Rep. Jehan Gordon-Booth

Filed: 11/26/2018

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 3242

2    AMENDMENT NO. ______. Amend Senate Bill 3242 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5renumbering and changing Section 228, as added by Public Act
6100-629, as follows:
 
7    (35 ILCS 5/228)
8    Sec. 228 227. Historic preservation credit. For tax years
9beginning on or after January 1, 2019 and ending on or before
10December 31, 2023, a taxpayer who qualifies for a credit under
11the Historic Preservation Tax Credit Act is entitled to a
12credit against the taxes imposed under subsections (a) and (b)
13of Section 201 of this Act as provided in that Act. If the
14taxpayer is a partnership, or Subchapter S corporation, or a
15limited liability company, the credit shall be allowed to the
16partners or shareholders in accordance with the determination

 

 

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1of income and distributive share of income under Sections 702
2and 704 and Subchapter S of the Internal Revenue Code, provided
3that credits granted to a partnership, a limited liability
4company taxed as a partnership, or other multiple owners of
5property shall be passed through to the partners, members, or
6owners respectively on a pro rata basis or pursuant to an
7executed agreement among the partners, members, or owners
8documenting any alternate distribution method. If the amount of
9any tax credit awarded under this Section exceeds the qualified
10taxpayer's income tax liability for the year in which the
11qualified rehabilitation plan was placed in service, the excess
12amount may be carried forward as provided in the Historic
13Preservation Tax Credit Act.
14(Source: P.A. 100-629, eff. 1-1-19; revised 10-9-18.)
 
15    Section 10. The Historic Preservation Tax Credit Act is
16amended by changing Sections 5, 10, and 20 as follows:
 
17    (35 ILCS 31/5)
18    (This Section may contain text from a Public Act with a
19delayed effective date)
20    Sec. 5. Definitions. As used in this Act, unless the
21context clearly indicates otherwise:
22    "Director" means the Director of Natural Resources or his
23or her designee.
24    "Division" means the State Historic Preservation Office

 

 

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1within the Department of Natural Resources.
2    "Phased rehabilitation" means a project that is completed
3in phases, as defined under Section 47 of the federal Internal
4Revenue Code and pursuant to National Park Service regulations
5at 36 C.F.R. 67.
6    "Placed in service" means the date when the property is
7placed in a condition or state of readiness and availability
8for a specifically assigned function as defined under Section
947 of the federal Internal Revenue Code and federal Treasury
10Regulation Sections 1.46 and 1.48.
11    "Qualified expenditures" means all the costs and expenses
12defined as qualified rehabilitation expenditures under Section
1347 of the federal Internal Revenue Code that were incurred in
14connection with a qualified rehabilitation plan historic
15structure.
16    "Qualified historic structure" means any structure that is
17located in Illinois and is defined as a certified historic
18structure under Section 47(c)(3) of the federal Internal
19Revenue Code.
20    "Qualified rehabilitation plan" means a project that is
21approved by the Department of Natural Resources and the
22National Park Service as being consistent with the United
23States Secretary of the Interior's Standards for
24Rehabilitation.
25    "Qualified taxpayer" means the owner of the qualified
26historic structure or any other person or entity who may

 

 

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1qualify for the federal rehabilitation credit allowed by
2Section 47 of the federal Internal Revenue Code.
3    "Recapture event" means any of the following events
4occurring during the recapture period:
5        (1) failure to place in service the rehabilitated
6    portions of the qualified historic structure, or failure to
7    maintain the rehabilitated portions of the qualified
8    historic structure in service after they are placed in
9    service; provided that a recapture event under this
10    paragraph (1) shall not include a removal from service for
11    a reasonable period of time to conduct maintenance and
12    repairs that are reasonably necessary to protect the health
13    and safety of the public or to protect the structural
14    integrity of the qualified historic structure or a
15    neighboring structure;
16        (2) demolition or other alteration of the qualified
17    historic structure in a manner that is inconsistent with
18    the qualified rehabilitation plan or the Secretary of the
19    Interior's Standards for Rehabilitation;
20        (3) disposition of the rehabilitated qualified
21    historic structure in whole or a proportional disposition
22    of a partnership interest therein, except as otherwise
23    permitted by this Section; or
24        (4) use of the qualified historic structure in a manner
25    that is inconsistent with the qualified rehabilitation
26    plan or that is otherwise inconsistent with the provisions

