Full Text of HB3025 101st General Assembly
HB3025ham001 101ST GENERAL ASSEMBLY | Rep. Jehan Gordon-Booth Filed: 3/22/2019
| | 10100HB3025ham001 | | LRB101 04951 HLH 58272 a |
|
| 1 | | AMENDMENT TO HOUSE BILL 3025
| 2 | | AMENDMENT NO. ______. Amend House Bill 3025 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 1. Short title. This Act may be cited as the | 5 | | School Building Rehabilitation Tax Credit Act. | 6 | | Section 5. Definitions. As used in this Act, unless the | 7 | | context clearly indicates otherwise: | 8 | | "Department" means the Department of Commerce and Economic | 9 | | Opportunity. | 10 | | "Phased rehabilitation" means a project that is completed | 11 | | in phases. | 12 | | "Placed in service" means the date when the property is | 13 | | placed in a condition or state of readiness and availability | 14 | | for a specifically assigned function. | 15 | | "Qualified expenditures" means all the costs and expenses | 16 | | for construction materials used to repurpose a qualified school |
| | | 10100HB3025ham001 | - 2 - | LRB101 04951 HLH 58272 a |
|
| 1 | | building. | 2 | | "Qualified school building" means a vacant school building | 3 | | located in Illinois. | 4 | | "Qualified rehabilitation plan" means a project involving | 5 | | a qualified school building that is approved by the Department. | 6 | | "Qualified taxpayer" means the owner of the qualified | 7 | | school building. | 8 | | "Recapture event" means any of the following events | 9 | | occurring during the recapture period: | 10 | | (1) failure to place in service the rehabilitated | 11 | | portions of the qualified school building, or failure to | 12 | | maintain the rehabilitated portions of the qualified | 13 | | school building in service after they are placed in | 14 | | service; provided that a recapture event under this | 15 | | paragraph (1) shall not include a removal from service for | 16 | | a reasonable period of time to conduct maintenance and | 17 | | repairs that are reasonably necessary to protect the health | 18 | | and safety of the public or to protect the structural | 19 | | integrity of the qualified school building or a neighboring | 20 | | structure; | 21 | | (2) demolition or other alteration of the qualified | 22 | | school building in a manner that is inconsistent with the | 23 | | qualified rehabilitation plan; | 24 | | (3) disposition of the rehabilitated qualified school | 25 | | building in whole or a proportional disposition of a | 26 | | partnership interest therein, except as otherwise |
| | | 10100HB3025ham001 | - 3 - | LRB101 04951 HLH 58272 a |
|
| 1 | | permitted by this Section; or | 2 | | (4) use of the qualified school building in a manner | 3 | | that is inconsistent with the qualified rehabilitation | 4 | | plan or that is otherwise inconsistent with the provisions | 5 | | and intent of this Section. | 6 | | A recapture event occurring in one taxable year shall be | 7 | | deemed continuing to subsequent taxable years unless and until | 8 | | corrected. | 9 | | The following dispositions of a qualified school building | 10 | | shall not be deemed to be a recapture event for purposes of | 11 | | this Section: | 12 | | (1) a transfer by reason of death; | 13 | | (2) a transfer between spouses incident to divorce; | 14 | | (3) a sale by and leaseback to an entity that, when the | 15 | | rehabilitated portions of the qualified school building | 16 | | are placed in service, will be a lessee of the qualified | 17 | | school building, but only for so long as the entity | 18 | | continues to be a lessee; and | 19 | | (4) a mere change in the form of conducting the trade | 20 | | or business by the owner (or, if applicable, the lessee) of | 21 | | the qualified school building, so long as the property | 22 | | interest in such qualified school building is retained in | 23 | | such trade or business and the owner or lessee retains a | 24 | | substantial interest in such trade or business. | 25 | | "Recapture period" means the 5-year period beginning on the | 26 | | date that the qualified school building or rehabilitated |
| | | 10100HB3025ham001 | - 4 - | LRB101 04951 HLH 58272 a |
|
