Public Act 93-0369

HB3049 Enrolled                      LRB093 10000 SJM 10250 b

    AN ACT concerning taxes.

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

    Section  5.  The  Illinois  Housing  Development  Act  is
amended by changing Section 7.28 as follows:

    (20 ILCS 3805/7.28)
    Sec.  7.28.  Tax  credit  for  donation  to sponsors. The
Illinois Housing Development  Authority  may  administer  and
adopt  rules  for  an  affordable housing tax donation credit
program to provide tax credits for donations to  sponsors  of
affordable housing projects as set forth in this Section.
    (a)  In this Section:
    "Administrative housing agency" means either the Illinois
Housing  Development  Authority  or  an agency of the City of
Chicago.
    "Affordable housing project" means either  (i)  a  rental
project  in  which  at  least  25%  of  the  units have rents
(including tenant-paid heat) that do not exceed, on a monthly
basis, maximum  gross  rent  figures,  as  published  by  the
Authority,  that are: (i) based on data published annually by
the U.S. Department of Housing and  Urban  Development,  (ii)
based  on  the annual income of households earning 60% of the
area median income, (iii) computed using a 30% of  the  gross
monthly  income standard and (iv) adjusted for unit size of a
household earning 60% of the area median income and at  least
25%  of  the units are occupied by persons and families whose
incomes do not exceed 60% of the median family income for the
geographic area in which the residential unit is  located  or
(ii)  a  unit  for  sale  to homebuyers whose gross household
income is at or below 60% of the area median income  and  who
pay  no  more  than  30%  of their gross household income for
mortgage principal, interest, property  taxes,  and  property
insurance (PITI).
    "Donation"  means  money, securities, or real or personal
property that is donated to a not-for-profit sponsor that  is
used  solely for costs associated with either (i) purchasing,
constructing, or rehabilitating an affordable housing project
in this State, (ii) an employer-assisted housing  project  in
this   State,   (iii)  general  operating  support,  or  (iv)
technical assistance as defined by this Section.
    "Employer-assisted   housing   project"   means    either
down-payment assistance, reduced-interest mortgages, mortgage
guarantee   programs,   rental   subsidies,   or   individual
development  account  savings  plans  that  are  provided  by
employers  to  employees  to  assist  in  securing affordable
housing near the work place, that are restricted  to  housing
near  the  work  place,  and that are restricted to employees
whose gross household income is at or below 120% of the  area
median income.
    "General  operating support" means any cost incurred by a
sponsor that is a part of its general program  costs  and  is
not  limited  to  costs  directly  incurred by the affordable
housing project.
    "Geographical area" means the metropolitan area or county
designated as an area by the federal  Department  of  Housing
and  Urban  Development  under Section 8 of the United States
Housing Act of 1937, as amended, for purposes of  determining
fair market rental rates.
    "Median  income" means the incomes that are determined by
the federal  Department  of  Housing  and  Urban  Development
guidelines and adjusted for family size.
    "Project"   means   an  affordable  housing  project,  an
employer-assisted housing project, general operating support,
or technical assistance.
    "Sponsor" means a not-for-profit organization that (i) is
organized as a not-for-profit organization under the laws  of
this State or another state and (1) for an affordable housing
project,  has  as  one  of  its  purposes  the development of
affordable housing;  (2)  for  an  employer-assisted  housing
project, has as one of its purposes home ownership education;
and (3) for a technical assistance project, has as one of its
purposes either the development of affordable housing or home
ownership   education   under  the  General  Not  For  Profit
Corporation Act of 1986 for the purpose  of  constructing  or
rehabilitating  affordable  housing units in this State; (ii)
is   organized   for   the   purpose   of   constructing   or
rehabilitating affordable housing units and has been issued a
ruling from the Internal Revenue Service of the United States
Department of the Treasury that the  organization  is  exempt
from income taxation under provisions of the Internal Revenue
Code;  or  (iii) is an organization designated as a community
development corporation by the United States government under
Title VII of the Economic Opportunity Act of 1964.
    "Tax credit" means a tax credit allowed under Section 214
of the Illinois Income Tax Act.
    "Technical assistance"  means  any  cost  incurred  by  a
sponsor  for  project  planning, assistance with applying for
financing, or counseling  services  provided  to  prospective
homebuyers.
    (b)  A  sponsor  must  apply  to  an  the  administrative
housing  agency  that administers the program for approval of
the project. The administrative housing agency must reserve a
specific amount of tax credits for each  approved  affordable
housing  project  for  24  months after the date of approval.
The sponsor must receive an  eligible  donation  within  that
24-month  time  period or donations to the project made after
the end of the 24-month period are not eligible for  the  tax
credit  allowed  under Section 214 of the Illinois Income Tax
Act. Tax credits for general operating support  can  only  be
reserved  as  part  of  a  reservation  of tax credits for an
affordable  housing  project,  an  employer-assisted  housing
project, or technical assistance. No  tax  credits  shall  be
allowed  for  a  project  without  a  reservation of such tax
credits by an administrative housing agency for that project.
    (c)  The  Illinois  Housing  Development  Authority  must
adopt rules establishing  criteria  for  eligible  costs  and
donations,  issuing  and verifying tax credits, and selecting
affordable housing projects  that  are  eligible  for  a  tax
credit under Section 214 of the Illinois Income Tax Act.
    (d)  Tax  credits  for employer-assisted housing projects
are limited to that pool of tax credits that  have  been  set
aside for employer-assisted housing.  Tax credits for general
operating  support are limited to 10% of the total tax credit
reservation for  the  related  project  (other  than  general
operating  support)  allocation  for  a  project and are also
limited to that pool of tax credits that have been set  aside
for  general  operating  support.   Tax credits for technical
assistance are limited to that pool of tax credits that  have
been set aside for technical assistance.
    (e)  The   amount   of   tax   credits  reserved  by  the
administrative housing agency  for  an  approved  project  is
limited to $13 million in the initial year and shall increase
each  year by 5%.  The City of Chicago shall receive 24.5% of
total tax credits  authorized  for  each  fiscal  year.   The
Illinois  Housing  Development  Authority  shall  receive the
balance of the tax credits authorized for each  fiscal  year.
The  tax credits may be used anywhere in this the State.  The
tax credits have the following set-asides:
         (1)  for  employer-assisted  housing  projects,   $2
    million; and
         (2)  for  general  operating  support  and technical
    assistance, $1 million.
    The balance of the funds  must  be  used  for  affordable
housing  projects that would otherwise meet the definition of
affordable housing. During the first 9  months  of  a  fiscal
year,  if  an  administrative  housing  agency  is  unable to
reserve the tax credits set aside for the purposes  described
in  subsection  (e),  the  administrative  housing agency may
reserve the tax credits for any approved projects.
    (f)  The administrative housing agency that reserves  tax
credits  for  an affordable housing project issues the credit
must record  against  the  land  upon  which  the  affordable
housing  project  is located an instrument to assure that the
property maintains its affordable housing  compliance  for  a
minimum of 10 years. The housing Authority has flexibility to
assure  that  the instrument does not cause undue hardship on
homeowners.
(Source: P.A. 92-491, eff. 8-23-01.)