 

 

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1    and intent of this Section.
2    A recapture event occurring in one taxable year shall be
3deemed continuing to subsequent taxable years unless and until
4corrected.
5    The following dispositions of a qualified historic
6structure shall not be deemed to be a recapture event for
7purposes of this Section:
8        (1) a transfer by reason of death;
9        (2) a transfer between spouses incident to divorce;
10        (3) a sale by and leaseback to an entity that, when the
11    rehabilitated portions of the qualified historic structure
12    are placed in service, will be a lessee of the qualified
13    historic structure, but only for so long as the entity
14    continues to be a lessee; and
15        (4) a mere change in the form of conducting the trade
16    or business by the owner (or, if applicable, the lessee) of
17    the qualified historic structure, so long as the property
18    interest in such qualified historic structure is retained
19    in such trade or business and the owner or lessee retains a
20    substantial interest in such trade or business.
21    "Recapture period" means the 5-year period beginning on the
22date that the qualified historic structure or rehabilitated
23portions of the qualified historic structure are placed in
24service.
25    "Substantial rehabilitation" means that the qualified
26rehabilitation expenditures during the 24-month period

 

 

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1selected by the taxpayer at the time and in the manner
2prescribed by rule and ending with or within the taxable year
3exceed the greater of (i) the adjusted basis of the building
4and its structural components or (ii) $5,000. The adjusted
5basis of the building and its structural components shall be
6determined as of the beginning of the first day of such
724-month period or as of the beginning of the first day of the
8holding period of the building, whichever is later. For
9purposes of determining the adjusted basis, the determination
10of the beginning of the holding period shall be made without
11regard to any reconstruction by the taxpayer in connection with
12the rehabilitation. In the case of any phased rehabilitation,
13with phases set forth in architectural plans and specifications
14completed before the rehabilitation begins, this definition
15shall be applied by substituting "60-month period" for
16"24-month period" wherever that term occurs in the definition.
17(Source: P.A. 100-629, eff. 1-1-19.)
 
18    (35 ILCS 31/10)
19    Sec. 10. Allowable credit.
20    (a) To the extent authorized by this Act, for taxable years
21beginning on or after January 1, 2019 and ending on or before
22December 31, 2023, there shall be allowed a tax credit to the
23qualified taxpayer against the tax imposed by subsections (a)
24and (b) of Section 201 of the Illinois Income Tax Act in an
25aggregate amount equal to the lesser of (i) 25% of qualified

 

 

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1expenditures incurred in by a qualified taxpayer undertaking a
2qualified rehabilitation plan or (ii) $3,000,000 of a qualified
3historic structure, provided that the total amount of such
4expenditures must (i) equal $5,000 or more and or (ii) exceed
5the adjusted basis of the qualified historic structure on the
6first day the qualified rehabilitation plan commenced. If the
7qualified rehabilitation plan spans multiple years, the
8aggregate credit for the entire project shall be allowed in the
9last taxable year.
10    (b) To obtain a tax credit certificate pursuant to this
11Section, the qualified taxpayer must apply with the Division.
12The Division shall determine the amount of eligible
13rehabilitation expenditures within 45 days after receipt of a
14complete application. The taxpayer must provide to the Division
15a third-party cost certification conducted by a certified
16public accountant verifying (i) the qualified and
17non-qualified rehabilitation expenses and (ii) that the
18qualified expenditures exceed the adjusted basis of the
19qualified historic structure on the first day the qualified
20rehabilitation plan commenced. The accountant shall provide
21appropriate review and testing of invoices. The Division is
22authorized, but not required, to accept this third-party cost
23certification to determine the amount of qualified
24expenditures. The Division and the National Park Service shall
25determine whether the rehabilitation is consistent with the
26Standards of the Secretary of the United States Department of

 

 

