HB357INTRODUCED
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DYUXNH-1
By Representative Almond
RFD: Ways and Means Education
First Read: 20-Apr-23
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5 DYUXNH-1 02/24/2023 JRF (F)JRF 2023-497
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SYNOPSIS:
This bill would establish the Alabama Workforce
Housing Tax Credit Act to authorize and provide a tax
credit for qualified taxpayers owning an interest in a
qualified workforce housing project located in the
State of Alabama.
A BILL
TO BE ENTITLED
AN ACT
Relating to the state income tax; to establish the
Alabama Workforce Housing Tax Credit Act; to create the
Alabama Workforce Housing Tax Credit for qualified workforce
housing projects; to define certain terms; to provide for
minimum and maximum annual award amounts for qualified
projects; to allow the tax credits to be claimed for 10 years
against the income tax liability of a qualified taxpayer; to
allow carryforward for earned but unused tax credits; to
require a minimum of the annual award cycle cap be awarded for
qualified projects located in areas designated as rural by the
authority; and to require the Alabama Housing Finance
Authority to implement and administer the provisions of this
act.
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BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act shall be known and may be cited as
the Alabama Workforce Housing Tax Credit Act.
Section 2. For the purposes of this act, the following
terms and phrases have the following meanings:
(1) ALABAMA TAX LIABILITY. The taxes otherwise due
under Sections 27-3-29, 27-4A-3, 40-16-4, or 40-18-2, Code of
Alabama 1975. An insurance company claiming a workforce
housing tax credit against the taxes, licenses, and other
fees, fines, and penalties imposed, including any retaliatory
tax imposed on insurance companies by Section 27-3-29, Code of
Alabama 1975, shall not be required to pay any additional tax
as a result of claiming the tax credit. The workforce housing
tax credit may fully offset any retaliatory tax imposed by the
Code of Alabama 1975. A reduction in the taxes of a foreign
insurance company to the extent obtained through a claim for
credit under this act does not increase the retaliatory tax
liability otherwise charged against that company.
(2) AUTHORITY. The Alabama Housing Finance Authority or
its successor agency.
(3) AWARD. The issuance by the authority of either of
the following:
a. A reservation letter pursuant to the qualified
allocation plan.
b. A declaration of official intent pursuant to the
Multifamily Housing Revenue Bond Policy, for workforce housing
tax credits to a qualified project during an award cycle, the
amount of which award shall be claimed in each year of the
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credit period.
(4) AWARD CYCLE. Each fiscal year or other 12-month
period designated by the authority over which the authority
awards workforce housing tax credits to qualified projects.
(5) AWARD CYCLE CAP. The sum of all of the following:
a. Fifteen million dollars ($15,000,000) for each year
of the 10-year credit period prescribed in 26 U.S.C. §
42(f)(1).
b. The amount, if any, by which the award cycle cap
prescribed by this act for the preceding award cycle exceeds
the workforce housing tax credits awarded by the authority in
that award cycle.
c. The amount of workforce housing tax credits
recaptured or otherwise disallowed under Section 3(e) in the
preceding fiscal year.
(6) CREDIT PERIOD. The 10-year credit period as defined
in 26 U.S.C. § 42(f)(1), subject to the special rule for the
first year of the credit period as set forth in 26 U.S.C. §
42(f)(2).
(7) DEPARTMENT. The Department of Revenue, or its
successor agency.
(8) ELIGIBILITY CERTIFICATE. A certificate issued by
the authority to the owner of a qualified project certifying
that such project is a qualified project that qualifies for
the workforce housing tax credit authorized by this act and
specifying the annual amount of workforce housing tax credits
that may be claimed in each year of the credit period. The
authority shall issue an eligibility certificate to a
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qualified project upon the authority's approval of a final
cost certification that complies with the authority's
requirements.
(9) FEDERAL LOW-INCOME HOUSING CREDIT or FEDERAL
CREDIT. The federal tax credit as provided in 26 U.S.C. § 42.
