HB3152 103RD GENERAL ASSEMBLY

LRB103 25769 HLH 52118 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3152

Introduced 2/17/2023, by Rep. Marcus C. Evans, Jr.

SYNOPSIS AS INTRODUCED:

New Act
65 ILCS 5/11-13-28 new
65 ILCS 5/11-13-29 new
20 ILCS 686/110 new
605 ILCS 5/5-907	from Ch. 121, par. 5-907
605 ILCS 5/5-918	from Ch. 121, par. 5-918
605 ILCS 5/5-918.1 new

Creates the Home Buyer Savings Account Act. Sets forth provisions concerning legislative findings; establishment of first-time and second-chance home buyer savings accounts; use of first-time and second-chance home buyer savings accounts; account holder responsibilities; responsibilities of financial institutions; deduction of contributions, exclusion of earnings, and limitations; penalty for withdrawal; Department of Revenue forms; and an annual report. Defines terms. Amends the Illinois Municipal Code. Sets forth provisions concerning accessory dwelling units and housing. Amends the Reimagining Electric Vehicles in Illinois Act. Provides that the Department of Commerce and Economic Opportunity shall establish a pilot grant program to encourage the construction and rehabilitation of housing located near a REV Illinois Project. Amends the Illinois Highway Code. Sets forth provisions concerning units of local government which have in effect an impact fee ordinance or resolution. Makes other changes.

A BILL FOR

AN ACT concerning local government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Article 5.

Section 5-1. Short title. This Act may be cited as the Home Buyer Savings Accounts Act.

Section 5-5. Legislative findings. The General Assembly finds and recognizes that the American Dream has always been closely associated with owning your own home. However, for many reasons, it is becoming more and more difficult to achieve the goal of homeownership in Illinois and throughout the country. The General Assembly finds and recognizes that homeownership provides more than a dream to an individual person or family, but that an increase in homeownership rates in Illinois has a direct impact on the quality of our communities and schools, economic and education opportunities, and safe streets. The General Assembly is intent on finding methods to make it easier for those in Illinois to achieve their goal of homeownership for the first time. It is the General Assembly's intent with this Act to provide a tax-incentivized savings account for qualified first-time and certain second-chance home buyers, which in turn can be used toward a down payment or certain eligible closing costs for the purchase of a home in Illinois.

Section 5-10. Definitions. In this Act:

"Account holder" means a first-time and second-chance home buyer who establishes, individually or jointly with another first-time and second-chance home buyer, a first-time and second-chance home buyer savings account.

"Allowable closing costs" means a disbursement listed on a settlement statement for the purchase of a single-family residence in Illinois by a first-time and second-chance home buyer.

"Department" means the Department of Revenue.

"Eligible costs" means the down payment and allowable closing costs for the purchase of a single-family residence in Illinois by a first-time and second-chance home buyer. Eligible costs do not include any costs incurred prior to the establishment of a first-time and second-chance home buyer savings account.

"Financial institution" means any bank, savings institution, industrial loan association, credit union, or other similar entity authorized to do business and accept deposits in Illinois.

"First-time and second-chance home buyer" means an individual who resides in Illinois and has not owned or purchased, either individually or jointly, a single-family residence during a period of ten years prior to the date of the purchase of a single-family residence.

"First-time and second-chance home buyer savings account" or "account" means an account with a financial institution created for the purpose of payment or reimbursement of eligible costs for the purchase of a single-family residence in Illinois by a first-time and second-chance home buyer and designated by the financial institution upon its creation as a first-time and second-chance home buyer savings account.

"Settlement statement" means the statement of receipts and disbursements for a transaction related to real estate, including a statement prescribed under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. 2601 et seq., as amended, and regulations thereunder.

"Single-family residence" means a single-family residence owned and occupied by a first-time and second-chance home buyer as the first-time and second-chance home buyer's principal residence, which may also include a manufactured home, trailer, mobile home, condominium unit, or cooperative.

Section 5-15. Establishment of first-time and second-chance home buyer savings account. After the effective date of this Act, a first-time and second-chance home buyer may open an account with a financial institution designated in its entirety by the financial institution as a first-time and second-chance home buyer savings account.

