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Public Act 102-0741


 

Public Act 0741 102ND GENERAL ASSEMBLY

  
  
  

 


 
Public Act 102-0741
 
SB1711 EnrolledLRB102 11477 HLH 16811 b

    AN ACT concerning revenue.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Historic Preservation Tax Credit Act is
amended by changing Sections 5, 10, 20, and 25 as follows:
 
    (35 ILCS 31/5)
    Sec. 5. Definitions. As used in this Act, unless the
context clearly indicates otherwise:
    "Director" means the Director of Natural Resources or his
or her designee.
    "Division" means the State Historic Preservation Office
within the Department of Natural Resources.
    "Phased rehabilitation" means a project that is completed
in phases, as defined under Section 47 of the federal Internal
Revenue Code and pursuant to National Park Service regulations
at 36 C.F.R. 67.
    "Placed in service" means the date when the property is
placed in a condition or state of readiness and availability
for a specifically assigned function as defined under Section
47 of the federal Internal Revenue Code and federal Treasury
Regulation Sections 1.46 and 1.48.
    "Qualified expenditures" means all the costs and expenses
defined as qualified rehabilitation expenditures under Section
47 of the federal Internal Revenue Code that were incurred in
connection with a qualified rehabilitation plan historic
structure.
    "Qualified historic structure" means any structure that is
located in Illinois and is defined as a certified historic
structure under Section 47(c)(3) of the federal Internal
Revenue Code.
    "Qualified rehabilitation plan" means a project that is
approved by the Department of Natural Resources and the
National Park Service as being consistent with the United
States Secretary of the Interior's Standards for
Rehabilitation.
    "Qualified taxpayer" means the owner of the qualified
historic structure or any other person or entity who may
qualify for the federal rehabilitation credit allowed by
Section 47 of the federal Internal Revenue Code.
    "Recapture event" means any of the following events
occurring during the recapture period:
        (1) failure to place in service the rehabilitated
    portions of the qualified historic structure, or failure
    to maintain the rehabilitated portions of the qualified
    historic structure in service after they are placed in
    service; provided that a recapture event under this
    paragraph (1) shall not include a removal from service for
    a reasonable period of time to conduct maintenance and
    repairs that are reasonably necessary to protect the
    health and safety of the public or to protect the
    structural integrity of the qualified historic structure
    or a neighboring structure;
        (2) demolition or other alteration of the qualified
    historic structure in a manner that is inconsistent with
    the qualified rehabilitation plan or the Secretary of the
    Interior's Standards for Rehabilitation;
        (3) disposition of the rehabilitated qualified
    historic structure in whole or a proportional disposition
    of a partnership interest therein, except as otherwise
    permitted by this Section; or
        (4) use of the qualified historic structure in a
    manner that is inconsistent with the qualified
    rehabilitation plan or that is otherwise inconsistent with
    the provisions and intent of this Section.
    A recapture event occurring in one taxable year shall be
deemed continuing to subsequent taxable years unless and until
corrected.
    The following dispositions of a qualified historic
structure shall not be deemed to be a recapture event for
purposes of this Section:
        (1) a transfer by reason of death;
        (2) a transfer between spouses incident to divorce;
        (3) a sale by and leaseback to an entity that, when the
    rehabilitated portions of the qualified historic structure
    are placed in service, will be a lessee of the qualified
    historic structure, but only for so long as the entity
    continues to be a lessee; and
        (4) a mere change in the form of conducting the trade
    or business by the owner (or, if applicable, the lessee)
    of the qualified historic structure, so long as the
    property interest in such qualified historic structure is
    retained in such trade or business and the owner or lessee
    retains a substantial interest in such trade or business.
    "Recapture period" means the 5-year period beginning on
the date that the qualified historic structure or
rehabilitated portions of the qualified historic structure are
placed in service.
    "Substantial rehabilitation" means that the qualified
rehabilitation expenditures during the 24-month period
selected by the taxpayer at the time and in the manner
prescribed by rule and ending with or within the taxable year
exceed the greater of (i) the adjusted basis of the building
and its structural components or (ii) $5,000. The adjusted
basis of the building and its structural components shall be
determined as of the beginning of the first day of such
24-month period or as of the beginning of the first day of the
holding period of the building, whichever is later. For
purposes of determining the adjusted basis, the determination
of the beginning of the holding period shall be made without
regard to any reconstruction by the taxpayer in connection
with the rehabilitation. In the case of any phased
rehabilitation, with phases set forth in architectural plans
and specifications completed before the rehabilitation begins,
this definition shall be applied by substituting "60-month
period" for "24-month period" wherever that term occurs in the
definition.
(Source: P.A. 100-629, eff. 1-1-19.)
 