(10) FOUR PERCENT QUALIFIED PROJECT. A qualified
project that is eligible for federal low-income housing tax
credits pursuant to 26 U.S.C. § 42(h)(4).
(11) MULTIFAMILY HOUSING REVENUE BOND POLICY. The
authority's policy, in effect from time to time, respecting
allocation of tax-exempt bond volume cap for affordable
multifamily housing.
(12) QUALIIFIED ALLOCATION PLAN. As defined in 26
U.S.C. § 42(m)(1)(B), subject to such additions and
modifications necessary to implement this act.
(13) QUALIFIED PROJECT. A qualified low-income
building, as defined in 26 U.S.C. § 42(c), that is located in
the State of Alabama, is eligible for the federal low-income
housing tax credit, and is placed in service on or after
January 1, 2024.
(14) QUALIFIED TAXPAYER. A taxpayer owning an interest,
directly or indirectly through one or more pass-through
entities, in a qualified project at any time prior to filing a
tax return claiming a workforce housing tax credit.
(15) TAXPAYER. An individual, corporation, S
corporation, partnership, limited partnership, limited
liability partnership, limited liability company, joint
venture, financial institution, fiduciary and trusts, or
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insurer.
(16) WORKFORCE HOUSING TAX CREDIT or TAX CREDIT. The
tax credit created by this act.
Section 3. (a) For applications for federal credits
submitted to the authority on and after January 1, 2024, the
authority, upon approving a federal low-income housing tax
credit for a qualified project pursuant to the authority's
qualified allocation plan or Multifamily Housing Revenue Bond
Policy, may award a workforce housing tax credit under this
act to the owner of the qualified project so long as doing so
will not result in exceeding the award cycle cap prescribed by
this subsection. The workforce housing tax credit shall be in
an amount determined by the authority to be necessary for the
financial feasibility of the qualified project and consistent
with the authority's qualified allocation plan and Multifamily
Housing Revenue Bond Policy, as applicable, but the annual
award for each qualified project shall not be less than two
hundred thousand dollars ($200,000) nor greater than two
million dollars ($2,000,000). The authority shall send written
notice of the award to the owner of the qualified project. The
award notice shall state the amount of workforce housing tax
credit awarded for each year of the qualified project's credit
period and stipulate that receipt of the tax credit is
contingent upon issuance of an eligibility certificate. Upon
issuance of an eligibility certificate, a workforce housing
tax credit shall be allowed for the qualified project for each
year of the credit period in the amount specified in the
eligibility certificate. The total amount of tax credit awards
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made by the authority under this chapter in each award cycle
shall not exceed the award cycle cap.
(b) A qualified taxpayer may claim a workforce housing
tax credit against its Alabama tax liability prior to
reduction by any other credits allowed the qualified taxpayer.
The tax credit may be allocated by pass-through entities to
some or all of its partners, members, or shareholders,
including any not-for-profit entity that is a partner, member,
or shareholder, in any manner agreed to by such persons,
regardless of whether or not any such person is allocated or
allowed any portion of any federal low-income housing tax
credit with respect to the qualified project, whether the
allocation of the tax credit under the terms of the agreement
has substantial economic effect within the meaning of 26
U.S.C. § 704(b), and whether any such person is deemed a
partner for federal income tax purposes as long as the partner
or member would be considered a partner or member under
applicable state law governing such entity, and has been
admitted as a partner or member on or prior to the date for
filing the qualified taxpayer's tax return, including any
amendments thereto, with respect to the year of the tax
credit. Such pass-through entities or qualified taxpayer may
assign all or any part of its interest, including its interest
in the tax credits, to one or more pass-through entities or
qualified taxpayers, and the qualified taxpayer shall be able
to claim the tax credit so long as its interest is acquired
prior to the filing of its tax return claiming the tax credit.