Section 5-20. Use of first-time and second-chance home buyer savings account.

(a) Funds from a first-time and second-chance home buyer savings account may be used only to pay a first-time and second-chance home buyer's eligible costs for the purchase of a single-family residence in Illinois.

(b) A first-time and second-chance home buyer may jointly own a first-time and second-chance home buyer savings account with another first-time and second-chance home buyer if the joint account holders file a joint income tax return.

(c) Only cash and marketable securities may be contributed to a first-time and second-chance home buyer savings account. Subject to the limitations of Section 5-35, persons other than the account holder may contribute funds to a first-time and second-chance home buyer savings account. There is no limitation on the amount of contributions that may be made to or retained in a first-time and second-chance home buyer savings account.

Section 5-25. Account holder responsibilities.

(a) The account holder shall do all the following:

(1) Not use funds held in a first-time and second-chance home buyer savings account to pay expenses of administering the account, except that a service or other account fee may be deducted from the account by the financial institution in which the account is held.

(2) Submit the following to the Department of Revenue with the account holder's Illinois income tax return:

(A) Detailed information, in a form prescribed by the Department of Revenue, regarding the first-time and second-chance home buyer savings account, including a list of transactions for the account during the tax year.

(B) Form 1099 issued by the financial institution for the account.

(3) Submit to the Department, upon a withdrawal of funds from a first-time and second-chance home buyer savings account, a detailed account of the eligible costs toward which the account funds were applied and a statement of the amount of funds remaining in the account, if any. If, upon withdrawal of funds from the first-time and second-chance home buyer savings account, the account holder fails to provide the Department with the detailed account of the eligible costs towards which the account funds were applied, the entire account's funds, including the interest and other income on principal, shall be subject to the penalties listed under Section 5-40.

(b) Failure to submit the documentation required under subsection (a) on an annual basis with the filing of the Illinois income tax return will result in the automatic denial of the deduction and exclusion.

Section 5-30. Responsibilities of financial institutions.

(a) A financial institution shall be required to do the following:

(1) Create a new account for the first-time and second-chance home buyer and designate the account as a "first-time and second-chance home buyer's savings account" on records and transactional statements related to the account.

(2) Provide the account holder with a detailed account statement relating to the first-time and second-chance home buyer's savings account on a yearly basis.

(b) A financial institution shall not be required to do any of the following:

(1) Track the use of money withdrawn from a first-time and second-chance home buyer savings account.

(2) Allocate funds in a first-time and second-chance home buyer savings account between joint account holders.

(3) Report any information not otherwise required by law to the Department of Revenue or any other governmental agency.

(c) A financial institution is not responsible or liable for the following:

(1) Determining or ensuring that an account satisfies the requirements to be a first-time and second-chance home buyer savings account.

(2) Determining or ensuring that funds in a first-time and second-chance home buyer savings account are used for eligible costs.

(3) Reporting or remitting taxes or penalties related to the use of a first-time and second-chance home buyer savings account.

(d) Upon being furnished proof of the death of the account holder and any other information related to the death required by the financial institution or contract governing the first-time and second-chance home buyer savings account, a financial institution shall distribute the principal and accumulated interest or other income in the account in accordance with the terms of the contract governing the account or as otherwise required by law.

Section 5-35. Deduction of contributions, exclusion of earnings, and limitations.

(a) Except as otherwise provided in this Act and subject to the limitations under this Section, a first-time and second-chance home buyer savings account holder shall be entitled to a state tax deduction, subject to the limitations of this Section, not to exceed $5,000 for an account holder who files an individual tax return or $10,000 for joint account holders who file a joint tax return, for contributions made by the account holder to a first-time and second-chance home buyer savings account during the tax year in which the deduction is claimed.

(b) Except as otherwise provided in this Act and subject to the limitations under this Section, earnings from the first-time and second-chance home buyer savings account, including interest and other income on the principal, shall be excluded from taxable income of an account holder for Illinois income tax purposes during the tax year.

(c) An account holder may claim the deduction and exclusion under this Section as follows:

(1) For a period not to exceed 10 years.

