State of Illinois
92nd General Assembly

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 1        AN ACT concerning taxes.

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

 4        Section 5.  The Illinois Income Tax  Act  is  amended  by
 5    adding Section 214 as follows:

 6        (35 ILCS 5/214 new)
 7        Sec. 214.  Tax credit for affordable housing donations.
 8        (a)  Beginning  with  taxable  years  ending  on or after
 9    December 31, 2001  and  until  the  taxable  year  ending  on
10    December  31,  2006,  a  taxpayer  who makes a donation under
11    Section  8.24  of  the  Housing  Authorities  Act   for   the
12    development  of  affordable housing in this State is entitled
13    to a credit against the tax imposed by  subsections  (a)  and
14    (b)  of Section 201 in an amount equal to 50% of the value of
15    the  donation.  Partners,  shareholders   of   subchapter   S
16    corporations,  and  owners of limited liability companies (if
17    the  liability  company  is  treated  as  a  partnership  for
18    purposes of federal and State income taxation) are entitled a
19    credit under this Section to be determined in accordance with
20    the determination of income and distributive share of  income
21    under  Sections  702  and 703 of subchapter S of the Internal
22    Revenue Code.
23        (b)  If  the  amount  of  the  credit  exceeds  the   tax
24    liability for the year, the excess may be carried forward and
25    applied to the tax liability of the 5 taxable years following
26    the  excess  credit year.  The tax credit shall be applied to
27    the earliest year for which there is  a  tax  liability.   If
28    there  are  credits for more than one year that are available
29    to offset a liability, the earlier credit  shall  be  applied
30    first.
31        (c)  The  transfer  of  the tax credit allowed under this
                            -2-                LRB9204622MWdv
 1    Section may be made (i) to the purchaser  of  land  that  has
 2    been  designated  solely  for  affordable housing projects in
 3    accordance with  the  Housing  Authorities  Act  or  (ii)  to
 4    another  donor  who has also made an eligible donation to the
 5    sponsor of an affordable housing project in  accordance  with
 6    the Housing Authorities Act.
 7        (d)  A  taxpayer  claiming  the  credit  provided by this
 8    Section must maintain and record  any  information  that  the
 9    Department may require by regulation regarding the affordable
10    housing  project  for  which  the  credit  is  claimed.  When
11    claiming the credit provided by this  Section,  the  taxpayer
12    must provide information regarding the taxpayer's donation to
13    the  development  of  affordable  housing  under  the Housing
14    Authorities Act.