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1the Interior.
2    (c) If the amount of any tax credit awarded under this Act
3exceeds the qualified taxpayer's income tax liability for the
4year in which the qualified rehabilitation plan was placed in
5service, the excess amount may be carried forward for deduction
6from the taxpayer's income tax liability in the next succeeding
7year or years until the total amount of the credit has been
8used, except that a credit may not be carried forward for
9deduction after the tenth taxable year after the taxable year
10in which the qualified rehabilitation plan was placed in
11service. Upon completion and review of the project and approval
12of the complete application, the Division shall issue a single
13certificate in the amount of the eligible credits equal to 25%
14of the qualified expenditures incurred during the eligible
15taxable years, not to exceed the lesser of the allocated amount
16or $3,000,000 per single qualified rehabilitation plan. Prior
17to the issuance of the tax credit certificate, the qualified
18taxpayer must provide to the Division verification that the
19rehabilitated structure is a qualified historic structure. At
20the time the certificate is issued, an issuance fee up to the
21maximum amount of 2% of the amount of the credits issued by the
22certificate may be collected from the qualified taxpayer
23applicant to administer the Act. If collected, this issuance
24fee shall be directed to the Division Historic Property
25Administrative Fund or other such fund as appropriate for use
26of the Division in the administration of the Historic

 

 

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1Preservation Tax Credit Program. The taxpayer must attach the
2certificate or legal documentation of her or his proportional
3share of the certificate to the tax return on which the credits
4are to be claimed. The tax credit under this Section may not
5reduce the taxpayer's liability to less than zero. If the
6amount of the credit exceeds the tax liability for the year,
7the excess credit may be carried forward and applied to the tax
8liability of the 10 taxable years following the first excess
9credit year. The taxpayer may not receive credits under this
10Section and Section 221 of the Illinois Income Tax Act for the
11same qualified expenditures or qualified rehabilitation plan.
12    (d) If the taxpayer is (i) a corporation having an election
13in effect under Subchapter S of the federal Internal Revenue
14Code, (ii) a partnership, or (iii) a limited liability company,
15the credit provided under this Act may be claimed by the
16shareholders of the corporation, the partners of the
17partnership, or the members of the limited liability company in
18the same manner as those shareholders, partners, or members
19account for their proportionate shares of the income or losses
20of the corporation, partnership, or limited liability company,
21or as provided in the bylaws or other executed agreement of the
22corporation, partnership, or limited liability company.
23Credits granted to a partnership, a limited liability company
24taxed as a partnership, or other multiple owners of property
25shall be passed through to the partners, members, or owners
26respectively on a pro rata basis or pursuant to an executed

 

 

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1agreement among the partners, members, or owners documenting
2any alternate distribution method.
3    (e) If a recapture event occurs during the recapture period
4with respect to a qualified historic structure, then for any
5taxable year in which the credits are allowed as specified in
6this Act, the tax under the applicable Section of this Act
7shall be increased by applying the recapture percentage set
8forth below to the tax decrease resulting from the allocation
9application of credits allowed under this Act to the taxable
10year in question.
11    For the purposes of this subsection, the recapture
12percentage shall be determined as follows:
13        (1) if the recapture event occurs within the first year
14    after commencement of the recapture period, then the
15    recapture percentage is 100%;
16        (2) if the recapture event occurs within the second
17    year after commencement of the recapture period, then the
18    recapture percentage is 80%;
19        (3) if the recapture event occurs within the third year
20    after commencement of the recapture period, then the
21    recapture percentage is 60%;
22        (4) if the recapture event occurs within the fourth
23    year after commencement of the recapture period, then the
24    recapture percentage is 40%; and
25        (5) if the recapture event occurs within the fifth year
26    after commencement of the recapture period, then the

 

 

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1    recapture percentage is 20%.
2    In the case of any recapture event, the carryforwards under
3this Act shall be adjusted by reason of such event.
4    (f) (d) The Division may adopt rules to implement this
5Section in addition to the rules expressly authorized herein.
6(Source: P.A. 100-629, eff. 1-1-19; revised 10-1-18.)
 