(2) For an aggregate total amount of principal and earnings not to exceed $25,000 for individual accounts and $50,000 for joint accounts during the 10-year period.

(3) Only if the principal and earnings of the account remain in the account until a withdrawal is made for eligible costs related to the purchase of a single-family residence by a first-time and second-chance home buyer.

(d) A person other than the account holder who deposits funds in a first-time and second-chance home buyer savings account shall not be entitled to the deduction and exclusion provided under this Act.

(e) The deduction and exclusion from taxable income provided by this Act shall apply to any alternative basis for calculating taxable income for Illinois income tax purposes.

(f) The funds in the first-time and second-chance home buyer savings account shall not be used to purchase a single-family residence outside of this State.

Section 5-40. Penalty for withdrawal for purpose other than eligible costs. Except as otherwise provided in this Section, if the account holder withdraws any funds from a first-time and second-chance home buyer savings account for a purpose other than eligible costs for the purchase of a single-family residence in this State, the following shall apply:

(1) The entire balance of the fund, including interest and other income on principal, shall be included in the account holder's taxable income for the tax year in which the withdrawal was made.

(2) The account holder shall pay a penalty to the Department of Revenue equal to 10% of the amount withdrawn. The penalty shall not apply to funds withdrawn from an account which were:

(A) Withdrawn by reason of the account holder's death or disability or due to unemployment after the account holder has exhausted his or her applicable unemployment compensation benefits.

(B) A disbursement of assets of the account pursuant to a filing for protection under the United States Bankruptcy Code.

(3) Paragraphs (1) and (2) do not apply to funds withdrawn or distributed from a first-time and second-chance home buyer savings account that within 60 days of their withdrawal or distribution are deposited in full into another first-time and second-chance home buyer savings account. This paragraph shall apply both to transfers between any qualifying first-time and second-chance home buyer savings accounts whether such transfers are to or from qualifying individual or joint accounts.

Section 5-45. Department; forms. The Department of Revenue shall adopt forms for the following:

(1) The designation of an account with a financial institution to serve as a first-time and second-chance home buyer savings account.

(2) An account holder to annually submit to the Department of Revenue detailed information regarding the first-time and second-chance home buyer savings account, including, but not limited to, a list of transactions for the account during the tax year and identifying any supporting documentation required to be maintained by the account holder.

Section 5-50. Annual report. The Department shall submit an annual report to the General Assembly no later than March 31 of each calendar year with the first annual report due no later than March 31, 2024, in which the Department shall include the total annual number of deductions claimed and the total amount of deposits deducted pursuant to this Act, the number of taxpayers who submitted an account to the Department pursuant to paragraph (3) of subsection (a) of Section 5-25, and the number of taxpayers who were subjected to the penalty provisions of Section 5-40.

Article 10.

Section 10-5. The Illinois Municipal Code is amended by adding Sections 11-13-28 and 11-13-29 as follows:

(65 ILCS 5/11-13-28 new)

Sec. 11-13-28. Accessory dwelling units.

(a) As used in this Section:

"Accessory dwelling unit" means an attached or a detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence and that includes permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family or multifamily dwelling upon which it is or will be situated. "Accessory dwelling unit" includes, but is not limited to:

(1) An efficiency unit.

(2) A manufactured home, as that term is defined in paragraph (53) of subsection (a) of Section 9-102 of the Uniform Commercial Code.

"Efficiency unit" means a unit for occupancy by no more than 2 persons that has a minimum floor area of 150 square feet and that may also have a partial kitchen or bathroom facilities.

(b) A unit of local government, as defined in Section 1 of Article VII of the Illinois Constitution, may not prohibit the building or usage of accessory dwelling units in the unit of local government.

(c) A unit of local government may provide reasonable regulations relating to the size and location of accessory dwelling units similar to other accessory structures, unless a regulation would have the effect of prohibiting accessory dwelling units.

(d) A home rule unit may not regulate accessory dwelling units in a manner inconsistent with this Section. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

(65 ILCS 5/11-13-29 new)

Sec. 11-13-29. Provisions related to housing.

