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SF 642 – Economic Development Authority and Finance Authority, Programs and Duties
(LSB1410SW)
Staff Contact: Evan Johnson (515.281.6301) evan.johnson@legis.iowa.gov
Fiscal Note Version – New
Description
Senate File 642 changes various programs, activities, and appropriations for the Iowa Economic
Development Authority (IEDA).
The following divisions of the Bill have no fiscal impact:
• Division I — Strategic Infrastructure Program
• Division III — Community Attraction and Tourism, and Vision Iowa — Required Benefits
• Division IV — Community Attraction and Tourism Program, and Sports Tourism Marketing
and Infrastructure Program — Application Review
• Division VI — Homelessness — Iowa Finance Authority
• Division VII — Title Guaranty Board — Elimination
• Division IX — Conforming Changes
• Division X — Iowa Reinvestment Act — District Establishment
The following divisions of the Bill have a fiscal impact and are described in further detail below:
• Division II — Brownfield, Grayfields, and Redevelopment Tax Credits
• Division V — Historic Preservation Tax Credit
• Division VIII — Arts and Culture
Division II — Brownfield, Grayfields, and Redevelopment Tax Credits
Description
Division II of the Bill eliminates the Brownfield Redevelopment Program, the Brownfield
Redevelopment Fund, and the Brownfield Redevelopment Advisory Council. The Division
makes changes related to the review of Redevelopment Tax Credit applications and transfers
any remaining moneys in the Brownfield Redevelopment Fund into a fund or funds established
pursuant to Iowa Code section 15.335B.
Background
A brownfield is an abandoned, idled, or underutilized industrial or commercial facility where
expansion or redevelopment is complicated by real or perceived environmental contamination.
The Brownfield Redevelopment Program provides financial and technical assistance for the
acquisition, remediation, or redevelopment of brownfield sites. The Brownfield Redevelopment
Fund last received an appropriation in FY 2010 from the Environment First Fund. As of April 24,
2025, there was approximately $1.4 million in the Brownfield Redevelopment Fund.
Assistance for brownfields is also available under the Redevelopment Tax Credit. Additional
information about the Redevelopment Tax Credit can be found in this Fiscal Topic.
Fiscal Note
Fiscal Services Division 2
A fund or funds established pursuant to Iowa Code section 15.335B may be used for the
following purposes:
• To provide project completion assistance and program support to eligible businesses related
to certain tax credits, tax refunds, and tax exemptions.
• To provide certain economic development region financial assistance.
• To provide financial assistance for business accelerators.
• To support the Innovation and Commercialization Fund.
• To provide financial assistance to businesses engaged in disaster recovery.
• To support the Entrepreneur Investment Awards Program Fund.
• To support the Strategic Infrastructure Fund.
• To support the Nuisance Property Remediation Fund.
• To support the Community Catalyst Building Remediation Fund.
Assumptions
No revenue or expenses will be registered for the Brownfield Redevelopment Fund in FY 2025
after April 24, 2025.
Fiscal Impact
Division II of the Bill transfers the balance of the Brownfield Redevelopment Fund to a fund or
funds established pursuant to Iowa Code section 15.335B as determined by the IEDA. As of
April 24, 2025, there was $1,441,854 in the Brownfield Redevelopment Fund.
Division V — Historic Preservation Tax Credit
Description
Division V of the Bill provides that the Historic Preservation Tax Credit (HPTC) may not be
used for single-family home projects unless the project results in two or more new single-family
homes that are located in the same neighborhood and that were not available for occupancy in
the preceding six months. The Division makes changes to the award date, commencement
date, and registration date of qualified rehabilitation projects. The IEDA may grant up to two
12-month extensions of a project’s completion date.
The Division removes the transferability of the HPTC beginning January 1, 2026. The refund
rate of the HPTC is increased to 100.0% for tax years beginning on or after January 1, 2026.
