|
located in Illinois and is defined as a certified historic |
structure under Section 47 (c)(3) of the federal Internal |
Revenue Code. |
"Qualified rehabilitation plan" means a project that is |
approved by the Department of Natural Resources and the |
National Park Service as being consistent with the United |
States Secretary of the Interior's Standards for |
Rehabilitation. |
"Qualified taxpayer" means the owner of the qualified |
historic structure or any other person who may qualify for the |
federal rehabilitation credit allowed by Section 47 of the |
federal Internal Revenue Code. |
"Recapture event" means any of the following events |
occurring during the recapture period: |
(1) failure to place in service the rehabilitated |
portions of the qualified historic structure, or failure to |
maintain the rehabilitated portions of the qualified |
historic structure in service after they are placed in |
service; provided that a recapture event under this |
paragraph (1) shall not include a removal from service for |
a reasonable period of time to conduct maintenance and |
repairs that are reasonably necessary to protect the health |
and safety of the public or to protect the structural |
integrity of the qualified historic structure or a |
neighboring structure; |
(2) demolition or other alteration of the qualified |
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historic structure in a manner that is inconsistent with |
the qualified rehabilitation plan or the Secretary of the |
Interior's Standards for Rehabilitation; |
(3) disposition of the rehabilitated qualified |
historic structure in whole or a proportional disposition |
of a partnership interest therein, except as otherwise |
permitted by this Section; or |
(4) use of the qualified historic structure in a manner |
that is inconsistent with the qualified rehabilitation |
plan or that is otherwise inconsistent with the provisions |
and intent of this Section. |
A recapture event occurring in one taxable year shall be |
deemed continuing to subsequent taxable years unless and until |
corrected. |
The following dispositions of a qualified historic |
structure shall not be deemed to be a recapture event for |
purposes of this Section: |
(1) a transfer by reason of death; |
(2) a transfer between spouses incident to divorce; |
(3) a sale by and leaseback to an entity that, when the |
rehabilitated portions of the qualified historic structure |
are placed in service, will be a lessee of the qualified |
historic structure, but only for so long as the entity |
continues to be a lessee; and |
(4) a mere change in the form of conducting the trade |
or business by the owner (or, if applicable, the lessee) of |
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the qualified historic structure, so long as the property |
interest in such qualified historic structure is retained |
in such trade or business and the owner or lessee retains a |
substantial interest in such trade or business. |
"Recapture period" means the 5-year period beginning on the |
date that the qualified historic structure or rehabilitated |
portions of the qualified historic structure are placed in |
service. |
"Substantial rehabilitation" means that the qualified |
rehabilitation expenditures during the 24-month period |
selected by the taxpayer at the time and in the manner |
prescribed by rule and ending with or within the taxable year |
exceed the greater of (i) the adjusted basis of the building |
and its structural components or (ii) $5,000. The adjusted |
basis of the building and its structural components shall be |
determined as of the beginning of the first day of such |
24-month period or as of the beginning of the first day of the |
holding period of the building, whichever is later. For |
purposes of determining the adjusted basis, the determination |
of the beginning of the holding period shall be made without |
regard to any reconstruction by the taxpayer in connection with |
the rehabilitation. In the case of any phased rehabilitation, |
with phases set forth in architectural plans and specifications |
completed before the rehabilitation begins, this definition |
shall be applied by substituting "60-month period" for |
"24-month period" wherever that term occurs in the definition.
