HB5153 95TH GENERAL ASSEMBLY

LRB095 18315 BDD 44399 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5153

Introduced , by Rep. Jay C. Hoffman

SYNOPSIS AS INTRODUCED:

New Act
35 ILCS 5/218 new

Creates the Distressed Areas Land Assemblage Tax Credit Act and amends the Illinois Income Tax Act. Provides an income tax credit for taxpayers who incur certain costs related to the acquisition of economically distressed property for redevelopment purposes. Sets forth requirements for the credit. Provides that the total aggregate amount of tax credits issued under this Act may not exceed $12,000,000 in any one calendar year and may not exceed $100,000,000 for all calendar years. Provides that the credit may be sold or transferred and may be carried forward for 6 years.

FISCAL NOTE ACT MAY APPLY

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 Distressed Areas Land Assemblage Tax Credit Act.

Section 5. Definitions. As used in this Section:

"Acquisition costs" means all costs and expenses incurred in the acquisition of an eligible parcel. Acquisition costs include, but are not limited to, the purchase price for the eligible parcel, costs for title insurance and survey, attorneys' fees, costs of environmental assessments, closing costs, real estate brokerage fees, demolition costs of vacant structures, relocation costs, and maintenance costs incurred to maintain an acquired eligible parcel for a period of 5 years after the acquisition of the eligible parcel.

"Applicant" means any person who has:

(1) incurred, within an eligible project area, acquisition costs for the acquisition of land sufficient to satisfy the requirements for an eligible project area; and

(2) been appointed or selected by a municipality as a redeveloper or similar designation under an economic incentive act to redevelop an urban renewal area or a redevelopment area that includes all of an eligible project area or whose redevelopment plan or redevelopment area, which encompasses all of an eligible project area, has been approved or adopted under an economic incentive act.

"Certificate" means a tax credit certificate issued under this Act.

"Condemnation proceedings" means any action taken by or on behalf of an applicant to initiate an action in a court of competent jurisdiction to use the power of eminent domain to acquire a parcel within the eligible project area. Condemnation proceedings include any and all actions taken after the submission of a notice of intended acquisition to an owner of a parcel within the eligible project area by a municipality or any other person under the Eminent Domain Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Economic incentive act" means any provision of Illinois law under which economic incentives are provided to redevelopers of a parcel or parcels to redevelop the land, such as tax abatement or payments in lieu of taxes, or redevelopment plans or redevelopment projects approved or adopted which include the use of economic incentives to redevelop the land.

"Eligible parcel" means a parcel that is located within an eligible project area and that has been acquired prior to the commencement of any condemnation proceedings within the eligible project area brought by or on behalf of the applicant. Any parcel acquired by the applicant from a municipality is not an eligible parcel.

"Eligible project area" means an area that satisfies all of the following requirements:

(1) the eligible project area consists of at least 30 acres for municipalities with populations of 75,000 or less and 75 acres for all other municipalities and counties and may include parcels within its boundaries that do not constitute eligible parcels;

(2) at least 80% of the eligible project area is located within a qualified census tract area, as designated by the United States Department of Housing and Urban Development under 26 U.S.C. Section 42;

(3) the eligible parcels acquired by the applicant within an eligible project area total at least 20 acres for municipalities with populations of 75,000 or less and 50 acres for all other municipalities and counties, which may consist of contiguous or noncontiguous parcels;

(4) with respect to an eligible project area located within a municipality, the average number of parcels per acre in an eligible project area are at least 2.5 for municipalities with populations of 75,000 or less and 4 for all other municipalities; and

(5) less than 5% of the acreage within the boundaries of the eligible project area consist of owner-occupied residences that the applicant has identified for acquisition under the urban renewal plan or the redevelopment plan pursuant to which the applicant was appointed or selected as the redeveloper or by which the person or entity was qualified as an applicant under this Act on the date of the approval or adoption of such plan.

