Iowa 2021 Legislative Report – Week 4

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

Week four brought extensive committee work in both chambers Monday-Wednesday, with a slower day on Thursday due to the snow in Des Moines and across the state, though virtual meetings allowed the Senate to continue to conduct business, despite the snowstorm. With numerous bills through committee, we will likely see more floor action in the coming weeks. Over 100 study bills were introduced this week alone, and more are expected as individual requests continue to be drafted. Next week brings the first legislative deadline. Friday, February 12 is the final day for individual senator and representative requests for bill and joint resolution drafts.

2021 Session Deadlines:

Childcare and Education

The House continued advancing childcare bills, addressing their priority of expanding access to childcare. The House also passed HF228, Voluntary Diversity Plans, on Tuesday evening, sending it to the Senate. The bill strikes the ability of school districts to use a voluntary diversity plan as a reason for denying open enrollment, giving parents the ability to decide where their children go to school. The bill passed on a 56-32 party-line vote (12 members were absent). The Senate already approved provisions of HF228 in the Governor’s Education Plan (SF159) on a 26-21 vote last week.

Access to Contraception

The House Human Resources Committee approved HSB121, Hormonal Contraceptives, on a 15-2 vote. The bill allows pharmacists to dispense self-administered hormonal contraceptives without a prescription. In the previous General Assembly, Governor Reynolds prioritized expanding access to contraception to Iowan women in rural areas. In 2019, SF513 passed the Senate on a 42-6 vote. The House Human Resources Committee passed a companion bill, but it never received a floor vote in 2019 or 2020.

Affordable Housing

The subcommittee on the Governor’s housing proposal (SSB1142) convened Thursday with immense support from groups across the spectrum. SSB1142 deals with the current shortage of affordable homes by:

  • creating a Housing Tax Credit program (aggregate credits of $15 million for affordable housing)
  • doubling the existing Workforce Housing Tax Credits ($50 million to clear existing backlog of eligible projects)
  • doubling the Redevelopment Tax Credit
  • including disaster housing assistance and assistance for downtowns

The Governor’s Office believes Iowa will need an additional 50,000 homes by 2030.

Executive Branch Update

Governor Reynolds has named Michael Bousselot as the new Director of the Department of Management, effective Monday, February 8. Bousselot replaces Director Dave Roederer who served in the role for ten years. Bousselot previously served as Chief of Staff, Legal Counsel, and Policy Advisor in the Branstad-Reynolds administration.

COVID Update

Governor Reynolds plans to request the development of a system to schedule COVID vaccinations. Iowa currently trails much of the nation in the rate of vaccination. The Governor also plans to press federal officials about why Iowa is receiving fewer vaccinations than other states; Iowa is 47th in the nation in per capita vaccine distribution. About 206,000 people in Iowa (6.5% of the population) have received at least one of the two required vaccine doses.

Other News

In a few weeks, Senator Charles Grassley is likely to announce whether he will run again. Senator Grassley is 87 and up for re-election in 2022. He served eight terms in the Iowa House, three terms in the U.S. House, and is serving his seventh term in the U.S. Senate.

Iowa 2021 Legislative Report – Week 3

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

Both chambers gaveled in for the third week of the legislative session, despite a massive snowstorm that dumped historic levels of snow across most of Iowa and the Des Moines metro. 

While the emphasis this week was largely on committee work, with dozens of bills advancing out of subcommittee each day, the week closed with two main accomplishments–floor action on education bills and constitutional amendments. 

Education Bills

Education bills requiring full-time, in-person learning for the 2020-2021 school year quickly became a top priority for both chambers and the Governor in response to virtual learning plans rolled out by numerous school districts during the COVID-19 pandemic.

The Senate moved the Governor’s Education Plan (SF159, formerly SSB1065, more details here) through subcommittee and committees (Education and Appropriations) on Monday along party-line votes.

Highlights of the bill include:

  • Scholarships that would allow parents to move students out of public schools that do not meet federal guidelines
  • End the use of voluntary diversity plans to deny open enrollment requests
  • Adopt provisions on charter schools
  • Require the coordination of school records electronically
  • Increase the tuition tax credit

Also on Monday, the Senate Education Committee approved SF160 (formerly SSB1064) School Instructional Time, which would require in-person learning. 

The House Education Committee began debate on both HF229 (formerly HF103 and the companion to SF160). School Instructional Time and HSB64 Voluntary Diversity Plans on Monday and finished the debate Tuesday, moving both bills forward. Provisions of HSB64 are included in the Governor’s proposals on education (which was approved by Senate Education in SF159).

Thursday brought floor action in both chambers on the education bills. The House and Senate both approved School Instructional Time (SF160) with the Senate amending the bill to concur with the language in the House bill. The Senate messaged the amended bill to the House who took it up late in the evening on Thursday, substituting HF229 for SF160, and approved the bill 59-39 before gaveling out for the week. Governor Reynolds signed the bill on Friday, January 29. The bill is effective on enactment and requires in-person learning to begin by the second Monday following the effective date, which is February 15.

The Senate also approved the Governor’s Education Plan (SF159) on a 26-21 vote with three Republican Senators voting with the Democrats.  A fiscal note on the Governor’s Education Plan was also released Thursday, January 28, estimating the impacts to school districts of reductions in state aid and reduced property taxes.  The bill now awaits action in the House.

Constitutional Amendments

In addition to the education bills, both chambers were eager to advance Constitutional Amendment resolutions this week. The Second Amendment Constitutional Amendment is a top priority for the Republicans.

  • Second Amendment Constitutional Amendment resolutions (SJR7/HJR4) were debated and advanced in both chambers on Thursday evening (the House substituted HJR4 for SJR7).  Passing on party-line votes, the bill now goes to the Secretary of State to be noticed and placed on the ballot in the 2022 election for a statewide vote before being added as a constitutional amendment.
  • No Right to Abortion Constitutional Amendment (HJR5) was debated in the House on Wednesday evening. The House adopted the amendment on a 55-44 vote, with three Republicans voting against the amendment.  The bill was immediately messaged and awaits action in the Senate.

