AL
Alabama House Bill HB357

Alabama 2023 Regular Session

Alabama House Bill HB357 Compare Versions

Only one version of the bill is available at this time.
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11 HB357INTRODUCED
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33 DYUXNH-1
44 By Representative Almond
55 RFD: Ways and Means Education
66 First Read: 20-Apr-23
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1111 5 DYUXNH-1 02/24/2023 JRF (F)JRF 2023-497
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1313 SYNOPSIS:
1414 This bill would establish the Alabama Workforce
1515 Housing Tax Credit Act to authorize and provide a tax
1616 credit for qualified taxpayers owning an interest in a
1717 qualified workforce housing project located in the
1818 State of Alabama.
1919 A BILL
2020 TO BE ENTITLED
2121 AN ACT
2222 Relating to the state income tax; to establish the
2323 Alabama Workforce Housing Tax Credit Act; to create the
2424 Alabama Workforce Housing Tax Credit for qualified workforce
2525 housing projects; to define certain terms; to provide for
2626 minimum and maximum annual award amounts for qualified
2727 projects; to allow the tax credits to be claimed for 10 years
2828 against the income tax liability of a qualified taxpayer; to
2929 allow carryforward for earned but unused tax credits; to
3030 require a minimum of the annual award cycle cap be awarded for
3131 qualified projects located in areas designated as rural by the
3232 authority; and to require the Alabama Housing Finance
3333 Authority to implement and administer the provisions of this
3434 act.
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6464 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
6565 Section 1. This act shall be known and may be cited as
6666 the Alabama Workforce Housing Tax Credit Act.
6767 Section 2. For the purposes of this act, the following
6868 terms and phrases have the following meanings:
6969 (1) ALABAMA TAX LIABILITY. The taxes otherwise due
7070 under Sections 27-3-29, 27-4A-3, 40-16-4, or 40-18-2, Code of
7171 Alabama 1975. An insurance company claiming a workforce
7272 housing tax credit against the taxes, licenses, and other
7373 fees, fines, and penalties imposed, including any retaliatory
7474 tax imposed on insurance companies by Section 27-3-29, Code of
7575 Alabama 1975, shall not be required to pay any additional tax
7676 as a result of claiming the tax credit. The workforce housing
7777 tax credit may fully offset any retaliatory tax imposed by the
7878 Code of Alabama 1975. A reduction in the taxes of a foreign
7979 insurance company to the extent obtained through a claim for
8080 credit under this act does not increase the retaliatory tax
8181 liability otherwise charged against that company.
8282 (2) AUTHORITY. The Alabama Housing Finance Authority or
8383 its successor agency.
8484 (3) AWARD. The issuance by the authority of either of
8585 the following:
8686 a. A reservation letter pursuant to the qualified
8787 allocation plan.
8888 b. A declaration of official intent pursuant to the
8989 Multifamily Housing Revenue Bond Policy, for workforce housing
9090 tax credits to a qualified project during an award cycle, the
9191 amount of which award shall be claimed in each year of the
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121121 credit period.
122122 (4) AWARD CYCLE. Each fiscal year or other 12-month
123123 period designated by the authority over which the authority
124124 awards workforce housing tax credits to qualified projects.
125125 (5) AWARD CYCLE CAP. The sum of all of the following:
126126 a. Fifteen million dollars ($15,000,000) for each year
127127 of the 10-year credit period prescribed in 26 U.S.C. §
128128 42(f)(1).
129129 b. The amount, if any, by which the award cycle cap
130130 prescribed by this act for the preceding award cycle exceeds
131131 the workforce housing tax credits awarded by the authority in
132132 that award cycle.
133133 c. The amount of workforce housing tax credits
134134 recaptured or otherwise disallowed under Section 3(e) in the
135135 preceding fiscal year.
136136 (6) CREDIT PERIOD. The 10-year credit period as defined
137137 in 26 U.S.C. § 42(f)(1), subject to the special rule for the
138138 first year of the credit period as set forth in 26 U.S.C. §
139139 42(f)(2).
140140 (7) DEPARTMENT. The Department of Revenue, or its
141141 successor agency.
142142 (8) ELIGIBILITY CERTIFICATE. A certificate issued by
143143 the authority to the owner of a qualified project certifying
144144 that such project is a qualified project that qualifies for
145145 the workforce housing tax credit authorized by this act and
146146 specifying the annual amount of workforce housing tax credits
147147 that may be claimed in each year of the credit period. The
148148 authority shall issue an eligibility certificate to a
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178178 qualified project upon the authority's approval of a final
179179 cost certification that complies with the authority's
180180 requirements.