| 1 | | portions of the qualified school building are placed in | 2 | | service. | 3 | | "Substantial rehabilitation" means that the qualified | 4 | | expenditures during the 24-month period selected by the | 5 | | taxpayer at the time and in the manner prescribed by rule and | 6 | | ending with or within the taxable year exceed the greater of | 7 | | (i) the adjusted basis of the building and its structural | 8 | | components or (ii) $5,000. The adjusted basis of the building | 9 | | and its structural components shall be determined as of the | 10 | | beginning of the first day of such 24-month period or as of the | 11 | | beginning of the first day of the holding period of the | 12 | | building, whichever is later. For purposes of determining the | 13 | | adjusted basis, the determination of the beginning of the | 14 | | holding period shall be made without regard to any | 15 | | reconstruction by the taxpayer in connection with the | 16 | | rehabilitation. In the case of any phased rehabilitation, with | 17 | | phases set forth in architectural plans and specifications | 18 | | completed before the rehabilitation begins, this definition | 19 | | shall be applied by substituting "60-month period" for | 20 | | "24-month period" wherever that term occurs in the definition. | 21 | | Section 10. Allowable credit. | 22 | | (a) To the extent authorized by this Act, for taxable years | 23 | | beginning on or after January 1, 2020 and ending on or before | 24 | | December 31, 2024, there shall be allowed a tax credit against | 25 | | the tax imposed by subsections (a) and (b) of Section 201 of |
| | | 10100HB3025ham001 | - 5 - | LRB101 04951 HLH 58272 a |
|
| 1 | | the Illinois Income Tax Act in an aggregate amount equal to 25% | 2 | | of qualified expenditures incurred by a qualified taxpayer | 3 | | undertaking a qualified rehabilitation plan of a qualified | 4 | | school building, provided that the total amount of such | 5 | | expenditures must (i) equal $5,000 or more or (ii) exceed the | 6 | | adjusted basis of the qualified school building on the first | 7 | | day the qualified rehabilitation plan commenced. If the | 8 | | qualified rehabilitation plan spans multiple years, the | 9 | | aggregate credit for the entire project shall be allowed in the | 10 | | last taxable year. | 11 | | (b) To obtain a tax credit pursuant to this Section, the | 12 | | taxpayer must apply with the Department. The Department shall | 13 | | determine the amount of eligible rehabilitation expenditures | 14 | | within 45 days after receipt of a complete application. The | 15 | | taxpayer must provide to the Department a third-party cost | 16 | | certification conducted by a certified public accountant | 17 | | verifying (i) the qualified and non-qualified rehabilitation | 18 | | expenses and (ii) that the qualified expenditures exceed the | 19 | | adjusted basis of the qualified school building on the first | 20 | | day the qualified rehabilitation plan commenced. The | 21 | | accountant shall provide appropriate review and testing of | 22 | | invoices. The Department is authorized, but not required, to | 23 | | accept this third-party cost certification to determine the | 24 | | amount of qualified expenditures. | 25 | | (c) If the amount of any tax credit awarded under this Act | 26 | | exceeds the qualified taxpayer's income tax liability for the |
| | | 10100HB3025ham001 | - 6 - | LRB101 04951 HLH 58272 a |
|
| 1 | | year in which the qualified rehabilitation plan was placed in | 2 | | service, the excess amount may be carried forward for a credit | 3 | | against the taxpayer's income tax liability in the next | 4 | | succeeding year or years until the total amount of the credit | 5 | | has been used, except that a credit may not be carried forward | 6 | | for deduction after the tenth taxable year after the taxable | 7 | | year in which the qualified rehabilitation plan was placed in | 8 | | service. Upon completion and review of the project, the | 9 | | Department shall issue a single certificate in the amount of | 10 | | the
eligible credits equal to 25% of the qualified expenditures | 11 | | incurred during the eligible taxable years. At the time the | 12 | | certificate is issued, an issuance fee up to the maximum amount | 13 | | of 2% of the amount of the credits issued by the certificate | 14 | | may be collected from the applicant to administer the Act. If | 15 | | collected, this issuance fee shall be paid into the School | 16 | | Building Rehabilitation Tax Credit Fund for use of the | 17 | | Department in the administration of this program. The taxpayer | 18 | | must attach the certificate or legal documentation of her or | 19 | | his proportional share of the certificate to the tax
return on | 20 | | which the credits are to be claimed. The tax credit under this | 21 | | Section may not reduce the taxpayer's liability to less than | 22 | | zero. If the amount of the credit exceeds the tax liability for | 23 | | the year, the excess credit may be carried forward and applied | 24 | | to the tax liability of the 10 taxable years following the | 25 | | excess credit year.