Childcare

A number of childcare bills are being considered and advanced to address the “childcare cliff” in Iowa, which has been identified by all parties as a priority this session.  Significant work was done on these bills this week and it is worth noting which bills have advanced: 

  • Child Tax Credits (HF230 formerly HF1)— Doubles the income threshold (to $90,000) for eligibility for child tax credits (advanced out of House Ways & Means Committee).
  • Business Childcare (HF4)— Establishes credits against the income tax, franchise tax, or gross premiums tax for businesses that offer childcare for employees of up to 25% of costs. It caps the credit at $150,000 and allows it to be carried forward. Includes building an on-site child center or leasing or paying the expenses of a childcare center (advanced out of House Ways and Means subcommittee). 
  • On-Site Childcare (HF3/SF176) — Allows the creation or expansion of an on-site daycare at a business to qualify for credits under the High Quality Jobs program (HF3 advanced out of House Economic Growth subcommittee). 
  • Childcare Matching Grants (HF6)— Creates the Iowa Childcare Workforce matching grant program to offer matching grants to communities that provide funding for the childcare WAGES stipend program, the teacher education and compensation helps scholarship program, or other childcare workforce strategies (advanced out of House Human Resources Committee).
  • Childcare Reimbursement Rates (HSB2)— Requires DHS to set the reimbursement rate under the Child Care Assistance program for providers whose reimbursement is under 50% level of the most recent market rate (advanced out of House Human Resources Committee).
  • Childcare Phase Out (HSB3)— Established a 12-month phase-out of eligibility for childcare assistance after the gross income of the family has increased (advanced out of House Human Resources Committee).

Special Election

Republican Adrian Dickey won the special election in Senate District 41 against Democrat Mary Stewart 5,040 votes to 4,074. Republicans now return to a 31-18 advantage in the Iowa Senate. 

Former State Senator Miller-Meeks has been seated by the U.S. House, though her challenger Former State Senator Hart has petitioned to contest the election; Miller-Meeks resigned before the start of session, which initiated a special election for her open seat.

Other News

Representative Ross Wilburn was selected as the new chair of the Iowa Democratic Party.  A former mayor serving his second term in the Iowa House, Representative Wilburn replaces former Representative Mark Smith who took the position in 2020.

Judge Thomas Bower was re-selected as the Chief Judge of the Iowa Court of Appeals; Judge Bower has served on the Court of Appeals since 2012 and was first elected Chief Judge in 2019.

Iowa 2021 Legislative Report – Week 2

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

Update: On Monday, January 25, the Governor introduced another bill, SSB1065, which establishes a student first scholarship program for certain pupils attending nonpublic schools. 

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The legislature did not meet on Monday in honor of the MLK Jr. holiday.  Legislators returned to the Capitol Tuesday morning with an increased presence of uniformed and non-uniformed officers, due to potential security concerns related to the inauguration of President-elect Biden.

Bills are being introduced at a rapid pace and subcommittees are hearing bills both in-person and virtually.  Only a handful of bills moved through House committees this week, but we can expect committee work to pick up next week in both chambers.  The House debated its first bill of the year on Thursday afternoon.

Constitutional Amendments

Two Constitutional Amendments were advanced this week:

1. Second Amendment Constitutional Amendment (HSB9/SJR1) proposes to add the Second Amendment with strict scrutiny standard of review to the Iowa Constitution. The bill advanced out of subcommittee in both the House and Senate and received party-line support in the House Public Safety Committee. It will be eligible for debate as early as next week in the House. The House and Senate both approved SJR18 in 2019, which is the same as the 2021 amendment. If the constitutional amendment measure passes both chambers again in this General Assembly, it will be included on the ballot in 2022 for a statewide vote before being added as a constitutional amendment.

2. No Right to Abortion (HSB41) proposes to adopt an amendment to the Iowa Constitution that the state does not recognize, grant, or secure a right to an abortion or the public funding of abortion.  The Senate previously passed SJR2001 in 2020 (32-18), but the proposed amendment did not reach the House floor. This year’s HSB41 advanced out of subcommittee and received party-line support in the House Judiciary Committee.  The Senate introduced their version of a No Right to Abortion bill SJR2, which is broader than HSB41.

Education Bills

The Governor’s Education Plan was introduced on Wednesday, January 20:

  • Student First: Establishes the Student First Scholarship program for non-public school students.
  • Charter schools: Establishes new provisions on charter schools.
  • Diversity: Strikes the use of a voluntary diversity plan to deny open enrollment.
  • Electronic records: Requires the Department of Education (DOE) to coordinate electronic data and to establish a statewide system.
  • Flex plan: Requires the DOE to establish a flexible student support plan to allow schools to implement innovative plans for up to three years.
  • Tuition Credit: Increases the Tuition Tax Credit to 50% of the first $2,000.
  • Other: Allows teachers to take deductions for certain expenses (similar to federal deductions). Makes changes to enrollment determinations. Makes changes to open enrollment, including transportation costs related to open enrollment. Deems that the directors of a school corporation are responsible for student improvement when given public funds.

Another bill introduced on Wednesday also addresses a priority of the Governor, in-person learning. SSB1064 requires schools to offer full-time, in-person learning for the rest of the 2020-2021 school year. Schools without full-time, in-person learning must notify parents and give them time to decide where they will send their children to school. The bill is effective on enactment and requires in-person learning to begin by the second Monday following the effective date.

COVID-19 Rules at the Capitol

While leadership has put in place some COVID protocols, there is continued debate about public health guidelines at the Capitol and making the legislature more accessible to Iowans. 

The House debated its first bill of the session on Thursday afternoon, HR3 House Rules. Typically, there is little to no debate on the rules, but due to the disagreement over public health guidelines at the Capitol, there was a lively debate with consideration of several amendments from the Democrats, including a mask requirement and the ability for the public and committee members to participate in committee meetings remotely.  The bill ultimately passed 55-35, on party lines with ten members not voting.

COVID-19 Public Health Measures

Governor Reynolds announced Thursday that the state will expand COVID vaccine availability as of February 1, including for those people aged 65 and older.  The state has established a tiered system for the vaccine rollout:

  • Tier 1: Law enforcement, first responders, pre-kindergarten and K-12 staff, early childhood educators, and child care workers
  • Tier 2: Essential workers in food, agriculture, and manufacturing who work in settings where social distancing is difficult and persons with disabilities
  • Tier 3: Staff and individuals in congregate living and government officials and staff at the Capitol
  • Tier 4: Health and safety inspectors
  • Tier 5: Correctional facility staff and inmates

The state has administered 106,000 shots out of the 160,000 doses received, with most vaccines going to health care workers. The state will start receiving 39,000 doses weekly on February 1, and those amounts will increase.