The Division permits the IEDA to award 20.0% more than the $45.0 million maximum aggregate
award limit for the HPTC if an applicant is eligible for $10.0 million or more in tax credits. Tax
credits awarded in excess of the maximum aggregate award limit are credited to the succeeding
fiscal year.
Background
The HPTC provides a 25.0% tax credit for qualified expenditures incurred during the substantial
rehabilitation of eligible historic properties in Iowa. To qualify, the property or district must meet
any of the following criteria:
• The property is listed on the National Register of Historic Places or is eligible for such a
listing.
• The property is designated as having historic significance to a district listed in the National
Register of Historic Places or is eligible for this designation.
• The property or district is designated as a local landmark by a city or county ordinance.
• The property is a barn constructed before 1937.
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Additional information on the HPTC, including redemption history, is available in the HPTC
Fiscal Topic.
Assumptions
• Tax credits are claimed in the year in which they are awarded.
• Requirements for claiming the HPTC are unchanged during the projection period.
• Demand for the HPTC is unchanged during the projection period.
• In any given fiscal year, the maximum aggregate award limit cannot exceed $54.0 million.
• Any amount exceeding the maximum aggregate award limit in one year will be credited
against the following year’s award amount.
• Changes to the HPTC will have no impact on the school district surtax.
• Tax credits awarded in calendar year (CY) 2026 are assumed to be claimed in FY 2027.
• The maximum aggregate award limit of $45.0 million will be awarded each year for purposes
of calculating tax credit transferability and refundability changes in the Bill.
• Approximately 75.0% of HPTC awards are transferred from the awarded entity.
• Under current law, 79.4% of the HPTC maximum aggregate award limit will be claimed each
year.
• On average, 7.5% of HPTC claims are against tax liability and 92.5% of claims are
refunded.
• Based on the refundability levels in Iowa Code section 404A.2(4)(a), it is assumed that the
reduction rates for tax credit refundability are 18.5% in tax year (TY) 2026 and 23.1% in
subsequent tax years.
Fiscal Impact
Allowing the HPTC to exceed the maximum aggregate award limit may decrease revenue to the
General Fund by up to $9.0 million in any given year, with an equal increase in revenue the
following year. This change is estimated to have a net neutral fiscal impact over a two-year
period.
Increasing the refund rate of the HPTC to 100.0% and eliminating transferability is estimated to
decrease revenue to the General Fund by $6.6 million in FY 2027 and by $8.3 million in
subsequent fiscal years.
Division VIII — Arts and Culture
Description
Division VIII of the Bill eliminates the following IEDA programs:
• Regional conferences and a statewide caucus on arts and cultural enhancement.
• The Cultural and Entertainment Districts Certification Program.
• The Iowa Great Places Program and the Iowa Great Places Program Fund.
• The Culture, History, and Arts Teams Program.
• The Iowa Cultural Trust, the Iowa Cultural Trust Fund, and the Iowa Cultural Trust Grant
Account.
• The Community Cultural Grants Program and the Operational Support Grants Program.
The Division removes the requirement that the IEDA do the following:
• Have advisory groups established by administrative rule.
• Develop and implement certain fee-based educational programming opportunities.
• Conduct surveys of existing art and cultural programs. 4
• Have a film office.
The Division establishes the Arts and Culture Enhancement Fund. Interest or earnings on the
Fund are deposited in the Fund. Moneys in the Fund at the close of a fiscal year remain in the
Fund and do not revert to the General Fund. Moneys in the Fund must be used for the following
purposes:
• To provide support to municipal and nonprofit arts and cultural organizations that serve as
significant attractions or community resources.
• To support artists and entities that foster artistic and cultural expression, promote lifelong
learning and engagement in the arts, advance community development goals, or emphasize
Iowa’s diverse heritage through artworks.
• To increase access to arts and culture in rural and underserved communities.
• To promote and invest in film, television, and video projects in the State.