| 26 | | (d) If the taxpayer is (i) a corporation having an election |
| | | 10100HB3025ham001 | - 7 - | LRB101 04951 HLH 58272 a |
|
| 1 | | in effect under Subchapter S of the federal Internal Revenue | 2 | | Code, (ii) a partnership, or (iii) a limited liability company, | 3 | | the credit provided under this Act may be claimed by the | 4 | | shareholders of the corporation, the partners of the | 5 | | partnership, or the members of the limited liability company in | 6 | | the same manner as those shareholders, partners, or members | 7 | | account for their proportionate shares of the income or losses | 8 | | of the corporation, partnership, or limited liability company, | 9 | | or as provided in the by-laws or other executed agreement of | 10 | | the corporation, partnership, or limited liability company. | 11 | | Credits granted to a partnership, a limited liability company | 12 | | taxed as a partnership, or other multiple owners of property | 13 | | shall be passed through to the partners, members, or owners | 14 | | respectively on a pro rata basis or pursuant to an executed | 15 | | agreement among the partners, members, or owners documenting | 16 | | any alternate distribution method. | 17 | | (e) If a recapture event occurs during the recapture period | 18 | | with respect to a qualified school building, then, for any | 19 | | taxable year in which the credits are allowed as specified in | 20 | | this Act, the tax under the applicable Section of this Act | 21 | | shall be increased by applying the recapture percentage set | 22 | | forth below to the tax decrease resulting from the application | 23 | | of credits allowed under this Act to the taxable year in | 24 | | question. | 25 | | For the purposes of this subsection, the recapture | 26 | | percentage shall be determined as follows: |
| | | 10100HB3025ham001 | - 8 - | LRB101 04951 HLH 58272 a |
|
| 1 | | (1) if the recapture event occurs within the first year | 2 | | after commencement of the recapture period, then the | 3 | | recapture percentage is 100%; | 4 | | (2) if the recapture event occurs within the second | 5 | | year after commencement of the recapture period, then the | 6 | | recapture percentage is 80%; | 7 | | (3) if the recapture event occurs within the third year | 8 | | after commencement of the recapture period, then the | 9 | | recapture percentage is 60%; | 10 | | (4) if the recapture event occurs within the fourth | 11 | | year after commencement of the recapture period, then the | 12 | | recapture percentage is 40%; and | 13 | | (5) if the recapture event occurs within the fifth year | 14 | | after commencement of the recapture period, then the | 15 | | recapture percentage is 20%.
| 16 | | In the case of any recapture event, the carryforwards under | 17 | | this Act shall be adjusted by reason of such event. | 18 | | (d) The Department may adopt rules to implement this | 19 | | Section in addition to the rules expressly authorized herein. | 20 | | Section 20. Limitations, reporting, and monitoring. | 21 | | (a) The Department shall award not more than an aggregate | 22 | | of $15,000,000 in total annual tax credits pursuant to | 23 | | qualified rehabilitation plans for qualified school building. | 24 | | The Department shall award not more than $3,000,000 in tax | 25 | | credits with regard to a single qualified rehabilitation plan. |
| | | 10100HB3025ham001 | - 9 - | LRB101 04951 HLH 58272 a |
|
| 1 | | In awarding tax credits under this Act, the Department must | 2 | | prioritize projects that meet one or more of the following: | 3 | | (1) the qualified school building was previously owned | 4 | | by a federal, State, or local governmental entity; | 5 | | (2) the qualified school building is located in a | 6 | | census tract that has a median family income at or below | 7 | | the State median family income; data from the most recent | 8 | | 5-year estimate from the American Community Survey (ACS), | 9 | | published by the U.S. Census Bureau, shall be used to | 10 | | determine eligibility; | 11 | | (3) the qualified rehabilitation plan includes in the | 12 | | development partnership a Community Development Entity or | 13 | | a low-profit (B Corporation) or not-for-profit | 14 | | organization, as defined by Section 501(c)(3) of the | 15 | | Internal Revenue Code; or | 16 | | (4) the qualified school building is located in an area | 17 | | declared under an Emergency Declaration or Major Disaster | 18 | | Declaration under the federal Robert T. Stafford Disaster | 19 | | Relief and Emergency Assistance Act. | 20 | | (b) The annual aggregate program allocation of $15,000,000 | 21 | | set forth in subsection (a) shall be allocated by the | 22 | | Department, in such proportion as determined by the Department, | 23 | | on a per calendar basis twice in each year that the program is | 24 | | in effect, provided that: (i) the amount initially allocated by | 25 | | the Department for any one calendar application period shall | 26 | | not exceed 65% of the total allowable amount and (ii) any |
