SB3442 103RD GENERAL ASSEMBLY

LRB103 38634 JRC 68771 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3442

Introduced 2/8/2024, by Sen. Willie Preston

SYNOPSIS AS INTRODUCED:

New Act
310 ILCS 65/5	from Ch. 67 1/2, par. 1255

Creates the House Illinois Families Act. Imposes on each applicable taxpayer an annual tax 10% of the property value for each single-family residence that the applicable taxpayer owns in excess of 25 single-family residences. Provides that "applicable taxpayer" means a taxpayer that is not any of the following: (i) a mortgage note holder that owns a single-family residence through foreclosure; (ii) an organization that is described in Section 501(c)(3) of the Internal Revenue Code and exempt from tax under Section 501(a); (iii) an organization primarily engaged in the construction or rehabilitation of single-family residences; or (v) a person who owns federally subsidized housing. Defines "single-family residence" as residential property consisting of not more than 4 dwelling units. Provides that this tax must be deposited into the Illinois Affordable Housing Trust Fund to fund housing programs for justice involved individuals and provide rental and mortgage assistance. Requires an applicable taxpayer to report to the Department of Revenue information about applicable single-family residences. Imposes a penalty of $50,000 for failure to comply with these notice provisions. Provides that the applicable taxpayer must give notice to each tenant of an applicable single-family residence of the taxpayer's intent to sell this residence. Provides the tenant with a right of first refusal in which the tenant has the right to purchase the property to continue to live there as their residence. Creates a process for the tenant to purchase the single-family residence. Amends the Illinois Affordable Housing Act. Allows the Trust Fund in that Act to receive moneys that are designated for deposit into the Trust Fund as provided in the House Illinois Families Act. Makes other changes. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

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

Section 1. Short title. This Act may be cited as the House Illinois Families Act.

Section 5. Definitions. As used in this Act:

"Applicable taxpayer" means a taxpayer that is not:

(i) A mortgage note holder that owns a single-family residence through foreclosure;

(ii) An organization that is described in Section 501(c)(3) and exempt from tax under Section 501(a);

(iii) An organization primarily engaged in the construction or rehabilitation of single-family residences; or.

(iv) A person who owns federally subsidized housing.

"Disqualified sale" means a sale or transfer to:

(i) A corporation or entity engaged in a trade or business;

(ii) A group of more than 2 individuals; or

(iii) A person who owns any other single-family residence.

"Department" means the Department of Revenue.

"Single-family residence" means a residential property consisting of not more than 4 dwelling units.

"Own" means having a direct majority ownership interest in the single-family residence.

Section 10. Excess single-family residences.

(a) There is imposed on each applicable taxpayer for each taxable year a tax of 10% of the property value of each single-family residence owned by the taxpayer as of the last day of the taxable year in excess of 25 single-family residences.

(b) The tax collected shall be deposited into the Illinois Affordable Housing Trust Fund with the purpose of funding housing programs for justice involved individuals and providing rental and mortgage assistance.

Section 15. Special rule for certain sales. A single-family residence which is sold or transferred in a disqualified sale during the taxable year shall be treated as a single-family residence which is owned by the applicable taxpayer as of the last day of such taxable year.

Section 20. Reporting.

(a) The Department of Revenue shall adopt rules to administer and enforce the provisions of this Act. Those rules require such reporting as the Department determines necessary or appropriate to carry out the purposes of this Act, including reporting with respect to:

(i) The dates on which single-family residences owned by an applicable taxpayer were acquired by the taxpayer;

(ii) The dates on which single-family residences owned by an applicable taxpayer are sold by the taxpayer in accordance with this Act; and

(iii) Whether any person acquiring a single-family residence from an applicable taxpayer owns any other single-family residences.

(b) Any applicable taxpayer who fails to report in accordance with this Section or who fails to include correct information in the report shall pay a penalty of $50,000, on notice and demand of the Department, to be deposited into the Illinois Affordable Housing Trust Fund with the purpose of funding housing programs for justice involved individuals and providing rental and mortgage payment assistance.

(c) No penalty shall be imposed under this paragraph with respect to any failure if it is shown that the failure is due to reasonable cause and not to willful neglect.

Section 25. Sale of applicable single-family residences; right of first refusal.

(a) An applicable taxpayer shall give notice to each tenant of an applicable single-family residence of their intent to sell the applicable single-family residence in which the tenant resides. The notice under this subsection shall be mailed by certified mail.

(b) Before an applicable single-family residence may be sold, the applicable taxpayer shall give notice to each tenant of the residence, by certified mail, of any third-party bona fide offer for sale that the taxpayer intends to accept. The notice shall include the price and the terms and conditions of the offer. The price shall be calculated as a single lump sum amount that reflects (i) the total purchase price, or (ii) the present value of any installment payments offered in lieu of cash payments.

(c) Upon receiving notice of any third-party bona fide offer, the tenant of that residence shall have the right to purchase the subject property for the purpose of continuing the use of the property as their residence. The tenant shall (1) submit to the applicable taxpayer notice of their interest in purchasing the applicable single-family residence; (2) submit to the applicable taxpayer a proposed purchase and sale agreement on substantially equivalent terms and conditions within 45 days after receipt of notice of the bona fide offer made; (3) obtain a binding commitment for any necessary financing or guarantees within an additional 90 days after execution of the purchase and sale agreement; and (4) close on the purchase within an additional 90 days after the end of the 90-day period under item (3).