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Section 10. Allowable credit. |
(a) To the extent authorized by this Act, for taxable years |
beginning on or after January 1, 2019 and ending on or before |
December 31, 2023, there shall be allowed a tax credit against |
the tax imposed by subsections (a) and (b) of Section 201 of |
the Illinois Income Tax Act in an aggregate amount equal to 25% |
of qualified expenditures incurred by a qualified taxpayer |
undertaking a qualified rehabilitation plan of a qualified |
historic structure, provided that the total amount of such |
expenditures must (i) equal $5,000 or more or (ii) exceed the |
adjusted basis of the qualified historic structure on the first |
day the qualified rehabilitation plan commenced. If the |
qualified rehabilitation plan spans multiple years, the |
aggregate credit for the entire project shall be allowed in the |
last taxable year. |
(b) To obtain a tax credit pursuant to this Section, the |
taxpayer must apply with the Division. The Division shall |
determine the amount of eligible rehabilitation expenditures |
within 45 days after receipt of a complete application. The |
taxpayer must provide to the Division a third-party cost |
certification conducted by a certified public accountant |
verifying (i) the qualified and non-qualified rehabilitation |
expenses and (ii) that the qualified expenditures exceed the |
adjusted basis of the qualified historic structure on the first |
day the qualified rehabilitation plan commenced. The |
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accountant shall provide appropriate review and testing of |
invoices. The Division is authorized, but not required, to |
accept this third-party cost certification to determine the |
amount of qualified expenditures. The Division and the National |
Park Service shall determine whether the rehabilitation is |
consistent with the Standards of the Secretary of the United |
States Department of the Interior. |
(c) If the amount of any tax credit awarded under this Act |
exceeds the qualified taxpayer's income tax liability for the |
year in which the qualified rehabilitation plan was placed in |
service, the excess amount may be carried forward for deduction |
from the taxpayer's income tax liability in the next succeeding |
year or years until the total amount of the credit has been |
used, except that a credit may not be carried forward for |
deduction after the tenth taxable year after the taxable year |
in which the qualified rehabilitation plan was placed in |
service. Upon completion and review of the project, the |
Division shall issue a single certificate in the amount of the
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eligible credits equal to 25% of the qualified expenditures |
incurred during the eligible taxable years. At the time the |
certificate is issued, an issuance fee up to the maximum amount |
of 2% of the amount of the credits issued by the certificate |
may be collected from the applicant to administer the Act. If |
collected, this issuance fee shall be directed to the Division |
Historic Property Administrative Fund or other such fund as |
appropriate for use of the Division in the administration of |
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the Historic Preservation Tax Credit Program. The taxpayer must |
attach the certificate or legal documentation of her or his |
proportional share of the certificate to the tax
return on |
which the credits are to be claimed. The tax credit under this |
Section may not reduce the taxpayer's liability to less than |
zero. If the amount of the credit exceeds the tax liability for |
the year, the excess credit may be carried forward and applied |
to the tax liability of the 10 taxable years following the |
excess credit year.
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(d) If the taxpayer is (i) a corporation having an election |
in effect under Subchapter S of the federal Internal Revenue |
Code, (ii) a partnership, or (iii) a limited liability company, |
the credit provided under this Act may be claimed by the |
shareholders of the corporation, the partners of the |
partnership, or the members of the limited liability company in |
the same manner as those shareholders, partners, or members |
account for their proportionate shares of the income or losses |
of the corporation, partnership, or limited liability company, |
or as provided in the bylaws or other executed agreement of the |
corporation, partnership, or limited liability company. |
Credits granted to a partnership, a limited liability company |
taxed as a partnership, or other multiple owners of property |
shall be passed through to the partners, members, or owners |
respectively on a pro rata basis or pursuant to an executed |
agreement among the partners, members, or owners documenting |
any alternate distribution method. |
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(e) If a recapture event occurs during the recapture period |
with respect to a qualified historic structure, then for any |
taxable year in which the credits are allowed as specified in |
this Act, the tax under the applicable Section of this Act |
shall be increased by applying the recapture percentage set |
forth below to the tax decrease resulting from the application |
of credits allowed under this Act to the taxable year in |
question. |
For the purposes of this subsection, the recapture |
percentage shall be determined as follows: |
(1) if the recapture event occurs within the first year |
after commencement of the recapture period, then the |
recapture percentage is 100%; |
(2) if the recapture event occurs within the second |
year after commencement of the recapture period, then the |
recapture percentage is 80%; |
(3) if the recapture event occurs within the third year |
after commencement of the recapture period, then the |
recapture percentage is 60%; |
(4) if the recapture event occurs within the fourth |
year after commencement of the recapture period, then the |
recapture percentage is 40%; and |
(5) if the recapture event occurs within the fifth year |
after commencement of the recapture period, then the |
recapture percentage is 20%.
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In the case of any recapture event, the carryforwards under |
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this Act shall be adjusted by reason of such event. |
(d) The Division may adopt rules to implement this Section |
in addition to the rules expressly authorized herein.
