State of Illinois
92nd General Assembly
Legislation

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92_SB0986

 
                                               LRB9208165SMdv

 1        AN ACT in relation to taxation.

 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.  Affordable housing donation tax credit.
 8        (a)  As used in this Section, unless the context  clearly
 9    requires otherwise:
10        "Affordable  housing  project"  means either (i) a rental
11    project, at least 25%  of  the  units  of  which  have  rents
12    (including tenant-paid heat) that do not exceed, on a monthly
13    basis, 30% of the gross monthly income of a household earning
14    60%  of the area median income, and at least 25% of the units
15    of which are occupied by persons and  families  whose  income
16    does  not  exceed  60%  of  the  median family income for the
17    geographic area in which the residential unit is located,  or
18    (ii)  a  unit  for  sale  to homebuyers whose gross household
19    income is at or below 60% of area median income, and who  pay
20    more  than  30%  of their gross household income for mortgage
21    principal, interest, property taxes, and  property  insurance
22    (PITI).
23        "Donation"  means  money, real or personal property, or a
24    professional service that  is  donated  to  a  not-for-profit
25    sponsor   that:   (i)   is   organized   under   the  General
26    Not-For-Protit Corporation Act of 1986  for  the  purpose  of
27    constructing  or  rehabilitating  affordable housing units in
28    this State; (ii) is organized for the purpose of constructing
29    or rehabilitating  affordable  housing  units  and  has  been
30    issued  a  ruling  from  the  Internal Revenue Service of the
31    United  States  Department   of   the   Treasury   that   the
 
                            -2-                LRB9208165SMdv
 1    organization   is  exempt  from  income  taxation  under  the
 2    provisions of the Internal Revenue Code;  or    (iii)  is  an
 3    organization    designated   as   a   community   development
 4    corporation by the United States government under  Title  VII
 5    of the Economic Opportunity Act of 1964.
 6        "Employer-assisted  housing  project"  means down-payment
 7    assistance, reduced-interest  mortgages,  mortgage  guarantee
 8    programs, rental subsidies, or Individual Development Account
 9    savings  plans that are provided by employers to employees to
10    assist in securing affordable housing near the workplace, and
11    which are  restricted  to  employees  whose  gross  household
12    income is at or below 120% of the area median income.
13        "General  operating  support"  means any cost incurred by
14    the not-for-profit sponsor that is  a  part  of  its  general
15    program  costs  and is not limited to costs directly incurred
16    by the affordable housing project.
17        "Geographic area" means the metropolitan area  or  county
18    designated  as  an  area by the federal Department of Housing
19    and Urban Development under Section 8 of  the  United  States
20    Housing  Act of 1937, as amended, for purposes of determining
21    fair market rental rates.
22        "Housing authority" means  either  the  Illinois  Housing
23    Development  Authority  or  the City of Chicago Department of
24    Housing.
25        "Median income" means those incomes that  are  determined
26    by  the  federal  Department of Housing and Urban Development
27    guidelines and adjusted for family size.
28        "Technical assistance" means any  cost  incurred  by  the
29    not-for-profit  sponsor for project planning, assistance with
30    applying for financing, or counseling  services  provided  to
31    prospective homebuyers.
32        (b)  Beginning  with  taxable  years  ending  on or after
33    December 31, 2001 and ending with taxable years ending on  or
34    before  December  31,  2007,  a  taxpayer  shall be allowed a
 
                            -3-                LRB9208165SMdv
 1    credit against the tax imposed by subsections (a) and (b)  of
 2    Section 201 for contributing to the development of affordable
 3    housing  in  this  State.  The credit allowed against the tax
 4    imposed by subsections (a) and (b)  of  Section  201,  to  be
 5    termed the "affordable housing donation tax credit", shall be
 6    equal  to  50%  of  the value of the taxpayer's donation. Tax
 7    credits for employer-assisted housing  are  limited  to  that
 8    pool   of   tax   credits   that  have  been  set  aside  for
 9    employer-assisted housing. Tax credits for general  operating
10    support are limited to 10% of the total tax credit allocation
11    for  a  project  and  are  also  limited  to that pool of tax
12    credits that  have  been  set  aside  for  general  operating
13    support.  Tax credits for technical assistance are limited to
14    that pool of  tax  credits  that  have  been  set  aside  for
15    technical assistance.
16        If the amount of the credit exceeds the tax liability for
17    the  year,  the  excess may be carried forward and applied to
18    the tax liability of the 5 taxable years following the excess
19    credit year.  The tax credit shall be applied to the earliest
20    year for which there  is  a  tax  liability.   If  there  are
21    credits for more than one year that are available to offset a
22    liability, the earlier credit shall be applied first.
23        The tax credit may be sold or transferred by the donor to
24    another  taxpayer  either directly or through an intermediary
25    organization. The third party  beneficiary  of  the  sale  or
26    transfer  of  the  credit  must  be  linked  to  the sale and
27    transfer of an ownership interest in the project by  being  a
28    donor to the project.
29        (c)  The  not-for-profit  sponsor  shall make application
30    for approval of a  project  to  the  housing  authority  that
31    administers   this  program.   The  housing  authority  shall
32    reserve the credits for an approved  project  for  24  months
33    from  the  date  of  approval.  The  sponsor  must receive an
34    eligible donation within that time period or forfeit the  tax
 
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 1    credit.  The  housing  authority shall administer, issue, and
 2    audit the  credit.   The  Department  of  Revenue  shall  not
 3    administer the credit.
 4        (d)  The   not-for-profit   organization   receiving  the
 5    donation shall maintain and record such  information  as  the
 6    Department may require by regulation regarding the affordable
 7    housing project and donation for which the credit is claimed.
 8    The   sponsor   shall  be  responsible  for  maintaining  the
 9    project's  eligibility  under  this  Section  and  associated
10    rules.
11        (e)  The Illinois  Housing  Development  Authority  shall
12    adopt    rules    establishing   criteria   for   designating
13    not-for-profit organizations that are  qualified  to  receive
14    donations  that  are  eligible  for  a  tax credit under this
15    Section.   The  criteria  shall   require   that   designated
16    not-for-profit  organizations  use  donations  solely for (i)
17    costs  associated   with   constructing   or   rehabilitating
18    affordable  housing  units  in  this  State,  (ii)  technical
19    assistance, or (iii) general operating expenses.
20        (f)  The  housing  authority that issues the credit shall
21    record against the land upon which  the  project  resides  an
22    instrument   to   assure  that  the  property  maintains  its
23    affordable housing compliance  for  10  years.   The  housing
24    authority   shall   have   flexibility  to  assure  that  the
25    instrument does not cause undue hardship on homeowners.
26        (g)  The amount of tax credits awarded shall  be  limited
27    to  $13  million  in the initial year and shall increase each
28    year by 5%.  The City of Chicago shall receive 24.5%  of  the
29    total  tax  credits  authorized  for  each  fiscal year.  The
30    Illinois Housing  Development  Authority  shall  receive  the
31    balance  of  the tax credits authorized for each fiscal year.
32    The tax credits may be used anywhere in the State.   The  tax
33    credits shall have the following set-asides:
34             (1)  For employer-assisted housing, $2 million; and
 
                            -5-                LRB9208165SMdv
 1             (2)  For  technical assistance and general operating
 2        support, $1 million.
 3        The balance of the funds shall be used for projects  that
 4    would  otherwise  meet  the  definition of affordable housing
 5    project as set forth in this Section.

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

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