15        Section 10.  The Housing Authorities Act  is  amended  by
16    adding Section 8.24 as follows:

17        (310 ILCS 10/8.24 new)
18        Sec. 8.24. Tax credit for donation to sponsors.
19        (a)  In this Act:
20        "Affordable  housing  project"  means either (i) a rental
21    project in which  at  least  25%  of  the  units  have  rents
22    (including tenant-paid heat) that do not exceed, on a monthly
23    basis, 30% of the gross monthly income of a household earning
24    60%  of  the area median income and at least 25% of the units
25    are occupied by persons and families  whose  incomes  do  not
26    exceed  60%  of  the  median family income for the geographic
27    area in which the residential unit is located or (ii) a  unit
28    for  sale to homebuyers whose gross household income is at or
29    below 60% of the area median income and who pay no more  than
30    30%  of  their gross household income for mortgage principal,
31    interest, property taxes, and property insurance (PITI).
32        "Donation" means money, securities, or real  or  personal
                            -3-                LRB9204622MWdv
 1    property  that is donated to a not-for-profit sponsor that is
 2    used solely for costs associated with either (i)  purchasing,
 3    constructing, or rehabilitating an affordable housing project
 4    in  this  State, (ii) an employer-assisted housing project in
 5    this  State,  (iii)  general  operating  support,   or   (iv)
 6    technical assistance as defined by this Section.
 7        "Sponsor" means a not-for-profit organization that (i) is
 8    organized under the General Not For Profit Corporation Act of
 9    1986  for  the  purpose  of  constructing  or  rehabilitating
10    affordable housing units in this State; (ii) is organized for
11    the  purpose  of  constructing  or  rehabilitating affordable
12    housing units and has been issued a ruling from the  Internal
13    Revenue  Service  of  the  United  States  Department  of the
14    Treasury that the organization is exempt from income taxation
15    under provisions of the Internal Revenue Code; or (iii) is an
16    organization   designated   as   a   community    development
17    corporation  by  the United States government under Title VII
18    of the Economic Opportunity Act of 1964.
19        "Employer-assisted   housing   project"   means    either
20    down-payment assistance, reduced-interest mortgages, mortgage
21    guarantee   programs,   rental   subsidies,   or   individual
22    development  account  savings  plans  that  are  provided  by
23    employers  to  employees  to  assist  in  securing affordable
24    housing near the work place, that are restricted  to  housing
25    near  the  work  place,  and that are restricted to employees
26    whose gross household income is at or below 120% of the  area
27    median income.
28        "General  operating support" means any cost incurred by a
29    sponsor that is a part of its general program  costs  and  is
30    not  limited  to  costs  directly  incurred by the affordable
31    housing project.
32        "Geographical area" means the metropolitan area or county
33    designated as an area by the federal  Department  of  Housing
34    and  Urban  Development  under Section 8 of the United States
                            -4-                LRB9204622MWdv
 1    Housing Act of 1937, as amended, for purposes of  determining
 2    fair market rental rates.
 3        "Housing  authority"  means  either  the Illinois Housing
 4    Development Authority or the Department  of  Housing  of  the
 5    City of Chicago.
 6        "Median  income" means the incomes that are determined by
 7    the federal  Department  of  Housing  and  Urban  Development
 8    guidelines and adjusted for family size.
 9        "Technical  assistance"  means  any  cost  incurred  by a
10    sponsor for project planning, assistance  with  applying  for
11    financing,  or  counseling  services  provided to prospective
12    homebuyers.
13        (b)  A sponsor must apply to the housing  authority  that
14    administers  the  program  for  approval  of the project. The
15    housing authority must  reserve  a  specific  amount  of  tax
16    credits  for  each approved affordable housing project for 24
17    months after the date of approval.  The sponsor must  receive
18    an  eligible  donation  within  that  24-month time period or
19    donations to the project made after the end of  the  24-month
20    period  are  not  eligible  for  the tax credit allowed under
21    Section 214 of the Illinois Income Tax Act.
22        (c)  The  Illinois  Housing  Development  Authority  must
23    adopt rules establishing  criteria  for  eligible  costs  and
24    donations,  issuing  and verifying tax credits, and selecting
25    affordable housing projects  that  are  eligible  for  a  tax
26    credit under Section 214 of the Illinois Income Tax Act.
27        (d)  Tax   credits   for  employer-assisted  housing  are
28    limited to that pool of tax credits that have been set  aside
29    for  employer-assisted  housing.   Tax  credits  for  general
30    operating  support are limited to 10% of the total tax credit
31    allocation for a project and are also limited to that pool of
32    tax credits that have been set aside  for  general  operating
33    support.  Tax credits for technical assistance are limited to
34    that  pool  of  tax  credits  that  have  been  set aside for
                            -5-                LRB9204622MWdv
 1    technical assistance.
 2        (e)  The amount of tax credits reserved  by  the  housing
 3    authority  for  an approved project is limited to $13 million
 4    in the initial year and shall increase each year by 5%.   The
 5    City  of  Chicago  shall  receive  24.5% of total tax credits
 6    authorized  for  each  fiscal  year.   The  Illinois  Housing
 7    Development Authority shall receive the balance  of  the  tax
 8    credits authorized for each fiscal year.  The tax credits may
 9    be  used  anywhere  in  the  State.  The tax credits have the
10    following set-asides:
11             (1)  for employer-assisted housing, $2 million; and
12             (2)  for general  operating  support  and  technical
13        assistance, $1 million.
14        The  balance  of the funds must be used for projects that
15    would otherwise meet the definition of affordable housing.
16        (f)  The housing authority that issues  the  credit  must
17    record  against the land upon which the project is located an
18    instrument  to  assure  that  the  property   maintains   its
19    affordable  housing compliance for a minimum of 10 years. The
20    housing  authority  has  flexibility  to  assure   that   the
21    instrument does not cause undue hardship on homeowners.

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

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