| | | 10100HB3025ham001 | - 10 - | LRB101 04951 HLH 58272 a |
|
| 1 | | portion of the allocated allowable amount remaining unused as | 2 | | of the end of any of the second calendar application period of | 3 | | a given calendar year shall be rolled into and added to the | 4 | | total allocated amount for the next available calendar year. | 5 | | The qualified rehabilitation plan must meet a readiness test, | 6 | | as defined in the rules created by the Department, in order for | 7 | | the Applicant to qualify. Applicants that qualify under this | 8 | | Act will be placed in a queue based on the date and time the | 9 | | application is received until the application period total | 10 | | allowable amount is reached. Applicants must reapply for each | 11 | | application period. | 12 | | (c) On or before December 31, 2020,
and on or before | 13 | | December 31 of each even-numbered year thereafter through
2024, | 14 | | subject to appropriation and prior to equal disbursement to the | 15 | | Department, moneys in the School Building Rehabilitation Tax | 16 | | Credit Fund attributable to fees under this Act shall be used, | 17 | | beginning at the end of the first fiscal year after the | 18 | | effective date of this Act, to hire a qualified third party to | 19 | | prepare a biennial report to assess the overall effectiveness | 20 | | of this Act from the qualified rehabilitation projects under | 21 | | this Act completed in that year and in previous years. Baseline | 22 | | data of the metrics in the report shall be collected at the | 23 | | initiation of a qualified rehabilitation project. The overall | 24 | | economic impact shall include at least: | 25 | | (1) the number of applications, project locations, and | 26 | | proposed use of qualified school building; |
| | | 10100HB3025ham001 | - 11 - | LRB101 04951 HLH 58272 a |
|
| 1 | | (2) the amount of credits awarded and the number and | 2 | | location of projects receiving credit allocations; | 3 | | (3) the status of ongoing projects and projected | 4 | | qualifying expenditures for ongoing projects;
| 5 | | (4) for completed projects, the total amount of | 6 | | qualifying rehabilitation expenditures and non-qualifying | 7 | | expenditures, the number of housing units created and the | 8 | | number of housing units that qualify as affordable, and the | 9 | | total square footage rehabilitated and developed; | 10 | | (5) direct, indirect, and induced economic impacts; | 11 | | (6) temporary, permanent, and construction jobs | 12 | | created; and | 13 | | (7) sales, income, and property tax generation before | 14 | | construction, during construction, and after completion. | 15 | | The report to the General Assembly shall be filed with the | 16 | | Clerk of the House of Representatives and the Secretary of the | 17 | | Senate in electronic form only, in the manner that the Clerk | 18 | | and the Secretary shall direct. | 19 | | (d) Any time prior to issuance of a tax credit certificate, | 20 | | the Director of the Department, the State Historic Preservation | 21 | | Officer, or staff of the Department may, upon reasonable notice | 22 | | to the project owner of not less than 3 business days, conduct | 23 | | a site visit to the project to inspect and evaluate the | 24 | | project. | 25 | | (e) Any time prior to the issuance of a tax credit | 26 | | certificate and for a period of 4 years following the effective |
| | | 10100HB3025ham001 | - 12 - | LRB101 04951 HLH 58272 a |
|