No applicable taxpayer shall unreasonably refuse to enter into, or unreasonably delay the execution or closing on, a purchase and sale or lease agreement with tenants who have made a bona fide offer to meet the price and substantially equivalent terms and conditions of an offer for which notice is required to be given pursuant to subsection (b). Failure of the tenants to submit such a purchase and sale agreement within the first 45-day period, to obtain a binding commitment for financing within the additional 90-day period, or to close on the purchase within the second 90-day period shall serve to terminate the rights of the residents to purchase the applicable single-family residence. The time periods provided in this Section may be extended by agreement. Nothing in this Section shall be construed to require an applicable taxpayer to provide financing to tenants except to the extent such financing would be provided to the third-party offeror.

(d) The right of first refusal created in this Section shall inure to the tenants for the time periods set forth in this Section, beginning on the date of notice to the tenants under paragraph (b). The effective period for such right of first refusal shall obtain separately for each substantially different bona fide offer to purchase the applicable single-family residence, and for each offer substantially equivalent to an offer made more than 3 months prior to the later offer; provided however, that in the case of a substantially equivalent offer made by a prospective buyer who has previously made an offer for which notice to tenants was required by subsection (b), the right of first refusal shall obtain only if the subsequent offer is made more than 6 months after the earlier offer. The right of first refusal shall not apply with respect to any offer received by the applicable taxpayer for which a notice is not required pursuant to subsection (b). No right of first refusal shall apply to a government taking by eminent domain or negotiated purchase, a forced sale pursuant to a foreclosure by an unrelated third party, transfer by gift, devise or operation of law, or a sale to a person who would be an heir at law if there were to be a death intestate of a mobile home park owner.

(e) If the tenants of the applicable single-family residence are not the successful purchasers, the applicable taxpayer shall provide evidence of compliance with this Section by filing an affidavit of compliance with the Department within 7 days after the sale or lease of the park.

Section 900. The Illinois Affordable Housing Act is amended by changing Section 5 as follows:

(310 ILCS 65/5) (from Ch. 67 1/2, par. 1255)

Sec. 5. Illinois Affordable Housing Trust Fund.

(a) There is hereby created the Illinois Affordable Housing Trust Fund, hereafter referred to in this Act as the "Trust Fund" to be held as a separate fund within the State Treasury and to be administered by the Program Administrator. The purpose of the Trust Fund is to finance projects of the Illinois Affordable Housing Program as authorized and approved by the Program Administrator. The Funding Agent shall establish, within the Trust Fund, a General Account, a Bond Account, a Commitment Account and a Development Credits Account. The Funding Agent shall authorize distribution of Trust Fund moneys to the Program Administrator or a payee designated by the Program Administrator for purposes authorized by this Act. After receipt of the Trust Fund moneys by the Program Administrator or designated payee, the Program Administrator shall ensure that all those moneys are expended for a public purpose and only as authorized by this Act.

(b) Except as otherwise provided in Section 8(c) of this Act, there shall be deposited in the Trust Fund such amounts as may become available under the provisions of this Act, including, but not limited to:

(1) all receipts, including dividends, principal and interest repayments attributable to any loans or agreements funded from the Trust Fund;

(2) all proceeds of assets of whatever nature received by the Program Administrator, and attributable to default with respect to loans or agreements funded from the Trust Fund;

(3) any appropriations, grants or gifts of funds or property, or financial or other aid from any federal or State agency or body, local government or any other public organization or private individual made to the Trust Fund;

(4) any income received as a result of the investment of moneys in the Trust Fund;

(5) all fees or charges collected by the Program Administrator or Funding Agent pursuant to this Act;

(6) amounts as provided in Section 31-35 of the Real Estate Transfer Tax Law;

(7) other funds as appropriated by the General Assembly; and

(8) any income, less costs and fees associated with the Program Escrow, received by the Program Administrator that is derived from Trust Fund Moneys held in the Program Escrow prior to expenditure of such Trust Fund Moneys.

(c) Additional Trust Fund Purpose: Receipt and use of federal funding for programs responding to the COVID-19 public health emergency. Notwithstanding any other provision of this Act or any other law limiting or directing the use of the Trust Fund, the Trust Fund may receive, directly or indirectly, federal funds from the Homeowner Assistance Fund authorized under Section 3206 of the federal American Rescue Plan Act of 2021 (Public Law 117-2). Any such funds shall be deposited into a Homeowner Assistance Account which shall be established within the Trust Fund by the Funding Agent so that such funds can be accounted for separately from other funds in the Trust Fund. Such funds may be used only in the manner and for the purposes authorized in Section 3206 of the American Rescue Plan Act of 2021 and in related federal guidance. Also, the Trust Fund may receive, directly or indirectly, federal funds from the Emergency Rental Assistance Program authorized under Section 3201 of the federal American Rescue Plan Act of 2021 and Section 501 of Subtitle A of Title V of Division N of the Consolidated Appropriations Act, 2021 (Public Law 116–260). Any such funds shall be deposited into an Emergency Rental Assistance Account which shall be established within the Trust Fund by the Funding Agent so that such funds can be accounted for separately from other funds in the Trust Fund. Such funds may be used only in the manner and for the purposes authorized in Section 3201 of the American Rescue Plan Act of 2021 and in related federal guidance. Expenditures under this subsection (c) are subject to annual appropriation to the Funding Agent. Unless used in this subsection (c), the defined terms set forth in Section 3 shall not apply to funds received pursuant to the American Rescue Plan Act of 2021. Notwithstanding any other provision of this Act or any other law limiting or directing the use of the Trust Fund, funds received under the American Rescue Plan Act of 2021 are not subject to the terms and provisions of this Act except as specifically set forth in this subsection (c).

(d) Additional Trust Fund Purpose. The Trust Fund may also receive moneys that are designated for deposit into the Trust Fund as provided in the House Illinois Families Act. Those moneys may be used as provided in that Act.

(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 7-1-23.)

Section 999. Effective date. This Act takes effect upon becoming law.