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Section 20. Limitations, reporting, and monitoring. |
(a) The Division shall award not more than an aggregate of |
$15,000,000 in total annual tax credits pursuant to qualified |
rehabilitation plans for qualified historic structures. The |
Division shall award not more than $3,000,000 in tax credits |
with regard to a single qualified rehabilitation plan. In |
awarding tax credits under this Act, the Division must |
prioritize projects that meet one or more of the following: |
(1) the qualified historic structure is located in a |
county that borders a State with a historic property |
rehabilitation credit; |
(2) the qualified historic structure was previously |
owned by a federal, state, or local governmental entity; |
(3) the qualified historic structure is located in a |
census tract that has a median family income at or below |
the State median family income; data from the most recent |
5-year estimate from the American Community Survey (ACS), |
published by the U.S. Census Bureau, shall be used to |
determine eligibility; |
(4) the qualified rehabilitation plan includes in the |
development partnership a Community Development Entity or |
a low-profit (B Corporation) or not-for-profit |
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organization, as defined by Section 501(c)(3) of the |
Internal Revenue Code; or |
(5) the qualified historic structure is located in an |
area declared under an Emergency Declaration or Major |
Disaster Declaration under the federal Robert T. Stafford |
Disaster Relief and Emergency Assistance Act. |
(b) The annual aggregate program allocation of $15,000,000 |
set forth in subsection (a) shall be allocated by the Division, |
in such proportion as determined by the Department, on a per |
calendar basis twice in each year that the program is in |
effect, provided that: (i) the amount initially allocated by |
the Division for any one calendar application period shall not |
exceed 65% of the total allowable amount and (ii) any portion |
of the allocated allowable amount remaining unused as of the |
end of any of the second calendar application period of a given |
calendar year shall be rolled into and added to the total |
allocated amount for the next available calendar year. The |
qualified rehabilitation plan must meet a readiness test, as |
defined in the rules created by the Division, in order for the |
Applicant to qualify. Applicants that qualify under this Act |
will be placed in a queue based on the date and time the |
application is received until such time as the application |
period total allowable amount is reached. Applicants must |
reapply for each application period. |
(c) On or before December 31, 2019,
and on or before |
December 31 of each odd-numbered year thereafter through
2023, |
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subject to appropriation and prior to equal disbursement to the |
Division, moneys in the Historic Property Administrative Fund |
shall be used, beginning at the end of the first fiscal year |
after the effective date of this Act, to hire a qualified third |
party to prepare a biennial report to assess the overall |
effectiveness of this Act from the qualified rehabilitation |
projects under this Act completed in that year and in previous |
years. Baseline data of the metrics in the report shall be |
collected at the initiation of a qualified rehabilitation |
project. The overall economic impact shall include at least: |
(1) the number of applications, project locations, and |
proposed use of qualified historic structures; |
(2) the amount of credits awarded and the number and |
location of projects receiving credit allocations; |
(3) the status of ongoing projects and projected |
qualifying expenditures for ongoing projects;
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(4) for completed projects, the total amount of |
qualifying rehabilitation expenditures and non-qualifying |
expenditures, the number of housing units created and the |
number of housing units that qualify as affordable, and the |
total square footage rehabilitated and developed; |
(5) direct, indirect, and induced economic impacts; |
(6) temporary, permanent, and construction jobs |
created; and |
(7) sales, income, and property tax generation before |
construction, during construction, and after completion. |
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The report to the General Assembly shall be filed with the |
Clerk of the House of Representatives and the Secretary of the |
Senate in electronic form only, in the manner that the Clerk |
and the Secretary shall direct. |
(d) Any time prior to issuance of a tax credit certificate, |
the Director of the Division, the State Historic Preservation |
Officer, or staff of the Division may, upon reasonable notice |
to the project owner of not less than 3 business days, conduct |
a site visit to the project to inspect and evaluate the |
project. |
