish an area by ordinance for 21 the purpose of imposing an entertainment surcharge (surcharge). 22 The city council shall initiate proceedings for adoption of 23 the ordinance upon signatures of at least 25 percent of the 24 owners of property within the proposed entertainment area. The 25 proposed area must meet all of the following requirements: 26 (1) the combined attendance at cultural or entertainment 27 establishments, food establishments, liquor establishments, 28 and lodging providers within the proposed area is reasonably 29 expected to exceed 250,000 persons per calendar year within 30 two years; (2) the area consists of contiguous parcels wholly 31 within the boundaries of the city and does not exceed 75 acres; 32 (3) the area does not include the entire incorporated area of 33 the city; (4) the area consists only of properties zoned for 34 commercial uses or properties within a designated historic 35 -11- LSB 1315YH (4) 91 jm/jh 11/ 13
H.F. 38 district, and at least 75 percent of the properties must be 1 cultural or entertainment establishments, food establishments, 2 liquor establishments, or lodging providers; (5) the area must 3 be comprised of property related in some manner; and (6) the 4 area must be given a descriptive name. 5 Adoption of the ordinance establishing the area requires the 6 affirmative vote of three-fourths of all the members of the 7 council, or in cities having three members of the council, the 8 affirmative vote of two members. However, if a remonstrance 9 has been filed with the clerk signed by at least 25 percent of 10 all owners of property within the proposed area representing 11 ownership of at least 25 percent or more of the total number of 12 cultural or entertainment establishments, food establishments, 13 liquor establishments, and lodging providers in the proposed 14 area, the adoption of the ordinance requires a unanimous vote 15 of the council. At any time prior to the final adoption 16 of an ordinance establishing an area, the entire matter 17 of establishing such area shall be withdrawn from council 18 consideration if a petition objecting to establishing such area 19 is filed with the clerk containing signatures of at least 40 20 percent or more of all owners of property in the proposed area 21 or signatures which together represent ownership of 40 percent 22 or more of the total number of cultural or entertainment 23 establishments, food establishments, liquor establishments, and 24 lodging providers within the proposed entertainment area. 25 The surcharge authorized under the bill shall be a rate not 26 to exceed 3 percent, which shall be imposed upon any of the 27 following within the area: (1) the retail sales price of food 28 or alcoholic beverages sold at a cultural or entertainment 29 establishment, food establishment, or liquor establishment; (2) 30 the sales price of all sales of entertainment tickets sold at a 31 cultural or entertainment establishment; or (3) the sales price 32 for the renting of any lodging. 33 The bill specifies that the surcharge shall be in addition 34 to the state sales tax imposed pursuant to Code chapter 423, 35 -12- LSB 1315YH (4) 91 jm/jh 12/ 13
H.F. 38 subchapter II, the state-imposed and locally imposed hotel and 1 motel tax pursuant to Code chapter 423A, and the local sales 2 and services tax imposed pursuant to Code chapter 423B. The 3 bill establishes a process and timing for imposition or repeal 4 of the surcharge and for dissolution of the area. 5 The bill specifies the director of the department of 6 revenue shall administer the surcharge as nearly as possible 7 in conjunction with the administration of the state sales tax. 8 The bill specifies that administrative and enforcement laws 9 relating to the sales tax apply to surcharges imposed under the 10 bill. The bill requires each city to assist the department in 11 identifying new establishments required to impose the surcharge 12 in the area. 13 The bill creates a state surcharge revenue fund in the 14 state treasury under the control of the department of revenue 15 consisting of surcharge revenues collected within each area. 16 The bill creates an area account for each city creating an 17 area. The bill requires the revenues be deposited into the 18 appropriate area account. All revenues in each area account 19 shall be remitted monthly by the department to the city that 20 established the area for deposit in the entertainment area 21 fund of the city. Surcharge revenues deposited into the 22 citys entertainment area fund may be deposited in any of 23 the following funds: the debt service fund in Code section 24 384.4, or the capital improvements fund in Code section 384.7. 25 If the surcharge revenues are not deposited in any of the 26 above-mentioned funds, the surcharge revenues may also be 27 used for any of the purposes described under Code section 28 384.3A(3)(b), (c), (e), (f), or (g). 29 -13- LSB 1315YH (4) 91 jm/jh 13/ 13