    (35 ILCS 31/10)
    Sec. 10. Allowable credit.
    (a) To the extent authorized by this Act, for taxable
years beginning on or after January 1, 2019 and ending on or
before December 31, 2023, there shall be allowed a tax credit
to the qualified taxpayer against the tax imposed by
subsections (a) and (b) of Section 201 of the Illinois Income
Tax Act in an aggregate amount equal to 25% of qualified
expenditures, but not to exceed $3,000,000, incurred by a
qualified taxpayer undertaking a qualified rehabilitation plan
of a qualified historic structure, provided that the total
amount of such expenditures must (i) equal $5,000 or more and
or (ii) exceed the adjusted basis of the qualified historic
structure on the first day the qualified rehabilitation plan
commenced. If the qualified rehabilitation plan spans multiple
years, the aggregate credit for the entire project shall be
allowed in the last taxable year.
    (b) To obtain a tax credit certificate pursuant to this
Section, the qualified taxpayer must apply with the Division.
The Division shall determine the amount of eligible
rehabilitation expenditures within 45 days after receipt of a
complete application. The taxpayer must provide to the
Division a third-party cost certification conducted by a
certified public accountant verifying (i) the qualified and
non-qualified rehabilitation expenses and (ii) that the
qualified expenditures exceed the adjusted basis of the
qualified historic structure on the first day the qualified
rehabilitation plan commenced. The accountant shall provide
appropriate review and testing of invoices. The Division is
authorized, but not required, to accept this third-party cost
certification to determine the amount of qualified
expenditures. The Division and the National Park Service shall
determine whether the rehabilitation is consistent with the
Standards of the Secretary of the United States Department of
the Interior.
    (c) If the amount of any tax credit awarded under this Act
exceeds the qualified taxpayer's income tax liability for the
year in which the qualified rehabilitation plan was placed in
service, the excess amount may be carried forward for
deduction from the taxpayer's income tax liability in the next
succeeding year or years until the total amount of the credit
has been used, except that a credit may not be carried forward
for deduction after the tenth taxable year after the taxable
year in which the qualified rehabilitation plan was placed in
service. Upon completion of the project and approval of the
complete application review of the project, the Division shall
issue a single certificate in the amount of the eligible
credits equal to 25% of the qualified expenditures incurred
during the eligible taxable years, not to exceed the lesser of
the allocated amount or $3,000,000 per single qualified
rehabilitation plan. Prior to the issuance of the tax credit
certificate, the qualified taxpayer must provide to the
Division verification that the rehabilitated structure is a
qualified historic structure. At the time the certificate is
issued, an issuance fee up to the maximum amount of 2% of the
amount of the credits issued by the certificate may be
collected from the qualified taxpayer applicant to administer
the Act. If collected, this issuance fee shall be directed to
the Division Historic Property Administrative Fund or other
such fund as appropriate for use of the Division in the
administration of the Historic Preservation Tax Credit
Program. The taxpayer must attach the certificate or legal
documentation of her or his proportional share of the
certificate to the tax return on which the credits are to be
claimed. The tax credit under this Section may not reduce the
taxpayer's liability to less than zero. If the amount of the
credit exceeds the tax liability for the year, the excess
credit may be carried forward and applied to the tax liability
of the 10 taxable years following the first excess credit
year. The taxpayer is not eligible to receive credits under
this Section and under Section 221 of the Illinois Income Tax
Act for the same qualified expenditures or qualified
rehabilitation plan.
    (d) If the taxpayer is (i) a corporation having an
election in effect under Subchapter S of the federal Internal
Revenue Code, (ii) a partnership, or (iii) a limited liability
company, the credit provided under this Act may be claimed by
the shareholders of the corporation, the partners of the
partnership, or the members of the limited liability company
in the same manner as those shareholders, partners, or members
account for their proportionate shares of the income or losses
of the corporation, partnership, or limited liability company,
or as provided in the bylaws or other executed agreement of the
corporation, partnership, or limited liability company.
Credits granted to a partnership, a limited liability company
taxed as a partnership, or other multiple owners of property
shall be passed through to the partners, members, or owners
respectively on a pro rata basis or pursuant to an executed
agreement among the partners, members, or owners documenting
any alternate distribution method.
    (e) If a recapture event occurs during the recapture
period with respect to a qualified historic structure, then
for any taxable year in which the credits are allowed as
specified in this Act, the tax under the applicable Section of
this Act shall be increased by applying the recapture
percentage set forth below to the tax decrease resulting from
the application of credits allowed under this Act to the
taxable year in question.
    For the purposes of this subsection, the recapture
percentage shall be determined as follows:
        (1) if the recapture event occurs within the first
    year after commencement of the recapture period, then the
    recapture percentage is 100%;
        (2) if the recapture event occurs within the second
    year after commencement of the recapture period, then the
    recapture percentage is 80%;
        (3) if the recapture event occurs within the third
    year after commencement of the recapture period, then the
    recapture percentage is 60%;
        (4) if the recapture event occurs within the fourth
    year after commencement of the recapture period, then the
    recapture percentage is 40%; and
        (5) if the recapture event occurs within the fifth
    year after commencement of the recapture period, then the
    recapture percentage is 20%.
    In the case of any recapture event, the carryforwards
under this Act shall be adjusted by reason of such event.
    (f) The Division may adopt rules to implement this Section
in addition to the rules expressly authorized herein.
(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)
 
