Illinois General Assembly - Full Text of SB1711
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Full Text of SB1711  102nd General Assembly

SB1711enr 102ND GENERAL ASSEMBLY

  
  
  

 


 
SB1711 EnrolledLRB102 11477 HLH 16811 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Historic Preservation Tax Credit Act is
5amended by changing Sections 5, 10, 20, and 25 as follows:
 
6    (35 ILCS 31/5)
7    Sec. 5. Definitions. As used in this Act, unless the
8context clearly indicates otherwise:
9    "Director" means the Director of Natural Resources or his
10or her designee.
11    "Division" means the State Historic Preservation Office
12within the Department of Natural Resources.
13    "Phased rehabilitation" means a project that is completed
14in phases, as defined under Section 47 of the federal Internal
15Revenue Code and pursuant to National Park Service regulations
16at 36 C.F.R. 67.
17    "Placed in service" means the date when the property is
18placed in a condition or state of readiness and availability
19for a specifically assigned function as defined under Section
2047 of the federal Internal Revenue Code and federal Treasury
21Regulation Sections 1.46 and 1.48.
22    "Qualified expenditures" means all the costs and expenses
23defined as qualified rehabilitation expenditures under Section

 

 

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147 of the federal Internal Revenue Code that were incurred in
2connection with a qualified rehabilitation plan historic
3structure.
4    "Qualified historic structure" means any structure that is
5located in Illinois and is defined as a certified historic
6structure under Section 47(c)(3) of the federal Internal
7Revenue Code.
8    "Qualified rehabilitation plan" means a project that is
9approved by the Department of Natural Resources and the
10National Park Service as being consistent with the United
11States Secretary of the Interior's Standards for
12Rehabilitation.
13    "Qualified taxpayer" means the owner of the qualified
14historic structure or any other person or entity who may
15qualify for the federal rehabilitation credit allowed by
16Section 47 of the federal Internal Revenue Code.
17    "Recapture event" means any of the following events
18occurring during the recapture period:
19        (1) failure to place in service the rehabilitated
20    portions of the qualified historic structure, or failure
21    to maintain the rehabilitated portions of the qualified
22    historic structure in service after they are placed in
23    service; provided that a recapture event under this
24    paragraph (1) shall not include a removal from service for
25    a reasonable period of time to conduct maintenance and
26    repairs that are reasonably necessary to protect the

 

 

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1    health and safety of the public or to protect the
2    structural integrity of the qualified historic structure
3    or a neighboring structure;
4        (2) demolition or other alteration of the qualified
5    historic structure in a manner that is inconsistent with
6    the qualified rehabilitation plan or the Secretary of the
7    Interior's Standards for Rehabilitation;
8        (3) disposition of the rehabilitated qualified
9    historic structure in whole or a proportional disposition
10    of a partnership interest therein, except as otherwise
11    permitted by this Section; or
12        (4) use of the qualified historic structure in a
13    manner that is inconsistent with the qualified
14    rehabilitation plan or that is otherwise inconsistent with
15    the provisions and intent of this Section.
16    A recapture event occurring in one taxable year shall be
17deemed continuing to subsequent taxable years unless and until
18corrected.
19    The following dispositions of a qualified historic
20structure shall not be deemed to be a recapture event for
21purposes of this Section:
22        (1) a transfer by reason of death;
23        (2) a transfer between spouses incident to divorce;
24        (3) a sale by and leaseback to an entity that, when the
25    rehabilitated portions of the qualified historic structure
26    are placed in service, will be a lessee of the qualified

 

 

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1    historic structure, but only for so long as the entity
2    continues to be a lessee; and
3        (4) a mere change in the form of conducting the trade
4    or business by the owner (or, if applicable, the lessee)
5    of the qualified historic structure, so long as the
6    property interest in such qualified historic structure is
7    retained in such trade or business and the owner or lessee
8    retains a substantial interest in such trade or business.
9    "Recapture period" means the 5-year period beginning on
10the date that the qualified historic structure or
11rehabilitated portions of the qualified historic structure are
12placed in service.
13    "Substantial rehabilitation" means that the qualified
14rehabilitation expenditures during the 24-month period
15selected by the taxpayer at the time and in the manner
16prescribed by rule and ending with or within the taxable year
17exceed the greater of (i) the adjusted basis of the building
18and its structural components or (ii) $5,000. The adjusted
19basis of the building and its structural components shall be
20determined as of the beginning of the first day of such
2124-month period or as of the beginning of the first day of the
22holding period of the building, whichever is later. For
23purposes of determining the adjusted basis, the determination
24of the beginning of the holding period shall be made without
25regard to any reconstruction by the taxpayer in connection
26with the rehabilitation. In the case of any phased