With respect to proposed project areas located within a municipality with a population equal to or less than 50,000 inhabitants, the requirements for an eligible project area may be modified or waived as deemed necessary and reasonable by the Department based upon information provided in the application required under this Act.

"Interest costs" means all costs and expenses of an applicant for loans incurred by the applicant to finance the acquisition of an eligible parcel. Interest costs include, but are not limited to, interest, loan fees, closing costs, and attorneys' fees.

"Parcel" means a single lot or tract of land, and the improvements thereon, owned by, or recorded as the property of, one or more persons or entities.

Section 10. Income tax credit granted. Any applicant is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount equal to 50% of the acquisition costs and 100% of the interest costs incurred for a period of 5 years after the acquisition of an eligible parcel. No tax credits may be certified under this Act until after January 1, 2009.

Section 15. Carryforward; transferability; pass-through entities.

(a) The credit may not be carried back. If the amount of the credit exceeds the tax liability for the year, then the excess may be carried forward and applied to the tax liability of the 6 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability.

(b) Applicants who are entitled to receive the credit may transfer, sell, or assign the credits.

(c) For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there is allowed a credit under this Section to be determined 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.

Section 20. Purchase of the credit. A purchaser, transferee, or assignee of the tax credits may use acquired credits to offset up to 100% of the tax liabilities otherwise imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act. A seller, transferor, or assignor shall perfect the transfer by notifying the Department in writing within 30 calendar days following the effective date of the transfer and shall provide any information as may be required by the Department to administer and to carry out the provisions of this Act.

Section 25. Certification by the Department. To claim credits authorized under this Act, an applicant must submit to the Department an application for a certificate. The applicant must identify the boundaries of the eligible project area in the application. The Department shall verify that the applicant has submitted a valid application in the form and format required by the Department. On an annual basis, an applicant may file for the credit for the acquisition costs and for the credit for the interest costs, subject to the limitations of this section. If an applicant applying for the tax credit meets the criteria required under this Act, the Department shall issue a certificate in the appropriate amount.

Section 30. Limitation on credits.

(a) The total aggregate amount of tax credits issued under this Act may not exceed $100,000,000 for all calendar years.

(b) The total aggregate amount of tax credits issued under this Act may not exceed $12,000,000 in any one calendar year. If the claims for tax credits under this Act exceed $12,000,000 in any one calendar year, then the Department shall either:

(1) certify the credit to the applicant in the amount of $12,000,000 if there is only one applicant entitled to receive the credit in that year; or

(2) certify the tax credits on a pro-rata basis to all applicants who are entitled to receive tax credits in that year. Any credit amount of tax credits to which an applicant is entitled that is not certified due to the $12,000,000 limitation shall be carried forward for the benefit of the applicant to subsequent years.

Section 35. Rules. The Department, in cooperation with the Department of Revenue, shall adopt any rules necessary for the implementation and administration of this Act.

Section 40. Sunset. The Department may not certify any credit under this Act for any taxable year that begins after January 1 of the 6th year after the effective date of this Act.

Section 900. The Illinois Income Tax Act is amended by adding Section 218 as follows:

(35 ILCS 5/218 new)

Sec. 218. Distressed Areas Land Assemblage Tax Credit.

(a) A taxpayer who has been awarded a tax credit under the Distressed Areas Land Assemblage Tax Credit Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of this Act in an amount certified by the Department of Commerce and Economic Opportunity under that Act.

(b) If the taxpayer is a partnership or Subchapter S corporation, the credit is 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.

(c) The credit may not be carried back. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 6 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, the earlier credit shall be applied first. In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. A transfer of this credit may be made by the taxpayer earning the credit as set forth under Section 15 of Distressed Areas Land Assemblage Tax Credit Act.

(d) The Department, in cooperation with the Department of Commerce and Economic Opportunity, must prescribe rules to enforce and administer the provisions of this Section.

(e) This Section is exempt from the provisions of Section 250 of this Act.