Alabama 2023 Regular Session

Alabama Senate Bill SB240 Compare Versions

Only one version of the bill is available at this time.

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1	1	SB240INTRODUCED
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3	3	83D8FF-1
4	4	By Senators Singleton, Chambliss, Smitherman
5	5	RFD: Finance and Taxation Education
6	6	First Read: 25-Apr-23
7	7	2023 Regular Session
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13	13	6 83D8FF-1 04/25/2023 THR (L) THR 2023-1579
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15	15	SYNOPSIS:
16	16	Under current law, the aggregate amount of all
17	17	tax credits that may be reserved in any year by the
18	18	Alabama Historical Commission shall not exceed twenty
19	19	million dollars.
20	20	This bill would allow the Alabama Historical
21	21	Commission to aggregate up to forty million dollars in
22	22	tax credits each year.
23	23	Under current law, rehabilitation tax credits
24	24	are tied to the year in which the certified
25	25	rehabilitation is placed in service.
26	26	This bill would allow rehabilitation tax credits
27	27	to be tied to the year in which the reservation is
28	28	allocated.
29	29	This bill would provide for additional
30	30	rehabilitation credit allocations.
31	31	This bill would further provide for the
32	32	membership of the Historic Tax Credit Evaluating
33	33	Committee and the factors considered by the committee.
34	34	This bill would also make nonsubstantive,
35	35	technical revisions to update the existing code
36	36	language to current style.
37	37	A BILL
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67	67	TO BE ENTITLED
68	68	AN ACT
69	69	Relating to taxation; to amend Sections 40-9F-31,
70	70	40-9F-33, and 40-9F-38, Code of Alabama 1975, to increase the
71	71	amount of tax credits that may be provided in a tax year; to
72	72	allow rehabilitation credits to be tied to the year in which
73	73	the reservation is allocated; to provide for additional
74	74	rehabilitation credit allocations; to further provide for the
75	75	membership of the Historic Tax Credit Evaluating Committee and
76	76	the factors considered by the committee; and to make
77	77	nonsubstantive, technical revisions to update the existing
78	78	code language to current style.
79	79	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
80	80	Section 1. Sections 40-9F-31, 40-9F-33, and 40-9F-38,
81	81	Code of Alabama 1975, are amended to read as follows:
82	82	"§40-9F-31
83	83	As used in this article, the following terms shall have
84	84	the following meanings:
85	85	(1) CERTIFIED HISTORIC STRUCTURE. A property located in
86	86	Alabama this state which is at least 60 years of age, unless
87	87	the structure is a historic structure located within the
88	88	boundaries of a National Monument or Park as declared by the
89	89	United States Congress or the President of the United States,
90	90	in which case the federal age provisions shall apply, and is
91	91	certified by the Alabama Historical Commission as being
92	92	individually listed in the National Register of Historic
93	93	Places, eligible for listing in the National Register of
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123	123	Historic Places, or certified by the commission as
124	124	contributing to the historic significance of a Registered
125	125	Historic District.
126	126	(2) CERTIFIED REHABILITATION. Repairs or alterations to
127	127	a certified historic structure that is certified by the
128	128	commission as meeting the U.S. Secretary of the Interior's
129	129	Standards for Rehabilitation which meet the requirements
130	130	contained in Section 47(c)(2)(C) of the Internal Revenue
131	131	Codeof 26 U.S.C. § 47, as amended, or to a certified historic
132	132	residential structure as defined in subdivision (3) .
133	133	(3) CERTIFIED HISTORIC RESIDENTIAL STRUCTURE. A
134	134	certified historic structure as defined in subdivision (1).
135	135	(4)(3) COMMISSION. The Alabama Historical Commission
136	136	and or its successor.
137	137	(5)(4) COMMITTEE. The Historic Tax Credit Evaluating
138	138	Committee established by this article.
139	139	(6)(5) DEPARTMENT. The Alabama Department of Revenue or
140	140	its successor.
141	141	(7)(6) DISQUALIFYING USE. Any use of a certified
142	142	historic residential structure that is occupied by an owner
143	143	and used exclusively as a primary or secondary residence.
144	144	(8)(7) OWNER. Any taxpayer filing a State of Alabama
145	145	income tax return or any entity that is exempt from federal
146	146	income taxation pursuant to Section 501(c) of the Internal
147	147	Revenue Code26 U.S.C. § 501, as amended, that:
148	148	a. Owns owns title to a qualified structure, or
149	149	b. Owns owns a leasehold interest in a qualified
150	150	structure for a term of not less than 39 years.
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180	180	An owner as defined herein shall not be considered a
181	181	private user as defined in Section 40-9A-1.