 

 

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1rehabilitation, with phases set forth in architectural plans
2and specifications completed before the rehabilitation begins,
3this definition shall be applied by substituting "60-month
4period" for "24-month period" wherever that term occurs in the
5definition.
6(Source: P.A. 100-629, eff. 1-1-19.)
 
7    (35 ILCS 31/10)
8    Sec. 10. Allowable credit.
9    (a) To the extent authorized by this Act, for taxable
10years beginning on or after January 1, 2019 and ending on or
11before December 31, 2023, there shall be allowed a tax credit
12to the qualified taxpayer against the tax imposed by
13subsections (a) and (b) of Section 201 of the Illinois Income
14Tax Act in an aggregate amount equal to 25% of qualified
15expenditures, but not to exceed $3,000,000, incurred by a
16qualified taxpayer undertaking a qualified rehabilitation plan
17of a qualified historic structure, provided that the total
18amount of such expenditures must (i) equal $5,000 or more and
19or (ii) exceed the adjusted basis of the qualified historic
20structure on the first day the qualified rehabilitation plan
21commenced. If the qualified rehabilitation plan spans multiple
22years, the aggregate credit for the entire project shall be
23allowed in the last taxable year.
24    (b) To obtain a tax credit certificate pursuant to this
25Section, the qualified taxpayer must apply with the Division.

 

 

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1The Division shall determine the amount of eligible
2rehabilitation expenditures within 45 days after receipt of a
3complete application. The taxpayer must provide to the
4Division a third-party cost certification conducted by a
5certified public accountant verifying (i) the qualified and
6non-qualified rehabilitation expenses and (ii) that the
7qualified expenditures exceed the adjusted basis of the
8qualified historic structure on the first day the qualified
9rehabilitation plan commenced. The accountant shall provide
10appropriate review and testing of invoices. The Division is
11authorized, but not required, to accept this third-party cost
12certification to determine the amount of qualified
13expenditures. The Division and the National Park Service shall
14determine whether the rehabilitation is consistent with the
15Standards of the Secretary of the United States Department of
16the Interior.
17    (c) If the amount of any tax credit awarded under this Act
18exceeds the qualified taxpayer's income tax liability for the
19year in which the qualified rehabilitation plan was placed in
20service, the excess amount may be carried forward for
21deduction from the taxpayer's income tax liability in the next
22succeeding year or years until the total amount of the credit
23has been used, except that a credit may not be carried forward
24for deduction after the tenth taxable year after the taxable
25year in which the qualified rehabilitation plan was placed in
26service. Upon completion of the project and approval of the

 

 

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1complete application review of the project, the Division shall
2issue a single certificate in the amount of the eligible
3credits equal to 25% of the qualified expenditures incurred
4during the eligible taxable years, not to exceed the lesser of
5the allocated amount or $3,000,000 per single qualified
6rehabilitation plan. Prior to the issuance of the tax credit
7certificate, the qualified taxpayer must provide to the
8Division verification that the rehabilitated structure is a
9qualified historic structure. At the time the certificate is
10issued, an issuance fee up to the maximum amount of 2% of the
11amount of the credits issued by the certificate may be
12collected from the qualified taxpayer applicant to administer
13the Act. If collected, this issuance fee shall be directed to
14the Division Historic Property Administrative Fund or other
15such fund as appropriate for use of the Division in the
16administration of the Historic Preservation Tax Credit
17Program. The taxpayer must attach the certificate or legal
18documentation of her or his proportional share of the
19certificate to the tax return on which the credits are to be
20claimed. The tax credit under this Section may not reduce the
21taxpayer's liability to less than zero. If the amount of the
22credit exceeds the tax liability for the year, the excess
23credit may be carried forward and applied to the tax liability
24of the 10 taxable years following the first excess credit
25year. The taxpayer is not eligible to receive credits under
26this Section and under Section 221 of the Illinois Income Tax