181181 (9) FEDERAL LOW-INCOME HOUSING CREDIT or FEDERAL
182182 CREDIT. The federal tax credit as provided in 26 U.S.C. § 42.
183183 (10) FOUR PERCENT QUALIFIED PROJECT. A qualified
184184 project that is eligible for federal low-income housing tax
185185 credits pursuant to 26 U.S.C. § 42(h)(4).
186186 (11) MULTIFAMILY HOUSING REVENUE BOND POLICY. The
187187 authority's policy, in effect from time to time, respecting
188188 allocation of tax-exempt bond volume cap for affordable
189189 multifamily housing.
190190 (12) QUALIIFIED ALLOCATION PLAN. As defined in 26
191191 U.S.C. § 42(m)(1)(B), subject to such additions and
192192 modifications necessary to implement this act.
193193 (13) QUALIFIED PROJECT. A qualified low-income
194194 building, as defined in 26 U.S.C. § 42(c), that is located in
195195 the State of Alabama, is eligible for the federal low-income
196196 housing tax credit, and is placed in service on or after
197197 January 1, 2024.
198198 (14) QUALIFIED TAXPAYER. A taxpayer owning an interest,
199199 directly or indirectly through one or more pass-through
200200 entities, in a qualified project at any time prior to filing a
201201 tax return claiming a workforce housing tax credit.
202202 (15) TAXPAYER. An individual, corporation, S
203203 corporation, partnership, limited partnership, limited
204204 liability partnership, limited liability company, joint
205205 venture, financial institution, fiduciary and trusts, or
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235235 insurer.
236236 (16) WORKFORCE HOUSING TAX CREDIT or TAX CREDIT. The
237237 tax credit created by this act.
238238 Section 3. (a) For applications for federal credits
239239 submitted to the authority on and after January 1, 2024, the
240240 authority, upon approving a federal low-income housing tax
241241 credit for a qualified project pursuant to the authority's
242242 qualified allocation plan or Multifamily Housing Revenue Bond
243243 Policy, may award a workforce housing tax credit under this
244244 act to the owner of the qualified project so long as doing so
245245 will not result in exceeding the award cycle cap prescribed by
246246 this subsection. The workforce housing tax credit shall be in
247247 an amount determined by the authority to be necessary for the
248248 financial feasibility of the qualified project and consistent
249249 with the authority's qualified allocation plan and Multifamily
250250 Housing Revenue Bond Policy, as applicable, but the annual
251251 award for each qualified project shall not be less than two
252252 hundred thousand dollars ($200,000) nor greater than two
253253 million dollars ($2,000,000). The authority shall send written
254254 notice of the award to the owner of the qualified project. The
255255 award notice shall state the amount of workforce housing tax
256256 credit awarded for each year of the qualified project's credit
257257 period and stipulate that receipt of the tax credit is
258258 contingent upon issuance of an eligibility certificate. Upon
259259 issuance of an eligibility certificate, a workforce housing
260260 tax credit shall be allowed for the qualified project for each
261261 year of the credit period in the amount specified in the
262262 eligibility certificate. The total amount of tax credit awards
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292292 made by the authority under this chapter in each award cycle
293293 shall not exceed the award cycle cap.
294294 (b) A qualified taxpayer may claim a workforce housing
295295 tax credit against its Alabama tax liability prior to
296296 reduction by any other credits allowed the qualified taxpayer.
297297 The tax credit may be allocated by pass-through entities to
298298 some or all of its partners, members, or shareholders,
299299 including any not-for-profit entity that is a partner, member,
300300 or shareholder, in any manner agreed to by such persons,
301301 regardless of whether or not any such person is allocated or
302302 allowed any portion of any federal low-income housing tax
303303 credit with respect to the qualified project, whether the
304304 allocation of the tax credit under the terms of the agreement
305305 has substantial economic effect within the meaning of 26
306306 U.S.C. § 704(b), and whether any such person is deemed a
307307 partner for federal income tax purposes as long as the partner
308308 or member would be considered a partner or member under
309309 applicable state law governing such entity, and has been
310310 admitted as a partner or member on or prior to the date for
311311 filing the qualified taxpayer's tax return, including any
312312 amendments thereto, with respect to the year of the tax
313313 credit. Such pass-through entities or qualified taxpayer may
314314 assign all or any part of its interest, including its interest
315315 in the tax credits, to one or more pass-through entities or
316316 qualified taxpayers, and the qualified taxpayer shall be able
317317 to claim the tax credit so long as its interest is acquired
318318 prior to the filing of its tax return claiming the tax credit.
