The Targeted Jobs Withholding Tax Credit Pilot Program is a pilot program enacted in 2006 which allows the diversion of withholding funds paid by an employer to be matched by a designated "pilot" city to create economic incentives that can be directed toward the growth and expansion of targeted businesses located within a pilot city.
An approved "pilot" city may enter into a withholding agreement: 1) with a business that is locating to its community from another state and is creating targeted jobs within a pilot city; or 2) an existing Iowa business that is creating ten new targeted jobs or makes a qualifying investment of $500,000 within an urban renewal area.
For purposes of this program, a targeted job is defined as a job with a business that is or will be located in a "pilot" project city that pays a minimum wage equal to the county-wide average wage.
A "pilot" city entering into a withholding agreement is required to provide a $1 match for every withholding dollar received. This match can be provided by a private donor, the "pilot" city, the employer, or a combination of all three; and can be either in the form of cash or in-kind contributions to be used for the project.
The withholding agreement allows an amount of up to three percent of the gross wages paid by the business to be directed to the "pilot" city on a quarterly basis.
All designated withholding funds and those pledged by the "pilot" city are required to be used for an urban renewal project related to the employer pursuant to the terms of the withholding agreement. A "pilot" city must obtain approval of the project from the Iowa Economic Development Authority prior to the execution of any withholding agreement. The withholding agreement may have a term of up to ten years.
In 2006, four cities were selected as part of this "pilot" program and were required to meet the following requirements: one city selected whose county borders Nebraska, one city was selected whose county borders South Dakota, and two cities were selected whose county borders another state other than Nebraska or South Dakota. The four pilot cities that were selected included: Sioux City, Council Bluffs, Burlington, and Keokuk.
In 2007, this program was modified to allow two eligible cities located within the same county with a population less than 45,000 to count as one "pilot" city. As a result, the cities of Keokuk and Fort Madison were approved to be counted together as one "pilot" city. The revised list of approved designated "pilot" cities now includes the cities of Sioux City, Council Bluffs, Burlington, Keokuk and Fort Madison.
Wage thresholds for applicants applying for tax credits from IEDA’s Targeted Jobs Withholding Tax Credit Program have been updated for Fiscal Year 2017. Wage thresholds are calculated on an annual basis using wage data submitted by Iowa Workforce Development during the most recent four quarters.
Effective July 1, FY 2017 hourly wage thresholds for the five pilot cities are:
Council Bluffs: $17.93
Fort Madison: $21.49
Sioux City: $18.72
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