182	182	(9)(8) QUALIFIED REHABILITATION EXPENDITURES. Any
183	183	expenditure as defined under Section 47(c)(2)(A) of the
184	184	Internal Revenue Code 26 U.S.C. § 47, as amended, and the
185	185	related regulations thereunder, and other reasonable expenses
186	186	and costs expended in the rehabilitation of a qualified
187	187	structure. For certified historic residential structures, this
188	188	term shall mean expenses incurred by the taxpayer in the
189	189	certified rehabilitation of a certified historic residential
190	190	structure, including but not limited to preservation and
191	191	rehabilitation work done to the exterior of a certified
192	192	historic residential structure, repair and stabilization of
193	193	historic structural systems, restoration of historic plaster,
194	194	energy efficiency measures except insulation in frame walls,
195	195	repairs or rehabilitation of heating, air conditioning, or
196	196	ventilation systems, repairs or rehabilitation of electrical
197	197	or plumbing systems exclusive of new electrical appliances and
198	198	electrical or plumbing fixtures, and architectural,
199	199	engineering, and land surveying fees. Qualified rehabilitation
200	200	expenditures do not include the cost of acquisition of the
201	201	qualified structure, the personal labor by the owner, or any
202	202	cost associated with the rehabilitation of an outbuilding of
203	203	the qualified structure, unless the outbuilding is certified
204	204	by the commission to contribute to the historical significance
205	205	of the qualified structure.
206	206	(10)(9) QUALIFIED STRUCTURE. Certified historic
207	207	structures which are certified by the commission as meeting
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237	237	the requirements contained in Section 47(c)(1)(A)(i) and (ii)
238	238	of the Internal Revenue Code 26 U.S.C. § 47, as amended, and to
239	239	certified historic residential structures as defined herein .
240	240	(11)(10) REGISTERED HISTORIC DISTRICT. Any district
241	241	listed in the National Register of Historic Places and any
242	242	district which is either of the following:
243	243	a. Designated under Alabama or local law as containing
244	244	criteria which substantially achieves the purpose of
245	245	preserving and rehabilitating buildings of historic
246	246	significance to the district.
247	247	b. Certified by the U.S. Secretary of the Interior as
248	248	meeting substantially all of the requirements for the listing
249	249	of districts in the National Register of Historic Places.
250	250	(12)(11) REHABILITATION PLAN. Construction plans and
251	251	specifications for the proposed rehabilitation of a qualified
252	252	structure in sufficient detail to enable the commission to
253	253	evaluate compliance with the standards developed under this
254	254	article.
255	255	(13)(12) SUBSTANTIAL REHABILITATION. Rehabilitation of
256	256	a qualified structure for which the qualified rehabilitation
257	257	expenditures exceed 50 percent of the owner's original
258	258	purchase price of the qualified structure or twenty-five
259	259	thousand dollars ($25,000), whichever is greater."
260	260	"§40-9F-33
261	261	(a) The state portion of any tax credit against the tax
262	262	imposed by Chapter 18 for the taxable year in which the
263	263	reservation is allocated to a project or the certified
264	264	rehabilitation is placed in service shall be equal to 25
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294	294	percent of the qualified rehabilitation expenditures for
295	295	certified historic structures. No tax credit claimed for any
296	296	certified rehabilitation may exceed five million dollars
297	297	($5,000,000) for all allowable property types except a
298	298	certified historic residential structure, and fifty thousand
299	299	dollars ($50,000) for a certified historic residential
300	300	structure.
301	301	(b) There is created within the Education Trust Fund a
302	302	separate account named the Historic Preservation Income Tax
303	303	Credit Account. The Commissioner of Revenue shall certify to
304	304	the Comptroller the amount of income tax credits under this
305	305	section and the Comptroller shall transfer into the Historic
306	306	Preservation Income Tax Credit Account only the amount from
307	307	sales tax revenues within the Education Trust Fund that is
308	308	sufficient for the Department of Revenue to use to cover the
309	309	income tax credits for the applicable tax year. The
310	310	Commissioner of Revenue shall distribute the funds in the
311	311	Historic Preservation Income Tax Credit Account pursuant to
312	312	this section.
313	313	(c) The entire tax credit must be claimed by the
314	314	taxpayer for the taxable year in which the reservation is
315	315	allocated to a project or the certified rehabilitation is
316	316	placed in service. Tax credits shall not be claimed prior to
317	317	the taxable year in which the certified rehabilitation is
318	318	placed in service. Where the taxes owed by the taxpayer are
319	319	less than the tax credit, the taxpayer shall be entitled to
320	320	claim a refund for the difference. In the event that any
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351	351	project, the additional credit must be claimed in the taxable
352	352	year the additional credit is allocated to the taxpayer.