7    (35 ILCS 31/20)
8    (This Section may contain text from a Public Act with a
9delayed effective date)
10    Sec. 20. Limitations, reporting, and monitoring.
11    (a) In every calendar year that this program is in effect,
12the Division is authorized to allocate $15,000,000 worth of tax
13credits in addition to any unallocated, returned, or rescinded
14allocations from previous years, pursuant to qualified
15rehabilitation plans. The Division shall award not more than an
16aggregate of $15,000,000 in total annual tax credits pursuant
17to qualified rehabilitation plans for qualified historic
18structures. The Division shall allocate and award not more than
19$3,000,000 in tax credits with regard to a single qualified
20rehabilitation plan. In allocating awarding tax credits under
21this Act, the Division must prioritize applications projects
22that meet one or more of the following:
23        (1) the qualified historic structure is located in a
24    county that borders a State with a historic
25    income-producing property rehabilitation credit;

 

 

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1        (2) the qualified historic structure was previously
2    owned by a federal, state, or local governmental entity for
3    no less than 6 months;
4        (3) the qualified historic structure is located in a
5    census tract that has a median family income at or below
6    the State median family income; data from the most recent
7    5-year estimate from the American Community Survey (ACS),
8    published by the U.S. Census Bureau, shall be used to
9    determine eligibility;
10        (4) the qualified rehabilitation plan includes in the
11    development partnership a Community Development Entity or
12    a low-profit (B Corporation) or not-for-profit
13    organization, as defined by Section 501(c)(3) of the
14    Internal Revenue Code; or
15        (5) the qualified historic structure is located in an
16    area declared under an Emergency Declaration or Major
17    Disaster Declaration under the federal Robert T. Stafford
18    Disaster Relief and Emergency Assistance Act. The
19    declaration must be no older than 3 years old at the time
20    of application.
21     (b) The annual aggregate authorization program allocation
22of $15,000,000 set forth in subsection (a) shall be allocated
23by the Division, in such proportion as determined by the
24Director Department, on a per calendar basis twice in each
25calendar year that the program is in effect, provided that: (i)
26the amount initially allocated by the Division for the first

 

 

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1any one calendar year application period shall not exceed 65%
2of the total allowable amount available for allocation. Any
3unallocated and (ii) any portion of the allocated allowable
4amount remaining unused as of the end of any of the second
5calendar application period of a given calendar year shall be
6rolled over into and added to the total authorized allocated
7amount for the next available calendar year. The qualified
8rehabilitation plan must meet a readiness test, as defined in
9the rules created by the Division, in order for the application
10Applicant to qualify. In any given application period,
11applications Applicants that qualify under this Act and are
12prioritized as set forth in subsection (a) will be placed in a
13queue based on the date and time the application is received
14until such time as the application period total allowable
15amount is reached. Applications that qualify but do not receive
16an allocation Applicants must reapply to be considered in
17subsequent for each application periods period.
18    (c) Subject On or before December 31, 2019, and on or
19before December 31 of each odd-numbered year thereafter through
202023, subject to appropriation and prior to equal disbursement
21to the Division, moneys in the Historic Property Administrative
22Fund shall be used, on a biennial basis beginning at the end of
23the second first fiscal year after the effective date of this
24Act, to hire a qualified third party to prepare a biennial
25report to assess the overall impact effectiveness of this Act
26from the qualified rehabilitation plans projects under this Act

 

 

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1completed in that year and in previous years. Baseline data of
2the metrics in the report shall be collected at the initiation
3of a qualified rehabilitation plan project. The overall
4economic impact shall include at least:
5        (1) the number of applications, project locations, and
6    proposed use of qualified historic structures;
7        (2) the amount of credits awarded and the number and
8    location of projects receiving credit allocations;
9        (3) the status of ongoing projects and projected
10    qualifying expenditures for ongoing projects;
11        (4) for completed projects, the total amount of
12    qualifying rehabilitation expenditures and non-qualifying
13    expenditures, the number of housing units created and the
14    number of housing units that qualify as affordable, and the
15    total square footage rehabilitated and developed;
16        (5) direct, indirect, and induced economic impacts;
17        (6) temporary, permanent, and construction jobs
18    created; and
19        (7) sales, income, and property tax generation before
20    construction, during construction, and after completion.
21    The report to the General Assembly shall be filed with the
22Clerk of the House of Representatives and the Secretary of the
23Senate in electronic form only, in the manner that the Clerk
24and the Secretary shall direct.
25    (d) Any time prior to issuance of a tax credit certificate,
26the Director of the Division, the State Historic Preservation