    Section 10.  The Illinois Income Tax Act  is  amended  by
changing Section 214 as follows:

    (35 ILCS 5/214)
    Sec. 214.  Tax credit for affordable housing donations.
    (a)  Beginning  with  taxable  years  ending  on or after
December 31, 2001  and  until  the  taxable  year  ending  on
December  31,  2006,  a  taxpayer  who makes a donation under
Section 7.28 of the Illinois Housing Development Act for  the
development  of  affordable housing in this State is entitled
to a credit against the tax imposed by  subsections  (a)  and
(b)  of Section 201 in an amount equal to 50% of the value of
the  donation.  Partners,  shareholders   of   subchapter   S
corporations,  and  owners of limited liability companies (if
the limited liability company is treated as a partnership for
purposes of federal and State income taxation) are entitled a
credit under this Section to be determined in accordance with
the determination of income and distributive share of  income
under  Sections  702 and 703 and subchapter S of the Internal
Revenue Code. Persons or entities  not  subject  to  the  tax
imposed  by  subsections  (a)  and (b) of Section 201 and who
make a donation under Section 7.28 of  the  Illinois  Housing
Development Act are entitled to a credit as described in this
subsection  and  may  transfer  that  credit  as described in
subsection (c).
    (b)  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 5 taxable years following
the  excess  credit year.  The tax credit shall be applied to
the earliest year for which there is  a  tax  liability.   If
there  are  credits for more than one year that are available
to offset a liability, the earlier credit  shall  be  applied
first.
    (c)  The  transfer  of  the tax credit allowed under this
Section may be made (i) to the purchaser  of  land  that  has
been  designated  solely  for  affordable housing projects in
accordance with the Illinois Housing Development Act or  (ii)
to  another donor who has also made a an eligible donation to
the sponsor of an affordable housing  project  in  accordance
with Section 7.28 of the Illinois Housing Development Act.
    (d)  A  taxpayer  claiming  the  credit  provided by this
Section must maintain and record  any  information  that  the
Department may require by regulation regarding the affordable
housing  project  for  which  the  credit  is  claimed.  When
claiming the credit provided by this  Section,  the  taxpayer
must provide information regarding the taxpayer's donation to
the  project  development  of  affordable  housing  under the
Illinois Housing Development Act.
(Source: P.A. 92-491, eff. 8-23-01.)

    Section 99.  Effective date.  This Act takes effect  upon
becoming law.