 

 

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1Act for the same qualified expenditures or qualified
2rehabilitation plan.
3    (d) If the taxpayer is (i) a corporation having an
4election in effect under Subchapter S of the federal Internal
5Revenue Code, (ii) a partnership, or (iii) a limited liability
6company, the credit provided under this Act may be claimed by
7the shareholders of the corporation, the partners of the
8partnership, or the members of the limited liability company
9in the same manner as those shareholders, partners, or members
10account for their proportionate shares of the income or losses
11of the corporation, partnership, or limited liability company,
12or as provided in the bylaws or other executed agreement of the
13corporation, partnership, or limited liability company.
14Credits granted to a partnership, a limited liability company
15taxed as a partnership, or other multiple owners of property
16shall be passed through to the partners, members, or owners
17respectively on a pro rata basis or pursuant to an executed
18agreement among the partners, members, or owners documenting
19any alternate distribution method.
20    (e) If a recapture event occurs during the recapture
21period with respect to a qualified historic structure, then
22for any taxable year in which the credits are allowed as
23specified in this Act, the tax under the applicable Section of
24this Act shall be increased by applying the recapture
25percentage set forth below to the tax decrease resulting from
26the application of credits allowed under this Act to the

 

 

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1taxable year in question.
2    For the purposes of this subsection, the recapture
3percentage shall be determined as follows:
4        (1) if the recapture event occurs within the first
5    year after commencement of the recapture period, then the
6    recapture percentage is 100%;
7        (2) if the recapture event occurs within the second
8    year after commencement of the recapture period, then the
9    recapture percentage is 80%;
10        (3) if the recapture event occurs within the third
11    year after commencement of the recapture period, then the
12    recapture percentage is 60%;
13        (4) if the recapture event occurs within the fourth
14    year after commencement of the recapture period, then the
15    recapture percentage is 40%; and
16        (5) if the recapture event occurs within the fifth
17    year after commencement of the recapture period, then the
18    recapture percentage is 20%.
19    In the case of any recapture event, the carryforwards
20under this Act shall be adjusted by reason of such event.
21    (f) The Division may adopt rules to implement this Section
22in addition to the rules expressly authorized herein.
23(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)
 
24    (35 ILCS 31/20)
25    Sec. 20. Limitations, reporting, and monitoring.

 

 

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1    (a) In every calendar year that this program is in effect,
2the Division is authorized to allocate $15,000,000 in tax
3credits in addition to any unallocated, returned, or rescinded
4allocations from previous years, pursuant to qualified
5rehabilitation plans. The Division shall award not more than
6an aggregate of $15,000,000 in total annual tax credits
7pursuant to qualified rehabilitation plans for qualified
8historic structures. The Division shall not allocate or award
9award not more than $3,000,000 in tax credits with regard to a
10single qualified rehabilitation plan. In allocating awarding
11tax credits under this Act, the Division must prioritize
12applications projects that meet one or more of the following:
13        (1) the qualified historic structure is located in a
14    county that borders a State with a historic
15    income-producing property rehabilitation credit;
16        (2) the qualified historic structure was previously
17    owned by a federal, state, or local governmental entity
18    for no less than 6 months;
19        (3) the qualified historic structure is located in a
20    census tract that has a median family income at or below
21    the State median family income; data from the most recent
22    5-year estimate from the American Community Survey (ACS),
23    published by the U.S. Census Bureau, shall be used to
24    determine eligibility;
25        (4) the qualified rehabilitation plan includes in the
26    development partnership a Community Development Entity or

 

 