(e) Any time prior to the issuance of a tax credit |
certificate and for a period of 4 years following the effective |
date of a project tax credit certificate, the Director may, |
upon reasonable notice of not less than 30 calendar days, |
request a status report from the Applicant consisting of |
information and updates relevant to the status of the project. |
Status reports shall not be requested more than twice yearly. |
(f) In order to demonstrate sufficient evidence of |
reviewable progress within 12 months after the date the |
Applicant received notification of approval from the Division, |
the Applicant shall provide all of the following: |
(1) a viable financial plan which demonstrates by way |
of an executed agreement that all financing has been |
secured for the project; such financing shall include, but |
not be limited to, equity investment as demonstrated by |
letters of commitment from the owner of the property, |
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investment partners, and equity investors; |
(2) final construction drawings or approved building |
permits that demonstrate the complete rehabilitation of |
the full scope of the application; and |
(3) all historic approvals, including all federal and |
State rehabilitation documents required by the Division. |
The Director shall review the submitted evidence and may |
request additional documentation from the Applicant if |
necessary. The Applicant will have 30 calendar days to provide |
the information requested, otherwise the approval may be |
rescinded at the discretion of the Director. |
(g) In order to demonstrate sufficient evidence of |
reviewable progress within 18 months after the date the |
application received notification of approval from the |
Division, the Applicant is required to provide detailed |
evidence that the Applicant has secured and closed on financing |
for the complete scope of rehabilitation for the project. To |
demonstrate evidence that the Applicant has secured and closed |
on financing, the Applicant will need to provide signed and |
processed loan agreements, bank financing documents or other |
legal and contractual evidence to demonstrate that adequate |
financing is available to complete the project. The Director |
shall review the submitted evidence and may request additional |
documentation from the Applicant if necessary. The Applicant |
will have 30 calendar days to provide the information |
requested, otherwise the approval may be rescinded at the |
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discretion of the Director. |
If the Applicant fails to document reviewable progress |
within 18 months of approval, the Director may notify the |
Applicant that the application is rescinded. However, should |
financing and construction be imminent, the Director may elect |
to grant the Applicant no more than 5 months to close on |
financing and commence construction. If the Applicant fails to |
meet these conditions in the required timeframe, the Director |
shall notify the Applicant that the application is rescinded. |
Any such rescinded allocation shall be added to the aggregate |
amount of credits available for allocation for the year in |
which the forfeiture occurred. |
The amount of the qualified expenditures identified in the |
Applicant's certification of completion and reflected on the |
Historic Preservation Tax Credit certificate issued by the |
Director is subject to inspection, examination, and audit by |
the Department of Revenue. |
The Applicant shall establish and maintain for a period of |
4 years following the effective date on a project tax credit |
certificate such records as required by the Director. Such |
records include, but are not limited to, records documenting |
project expenditures and compliance with the U.S. Secretary of |
the Interior's Standards. The Applicant shall make such records |
available for review and verification by the Director, the |
State Historic Preservation Officer, the Department of |
Revenue, or appropriate staff, as well as other appropriate |
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State agencies. In the event the Director determines an |
Applicant has submitted an annual report containing erroneous |
information or data not supported by records established and |
maintained under this Act, the Director may, after providing |
notice, require the Applicant to resubmit corrected reports.
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Section 25. Powers. The Division shall adopt rules for the |
administration of this Act. The Division may enter into an |
intergovernmental agreement with the Department of Commerce |
and Economic Opportunity, the Department of Revenue, or both, |
for the administration of this Act. Such intergovernmental |
agreement may allow for the distribution of all or a portion of |
the issuance fee imposed under Section 10 to the Department of |
Commerce and Economic Opportunity or the Department of Revenue, |
as applicable.