353	353	(d)(1) For the tax years 2018 through 20272022, the
354	354	aggregate amount of all tax credits that may be reserved in
355	355	any one of such years by the commission and certification of
356	356	rehabilitation plans under subsection (c) of Section
357	357	40-9F-32(c) shall not exceed twenty million dollars
358	358	($20,000,000), plus any amount of previous reservations of tax
359	359	credits that were rescinded under subsection (c) of Section
360	360	40-9F-32(c) during the tax year. However, if all of the
361	361	allowable tax credit amount for any tax year is not requested
362	362	and reserved, any unreserved tax credits may be utilized by
363	363	the commission in awarding tax credits in subsequent years;
364	364	provided, however, that in no event shall a total of more than
365	365	two hundred million dollars ($200,000,000) be reserved by the
366	366	commission during the period from May 25, 2017, through
367	367	December 31, 20272022, pursuant to this article . Applications
368	368	shall not be received by the commission after the Historic Tax
369	369	Credit Evaluating Committee has ranked projects with a total
370	370	amount exceeding two hundred million dollars ($200,000,000).
371	371	For purposes of this article, tax year shall mean the calendar
372	372	year.
373	373	(2) For the tax years 2023 through 2027, the aggregate
374	374	amount of all tax credits that may be reserved in any one of
375	375	such years by the commission and certification of
376	376	rehabilitation plans under Section 40-9F-32(c) shall not
377	377	exceed forty million dollars ($40,000,000), plus any amount of
378	378	previous reservations of tax credits that were rescinded under
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408	408	Section 40-9F-32(c) during the tax year. However, if all of
409	409	the allowable tax credit amount for any tax year is not
410	410	requested and reserved, any unreserved tax credits may be
411	411	utilized by the commission in awarding tax credits in
412	412	subsequent years; provided, however, that in no event shall a
413	413	total of more than two hundred million dollars ($200,000,000)
414	414	be reserved by the commission during the period from May 25,
415	415	2017, through December 31, 2027, pursuant to this article.
416	416	(3) For tax years 2023 through 2027, no tax credits
417	417	shall be reserved for qualified structures the end use of
418	418	which is proposed to be a disqualifying use.
419	419	(4) For purposes of this article, "tax year" shall mean
420	420	calendar year.
421	421	(e) Of the annual amount of the tax credits provided
422	422	for in subsection (d), 40 percent shall be reserved to
423	423	taxpayers with a certified rehabilitation project located in a
424	424	county in which the population does not exceed 175,000
425	425	according to the most recent federal decennial census. In the
426	426	event applications are not received and credits are not
427	427	allocated for projects in these areas by the close of the
428	428	third quarter of the program year, the funds may revert for
429	429	allocations of other project applications.
430	430	(f) Tax credits granted to a partnership, a limited
431	431	liability company, S corporations, trusts, or estates, shall
432	432	be claimed at the entity level and shall not pass through to
433	433	the partners, members, or owners.
434	434	(g) All or any portion of the income tax credits under
435	435	this section and Section 40-9F-32 shall be transferable and
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465	465	assignable, subject to any notice and verification
466	466	requirements to be determined by the department, without the
467	467	requirement of transferring any ownership interest in the
468	468	qualified structure or any interest in the entity which owns
469	469	the qualified structure. Any tax credits transferred shall be
470	470	at a value of at least 85 percent of the present value of the
471	471	credits. However, once a credit is transferred, only the
472	472	transferee may utilize such the credit and the credit cannot
473	473	may not be transferred again. A transferee of the tax credits
474	474	may use the amount of tax credits transferred to offset any
475	475	income tax under Chapter 18. The entire tax credit must be
476	476	claimed by the transferee for the taxable year in which the
477	477	reservation is allocated to a project or the certified
478	478	rehabilitation is placed in service. When the taxes owed by
479	479	the transferee are less than the tax credit, the transferee
480	480	shall be entitled to claim a refund for the difference. The
481	481	department shall adopt a form transfer statement to be filed
482	482	by the transferor with the department prior to the purported
483	483	transfer of any credit issued under this article. The transfer
484	484	statement form shall include the name and federal taxpayer
485	485	identification number of the transferor and each transferee
486	486	listed therein along with the amount of the tax credit to be
487	487	transferred to each transferee listed on the form. The
488	488	transfer statement form shall also contain any other
489	489	information as the department may from time to time reasonably
490	490	require. For each transfer, the transferor shall file: (1) a
491	491	completed transfer statement form; (2) a copy of the tax
492	492	credit certificate issued by the commission documenting the
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522	522	amount of tax credits which the transferor intends to
523	523	transfer; (3) a copy of the proposed written transfer
524	524	agreement; and (4) a transfer fee payable to the department in
525	525	the amount of one thousand dollars ($1,000) per transferee
526	526	listed on the transfer statement form. The transferor shall
527	527	file with the department a fully executed copy of the written
528	528	transfer agreement with each transferee within 30 days after
529	529	the completed transfer. Filing of the written transfer
530	530	agreement with the department shall perfect the transfer with
531	531	respect to the transferee. Within 30 days after the
532	532	department's receipt of the fully executed written transfer
533	533	agreement, the department shall issue a tax credit certificate
534	534	to each transferee listed in the agreement in the amount of
535	535	the tax credit so transferred. The certificate shall be used
536	536	by the transferee in claiming the tax credit pursuant to
537	537	subsections (e) and (f) of Section 40-9F-32. The department
538	538	may adopt additional rules as are necessary to permit
539	539	verification of the ownership of the tax credits, but shall
540	540	not adopt any rules which unduly restrict or hinder the
541	541	transfer of the tax credits."
