Relating to water quality, including a water quality monitoring network and the water quality initiative, an agricultural best management practices tax credit, an Iowa clean water farm program and property tax credit, and water quality practices loans, making appropriations, and including applicability provisions

DIVISION II —— WATER QUALITY INITIATIVE. The bill appropriates moneys from the environment first fund and the rebuild Iowa infrastructure fund to the department of agriculture and land stewardship (DALS) for FY 2026-2027 for purposes of supporting the water quality initiative administered by the division of soil conservation and water quality (division). The bill requires the appropriated moneys to be used for watershed projects designated by the division or the water resources coordinating council, education and outreach that encourages persons who hold a legal interest in agricultural land used for farming to implement water quality practices, or contracts to coordinate the implementation of water quality improvement efforts. The bill also allows the appropriated moneys to be used by DALS to support certain urban soil and water conservation efforts. The bill allows DALS to use the appropriated moneys to carry out the purposes of the water quality initiative on a cost-share basis in combination with other available state or federal funds. The bill restricts DALS from using more than percent of the moneys appropriated for administrative costs of administering and implementing the water quality initiative. DIVISION III —— AGRICULTURAL BEST MANAGEMENT PRACTICES TAX CREDIT. The bill defines “agricultural best management practices plan” (plan) to mean a plan approved by the division that provides significant improvement to water quality in this state utilizing eligible practices, and is consistent with other state and federal programs that address agriculture nonpoint source pollution management.43. “Eligible practice” also includes other practices used to reduce contributing nutrient loads including but not limited to alternative water systems, stream crossings and hardened access points, stream channel stabilizations, stormwater retention ponds, surface water runoff impoundments, constructed wetlands, wetland restorations, fuel tank storage treatments, capping and plugging abandoned wells, or integrated pest management principles. A taxpayer may claim the ABMP credit that is equal to percent of any unreimbursed costs incurred by the taxpayer during the tax year for the completion of an eligible practice that is in the plan approved by the division. After completion of any eligible practice, the bill requires the division to inspect the completion of the eligible practice, and, if completed, then certify the eligible practice as completed. The taxpayer shall provide the certification to the department of revenue when filing a return in a manner approved by the department of revenue. The ABMP credit shall be available to the taxpayer for a period not to exceed consecutive tax years and shall not exceed $150,000 in the aggregate per plan. The bill makes the ABMP credit refundable. In lieu of claiming a refund, the taxpayer may elect to have the overpayment shown on the taxpayer’s final, completed return credited to the tax liability for the following tax year. DALS is required to adopt rules pursuant to Code chapter 17A to administer the bill.50, created in the bill, as Code chapter 466B, subchapter V, entitled “Agricultural Best Management Practices Tax Credit”. The bill applies to tax years beginning on or after January 1, 2027. DIVISION IV —— CLEAN WATER FARM PROGRAM AND PROPERTY TAX CREDIT. The bill defines “agricultural land” to generally mean tracts of acres or more excluding any buildings or other structures used in agricultural or horticultural purposes. The bill specifies a qualifying owner shall be allowed a CWF credit on agricultural land equal to $5 per acre on property placed in the Iowa clean water farm program that has been certified by the division.2. Upon application to the division, the bill requires the division to conduct a comprehensive review of the nutrient loads associated with the acres proposed to be placed into the program, including conservation structures, best practices, or other measures that have been implemented to reduce contributing nutrient loads in Iowa’s water resources. After the comprehensive review, the division shall determine whether to certify the proposed acres as meeting the program goal of preserving and protecting Iowa’s water resources by reducing contributing nutrient loads. The administration and apportionment of the CWF credit is similar to the agricultural land credit in Code chapter 426. The CWF credit is allowed on the certified acres for successive years without further application as long as the certified acres are owned by the qualifying owner or the spouse of the qualifying owner. The bill appropriates from the general fund of the state the amounts necessary to fund the CWF credit. The bill applies to assessment years beginning on or after January 1, 2027. DIVISION V —— WATER QUALITY PRACTICES LOANS AND GRANTS PROGRAM. The bill provides that the water quality practices loans and grants program (program) be administered by the department of natural resources (DNR) and that the program is subject to available funding. The bill authorizes DNR to provide no-interest loans and grants to any person for the construction, renovation, improvement, or equipping of facilities or structures that implement agricultural best management practices intended to prevent pollution of state waters. The bill also authorizes DNR to provide no-interest loans and grants to local government entities that have developed no-interest loan programs or other incentives to facilitate the construction, renovation, improvement, or equipping of the facilities or structures. In addition, the bill authorizes assistance to financial institutions that are working with local governments to establish such local loan or incentive programs. The bill requires DNR to adopt rules for the program and to determine the terms and conditions of any loan or grant awarded under the program.