|
Section 900. The Illinois Income Tax Act is amended by |
changing Section 221 and by adding Section 227 as follows:
|
(35 ILCS 5/221) |
Sec. 221. Rehabilitation costs; qualified historic |
properties; River Edge Redevelopment Zone. |
(a) For taxable years that begin beginning on or after |
January 1, 2012 and begin ending prior to January 1, 2018 |
January 1, 2022, there shall be allowed a tax credit against |
the tax imposed by subsections (a) and (b) of Section 201 of |
|
this Act in an amount equal to 25% of qualified expenditures |
incurred by a qualified taxpayer during the taxable year in the |
restoration and preservation of a qualified historic structure |
located in a River Edge Redevelopment Zone pursuant to a |
qualified rehabilitation plan, provided that the total amount |
of such expenditures (i) must equal $5,000 or more and (ii) |
must exceed 50% of the purchase price of the property. |
(a-1) For taxable years that begin on or after January 1, |
2018 and end prior to January 1, 2022, there shall be allowed a |
tax credit against the tax imposed by subsections (a) and (b) |
of Section 201 of this Act in an aggregate amount equal to 25% |
of qualified expenditures incurred by a qualified taxpayer in |
the restoration and preservation of a qualified historic |
structure located in a River Edge Redevelopment Zone pursuant |
to a qualified rehabilitation plan, provided that the total |
amount of such expenditures must (i) equal $5,000 or more and |
(ii) exceed the adjusted basis of the qualified historic |
structure on the first day the qualified rehabilitation plan |
begins. For any rehabilitation project, regardless of duration |
or number of phases, the project's compliance with the |
foregoing provisions (i) and (ii) shall be determined based on |
the aggregate amount of qualified expenditures for the entire |
project and may include expenditures incurred under subsection |
(a), this subsection, or both subsection (a) and this |
subsection. If the qualified rehabilitation plan spans |
multiple years, the aggregate credit for the entire project |
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shall be allowed in the last taxable year, except for phased |
rehabilitation projects, which may receive credits upon |
completion of each phase. Before obtaining the first phased |
credit: (A) the total amount of such expenditures must meet the |
requirements of provisions (i) and (ii) of this subsection; (B) |
the rehabilitated portion of the qualified historic structure |
must be placed in service; and (C) the requirements of |
subsection (b) must be met. |
(b) To obtain a tax credit pursuant to this Section, the |
taxpayer must apply with the Department of Natural Resources |
Commerce and Economic Opportunity. The Department of Natural |
Resources Commerce and Economic Opportunity, in consultation |
with the Historic Preservation Agency, shall determine the |
amount of eligible rehabilitation costs and expenses within 45 |
days of receipt of a complete application. The taxpayer must |
submit a certification of costs prepared by an independent |
certified public accountant that certifies (i) the project |
expenses, (ii) whether those expenses are qualified |
expenditures, and (iii) that the qualified expenditures exceed |
the adjusted basis of the qualified historic structure on the |
first day the qualified rehabilitation plan commenced. The |
Department of Natural Resources is authorized, but not |
required, to accept this certification of costs to determine |
the amount of qualified expenditures and the amount of the |
credit. The Department of Natural Resources shall provide |
guidance as to the minimum standards to be followed in the |
|
preparation of such certification. The Department of Natural |
Resources and the National Park Service Historic Preservation |
Agency shall determine whether the rehabilitation is |
consistent with the United States Secretary of the Interior's |
Standards for Rehabilitation the standards of the Secretary of |
the United States Department of the Interior for |
rehabilitation. |
(b-1) Upon completion and review of the project and |
approval of the complete application, the Department of Natural |
Resources Commerce and Economic Opportunity shall issue a |
single certificate in the amount of the eligible credits equal |
to 25% of qualified expenditures incurred during the eligible |
taxable years, as defined in subsections (a) and (a-1), |
excepting any credits awarded under subsection (a) prior to the |
effective date of this amendatory Act of the 100th General |
Assembly and any phased credits issued prior to the eligible |
taxable year under subsection (a-1). At the time the |
certificate is issued, an issuance fee up to the maximum amount |
of 2% of the amount of the credits issued by the certificate |
may be collected from the applicant to administer the |
provisions of this Section. If collected, this issuance fee |
shall be deposited into the Historic Property Administrative |
Fund, a special fund created in the State treasury. Subject to |
appropriation, moneys in the Historic Property Administrative |
Fund shall be provided to the Department of Natural Resources |
as reimbursement evenly divided between the Department of |
|
Commerce and Economic Opportunity and the Historic |
Preservation Agency to reimburse the Department of Commerce and |
Economic Opportunity and the Historic Preservation Agency for |
the costs associated with administering this Section. The |