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1    a low-profit (B Corporation) or not-for-profit
2    organization, as defined by Section 501(c)(3) of the
3    Internal Revenue Code; or
4        (5) the qualified historic structure is located in an
5    area declared under an Emergency Declaration or Major
6    Disaster Declaration under the federal Robert T. Stafford
7    Disaster Relief and Emergency Assistance Act. The
8    declaration must be no older than 3 years at the time of
9    application.
10    (b) The annual aggregate authorization program allocation
11of $15,000,000 set forth in subsection (a) shall be allocated
12by the Division, in such proportion as determined by the
13Director Department, on a per calendar basis twice in each
14calendar year that the program is in effect, provided that:
15(i) the amount initially allocated by the Division for the
16first any one calendar year application period shall not
17exceed 65% of the total allowable amount available for
18allocation. Any unallocated and (ii) any portion of the
19allocated allowable amount remaining unused as of the end of
20any of the second calendar application period of a given
21calendar year shall be rolled over into and added to the total
22authorized allocated amount for the next available calendar
23year. The qualified rehabilitation plan must meet a readiness
24test, as defined in the rules created by the Division, in order
25for the application Applicant to qualify. In any given
26application period, applications Applicants that qualify under

 

 

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1this Act will be prioritized as set forth in subsection (a) and
2placed in a queue based on the date and time the application is
3received. Applicants whose applications qualify but do not
4receive an allocation until such time as the application
5period total allowable amount is reached. Applicants must
6reapply to be considered in subsequent for each application
7periods period.
8    (c) Subject On or before December 31, 2019, and on or
9before December 31 of each odd-numbered year thereafter
10through 2023, subject to appropriation and prior to equal
11disbursement to the Division, moneys in the Historic Property
12Administrative Fund shall be used, on a biennial basis,
13beginning at the end of the second first fiscal year after the
14effective date of this Act, to hire a qualified third party to
15prepare a biennial report to assess the overall impact
16effectiveness of this Act from the qualified rehabilitation
17plans projects under this Act completed in that year and in
18previous years. Baseline data of the metrics in the report
19shall be collected at the initiation of a qualified
20rehabilitation plan project. The overall economic impact shall
21include at least:
22        (1) the number of applications, project locations, and
23    proposed use of qualified historic structures;
24        (2) the amount of credits awarded and the number and
25    location of projects receiving credit allocations;
26        (3) the status of ongoing projects and projected

 

 

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1    qualifying expenditures for ongoing projects;
2        (4) for completed projects, the total amount of
3    qualifying rehabilitation expenditures and non-qualifying
4    expenditures, the number of housing units created and the
5    number of housing units that qualify as affordable, and
6    the total square footage rehabilitated and developed;
7        (5) direct, indirect, and induced economic impacts;
8        (6) temporary, permanent, and construction jobs
9    created; and
10        (7) sales, income, and property tax generation before
11    construction, during construction, and after completion.
12    The report to the General Assembly shall be filed with the
13Clerk of the House of Representatives and the Secretary of the
14Senate in electronic form only, in the manner that the Clerk
15and the Secretary shall direct.
16    (d) Any time prior to issuance of a tax credit
17certificate, the Director of the Division, the State Historic
18Preservation Officer, or staff of the Division may, upon
19reasonable notice to the project owner of not less than 3
20business days, conduct a site visit to the project to inspect
21and evaluate the project.
22    (e) Any time prior to the issuance of a tax credit
23certificate and for a period of 4 years following the
24effective date of a project tax credit certificate, the
25Director may, upon reasonable notice of not less than 30
26calendar days, request a status report from the Applicant

 

 

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1consisting of information and updates relevant to the status
2of the project. Status reports shall not be requested more
3than twice yearly.
4    (f) In order to demonstrate sufficient evidence of
5reviewable progress within 12 months after the date the
6Applicant received notification of allocation approval from
7the Division, the Director may require the Applicant to shall
8provide all of the following:
9        (1) a viable financial plan which demonstrates by way
10    of an executed agreement that all financing has been
11    secured for the project; such financing shall include, but
12    not be limited to, equity investment as demonstrated by
13    letters of commitment from the owner of the property,
14    investment partners, and equity investors;
15        (2) (blank); final construction drawings or approved
16    building permits that demonstrate the complete
17    rehabilitation of the full scope of the application; and
18        (3) all historic approvals, including all federal and
19    State rehabilitation documents required by the Division.
20    The Director shall review the submitted evidence and may
21request additional documentation from the Applicant if
22necessary. The Applicant will have 30 calendar days to provide
23the information requested, otherwise the allocation approval
24may be rescinded at the discretion of the Director.
25    (g) In order to demonstrate sufficient evidence of
26reviewable progress within 24 18 months after the date the