The Governor also announced a reallocation of $17 million in relief money available to local governments for direct expenses incurred in response to COVID-19.  She also announced a grant program to help bars and restaurants deal with losses from the pandemic; businesses can apply between February 1 and February 25 for up to $25,000 in funding.

Special Election and Other News

The special election for Senate District 41 is slated for next Tuesday, January 26, with Republican Adrian Dickey running against Democrat Mary Stewart.  The district currently has a registration advantage for the Democrats, but Republicans carried the district in the last two Senate elections. This seat is open due to Mariannette Miller-Meeks’ election to the U.S. House of Representatives.

Former Speaker Linda Upmeyer was elected co-chair of the Iowa Republican Party.

Federal Report

Joe Biden was inaugurated as the 46th President of the United States on Wednesday, January 20, just before noon.  The inauguration marks the commencement of a four-year term for President Biden and Vice-President Kamala Harris.  The inauguration took place amidst extraordinary political, public health, economic, and national security crises, including the ongoing COVID-19 pandemic and the threat of civil unrest. Inauguration festivities were sharply curtailed by efforts to prevent the spread of COVID-19 and mitigate the potential for violence near the Capitol.

Shortly after President Joe Biden was inaugurated, his administration began taking immediate action on a number of policy priorities.  However, the top priority this week was clearly COVID-19.

On Wednesday night, the Biden Administration released a 21-page summary of their “National Strategy for the Covid-19 Response and Pandemic Preparedness.” The full 200-page document was released Thursday. The plan focuses on seven areas:

  1. Restore trust with the American people.
  2. Mount a safe, effective, and comprehensive vaccination campaign.
  3. Mitigate spread through expanding masking, testing, data, treatments, health care workforce, and clear public health standards.
  4. Immediately expand emergency relief and exercise the Defense Production Act.
  5. Safely reopen schools, businesses, and travel while protecting workers.
  6. Protect those most at risk and advance equity, including across racial, ethnic, and rural/urban lines.
  7. Restore U.S. leadership globally and build better preparedness for future threats.

On Thursday afternoon, President Biden held a press event to announce his strategy to combat COVID-19. Biden announced that he will sign 10 executive actions aimed at enhancing the federal response to the pandemic. Biden warned that it will take months to vaccinate the majority of Americans and that 100,000 people could die from the virus in the next month.

The ten executive actions and memos issued Thursday:

  1. Executive order directing federal agencies to use the Defense Production Act (DPA) to speed the manufacturing of coronavirus vaccines, testing, and supplies.
  2. Memorandum directing FEMA to increase federal reimbursement to 100% for the cost of National Guard personnel and emergency supplies.
  3. Executive order establishing a Pandemic Testing Board, aimed at increasing domestic capacity.
  4. Executive order directing studies to identify COVID-19 treatments.
  5. Executive order to improve data collection, production, sharing, and analysis.
  6. Executive order directing the Departments of Education and Health and Human Services to provide guidance for the safe reopening and operating of schools.
  7. Executive order calling on the Occupational Safety and Health Administration (OSHA) to release guidance for employers on worker safety; enhance worker health and safety requirements; and target the worst violators.
  8. Executive order requiring mask-wearing in airports and on multiple forms of interstate travel.
  9. Executive order to establish a COVID-19 Health Equity Task Force.
  10. Presidential directive to restore America’s leadership, support international pandemic response effort, promote resilience for future threats, and advance global health security

Iowa 2021 Legislative Report – Week 1

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

The Legislature convened on Monday, January 15, with new COVID-19 protocols controlling access in the Capitol. The opening of the General Assembly began with remarks by leaders in both chambers and joint conventions for the Condition of the State speech by Governor Reynolds, the Condition of the Judiciary by Chief Justice Christensen, and the Condition of the Guard speech by Major General Benjamin Correll.

Iowa Legislative Branch Update

Among other priorities, majority leaders in both chambers emphasized the need for continued disciplined budgeting practices. Senate Majority Leader Whitver and Senate President Champan included remarks about improving Iowa’s tax climate and protecting K-12 education. President Chapman also mentioned that the legislature must propose an amendment to the Iowa Constitution that states there is no right to an abortion. House Speaker Grassley and House Majority Leader Windschitl also discussed the necessity to lower taxes and addressed the childcare crisis in Iowa. Majority Leader Windschitl also mentioned the protection of the unborn as well as the protection of rights under the Second Amendment.

Minority Leader remarks in both chambers were largely related to making pandemic recovery and investment in public health a priority.

Specifically, Senate Minority Leader Wahls called for the development of an independent and nonpartisan COVID Commission to investigate the state’s COVID response. House Minority Leader Prichard also took the opportunity to denounce the disturbance at the nation’s capital and the actions that threaten our democracy.

The full text of each address is linked below:

Senate:

House:

Iowa Executive Branch Update

Governor Reynolds delivered the Condition of the State speech on Tuesday, January 12, at 6:00 p.m., breaking with the normal tradition of a morning joint convention. Governor Reynolds opened by addressing the challenges of 2020 – COVID-19, civil unrest, a drought, a derecho and she commended Iowans and their response to the challenges of 2020.

Highlights:

  • Increasing spending by 3.7% in FY2022 to $8.079 billion and by 2.3% in FY2023 to $8.275 billion (FY2022 increase includes the increased federal spending for Medicaid in the state)
  • Increasing mental health funding by $15 million over the next two years
  • Increasing school spending by 2.5% ($27 million) in 2022-2023 and by $143 million in 2023-2024 (additional $20 million for pandemic aid)
  • Requiring schools to return to in-person learning and giving parents the option to send their children to districts with in-person school
  • Removing triggers for tax cuts in the 2018 legislation and allowing tax changes to take effect in 2023
  • Expanding broadband access with $150 million in funding over the next three years
  • Doubling the affordable housing tax credit to $50 million
  • Making work-based learning available to all Iowa students
  • Increasing funding to make childcare more affordable and available
  • Addressing police safety and racial profiling with legislation to create protections for police and improve data collection on arrests
  • Introducing an amendment to restore voting rights of felons

Other significant Executive Branch developments:

  • Governor Reynolds set a goal to have 70% of Iowans in the workforce with education and training beyond high school by 2025. The Iowa Employer Grant Program with $1.2 million in grants is now available through two grant programs from Iowa Future Ready.
    • The Iowa Employer Innovation Grant fund will help Iowans earn post-secondary degrees. Employers, non-profits, and schools can receive grants up to $50,000 to help design programs with services such as childcare, transportation, books, and internet to help students.

