Iowa Special Session Passes Enabling Legislation for Iowa Steel Mill

Pursuant to a proclamation By Governor Kim Reynolds, the Iowa Legislature convened today in a special session to consider amendments to Iowa’s MEGA law.

Background: The law was first passed in 2024 as a package of tax incentives for extremely large economic development projects making investments in Iowa by existing or new Iowa businesses of over $1 billion dollars.

At the time, Debi Durham, the head of the Iowa Economic Development Authority (IEDA) explained that Iowa had been competing for exceptionally large projects against locations in other states and simply did not have the growth and attraction incentives of other states. During the 2026 regular legislative session additional changes to MEGA were added in a catch-all bill for the IEDA and the legislature approved them to again, keep Iowa equipped to compete with other states for large projects.

Why Today's Legislation: The Governor and IEDA have negotiated for the location of a potential $15 billion steel mill in SE Iowa. Because of the investment size, and the needs of the project, the Legislature had a suite of changes to make to the existing MEGA Bill law.

What the Bill Does:

• Combines a 5% investment tax credit over 5 years for two projects into a 10% investment tax credit over ten years.
• Makes sure that Lee County qualifies as a rural county by allowing that 50,000 people may live in the qualifying county.
• Requires that the project be placed in service and half the workforce hired before awards are made, protecting taxpayers.
• Allows that the awarded investment tax credit is transferrable.
• Allows that locally assessed sales, use and property taxes may be credited or exempted with the approval of the local government.

ABI has engaged in the development of the MEGA Bill law since the beginning. Testifying in support of the original bill and speaking in support of the changes that occurred earlier this year. Today, ABI again spoke in support of the legislation, noting that we have been advocating for over 20 years for the regulatory and tax environment that can grow Iowa companies, locate new manufacturing, and make the state known as open for business.

The rules of order for special sessions are no different than for regular sessions. Bills must pass subcommittee, committee and of the floor of both chambers. ABI staff spoke at subcommittee in both chambers noting the improvement over time of the regulatory and tax climate in Iowa that makes such a project possible and encouraged passage. Others supporting the bill included the building trade unions the Iowa Business Council and several economic developers and business owners from SE Iowa. The Sierra Club spoke against the bill and tried vainly to tie it to eminent domain laws they have attempted to change to slow a separate development project.

On the Senate side the bill advanced 10-8 out of the Ways and Means Committee with support from most Republican Senators and no Democratic support. The Democrats explained they were not against a project but there were too many unanswered questions and no need for quick action. 

The companion bill in the House advanced out of their Ways and Means Committee on a bipartisan vote, losing only five votes, all Democrats, who cited concerns of a rushed process.

Debate was brief in the full Iowa House with the politics of an election year and not the substance of the bill taking center stage. Representative Carter Nordman, the Chair of the Ways and Means Committee, was asked if this would allow for the foreign ownership of Iowa farmland (it does not change Iowa law on that subject). Gubernatorial Candidate Zach Lahn’s running mate Derek Wulf, a sitting House member, was asked if he supported the IEDA awarding development incentives to out of state and foreign entities – as such a prohibition is a central policy of the Lahn agenda. Wulf countered that Iowans would feel the economic benefits.

On the Senate side floor debate lasted a bit longer with two amendments offered by Democrats Zimmer and Donahue. Zimmer sought a requirement that the project must use a project labor agreement. Senator Jeff Reichman of Lee County, the floor manager of the bill, noted that there would be 30-50 million hours of construction labor. The amendment was defeated. Donahue offered that the Senate should require that the project owner pledge in writing that they would not interfere if workers sought to form a union workforce. Reichman countered that the National Labor Relations Board controlled that activity, and no state legislation was required. The amendment was defeated.

With amendments disposed of, debate began on the bill. Senators of both parties rose to speak against the bill. Democrat Senators focused on the perceived rush to pass the legislation and affordability issues of regular Iowans. Republican opposition centered on whether the state general fund could afford the incentive package.

Reichman closed the debate by reiterating the positive impacts to the state and highlighted that an IEDA study of the project identified a 5 to 1 return on investment to the state general fund over time.

In the end, the Senate, like the House, passed the bill with bipartisan support 28-19. The Governor is expected to sign the bill.