• To address other goals and priorities included in the IEDA’s comprehensive, statewide,
long-range plan to develop the arts in Iowa.
• To cover the administrative costs of programs under the Arts and Culture Enhancement
Fund.
The Division makes changes related to the selection of the chairperson and the duties of the
Iowa Arts Council.
The Division provides that the $520,000 standing appropriation in Iowa Code section
99F.11(4)(d)(1) for operational support grants and community cultural grants be deposited in the
Arts and Culture Enhancement Fund.
The Division transfers all remaining unencumbered and unobligated moneys in the Iowa Great
Places Program Fund, the Iowa Cultural Trust Fund, and the Iowa Cultural Trust Grant Account
to the Arts and Culture Enhancement Fund.
Background
In FY 2025, the Community Cultural Grants Program received an appropriation of $172,090,
Cultural Trust Grants received an appropriation of $150,000, and the Iowa Great Places
Program received an appropriation of $149,710.
Under current law, Iowa Code section 99F.11(4)(d)(1) provides a standing limited appropriation
of $520,000 for operational support grants and community cultural grants from a portion of the
State Wagering Tax revenue deposited in the General Fund. For FY 2025, this standing
appropriation was limited to $448,403 in 2024 Iowa Acts, Senate File 2432 (FY 2025 Economic
Development Appropriations Act).
Assumptions
• Changes related to the appropriations for the Community Cultural Grants Program, Cultural
Trust Grants, and the Iowa Great Places Program will be determined in the annual
Economic Development Appropriations Act.
• No revenue or expenses will be credited to the Iowa Great Places Program Fund, the Iowa
Cultural Trust Fund, and the Iowa Cultural Trust Grant Account for the remainder of
FY 2025.
Fiscal Impact
Division VIII of the Bill creates the Arts and Culture Enhancement Fund. Interest earned on
moneys in to the Fund will remain with the Fund. The moneys in the Fund will not revert but will
remain available for expenditure for subsequent fiscal years. 5
The Division modifies a standing appropriation of $520,000 for operational support grants and
community cultural grants by instead depositing it in the Arts and Culture Enhancement Fund.
The Division transfers moneys in the Iowa Great Places Program Fund, the Iowa Cultural Trust
Fund, and the Iowa Cultural Trust Grant Account to the Arts and Culture Enhancement Fund.
As of April 24, 2025, there was $126,584 in the Iowa Great Places Program Fund, $67,148 in
the Iowa Cultural Trust Fund, and $27 in the Iowa Cultural Trust Grant Account.
Fiscal Impact Summary
Senate File 642 is estimated to increase and decrease the amount of funds available for various
funds and programs as shown in Figure 1.
Figure 1 — Fiscal Impact of Senate File 642
Division V of the Bill allows the HPTC to exceed the maximum aggregate award limit. This
may decrease revenue to the General Fund by up to $9.0 million in any given year, with an
equal increase in revenue the following year. This change is estimated to have a net neutral
fiscal impact over a two-year period.
Sources
Iowa Economic Development Authority
Department of Revenue
State Accounting System
/s/ Jennifer Acton
April 29, 2025
Doc ID 1526671
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
www.legis.iowa.gov Division II FY 2026 FY 2027 FY 2028
Brownfield Redevelopment Fund -1,441,854$ 0$ 0$
A Fund under Iowa Code section 15.335B 1,441,854 0 0
Division V
HPTC refundability - General Fund 0$ -6,600,000$ -8,300,000$
HPTC maximum aggregate award limit Unknown Unknown Unknown
Division VIII
Operational Support Grants -520,000$ -520,000$ -520,000$
Iowa Great Places Program Fund -126,584 0 0
Iowa Cultural Trust Fund -67,148 0 0
Iowa Cultural Trust Fund Account -27 0 0
Arts and Culture Enhancement Fund 713,759 520,000 520,000
Total 0$ -6,600,000$ -8,300,000$