    • The Child Care Challenge Fund allows employers, non-profits, and schools to receive grants up to $100,000 to help build new childcare facilities and rehab or repurpose older facilities and structures for use as childcare facilities.

  • Department of Management (DOM) Dave Roederer will retire on January 31, 2021. Roederer has served as the Director of DOM since 2011 and has served in state government for 38 years.
  • Governor Reynolds appointed Adam Steen as the new Director of the Department of Administrative Services (DAS). Steen is currently Director of Business Development at Syverson Strege and replaces resigning Director Jim Kurtenbach.

Iowa Judicial Branch Update

On Friday, January 8, the justices on the Iowa Supreme Court selected Justice Susan Christensen to continue serving as the Chief Justice of the Iowa Supreme Court. The Chief Justice is now selected for a two-year term after the legislature made changes to the selection of judges and other related matters. Christensen was first selected as Chief Justice following the retirement of Acting Chief Justice Wiggins in February 2020.

On Wednesday, January 13, Chief Justice Christensen delivered the 2021 Condition of the Judiciary to a joint convention of the General Assembly. The speech covered access to justice during a pandemic, expansion of implicit bias training, and highlighted two of the Chief’s priorities: helping Iowa children remain with their families and elevating Family Treatment Courts.

Published along with the address was the Iowa Judicial Branch 2020 Annual Report—a comprehensive report about the courts, their response efforts/orders during the pandemic, an overview of Iowa specialty courts, court innovation, access to justice, and caseload numbers.

Congressional Update

Former State Senator Miller-Meeks resigned her seat in Iowa Senate District 41 after being seated in the U.S. Congress earlier this month. Congresswoman Miller-Meeks won the race for Iowa’s 2nd Congressional District over Rita Hart by six votes; Hart remains committed to contesting the election in the U.S. House. Governor Reynolds has set a special election for Senate District 41 for Tuesday, January 26. Republicans have selected Adrian Dickey to run and Democrats have selected Mary Stewart to run. Stewart lost the race for the Senate in 2018 to Miller-Meeks.

What’s Next

Bill introductions were voluminous this week, with over 130 bills introduced in the Senate and nearly 170 bills introduced in the House.

The House began committee work, holding a number of subcommittee meetings on Wednesday and Thursday. Subcommittees can be attended in-person or online. The Senate held one subcommittee this week on SSB1004, an act that would reinstate the death penalty for capital murder.

Neither chamber will meet on Monday, January 18, in observance of Martin Luther King, Jr. Day. Regular session will resume Tuesday, though both chambers gaveled-in Friday to read in bills.

Iowa 2021 Legislative Session Kicks Off

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

The 2021 session of the 89th General Assembly began today, Monday, January 11.

Legislative Branch Development

The Makeup of the 89th General Assembly

Republicans maintain their majority in both chambers. House Republicans picked up six seats in the November election, increasing their majority to 59 Republicans to 41 Democrats. The Senate currently sits at 31 Republicans to 18 Democrats due to the resignation of former State Senator Miller-Meeks who was sworn into Congress to represent Iowa’s 2nd Congressional District last week. Governor Reynolds has set a special election for Senate District 41 for January 26. Note: Miller-Meeks won the race over Rita Hart by six votes; Hart is contesting the election in the U.S. House, but Miller-Meeks has been seated.

House Map

Iowa House Map

Senate Map

Iowa Senate Map

New Leadership

Due to the retirement of former Senate President Schneider, Senate Republicans elected new leadership this interim. Senator Jake Chapman of Adel will serve as the Senate President for the 89th General Assembly and Senator Brad Zaun of Urbandale will serve as the Senate President Pro tempore.

Jake Chapman
Sen. Jake Chapman, Adel

Brad Zaun
Sen. Brad Zaun, Urbandale

Senator Janet Petersen has stepped down from her position serving as Minority Leader in the Senate. Petersen was the first woman to lead the Iowa Senate Democratic caucus. Senator Zach Wahls of Coralville was chosen by his caucus to serve as the new Minority Leader. He is in his first term and is the youngest lawmaker to lead the Senate Democrats.

Zach Wahls
Sen. Zach Wahls, Coralville

A number of new assistant majority and minority leaders were also selected in both chambers:

House Republicans (Assistant Majority Leaders):

  • Holly Brink
  • Jon Thorup

Senate Republicans (Assistant Majority Leaders):

  • Chris Cournoyer
  • Carrie Koelker
  • Mark Lofgren
  • Zach Whiting

House Democrats (Assistant Minority Leader):

  • Jennifer Konfrost

New Committee Chairs

Retirements, congressional elections, and leadership changes prompted numerous committee changes. New committee chairs were installed on several committees as well as a shuffling of committee members. The Iowa Legislature website lists full committee membership assignments.

Iowa Committee Chairs

Note: The Information Technology Committee is newly formed in the Iowa House focusing on state technology infrastructure, cybersecurity, and broadband issues. The Senate did not create a similar committee.

State Budget Outlook

A slow revenue increase is anticipated as the economy gradually emerges from the COVID-19 pandemic recession. Even still, current Iowa leadership has remarked that past budgeting practices have left the state in good financial shape to deal with the impact of the pandemic. Speaker Grassley said that it would be a bad budgeting practice to use the emergency funds for COVID-19 relief, but that the ending balance could be used for one-time expenses.

State Budget Outlook

Major Topics for 2021

Caucuses have set priorities for 2021 in their leadership addresses. Full texts of each address will be included in the next weekly update. At this time, we expect the 2021 session to include COVID relief, economic recovery, tax reform, education reform, police reform, medical malpractice reform, funding for mental health, and childcare assistance.

Governor Reynolds said will not re-introduce her “Invest in Iowa” Act this session, which included proposals to shift taxes and to shift spending for mental health services to the state.

Redistricting

2021 is a redistricting year for the Legislature, and legislators will need to approve a new redistricting map drawn by the non-partisan redistricting commission. Iowa has used a non-partisan commission since the redistricting after the 1980 census and has approved a first or second map each time, without amendment. By law, legislators cannot offer amendments to the first two proposed maps but can offer amendments on a third map. Speaker Grassley and Senate Majority Leader Whitver both said that Iowa has an excellent redistricting process that does not need to be changed but said that they could not commit to agreeing to not offer amendments to a third map in advance of seeing such a map.