542	542	"§40-9F-38
543	543	(a) There is established the Historic Tax Credit
544	544	Evaluating Committee, which shall review qualifying projects,
545	545	approve credits for projects, and rank projects in the order
546	546	in which the projects should receive tax credit reservations
547	547	based on criteria established by the commission. The
548	548	commission shall establish a review cycle for the committee
549	549	beginning on January 1, 2018, provided that the committee
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579	579	shall meet at least quarterly unless no credits remain to be
580	580	allocated. The Commissioner of Revenue shall be a nonvoting
581	581	member of the committee and provide advisory and technical
582	582	support. The committee shall consist of the following:
583	583	(1) The Director of the Alabama Office of Minority
584	584	Affairs.
585	585	(2) The Executive Director of the Alabama Historical
586	586	Commission.
587	587	(3) The Finance Director.
588	588	(4) The Director of the Alabama Department of Economic
589	589	and Community Affairs.
590	590	(5) The Secretary of Commerce.
591	591	(6) Two members of the Alabama House of
592	592	Representatives, at least one of which shall be a member of
593	593	the minority party, to be appointed by the Speaker of the
594	594	House of Representatives.
595	595	(7) Two members of the Alabama Senate, at least one of
596	596	which shall be a member of the minority party, to be appointed
597	597	by the President Pro Tempore of the Senate.
598	598	(8) The Chair of the Senate Finance Taxation Education
599	599	Committee or his or her designee.
600	600	(9) The Chair of the House Ways and Means Education
601	601	Committee or his or her designee.
602	602	(b)(1) The Alabama Historical Commission shall adopt
603	603	rules that shall set forth guidelines to be used by the
604	604	committee in determining the allocation of credits. The
605	605	guidelines shall set forth factors to be considered by the
606	606	committee including all of the following :
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636	636	a. RelativeThe relative value of the proposed project
637	637	to the particular community, including the maintenance of the
638	638	historic fabric of the community ;.
639	639	b. The possible return on investment for the community
640	640	in which the proposed project is located ;.
641	641	c. the The geographic distribution of projects ;.
642	642	d. the The likelihood of the project proceeding without
643	643	the historic tax credit authorized in this article ;.
644	644	e. and The strength of local support for the proposed
645	645	project.
646	646	f. The leveraged investment ratio of the project, as
647	647	determined by the total project investment divided by the
648	648	amount of tax credits requested.
649	649	g. The number of net new jobs the project will create
650	650	in the state.
651	651	h. The amount of overall project financing for which
652	652	the applicant has firm, secured commitments prior to
653	653	submitting its application.
654	654	(2) Included in the information to be required for the
655	655	evaluation submitted in the application of any project shall
656	656	be any additional tax credits or state, federal, or local
657	657	government grants that the applicant expects to utilize for
658	658	the construction of the project.
659	659	(3) The committee shall establish a minimum threshold
660	660	that a project must exceed before the project may be funded by
661	661	the committee.
662	662	(c) The committee may meet in person, remotely, or by
663	663	using a hybrid model where some members attend in person and
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691	691	336 SB240 INTRODUCEDSB240 INTRODUCED
692	692	Page 13
693	693	others attend remotely, pursuant to Section 36-25A-5.1. "
694	694	Section 2. This act shall become effective immediately
695	695	following its passage and approval by the Governor, or its
696	696	otherwise becoming law.
697	697	337
698	698	338
699	699	339
700	700	340