(a) As used in this Section:

"Cottage clusters" means groupings of no fewer than 4 detached housing units per acre with a footprint of no less than 900 and no more than 1500 square feet each and that include a common courtyard.

"Middle housing" means:

(A) duplexes;

(B) triplexes;

(C) quadplexes;

(D) cottage clusters; and

(E) townhouses. "Townhouses" means a dwelling unit constructed in a row of 2 or more attached units, where each dwelling unit is located on an individual lot or parcel and shares at least one common wall with an adjacent unit.

(b) Except as provided in subsection (d), each city with a population of 25,000 or more shall allow the development of:

(1) all middle housing types in areas zoned for residential use that allow for the development of detached single-family dwellings; and

(2) a duplex on each lot or parcel zoned for residential use that allows for the development of detached single-family dwellings.

(c) Except as provided in subsection (d), each city with a population of more than 10,000 and less than 25,000 shall allow the development of a duplex on each lot or parcel zoned for residential use that allows for the development of detached single-family dwellings. Nothing in this subsection prohibits a local government from allowing middle housing types in addition to duplexes.

(d) This Section does not apply to:

(1) cities with a population of 10,000 or fewer; and

(2) unincorporated lands adjacent to or adjoining incorporated city boundaries.

(e) Local governments may regulate siting and design of middle housing required to be permitted under this Section, if the regulations do not, individually or cumulatively, discourage the development of all middle housing types permitted in the area through unreasonable costs or delay. Local governments may regulate middle housing to comply with protective measures adopted pursuant to statewide land use planning goals.

(f) This Section does not prohibit local governments from permitting:

(1) single-family dwellings in areas zoned to allow for single-family dwellings; or

(2) middle housing in areas not required under this Section.

(g) A home rule unit may not regulate housing developments in a manner inconsistent with this Section. This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Article 15.

Section 15-5. The Reimagining Electric Vehicles in Illinois Act is amended by adding Section 110 as follows:

(20 ILCS 686/110 new)

Sec. 110. Electric Vehicle Oriented (EVO) Housing Pilot Program.

(a) The inventory of available homes for sale in Illinois has been in continuous decline for multiple years. The lack of inventory contributes directly to affordability, making it more difficult to purchase a home, even for those individuals who have incomes at or close to the median income of the area in which they live. This problem is especially frustrating where a potential REV Illinois Project faces the prospect of little to no housing options for the employees of that project. The General Assembly intends to authorize the creation of a pilot grant program for electric vehicle oriented (EVO) housing, with the goal of incentivizing the construction of new homes near REV Illinois Projects.

(b) Subject to appropriation, the Department shall establish a pilot grant program to encourage the construction and rehabilitation of housing located near a REV Illinois Project. Funding may be used for the acquisition, construction, development, predevelopment, or rehabilitation of a qualified development as provided in subsection (d).

(c) "Qualified development" means a project that (i) is geographically located within 10 miles of a REV Illinois Project, (ii) involves the new construction of 2 or more single-family homes, including detached homes, attached duplex, triplex or fourplex homes, and condominiums, and (iii) results in the construction of homes that, according to the federal Department of Housing and Urban Development, are affordable for either home ownership or rental and that are occupied, reserved, or marketed for occupancy by households with a gross household income that is greater than 80% but less than 120% of the area median household income.

(d) The EVO housing pilot grant program shall provide for grants of up to 10% of the land acquisition costs and 15% of the construction, development, predevelopment, or rehabilitation costs of a qualified development.

(e) Project sponsors who wish to participate in the EVO housing pilot grant program shall submit a grant application to the Department in accordance with rules adopted by the Department.

(f) No application for the EVO Housing Grant Pilot Program shall be accepted by the Department after December 31, 2026.

Article 20.

Section 20-5. The Illinois Highway Code is amended by changing Sections 5-907 and 5-918 and by adding Section 5-918.1 as follows:

(605 ILCS 5/5-907) (from Ch. 121, par. 5-907)

Sec. 5-907. Advisory Committee. A road improvement impact fee advisory committee shall be created by the unit of local government intending to impose impact fees. The Advisory Committee shall consist of not less than 10 members and not more than 20 members. Not less than 40% of the members of the committee shall be representatives of the real estate, development, and building industries and the labor communities and may not be employees or officials of the unit of local government.