Broadband

With many K-12 schools going online due to surging COVID-19 cases, addressing the lack of broadband Internet in many rural areas will be a top priority. Gov. Reynolds’ administration has undertaken ambitious plans to make broadband more accessible and has directed a large share of federal COVID-19 relief dollars toward bolstering broadband access.

Healthcare

Policymakers are pushing to allow additional types of medical professionals, including dentists and pharmacy personnel, to administer vaccines when a long-awaited COVID-19 vaccine rolls out. Discussions surrounding telehealth also are likely to continue into the 2021 session as lawmakers look to facilitate better access to health care. Like many rural states, Iowa suffers from a shortage of healthcare providers in some regions.

Workforce

Iowa’s low unemployment rate, even in the face of the pandemic, means the state will continue to find ways to train workers to fill available jobs. To meet growing employer needs, Gov. Reynolds and lawmakers are expected to expand their marquee workforce initiative, Future Ready Iowa. The program provides scholarships and apprenticeship training geared toward specific positions. Legislative leaders also have pledged to reform childcare assistance programs that serve low-income workers so that parents don’t lose benefits if their wages increase.

Taxes

Gov. Reynolds, who has supported a one-cent increase in the state sales tax, will likely face an uphill battle this year because of the focus on pandemic recovery. The tax increase would fund natural resources, water quality, and outdoor recreation initiatives, as well as provide property tax relief. However, tax cuts remain on the table. GOP legislative leaders have expressed interest in finally implementing income tax cuts passed in 2018 as the state continues its economic recovery.

Legislative Timetable

The 2021 Iowa Legislative session is slated for 110 days:

Legislative Timetable

Preliminary Results from Election Night 2020

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

This was written at 9:30am CST on November 4 before the result of the Presidential race is known and with several US House and Senate races still undecided.  Iowa has results at the federal and state level but it remains to be seen if the close races in the 1st and 2nd Congressional Districts resulting in Republican pickups will trigger recounts. Below is a high-level breakdown of the results that we know now.  A more detailed analysis will be provided later this week or early next week.

Presidential – Undecided

  • Iowa – President Trump defeated Joe Biden 53% to 44%.
  • National – The electoral count currently has Joe Biden with 238 and President Trump with 213.  These states have yet to be called:
    • Pennsylvania
    • Michigan
    • Wisconsin
    • Nevada
    • North Carolina
    • Georgia

US Senate – Likely Republican Hold

  • Iowa – Senator Joni Ernst defeated Theresa Greenfield 51% to 45%.
  • National – Currently the Senate is split 47-47 with 6 races having yet to be called.  We won’t know the outcome of the Georgia race until a run-off election in January 2021.  That being said, it is anticipated that the Senate will remain in Republican control regardless of the outcome of the Georgia run-off.

US House – Likely Democratic Hold

  • Iowa –
    • Congressional District 1: Ashley Hinson currently leads Rep. Finkenauer 51%-49% (just under 11,000 votes) but Finkenauer has yet to concede.
    • Congressional District 2:  Mariannette Miller-Meeks currently leads Rita Hart by just under 300 votes but Hart has yet to concede.
    • Congressional District 3:  Rep. Cindy Axne defeated David Young 49%-47%.
    • Congressional District 4: Randy Feenstra defeated J.D. Scholten 62%-38%.
  • National – The House is currently at 189-183 with a large number of races having yet to be decided. The Republicans have picked up 4 seats.  That being said, the Democrats are expected to retain their majority.

Iowa Statehouse

Senate – Republicans maintained their 32-18 majority

  • Republicans successfully defended six open seats and defeated one Democratic incumbent.
  • Democrats won one Republican open seat (Sen. Schneider’s).

House-Republicans increased their majority to 59-41 from 53-47

  • Republicans defeated seven Democratic incumbents while successfully defending all of their own incumbents.
  • Democrats won one open seat (Rep. Hinson’s).

2020 Iowa Legislative Report

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

Governor’s Desk-Bill Status Report

After an 11-week recess and a number of long days and late nights, the “second” session of the 88th General Assembly of Iowa adjourned sine die Sunday, June 14, 2020, almost two months after it was originally scheduled to adjourn (April 21, the 100th day). 

The legislature sent 123 bills down to the Governor for her review. The Governor signed 122 bills in total, line iteming various provisions in HF2643 FY2021 Appropriations Changes and vetoing HF2556 in its entirety. Some of the final bills signed into law by Governor Reynolds included some of her key legislative priorities and major topics from 2020. Our previous post, 2020 Legislative Report End of Session Summary, details the budget decisions, and major legislative topics from the session.