 

 

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1application received notification of approval from the
2Division, the Director may require the Applicant is required
3to provide detailed evidence that the Applicant has secured
4and closed on financing for the complete scope of
5rehabilitation for the project. To demonstrate evidence that
6the Applicant has secured and closed on financing, the
7Applicant will need to provide signed and processed loan
8agreements, bank financing documents or other legal and
9contractual evidence to demonstrate that adequate financing is
10available to complete the project. The Director shall review
11the submitted evidence and may request additional
12documentation from the Applicant if necessary. The Applicant
13will have 30 calendar days to provide the information
14requested, otherwise the allocation approval may be rescinded
15at the discretion of the Director.
16    If the Applicant fails to document reviewable progress
17within 24 18 months of approval, the Director may notify the
18Applicant that the allocation application is rescinded.
19However, should financing and construction be imminent, the
20Director may elect to grant the Applicant no more than 5 months
21to close on financing and commence construction. If the
22Applicant fails to meet these conditions in the required
23timeframe, the Director shall notify the Applicant that the
24allocation application is rescinded. Any such rescinded
25allocation shall be added to the aggregate amount of credits
26available for allocation for the year in which the forfeiture

 

 

SB1711 Enrolled- 16 -LRB102 11477 HLH 16811 b

1occurred.
2    The amount of the qualified expenditures identified in the
3qualified taxpayer's Applicant's certification of completion
4and reflected on the Historic Preservation Tax Credit
5certificate issued by the Director is subject to inspection,
6examination, and audit by the Department of Revenue.
7    The qualified taxpayer Applicant shall establish and
8maintain for a period of 4 years following the effective date
9on a project tax credit certificate such records as required
10by the Director. Such records include, but are not limited to,
11records documenting project expenditures and compliance with
12the U.S. Secretary of the Interior's Standards. The qualified
13taxpayer Applicant shall make such records available for
14review and verification by the Director, the State Historic
15Preservation Officer, the Department of Revenue, or
16appropriate staff, as well as other appropriate State
17agencies. In the event the Director determines an Applicant
18has submitted a status an annual report containing erroneous
19information or data not supported by records established and
20maintained under this Act, the Director may, after providing
21notice, require the Applicant to resubmit corrected reports.
22(Source: P.A. 100-629, eff. 1-1-19.)
 
23    (35 ILCS 31/25)
24    Sec. 25. Powers. The Division may shall adopt rules for
25the administration of this Act. The Division may enter into an

 

 

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1intergovernmental agreement with the Department of Commerce
2and Economic Opportunity, the Department of Revenue, or both,
3for the administration of this Act. Such intergovernmental
4agreement may allow for the distribution of all or a portion of
5the issuance fee imposed under Section 10 to the Department of
6Commerce and Economic Opportunity or the Department of
7Revenue, as applicable.
8(Source: P.A. 100-629, eff. 1-1-19.)
 
9    Section 10. The Illinois Income Tax Act is amended by
10changing Section 228 as follows:
 
11    (35 ILCS 5/228)
12    Sec. 228. Historic preservation credit. For tax years
13beginning on or after January 1, 2019 and ending on or before
14December 31, 2023, a taxpayer who qualifies for a credit under
15the Historic Preservation Tax Credit Act is entitled to a
16credit against the taxes imposed under subsections (a) and (b)
17of Section 201 of this Act as provided in that Act. If the
18taxpayer is a partnership, or Subchapter S corporation, or a
19limited liability company the credit shall be allowed to the
20partners, or shareholders, or members in accordance with the
21determination of income and distributive share of income under
22Sections 702 and 704 and Subchapter S of the Internal Revenue
23Code provided that credits granted to a partnership, a limited
24liability company taxed as a partnership, or other multiple

 

 

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1owners of property shall be passed through to the partners,
2members, or owners respectively on a pro rata basis or
3pursuant to an executed agreement among the partners, members,
4or owners documenting any alternate distribution method. If
5the amount of any tax credit awarded under this Section
6exceeds the qualified taxpayer's income tax liability for the
7year in which the qualified rehabilitation plan was placed in
8service, the excess amount may be carried forward as provided
9in the Historic Preservation Tax Credit Act.
10(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.