taxpayer must attach the certificate to the tax return on which |
the credits are to be claimed. The Department of Commerce and |
Economic Opportunity may adopt rules to implement this Section. |
(c) The taxpayer must attach the certificate to the tax |
return on which the credits are to be claimed. The tax credit |
under this Section may not reduce the taxpayer's liability to |
less than
zero. If the amount of the credit exceeds the tax |
liability for the year, the excess credit may be carried |
forward and applied to the tax liability of the 5 taxable years |
following the excess credit year. |
(c-1) Subject to appropriation, moneys in the Historic |
Property Administrative Fund shall be used, on a biennial basis |
beginning at the end of the second fiscal year after the |
effective date of this amendatory Act of the 100th General |
Assembly, to hire a qualified third party to prepare a biennial |
report to assess the overall economic impact to the State from |
the qualified rehabilitation projects under this Section |
completed in that year and in previous years. The overall |
economic impact shall include at least: (1) the direct and |
indirect or induced economic impacts of completed projects; (2) |
temporary, permanent, and construction jobs created; (3) |
sales, income, and property tax generation before, during |
|
construction, and after completion; and (4) indirect |
neighborhood impact after completion. The report shall be |
submitted to the Governor and the General Assembly. The report |
to the General Assembly shall be filed with the Clerk of the |
House of Representatives and the Secretary of the Senate in |
electronic form only, in the manner that the Clerk and the |
Secretary shall direct. |
(c-2) The Department of Natural Resources may adopt rules |
to implement this Section in addition to the rules expressly |
authorized in this Section. |
(d) As used in this Section, the following terms have the |
following meanings. |
"Phased rehabilitation" means a project that is completed |
in phases, as defined under Section 47 of the federal Internal |
Revenue Code and pursuant to National Park Service regulations |
at 36 C.F.R. 67. |
"Placed in service" means the date when the property is |
placed in a condition or state of readiness and availability |
for a specifically assigned function as defined under Section |
47 of the federal Internal Revenue Code and federal Treasury |
Regulation Sections 1.46 and 1.48. |
"Qualified expenditure" means all the costs and expenses |
defined as qualified rehabilitation expenditures under Section |
47 of the federal Internal Revenue Code that were incurred in |
connection with a qualified historic structure. |
"Qualified historic structure" means a certified historic |
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structure as defined under Section 47(c)(3) of the federal |
Internal Revenue Code. |
"Qualified rehabilitation plan" means a project that is |
approved by the Department of Natural Resources and the |
National Park Service Historic Preservation Agency as being |
consistent with the United States Secretary of the Interior's |
Standards for Rehabilitation standards in effect on the |
effective date of this amendatory Act of the 97th General |
Assembly for rehabilitation as adopted by the federal Secretary |
of the Interior. |
"Qualified taxpayer" means the owner of the qualified |
historic structure or any other person who qualifies for the |
federal rehabilitation credit allowed by Section 47 of the |
federal Internal Revenue Code with respect to that qualified |
historic structure. Partners, shareholders of subchapter S |
corporations, and owners of limited liability companies (if the |
limited liability company is treated as a partnership for |
purposes of federal and State income taxation) are entitled to |
a credit under this Section to be determined in accordance with |
the determination of income and distributive share of income |
under Sections 702 and 703 and subchapter S of the Internal |
Revenue Code, provided that credits granted to a partnership, a |
limited liability company taxed as a partnership, or other |
multiple owners of property shall be passed through to the |
partners, members, or owners respectively on a pro rata basis |
or pursuant to an executed agreement among the partners, |
|
members, or owners documenting any alternate distribution |
method.
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(Source: P.A. 99-914, eff. 12-20-16; 100-236, eff. 8-18-17.)
|
(35 ILCS 5/227 new) |
Sec. 227. Historic preservation credit. For
tax years |
beginning on or after January 1, 2019 and ending on
or before |
December 31, 2023, a taxpayer who qualifies for a
credit under |
the Historic Preservation Tax Credit Act is entitled to a |
credit against the taxes
imposed under subsections (a) and (b) |
of Section 201 of this
Act as provided in that Act. If the |
taxpayer is a partnership
or Subchapter S corporation, the |
credit shall be allowed to the
partners or shareholders in |
accordance with the determination
of income and distributive |
share of income under Sections 702
and 704 and Subchapter S of |
the Internal Revenue Code.
If the amount of any tax credit |
awarded under this Section
exceeds the qualified taxpayer's |
income tax liability for the
year in which the qualified |
rehabilitation plan was placed in
service, the excess amount |
may be carried forward as
provided in the Historic Preservation |
Tax Credit Act.
|