Bills Signed by Governor

 
SF 2144 SUPPLEMENTAL APPROPRIATIONS Signed 2.13.20
SF 2164 TRANSPORTATION EQUITY Signed 2.25.20
SF 155 MOVEABLE BARBERSHOPS Signed 3.10.20
HF 426 INSURANCE DIVISION Signed 3.12.20
HF 2235 CDL BAN FOR HUMAN TRAFFICKING Signed 3.12.20
HF 2267 DENTAL MATTERS Signed 3.12.20
SF 583 PRIVATE GENERATION TARIFFS Signed 3.12.20
SF 2025 COUNTY ENGINEERS Signed 3.12.20
SF 2091 ODOMETER STATEMENTS Signed 3.12.20
SF 2118 PHYSICIAN LOAN REPAYMENT Signed 3.12.20
SF 2131 REINSURANCE CREDITS Signed 3.12.20
SF 2132 HEDGING TRANSACTIONS Signed 3.12.20
SF 2134 CANNED COCKTAILS Signed 3.12.20
SF 2137 MORTGAGE/BOND MATURITY FILINGS Signed 3.12.20
SF 2142 STATE SCHOOL AID Signed 3.12.20
SF 2187 UNIFORM LLC ACT ENFORCEMENT Signed 3.12.20
SF 2198 CONSUMER LENDING Signed 3.12.20
SF 2250 TIMBER BUYERS & PRODUCTS Signed 3.12.20
SF 2408 EMERGENCY MEASURES Signed 3.17.20
SF 2357 PA DUTIES Signed 3.18.20
HF 2454 COMMUNITY COLLEGE INSTRUCTORS Signed 6.1.20
HF 2475 SEWER SYSTEM REVIEW Signed 6.1.20
HF 2477 AGRICULTURAL EXPERIENCES Signed 6.1.20
HF 2512 COUNTY ZONING Signed 6.1.20
SF 537 HUNTING COYOTES WITH LIGHTS Signed 6.1.20
SF 2082 DOE TECHNICAL BILL Signed 6.1.20
SF 2119 CONTROLLED SUBSTANCES Signed 6.1.20
SF 2120 PRESCRIPTION MONITORING PROGRAM Signed 6.1.20
SF 2135 DISINTERRING CREMAINS Signed 6.1.20
SF 2196 CEL TOWER SITING ACT Signed 6.1.20
SF 2259 SAFETY EQUIPMENT DONATIONS Signed 6.1.20
SF 2275 ELUDING OFFENSES Signed 6.1.20
SF 2299 BACKGROUND CHECKS Signed 6.1.20
SF 2337 ASBESTOS CLAIMS Signed 6.1.20
SF 2348 DISCHARGE OF A SENTENCE Signed 6.4.20
SF 2413 DALS BILL Signed 6.10.20
HF 2647 POLICE CHOKEHOLDS Signed 6.12.20
HF 717 VETERAN EMPLOYMENT Signed 6.17.20
HF 2220 ADULT LIVING PROGRAM Signed 6.17.20
HF 2236 COPY VETERANS RECORDS Signed 6.17.20
HF 2269 HCBS WAIVER MONTHLY CAP Signed 6.17.20
HF 2310 MOVING HAY Signed 6.17.20
HF 2312 VETERANS HOME AFFIDAVIT Signed 6.17.20
HF 2362 NON-PROFIT UNEMPLOYMENT APPEALS Signed 6.17.20
HF 2382 DISABLED VETERAN CONFIDENTIALITY Signed 6.17.20
HF 2402 REGISTERED AGENTS Signed 6.17.20
HF 2411 24/7 PROGRAM ELIGIBILITY Signed 6.17.20
HF 2474 ARREST WARRANT CONFIDENTIALITY Signed 6.17.20
HF 2481 TREASURER TAX CERTIFICATES Signed 6.17.20
HF 2535 CODE EDITOR I Signed 6.17.20
HF 2536 CODE EDITOR II Signed 6.17.20
HF 2565 SET-OFF PROCEDURES Signed 6.17.20
HF 2581 IOWA HEMP ACT Signed 6.17.20
HF 2623 WAGER WIN SETOFFS Signed 6.17.20
SF 388 PATRIOT MEMORIAL HIGHWAY Signed 6.17.20
SF 2097 INDECENT EXPOSURE Signed 6.17.20
SF 2182 CHILD/FAMILY LEGAL REPRESENTATION Signed 6.17.20
SF 2188 HAZARD MITIGATION FUNDS Signed 6.17.20
SF 2191 PRISONER MEDICAL AID Signed 6.17.20
SF 2195 COMMERCIAL ELEVATOR EXCEPTIONS Signed 6.17.20
SF 2225 THEFT OFFENSES Signed 6.17.20
SF 2284 REGENT INSTITUTIONS Signed 6.17.20
SF 2300 TRUSTEE DUTIES Signed 6.17.20
SF 2323 GUARDIAN/CONSERVATORSHIP CARE PLANS Signed 6.17.20
SF 2356 DYSLEXIA SPECIALISTS & BOARD Signed 6.17.20
SF 2398 RURAL VET LOAN REPAYMENTS Signed 6.17.20
HF 716 HUNTING FIREARMS Signed 6.18.20
HF 2360 SENIOR DRIVERS LICENSES Signed 6.18.20
SF 272 EDUCATION LOAN MANAGEMENT Signed 6.18.20
SF 620 CITY UTILITY SALES Signed 6.18.20
SF 2296 INDEPENDENT TRUCKERS Signed 6.18.20
SF 2338 MEDICAL EXPENSES/COVID PROTECTIONS Signed 6.18.20
HF 599 APPRENTICE HUNTERS Signed 6.25.20
HF 684 IMMUNITY IN ALCOHOL CASES Signed 6.25.20
HF 760 MOTEL ROOM TAXES Signed 6.25.20
HF 2197 RURAL MEDICAL RESIDENCIES Signed 6.25.20
HF 2221 BOARD OF HEALTH MEMBERS Signed 6.25.20
HF 2238 MINOR FOOD SALES Signed 6.25.20
HF 2359 TEACHER PREPARATION REPORTS Signed 6.25.20
HF 2363 LANDSCAPING UNEMPLOYMENT Signed 6.25.20
HF 2364 UNEMPLOYMENT INSURANCE RECORDS Signed 6.25.20
HF 2365 UNEMPLOYMENT NOTIFICATIONS Signed 6.25.20
HF 2372 FARM CHAUFFEURS Signed 6.25.20
HF 2389 ARRC POWERS Signed 6.25.20
HF 2410 SENIOR CROSSBOW LICENSE Signed 6.25.20
HF 2412 PUBLIC IMPROVEMENTS Signed 6.25.20
HF 2418 SCHOOL BUDGET CALCULATIONS Signed 6.25.20
HF 2445 SEX OFFENSE VICTIM PRIVACY Signed 6.25.20
HF 2452 ACQUIRING CITY WATER UTILITIES Signed 6.25.20
HF 2455 TRACKING DEER WITH DOGS Signed 6.25.20
HF 2485 CHILDCARE HOME NUMBERS Signed 6.25.20
HF 2486 COUNTY SEALS Signed 6.25.20
HF 2502 WEAPONS RULES Signed 6.25.20
HF 2528 EMERGENCY REQUESTS Signed 6.25.20
HF 2561 ORGAN DONATIONS Signed 6.25.20
HF 2585 DEAF/HARD OF HEARING Signed 6.25.20
HF 2627 LICENSING QUALIFICATIONS Signed 6.25.20
SF 280 MILITARY HUNTING & FISHING Signed 6.25.20
SF 457 CRIMINAL SURCHARGES Signed 6.25.20
SF 458 HOMESTEAD SALES Signed 6.25.20
SF 2232 DECANTING TRUSTS Signed 6.25.20
SF 2373 PUBLIC SAFETY TELECOMMUNICATORS Signed 6.25.20
SF 2400 BROADBAND CHANGES Signed 6.25.20
HF 310 OPTOMETRY INJECTIONS Signed 6.29.20
HF 594 WITHDRAWING LIFE SUPPORT Signed 6.29.20
HF 737 ANIMAL MISTREATMENT OFFENSES Signed 6.29.20
HF 2259 HUMAN TRAFFICKING TRAINING Signed 6.29.20
HF 2340 EDUCATIONAL PLAN SPENDING Signed 6.29.20
HF 2540 CHARITY ALCOHOL EVENTS Signed 6.29.20
HF 2554 CONTINUOUS SEXUAL ABUSE Signed 6.29.20
HF 2589 MEDICAL CANNABIS Signed 6.29.20
HF 2629 FUTURE READY ACT Signed 6.29.20
HF 2641 TAX CHANGES Signed 6.29.20
SF 526 BLUE ALERTS Signed 6.29.20
SF 2261 TELEHEALTH SCHOOL BEHAVIORAL SERVICES Signed 6.29.20
SF 2268 SMOKING/VAPING AGE Signed 6.29.20
SF 2310 ON-LINE LEARNING Signed 6.29.20
SF 2360 CLASSROOM BEHAVIOR Signed 6.29.20
HF 2642 RIIF APPROPRIATIONS Signed 6.30.20
HF 2644 TRANSPORTATION, INFRASTRUCTURE & CAPITALS Signed 6.30.20
SF 2403 ETHANOL & BIODIESEL TAXES Signed 6.30.20
HF 2556 LEASE/PURCHASE NOTIFICATIONS VETOED 6.30.20
HF 2643 APPROPRIATION CHANGES ITEM VETO 6.30.20