    (35 ILCS 31/20)
    Sec. 20. Limitations, reporting, and monitoring.
    (a) In every calendar year that this program is in effect,
the Division is authorized to allocate $15,000,000 in tax
credits in addition to any unallocated, returned, or rescinded
allocations from previous years, pursuant to qualified
rehabilitation plans. The Division shall award not more than
an aggregate of $15,000,000 in total annual tax credits
pursuant to qualified rehabilitation plans for qualified
historic structures. The Division shall not allocate or award
award not more than $3,000,000 in tax credits with regard to a
single qualified rehabilitation plan. In allocating awarding
tax credits under this Act, the Division must prioritize
applications projects that meet one or more of the following:
        (1) the qualified historic structure is located in a
    county that borders a State with a historic
    income-producing property rehabilitation credit;
        (2) the qualified historic structure was previously
    owned by a federal, state, or local governmental entity
    for no less than 6 months;
        (3) the qualified historic structure is located in a
    census tract that has a median family income at or below
    the State median family income; data from the most recent
    5-year estimate from the American Community Survey (ACS),
    published by the U.S. Census Bureau, shall be used to
    determine eligibility;
        (4) the qualified rehabilitation plan includes in the
    development partnership a Community Development Entity or
    a low-profit (B Corporation) or not-for-profit
    organization, as defined by Section 501(c)(3) of the
    Internal Revenue Code; or
        (5) the qualified historic structure is located in an
    area declared under an Emergency Declaration or Major
    Disaster Declaration under the federal Robert T. Stafford
    Disaster Relief and Emergency Assistance Act. The
    declaration must be no older than 3 years at the time of
    application.
    (b) The annual aggregate authorization program allocation
of $15,000,000 set forth in subsection (a) shall be allocated
by the Division, in such proportion as determined by the
Director Department, on a per calendar basis twice in each
calendar year that the program is in effect, provided that:
(i) the amount initially allocated by the Division for the
first any one calendar year application period shall not
exceed 65% of the total allowable amount available for
allocation. Any unallocated and (ii) any portion of the
allocated allowable amount remaining unused as of the end of
any of the second calendar application period of a given
calendar year shall be rolled over into and added to the total
authorized allocated amount for the next available calendar
year. The qualified rehabilitation plan must meet a readiness
test, as defined in the rules created by the Division, in order
for the application Applicant to qualify. In any given
application period, applications Applicants that qualify under
this Act will be prioritized as set forth in subsection (a) and
placed in a queue based on the date and time the application is
received. Applicants whose applications qualify but do not
receive an allocation until such time as the application
period total allowable amount is reached. Applicants must
reapply to be considered in subsequent for each application
periods period.
    (c) Subject On or before December 31, 2019, and on or
before December 31 of each odd-numbered year thereafter
through 2023, subject to appropriation and prior to equal
disbursement to the Division, moneys in the Historic Property
Administrative Fund shall be used, on a biennial basis,
beginning at the end of the second first fiscal year after the
effective date of this Act, to hire a qualified third party to
prepare a biennial report to assess the overall impact
effectiveness of this Act from the qualified rehabilitation
plans projects under this Act completed in that year and in
previous years. Baseline data of the metrics in the report
shall be collected at the initiation of a qualified
rehabilitation plan project. The overall economic impact shall
include at least:
        (1) the number of applications, project locations, and
    proposed use of qualified historic structures;
        (2) the amount of credits awarded and the number and
    location of projects receiving credit allocations;
        (3) the status of ongoing projects and projected
    qualifying expenditures for ongoing projects;
        (4) for completed projects, the total amount of
    qualifying rehabilitation expenditures and non-qualifying
    expenditures, the number of housing units created and the
    number of housing units that qualify as affordable, and
    the total square footage rehabilitated and developed;
        (5) direct, indirect, and induced economic impacts;
        (6) temporary, permanent, and construction jobs
    created; and
        (7) sales, income, and property tax generation before