| 1 | | date of a project tax credit certificate, the Director may, | 2 | | upon reasonable notice of not less than 30 calendar days, | 3 | | request a status report from the Applicant consisting of | 4 | | information and updates relevant to the status of the project. | 5 | | Status reports shall not be requested more than twice yearly. | 6 | | (f) In order to demonstrate sufficient evidence of | 7 | | reviewable progress within 12 months after the date the | 8 | | Applicant received notification of approval from the | 9 | | Department, the Applicant shall provide all of the following: | 10 | | (1) a viable financial plan which demonstrates by way | 11 | | of an executed agreement that all financing has been | 12 | | secured for the project; such financing shall include, but | 13 | | not be limited to, equity investment as demonstrated by | 14 | | letters of commitment from the owner of the property, | 15 | | investment partners, and equity investors; and | 16 | | (2) final construction drawings or approved building | 17 | | permits that demonstrate the complete rehabilitation of | 18 | | the full scope of the application. | 19 | | The Director shall review the submitted evidence and may | 20 | | request additional documentation from the Applicant if | 21 | | necessary. The Applicant will have 30 calendar days to provide | 22 | | the information requested, otherwise the approval may be | 23 | | rescinded at the discretion of the Director. | 24 | | (g) In order to demonstrate sufficient evidence of | 25 | | reviewable progress within 18 months after the date the | 26 | | application received notification of approval from the |
| | | 10100HB3025ham001 | - 13 - | LRB101 04951 HLH 58272 a |
|
| 1 | | Department, the Applicant is required to provide detailed | 2 | | evidence that the Applicant has secured and closed on financing | 3 | | for the complete scope of rehabilitation for the project. To | 4 | | demonstrate evidence that the Applicant has secured and closed | 5 | | on financing, the Applicant will need to provide signed and | 6 | | processed loan agreements, bank financing documents or other | 7 | | legal and contractual evidence to demonstrate that adequate | 8 | | financing is available to complete the project. The Director | 9 | | shall review the submitted evidence and may request additional | 10 | | documentation from the Applicant if necessary. The Applicant | 11 | | will have 30 calendar days to provide the information | 12 | | requested, otherwise the approval may be rescinded at the | 13 | | discretion of the Director. | 14 | | If the Applicant fails to document reviewable progress | 15 | | within 18 months of approval, the Director may notify the | 16 | | Applicant that the application is rescinded. However, should | 17 | | financing and construction be imminent, the Director may elect | 18 | | to grant the Applicant no more than 5 months to close on | 19 | | financing and commence construction. If the Applicant fails to | 20 | | meet these conditions in the required timeframe, the Director | 21 | | shall notify the Applicant that the application is rescinded. | 22 | | Any such rescinded allocation shall be added to the aggregate | 23 | | amount of credits available for allocation for the year in | 24 | | which the forfeiture occurred. | 25 | | The amount of the qualified expenditures identified in the | 26 | | Applicant's certification of completion and reflected on the |
| | | 10100HB3025ham001 | - 14 - | LRB101 04951 HLH 58272 a |
|
| 1 | | certificate issued by the Department is subject to inspection, | 2 | | examination, and audit. | 3 | | The Applicant shall establish and maintain for a period of | 4 | | 4 years following the effective date on a project tax credit | 5 | | certificate such records as required by the Department. | 6 | | Section 25. Powers. The Department shall adopt rules for | 7 | | the administration of this Act. | 8 | | Section 60. The Illinois Income Tax Act is amended by | 9 | | adding Section 229 as follows: | 10 | | (35 ILCS 5/229 new) | 11 | | Sec. 229. School Building Rehabilitation Tax Credit. For | 12 | | taxable years beginning on or after January 1, 2020 and ending | 13 | | on or before December 31, 2024, each taxpayer that is awarded a | 14 | | credit under the School Building Rehabilitation Tax Credit Act | 15 | | is entitled to a credit as provided in that Act. | 16 | | Section 65. The State Finance Act is amended by adding | 17 | | Section 5.891 as follows: | 18 | | (30 ILCS 105/5.891 new) | 19 | | Sec. 5.891. The School Building Rehabilitation Tax Credit | 20 | | Fund.
|
| | | 10100HB3025ham001 | - 15 - | LRB101 04951 HLH 58272 a |
|
| 1 | | Section 99. Effective date. This Act takes effect upon | 2 | | becoming law.".
|
|