Miscellaneous Tax Changes in HF2641

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

This post was researched and written by 2020 Summer Associates Asher Mitchell and Kelsy Shay. Nicole Krueger, Jana Weiler and Courtney Strutt Todd reviewed the post.

In the final day of the 2020 session, the Iowa legislature passed a bill that enacted several changes to Iowa tax laws. This post addresses several miscellaneous changes made to the tax laws that are effective immediately.

Income tax

Taxpayers are now allowed to make an irrevocable election to waive the entire carryback period for Iowa net operating losses (NOL) beginning on or after January 1, 2020. The Iowa NOL may then be carried forward for twenty taxable years. Iowa farming loss is an Iowa NOL, and the taxpayer may elect for the farming loss to be carried back five taxable years prior to the year of loss. This election is irrevocable during the taxable year in which it is made. These provisions apply to tax years beginning on or after January 1, 2020.

Research activities credit

The amendment made changes to research activities credits and updates all references to the Internal Revenue Code section on the election of alternative simplified credit. This provision is effective immediately and applies to tax years beginning on or after January 1, 2019.

Married taxpayers – joint liability

This amendment changes the language from an innocent spouse to a spouse eligible for relief from joint and several liability. It allows the Department of Revenue to notify and permit the intervention of the non-requesting or former spouse when relief from joint and several liability is requested. This provision is effective immediately.

Business interest expense deduction and global intangible low-taxed income

This amendment adds new subsections for computing net income for both individuals and corporations. Business interest is limited under the Internal Revenue Code, so taxpayers whose adjusted gross income for the tax year was increased or decreased by business interest must recalculate net income for state tax purposes. This does not apply when additional first-year depreciation is authorized and applies in computing net income for state tax purposes. A taxpayer may not currently deduct interest expense paid or accrued in a previous taxable year by reason of carryforward of disallowed business interest. Corporations may subtract global intangible low-taxed income.

Computer peripherals

Computer peripherals are now exempted from sales tax. The legislature defines “computer peripheral” as an ancillary device connected to the computer digitally, by cable, or by another medium, used to put information into or get information out of a computer.

School Tuition Tax Credit

The current “total approved tax credits” for calendar years beginning on or after January 1, 2020, is $15 million. The changes in the bill allow for increases for any calendar year beginning on or after January 1, 2022, as follows:

  1. If the total amount of awarded tax credits from the preceding year is equal to or greater than 90% of the total approved tax credits for the current year, the current year’s total approved tax credits will be increased by 10%.
  2. If an increase occurs under (i), this recomputed total approved tax credits will carry forward to the following year (rather than starting back at $15 million), once again allowing for another 10% increase if the 90% threshold for awarded tax credits is met from the previous year. However, there is a maximum cap for recomputed total approved tax credits of $20 million for any calendar year.

Broadband infrastructure taxation

This amendment allows individual and corporate taxpayers to subtract grants provided to a communications service provider, if the grant is used to install broadband infrastructure, in computing net income.

Refunds will be allowed for claims between January 1, 2019, and January 1, 2020, only if it is filed prior to October 1, 2020. This provision is effective immediately and applies to tax years beginning on or after January 1, 2019.

Local assessors

The conference board must provide written notice of the appointment of an assessor within 10 days of the decision of the board and no longer needs to include its effective date. A new subsection requires confirmation of the appointment by the Director of Revenue prior to assuming the office of city or county assessor. Assessors and deputy assessors may not assess a property if the person or a member of the person’s immediate family owns or has a financial interest in the property.

The conference board is now subject to review and prior approval by the city legal department or county attorney when employing special counsel to assist the city legal department or county attorney.

Military student loan repayments

This amendment removes the subtraction of military student loan repayments received by individual taxpayers while on active duty. It also strikes sections regarding increased expensing allowance under section 179 of the Internal Revenue Code for both individuals and corporations.

Donation of qualifying personal protection equipment

“Qualifying personal protection equipment” refers to personal protective equipment that is manufactured and donated during (and up to 180 days after) a state of disaster emergency declared by the governor. Refunds of sales taxes, interest, or penalties reflecting these kinds of donations made before January 1, 2020, will be allowed only if the claim is filed before October 1, 2020.

Short-term rental properties 

Under the new amendments, counties can only regulate short-term rental properties (single-family home units rented for thirty days or less) for select purposes like public safety, residential zoning, or certain illegal or obscene activity like illegal drug manufacturing.

Addition of Flying Our Colors special registration plates

The legislature has permitted the Department of Transportation to design the “Flying Our Colors” special registration plate, a plate consisting of the colors of the Iowa flag. The fee for the plate is $35 and will be applied toward the state’s road use tax fund.