    construction, during construction, and after completion.
    The report to the General Assembly shall be filed with the
Clerk of the House of Representatives and the Secretary of the
Senate in electronic form only, in the manner that the Clerk
and the Secretary shall direct.
    (d) Any time prior to issuance of a tax credit
certificate, the Director of the Division, the State Historic
Preservation Officer, or staff of the Division may, upon
reasonable notice to the project owner of not less than 3
business days, conduct a site visit to the project to inspect
and evaluate the project.
    (e) Any time prior to the issuance of a tax credit
certificate and for a period of 4 years following the
effective date of a project tax credit certificate, the
Director may, upon reasonable notice of not less than 30
calendar days, request a status report from the Applicant
consisting of information and updates relevant to the status
of the project. Status reports shall not be requested more
than twice yearly.
    (f) In order to demonstrate sufficient evidence of
reviewable progress within 12 months after the date the
Applicant received notification of allocation approval from
the Division, the Director may require the Applicant to shall
provide all of the following:
        (1) a viable financial plan which demonstrates by way
    of an executed agreement that all financing has been
    secured for the project; such financing shall include, but
    not be limited to, equity investment as demonstrated by
    letters of commitment from the owner of the property,
    investment partners, and equity investors;
        (2) (blank); final construction drawings or approved
    building permits that demonstrate the complete
    rehabilitation of the full scope of the application; and
        (3) all historic approvals, including all federal and
    State rehabilitation documents required by the Division.
    The Director shall review the submitted evidence and may
request additional documentation from the Applicant if
necessary. The Applicant will have 30 calendar days to provide
the information requested, otherwise the allocation approval
may be rescinded at the discretion of the Director.
    (g) In order to demonstrate sufficient evidence of
reviewable progress within 24 18 months after the date the
application received notification of approval from the
Division, the Director may require the Applicant is required
to provide detailed evidence that the Applicant has secured
and closed on financing for the complete scope of
rehabilitation for the project. To demonstrate evidence that
the Applicant has secured and closed on financing, the
Applicant will need to provide signed and processed loan
agreements, bank financing documents or other legal and
contractual evidence to demonstrate that adequate financing is
available to complete the project. The Director shall review
the submitted evidence and may request additional
documentation from the Applicant if necessary. The Applicant
will have 30 calendar days to provide the information
requested, otherwise the allocation approval may be rescinded
at the discretion of the Director.
    If the Applicant fails to document reviewable progress
within 24 18 months of approval, the Director may notify the
Applicant that the allocation application is rescinded.
However, should financing and construction be imminent, the
Director may elect to grant the Applicant no more than 5 months
to close on financing and commence construction. If the
Applicant fails to meet these conditions in the required
timeframe, the Director shall notify the Applicant that the
allocation application is rescinded. Any such rescinded
allocation shall be added to the aggregate amount of credits
available for allocation for the year in which the forfeiture
occurred.
    The amount of the qualified expenditures identified in the
qualified taxpayer's Applicant's certification of completion
and reflected on the Historic Preservation Tax Credit
certificate issued by the Director is subject to inspection,
examination, and audit by the Department of Revenue.
    The qualified taxpayer Applicant shall establish and
maintain for a period of 4 years following the effective date
on a project tax credit certificate such records as required
by the Director. Such records include, but are not limited to,
records documenting project expenditures and compliance with
the U.S. Secretary of the Interior's Standards. The qualified
taxpayer Applicant shall make such records available for
review and verification by the Director, the State Historic
Preservation Officer, the Department of Revenue, or
appropriate staff, as well as other appropriate State
agencies. In the event the Director determines an Applicant
has submitted a status an annual report containing erroneous
information or data not supported by records established and
maintained under this Act, the Director may, after providing
notice, require the Applicant to resubmit corrected reports.
(Source: P.A. 100-629, eff. 1-1-19.)
 