319319 If the tax credit is used to offset financial institution
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349349 excise tax, the offset shall be limited to the state portion
350350 of the financial institution excise tax.
351351 (c) The tax credit authorized by this act shall not be
352352 refundable. Any tax credit not used in a taxable year may be
353353 carried forward by a qualified taxpayer for the succeeding
354354 five years.
355355 (d) A qualified taxpayer claiming a workforce housing
356356 tax credit shall submit a copy of the eligibility certificate
357357 at the time of filing its tax return with the department. If
358358 the owner of the qualified project has applied to the
359359 authority for the eligibility certificate but the authority
360360 has not yet issued the eligibility certificate at the time the
361361 qualified taxpayer files its original tax return claiming the
362362 tax credit, the qualified taxpayer may claim the tax credit
363363 based upon the amount of tax credit set forth in the award
364364 issued to the qualified project, and shall amend its tax
365365 return to include the eligibility certificate upon its
366366 receipt. If the amount of tax credit in the eligibility
367367 certificate is different than the amount of tax credit
368368 previously claimed, the qualified taxpayer shall adjust the
369369 tax credit amount claimed on the amended tax return.
370370 (e) If under 26 U.S.C. § 42, a portion of any federal
371371 low-income housing credits taken on a qualified project is
372372 required to be recaptured or is otherwise disallowed during
373373 the credit period, the qualified taxpayer claiming workforce
374374 housing tax credits with respect to the qualified project
375375 shall also be required to recapture a portion of any tax
376376 credits authorized by this act. The percentage of workforce
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406406 housing tax credits subject to recapture shall be equal to the
407407 percentage of federal low-income housing credits subject to
408408 recapture or otherwise disallowed during such period. Any tax
409409 credits recaptured or disallowed shall increase the income tax
410410 liability of the qualified taxpayer who claimed the tax
411411 credits in a like amount and shall be included on the tax
412412 return of the qualified taxpayer submitted for the taxable
413413 year in which the recapture or disallowance event is
414414 identified. The owner of the qualified project shall report
415415 any recapture event to the department, authority, and, in the
416416 same manner done for recapture of federal low-income housing
417417 credits, to the qualified taxpayer, if the project owner is
418418 not the qualified taxpayer.
419419 (f) For each award cycle, the authority shall award at
420420 least 20 percent but not more than 25 percent of the award
421421 cycle cap to qualified projects located in areas designated as
422422 rural by the authority, and the balance of the remaining
423423 available award cycle cap to four percent qualified projects
424424 without any geographic limitation.
425425 Section 4. The authority shall administer the workforce
426426 housing tax credit program and shall be authorized to adopt
427427 the regulations, guidelines, and qualified allocation plans
428428 necessary to implement and administer this act. The workforce
429429 housing tax credit authorized by this act shall not be
430430 available to taxpayers which submit an application for federal
431431 low-income housing tax credits for a qualified project after
432432 September 30, 2026. No action or inaction on the part of the
433433 Legislature shall reduce or suspend the tax credits authorized
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463463 by this act in any past or future calendar year with respect
464464 to a qualified project if the application to the authority was
465465 substantially complete on or prior to September 30, 2026, even
466466 if the award is made after such date, the qualified project is
467467 placed in service after September 30, 2026, or the first
468468 workforce housing credits are available to the qualified
469469 taxpayer after September 30, 2026. The authority shall adopt
470470 by July 31, 2023, any and all regulations, guidelines, and
471471 qualified allocation plans necessary to implement this act.
472472 Section 5. The tax credit created pursuant to this act
473473 shall only be claimed with respect to taxable years beginning
474474 on or after January 1, 2024. The tax credit provided in this
475475 act shall be subject to the reporting requirements of Section
476476 40-1-50, Code of Alabama 1975. The department may adopt rules
477477 for the implementation and administration of this act.
478478 Section 6. In connection with the adoption of qualified
479479 allocation plans insofar as they relate to the workforce
480480 housing tax credit by the authority, the authority shall
481481 consult with the Alabama Department of Commerce concerning its
482482 priorities for the location and type, including new
483483 construction, rehabilitation, or both, of multifamily housing
484484 which will support economic development efforts and the
485485 creation of stable, good-paying jobs in the State of Alabama.
486486 It is the desire of the Legislature that the efforts of the
487487 Alabama Department of Commerce in seeking to create jobs will
488488 be generally supported by the creation of multifamily rental
489489 housing opportunities supported by the workforce housing tax
490490 credit.
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520520 Section 7. This act shall become effective on the first
521521 day of the third month following its passage and approval by
522522 the Governor, or its otherwise becoming law.
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