 

 

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1Officer, or staff of the Division may, upon reasonable notice
2to the project owner of not less than 3 business days, conduct
3a site visit to the project to inspect and evaluate the
4project.
5    (e) Any time prior to the issuance of a tax credit
6certificate and for a period of 4 years following the effective
7date of a project tax credit certificate, the Director may,
8upon reasonable notice of not less than 30 calendar days,
9request a status report from the Applicant consisting of
10information and updates relevant to the status of the project.
11Status reports shall not be requested more than twice yearly.
12    (f) In order to demonstrate sufficient evidence of
13reviewable progress within 12 months after the date the
14Applicant received notification of allocation approval from
15the Division, the Director may require the Applicant to shall
16provide all of the following:
17        (1) a viable financial plan which demonstrates by way
18    of an executed agreement that all financing has been
19    secured for the project; such financing shall include, but
20    not be limited to, equity investment as demonstrated by
21    letters of commitment from the owner of the property,
22    investment partners, and equity investors;
23        (2) (blank); final construction drawings or approved
24    building permits that demonstrate the complete
25    rehabilitation of the full scope of the application; and
26        (3) all historic approvals, including all federal and

 

 

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1    State rehabilitation documents required by the Division.
2    The Director shall review the submitted evidence and may
3request additional documentation from the Applicant if
4necessary. The Applicant will have 30 calendar days to provide
5the information requested, otherwise the allocation approval
6may be rescinded at the discretion of the Director.
7    (g) In order to demonstrate sufficient evidence of
8reviewable progress within 24 18 months after the date the
9application received notification of approval from the
10Division, the Director may require the Applicant is required to
11provide detailed evidence that the Applicant has secured and
12closed on financing for the complete scope of rehabilitation
13for the project. To demonstrate evidence that the Applicant has
14secured and closed on financing, the Applicant will need to
15provide signed and processed loan agreements, bank financing
16documents or other legal and contractual evidence to
17demonstrate that adequate financing is available to complete
18the project. The Director shall review the submitted evidence
19and may request additional documentation from the Applicant if
20necessary. The Applicant will have 30 calendar days to provide
21the information requested, otherwise the allocation approval
22may be rescinded at the discretion of the Director.
23    If the Applicant fails to document reviewable progress
24within 24 18 months of approval, the Director may notify the
25Applicant that the allocation application is rescinded.
26However, should financing and construction be imminent, the

 

 

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1Director may elect to grant the Applicant no more than 5 months
2to close on financing and commence construction. If the
3Applicant fails to meet these conditions in the required
4timeframe, the Director shall notify the Applicant that the
5allocation application is rescinded. Any such rescinded
6allocation shall be added to the aggregate amount of credits
7available for allocation for the year in which the forfeiture
8occurred.
9    The amount of the qualified expenditures identified in the
10qualified taxpayer's Applicant's certification of completion
11and reflected on the Historic Preservation Tax Credit
12certificate issued by the Director is subject to inspection,
13examination, and audit by the Department of Revenue.
14    The qualified taxpayer Applicant shall establish and
15maintain for a period of 4 years following the effective date
16on a project tax credit certificate such records as required by
17the Director. Such records include, but are not limited to,
18records documenting project expenditures and compliance with
19the U.S. Secretary of the Interior's Standards. The qualified
20taxpayer Applicant shall make such records available for review
21and verification by the Director, the State Historic
22Preservation Officer, the Department of Revenue, or
23appropriate staff, as well as other appropriate State agencies.
24In the event the Director determines an Applicant has submitted
25a status an annual report containing erroneous information or
26data not supported by records established and maintained under

 

 

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1this Act, the Director may, after providing notice, require the
2Applicant to resubmit corrected reports.
3(Source: P.A. 100-629, eff. 1-1-19.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".