    (35 ILCS 31/25)
    Sec. 25. Powers. The Division may shall adopt rules for
the administration of this Act. The Division may enter into an
intergovernmental agreement with the Department of Commerce
and Economic Opportunity, the Department of Revenue, or both,
for the administration of this Act. Such intergovernmental
agreement may allow for the distribution of all or a portion of
the issuance fee imposed under Section 10 to the Department of
Commerce and Economic Opportunity or the Department of
Revenue, as applicable.
(Source: P.A. 100-629, eff. 1-1-19.)
 
    Section 10. The Illinois Income Tax Act is amended by
changing Section 228 as follows:
 
    (35 ILCS 5/228)
    Sec. 228. Historic preservation credit. For tax years
beginning on or after January 1, 2019 and ending on or before
December 31, 2023, a taxpayer who qualifies for a credit under
the Historic Preservation Tax Credit Act is entitled to a
credit against the taxes imposed under subsections (a) and (b)
of Section 201 of this Act as provided in that Act. If the
taxpayer is a partnership, or Subchapter S corporation, or a
limited liability company the credit shall be allowed to the
partners, or shareholders, or members 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 provided that credits granted to a partnership, a limited
liability company taxed as a partnership, or other multiple
owners of property shall be passed through to the partners,
members, or owners respectively on a pro rata basis or
pursuant to an executed agreement among the partners, members,
or owners documenting any alternate distribution method. If
the amount of any tax credit awarded under this Section
exceeds the qualified taxpayer's income tax liability for the
year in which the qualified rehabilitation plan was placed in
service, the excess amount may be carried forward as provided
in the Historic Preservation Tax Credit Act.
(Source: P.A. 100-629, eff. 1-1-19; 101-81, eff. 7-12-19.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 5/6/2022