Entity level foreign tax paid

This section expands the language in Iowa Code Section 422.8 regarding credits towards Iowa income taxes for income tax paid in another state. Previously the section only addressed foreign taxes paid by a taxpayer as credit for that taxpayer. The revised language now provides for a credit towards Iowa income taxes paid to other states by entities, such as a partnership, corporation, estate, or trust. The new language states an Iowa resident who is a partner, shareholder, or beneficiary is deemed to have paid a pro rata share of the foreign income tax paid by the entity. The entity must provide the partner, shareholder, or resident a statement documenting that person’s share of the income, the income tax liability, and the amount of tax paid to the foreign state. This provision is effective immediately and applies to tax years beginning on or after January 1, 2020.

First-time home buyer accounts

Taxpayers now have until July 31, 2020, to designate an account opened in 2019 as a first-time homebuyer savings account. Typically, the deadline would have been April 30, 2020. The extension of time to designate the account reflects the extended due date for 2019 Iowa income tax returns.

Big picture

HF2641 encompasses several tax law changes including many miscellaneous aspects listed above. Questions about your specific tax situation, whether personal or business, should be addressed to a competent tax attorney.

Iowa Law Changes Affecting 529 Plan Accounts

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

The Iowa legislature recently enacted several new laws affecting the College Savings Iowa 529 Plan and the IAdvisor 529 Plan (the 529 Plans) in passing HF2641. These changes broaden what constitutes “qualified higher education expenses,” extend the deadline to make 529 Plan contributions for tax year 2019, and exclude from Iowa income refunds from higher education institutions that are re-contributed to a 529 plan.

Certain apprenticeship program expenses and student loan repayments treated as “qualified higher education expenses”

Federal legislation passed in 2019 expanded the types of expenses for which funds in a 529 college savings account can be used without losing favorable federal tax treatment of earnings on investments. The legislation permits certain apprenticeship program expenses and student loan repayments to be treated as “qualified higher education expenses.” Thus, with respect to the federal tax benefit, account owners can withdraw assets from 529 plans to pay apprenticeship program expenses or loan repayments and treat the withdrawals as qualified expenses.

As we indicated in our January post on the federal changes, it took an act of the Iowa legislature to extend favorable state tax treatment of contributions or withdrawals by Iowa 529 Plan participants to align with the federal changes. With the adoption of HF2641, withdrawals for certain expenses related to approved apprenticeship programs are now allowed. Individuals will be able to use their 529 accounts to pay for fees, books, supplies, and equipment required to participate in an apprenticeship program registered and certified with the Secretary of Labor under the National Apprenticeship Act.

In addition, amounts paid as principal or interest on any qualified education loan of the beneficiary or a sibling may be treated as a “qualified higher education expense.” It is important to note that the total cumulative amount in all years that may be used from all accounts for repayment of loans of an individual may not exceed $10,000. Also, loan repayments paid with 529 account funds will reduce the amount of allowed student loan interest deduction to which the taxpayer might otherwise be entitled.

These provisions apply to distributions made after December 31, 2018.

2019 tax year 529 plan contribution deadline extended

Ordinarily, taxpayers may elect to treat contributions to 529 Plans made between January 1 and the filing deadline as if they were made during the previous calendar year for purposes of state income taxes, and thus deduct them on the prior year’s income tax return. When the income tax filing deadline was extended to July 31 due to COVID-19, it became unclear the extent to which taxpayers could elect to treat contributions made up to the extended filing deadline as if they were made in 2019.

In HF2641, the legislature provided that a participant who makes a 529 Plan contribution after January 1, 2020, but on or before July 31, 2020, may elect to treat the contribution as having been made in 2019, allowing the participant to deduct the contribution on their 2019 tax return, to the extent of the amount permitted by law.

Refunds from higher education institutions that are re-contributed to a 529 plan are excluded from Iowa income

As a result of COVID-19, many colleges and universities have issued refunds to students and families for tuition, housing costs, and other higher education expenses. Iowa law permits taxpayers to deduct certain contributions to 529 Plans so long as the funds are used for “qualified higher education expenses.” While originally withdrawn from 529 Plans to pay for qualified higher education expenses, the refunded amounts would no longer be used for such purpose and would potentially be subject to Iowa income taxation.

HF2641 provided that refunds of qualified higher education expenses from higher education institutions would not be subject to Iowa income taxation so long as all of the following conditions are met:

  1. The refund is re-contributed to the same 529 Plan from which the original withdrawal was made
  2. Re-contribution is made within sixty days of the date of the refund
  3. The re-contribution amount does not exceed the amount of the refund

The legislature also clarified that a taxpayer cannot take a deduction for the amount of the re-contribution. The taxpayer should have already taken the deduction at the time the original contribution was made.

We were hopeful the Iowa legislature would take action to align Iowa law relating to 529 Plans with federal law and are happy to see that conformity, as well as these other changes beneficial to Iowa taxpayers. Questions about 529 Plans should be directed to a qualified tax attorney to ensure you are in compliance with the new regulations.

Iowa Reinvestment Act Rejuvenated

This content was published prior to the combination of Dentons Davis Brown. Learn more about Dentons Davis Brown.

Under the Iowa Reinvestment Act, municipalities may apply to the Iowa Economic Development Authority to establish a reinvestment district and receive tax-generated funds for large-scale development projects.

The act originally approved $100 million in funding and required the Economic Development Authority Board to approve proposed district plans no later than July 1, 2018. The recently passed House File 2641 will reopen approval for district plans, permit additional funding for new districts, and expand the qualification definitions.

New Reinvestment Districts and Funding

The changes to the act will allow the board to begin approving district plans again. All district plans will need to be approved no later than July 1, 2025. The changes also allow for an additional $100 million in total tax revenue to be transferred to the state reinvestment district fund to be used for reinvestment districts that are approved between July 1, 2020 and July 1, 2025.

Expanded Definition of Reinvestment Districts

An application to establish a reinvestment district must be submitted by a “municipality.” Under the original terms, the definition of a municipality was limited to a county or an incorporated city. The changes to the act will now allow two or more contiguous counties and/or incorporated cities to join forces and apply as a single municipality as long as they have an active 28E agreement.

Additionally, the area of land that can be included in the reinvestment district is being expanded from 25 acres to 75 acres for all districts approved after July 1, 2020.

All reinvestment districts, regardless of the approval date, remain in existence for 20 years unless dissolved by the municipality at an earlier date. However, the changes to the act will allow a municipality to request an extension of up to five years under certain conditions.

Big Picture

New applications for reinvestment districts implementing these changes may be accepted as soon as July 1. Municipalities looking to fund large development projects through the establishment of a reinvestment district should watch for updates from the Economic Development Authority regarding future application opportunities and requirements.