If the tax credit is used to offset financial institution
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excise tax, the offset shall be limited to the state portion
of the financial institution excise tax.
(c) The tax credit authorized by this act shall not be
refundable. Any tax credit not used in a taxable year may be
carried forward by a qualified taxpayer for the succeeding
five years.
(d) A qualified taxpayer claiming a workforce housing
tax credit shall submit a copy of the eligibility certificate
at the time of filing its tax return with the department. If
the owner of the qualified project has applied to the
authority for the eligibility certificate but the authority
has not yet issued the eligibility certificate at the time the
qualified taxpayer files its original tax return claiming the
tax credit, the qualified taxpayer may claim the tax credit
based upon the amount of tax credit set forth in the award
issued to the qualified project, and shall amend its tax
return to include the eligibility certificate upon its
receipt. If the amount of tax credit in the eligibility
certificate is different than the amount of tax credit
previously claimed, the qualified taxpayer shall adjust the
tax credit amount claimed on the amended tax return.
(e) If under 26 U.S.C. § 42, a portion of any federal
low-income housing credits taken on a qualified project is
required to be recaptured or is otherwise disallowed during
the credit period, the qualified taxpayer claiming workforce
housing tax credits with respect to the qualified project
shall also be required to recapture a portion of any tax
credits authorized by this act. The percentage of workforce
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housing tax credits subject to recapture shall be equal to the
percentage of federal low-income housing credits subject to
recapture or otherwise disallowed during such period. Any tax
credits recaptured or disallowed shall increase the income tax
liability of the qualified taxpayer who claimed the tax
credits in a like amount and shall be included on the tax
return of the qualified taxpayer submitted for the taxable
year in which the recapture or disallowance event is
identified. The owner of the qualified project shall report
any recapture event to the department, authority, and, in the
same manner done for recapture of federal low-income housing
credits, to the qualified taxpayer, if the project owner is
not the qualified taxpayer.
(f) For each award cycle, the authority shall award at
least 20 percent but not more than 25 percent of the award
cycle cap to qualified projects located in areas designated as
rural by the authority, and the balance of the remaining
available award cycle cap to four percent qualified projects
without any geographic limitation.
Section 4. The authority shall administer the workforce
housing tax credit program and shall be authorized to adopt
the regulations, guidelines, and qualified allocation plans
necessary to implement and administer this act. The workforce
housing tax credit authorized by this act shall not be
available to taxpayers which submit an application for federal
low-income housing tax credits for a qualified project after
September 30, 2026. No action or inaction on the part of the
Legislature shall reduce or suspend the tax credits authorized
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by this act in any past or future calendar year with respect
to a qualified project if the application to the authority was
substantially complete on or prior to September 30, 2026, even
if the award is made after such date, the qualified project is
placed in service after September 30, 2026, or the first
workforce housing credits are available to the qualified
taxpayer after September 30, 2026. The authority shall adopt
by July 31, 2023, any and all regulations, guidelines, and
qualified allocation plans necessary to implement this act.
Section 5. The tax credit created pursuant to this act
shall only be claimed with respect to taxable years beginning
on or after January 1, 2024. The tax credit provided in this
act shall be subject to the reporting requirements of Section
40-1-50, Code of Alabama 1975. The department may adopt rules
for the implementation and administration of this act.
Section 6. In connection with the adoption of qualified
allocation plans insofar as they relate to the workforce
housing tax credit by the authority, the authority shall
consult with the Alabama Department of Commerce concerning its
priorities for the location and type, including new
construction, rehabilitation, or both, of multifamily housing
which will support economic development efforts and the
creation of stable, good-paying jobs in the State of Alabama.
It is the desire of the Legislature that the efforts of the
Alabama Department of Commerce in seeking to create jobs will
be generally supported by the creation of multifamily rental
housing opportunities supported by the workforce housing tax
credit.
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Section 7. This act shall become effective on the first
day of the third month following its passage and approval by
the Governor, or its otherwise becoming law.
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