(a) The members of the Advisory Committee shall be selected as follows:

(1) The representatives of real estate shall be licensed under the Real Estate License Act of 2000 and shall be designated by the President of the Illinois Association of Realtors from a local Board from the service area or areas of the unit of local government.

(2) The representatives of the development industry shall be designated by the Regional Developers Association.

(3) The representatives of the building industry shall be designated representatives of the Regional Home Builders representing the unit of local government's geographic area as appointed from time to time by that Association's president.

(4) The labor representatives shall be chosen by either the Central Labor Council or the Building and Construction Trades Council having jurisdiction within the unit of local government.

(b) If the unit of local government is a county, at least 30% of the members serving on the commission must be representatives of the municipalities within the county. The municipal representatives shall be selected by a convention of mayors in the county, who shall elect from their membership municipal representatives to serve on the Advisory Committee. The members representing the county shall be appointed by the chief executive officer of the county.

(c) If the unit of local government is a municipality, the non-public representatives shall be appointed by the chief executive officer of the municipality.

(d) Each unit of local government that imposes or intends to impose impact fees and that has created an Advisory Committee shall publish the names of the Advisory Committee members on the public website maintained by the unit of local government, together with a list of the dates and times at which the Advisory Committee has met, and shall provide an electronically accessible copy of the minutes of any such meetings.

If the unit of local government has a planning or zoning commission, the unit of local government may elect to use its planning or zoning commission to serve as the Advisory Committee, provided that not less than 40% of the committee members include representatives of the real estate, development, and building industries and the labor communities who are not employees or officials of the unit of local government. A unit of local government may appoint additional members to serve on the planning or zoning commission as ad hoc voting members whenever the planning or zoning commission functions as the Advisory Committee; provided that no less than 40% of the members include representatives of the real estate, development, and building industries and the labor communities.

(Source: P.A. 91-245, eff. 12-31-99.)

(605 ILCS 5/5-918) (from Ch. 121, par. 5-918)

Sec. 5-918. Transition Clauses.

(a) Conformance of Existing Ordinances. A unit of local government which currently has in effect an impact fee ordinance or resolution shall have not more than 12 months from July 1, 2023 26, 1989 to bring its ordinance or resolution into conformance with the requirements imposed by this Act, except that a home rule unit of local government with a population over 75,000 and located in a county with a population over 600,000 and less than 2,000,000 shall have not more than 18 months from July 1, 2023 26, 1989, to bring that ordinance or resolution into conformance. As used in this subsection, "conformance" includes conformance with Section 5-907.

(b) Exemption of Developments Receiving Site Specific Development Approval. No development which has received site specific development approval from a unit of local government within 18 months before the first date of publication by the unit of local government of a notice of public hearing to consider land use assumptions relating to the development of a comprehensive road improvement plan and imposition of impact fees and which has filed for building permits or certificates of occupancy within 18 months of the date of approval of the site specific development plan shall be required to pay impact fees for permits or certificates of occupancy issued within that 18 month period.

This Division shall have no effect on the validity of any existing agreements entered into between a developer and a unit of local government pertaining to fees, exactions or donations made by a developer for the purpose of funding road improvements.

(c) Exception to the Exemption of Developments Receiving Site Specific Development Approval. Nothing in this Section shall require the refund of impact fees previously collected by units of local government in accordance with their ordinances or resolutions, if such ordinances or resolutions were adopted prior to the effective date of this Act and provided that such impact fees are encumbered as provided in Section 5-916.

(Source: P.A. 86-97; 86-1158.)

(605 ILCS 5/5-918.1 new)

Sec. 5-918.1. Refund for non-compliance. Any unit of local government that has in effect an impact fee ordinance or resolution on the effective date of this amendatory Act of the 103rd General Assembly and that has not brought its impact fee ordinance or resolution into compliance with this Section by the date provided for in Section 5-918 shall refund all funds previously collected under the impact fee ordinance or resolution together with any interest earned on those funds. Any impact fee ordinance or resolution that does not conform with this Section by the date provided for in Section 5-918 shall be considered null and void.