SB240INTRODUCED
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83D8FF-1
By Senators Singleton, Chambliss, Smitherman
RFD: Finance and Taxation Education
First Read: 25-Apr-23
2023 Regular Session
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6 83D8FF-1 04/25/2023 THR (L) THR 2023-1579
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SYNOPSIS:
Under current law, the aggregate amount of all
tax credits that may be reserved in any year by the
Alabama Historical Commission shall not exceed twenty
million dollars.
This bill would allow the Alabama Historical
Commission to aggregate up to forty million dollars in
tax credits each year.
Under current law, rehabilitation tax credits
are tied to the year in which the certified
rehabilitation is placed in service.
This bill would allow rehabilitation tax credits
to be tied to the year in which the reservation is
allocated.
This bill would provide for additional
rehabilitation credit allocations.
This bill would further provide for the
membership of the Historic Tax Credit Evaluating
Committee and the factors considered by the committee.
This bill would also make nonsubstantive,
technical revisions to update the existing code
language to current style.
A BILL
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TO BE ENTITLED
AN ACT
Relating to taxation; to amend Sections 40-9F-31,
40-9F-33, and 40-9F-38, Code of Alabama 1975, to increase the
amount of tax credits that may be provided in a tax year; to
allow rehabilitation credits to be tied to the year in which
the reservation is allocated; to provide for additional
rehabilitation credit allocations; to further provide for the
membership of the Historic Tax Credit Evaluating Committee and
the factors considered by the committee; and to make
nonsubstantive, technical revisions to update the existing
code language to current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 40-9F-31, 40-9F-33, and 40-9F-38,
Code of Alabama 1975, are amended to read as follows:
"§40-9F-31
As used in this article, the following terms shall have
the following meanings:
(1) CERTIFIED HISTORIC STRUCTURE. A property located in
Alabama this state which is at least 60 years of age, unless
the structure is a historic structure located within the
boundaries of a National Monument or Park as declared by the
United States Congress or the President of the United States,
in which case the federal age provisions shall apply, and is
certified by the Alabama Historical Commission as being
individually listed in the National Register of Historic
Places, eligible for listing in the National Register of
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Historic Places, or certified by the commission as
contributing to the historic significance of a Registered
Historic District.
(2) CERTIFIED REHABILITATION. Repairs or alterations to
a certified historic structure that is certified by the
commission as meeting the U.S. Secretary of the Interior's
Standards for Rehabilitation which meet the requirements
contained in Section 47(c)(2)(C) of the Internal Revenue
Codeof 26 U.S.C. § 47, as amended, or to a certified historic
residential structure as defined in subdivision (3) .
(3) CERTIFIED HISTORIC RESIDENTIAL STRUCTURE. A
certified historic structure as defined in subdivision (1).
(4)(3) COMMISSION. The Alabama Historical Commission
and or its successor.
(5)(4) COMMITTEE. The Historic Tax Credit Evaluating
Committee established by this article.
(6)(5) DEPARTMENT. The Alabama Department of Revenue or
its successor.
(7)(6) DISQUALIFYING USE. Any use of a certified
historic residential structure that is occupied by an owner
and used exclusively as a primary or secondary residence.
(8)(7) OWNER. Any taxpayer filing a State of Alabama
income tax return or any entity that is exempt from federal
income taxation pursuant to Section 501(c) of the Internal
Revenue Code26 U.S.C. § 501, as amended, that:
a. Owns owns title to a qualified structure, or
b. Owns owns a leasehold interest in a qualified
structure for a term of not less than 39 years.
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An owner as defined herein shall not be considered a
private user as defined in Section 40-9A-1.
(9)(8) QUALIFIED REHABILITATION EXPENDITURES. Any
expenditure as defined under Section 47(c)(2)(A) of the
Internal Revenue Code 26 U.S.C. § 47, as amended, and the
related regulations thereunder, and other reasonable expenses
and costs expended in the rehabilitation of a qualified
structure. For certified historic residential structures, this
term shall mean expenses incurred by the taxpayer in the
certified rehabilitation of a certified historic residential
structure, including but not limited to preservation and
rehabilitation work done to the exterior of a certified
historic residential structure, repair and stabilization of
historic structural systems, restoration of historic plaster,
energy efficiency measures except insulation in frame walls,
repairs or rehabilitation of heating, air conditioning, or
ventilation systems, repairs or rehabilitation of electrical
or plumbing systems exclusive of new electrical appliances and
electrical or plumbing fixtures, and architectural,
engineering, and land surveying fees. Qualified rehabilitation
expenditures do not include the cost of acquisition of the
qualified structure, the personal labor by the owner, or any
cost associated with the rehabilitation of an outbuilding of
the qualified structure, unless the outbuilding is certified
by the commission to contribute to the historical significance
of the qualified structure.
(10)(9) QUALIFIED STRUCTURE. Certified historic
structures which are certified by the commission as meeting
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the requirements contained in Section 47(c)(1)(A)(i) and (ii)
of the Internal Revenue Code 26 U.S.C. § 47, as amended, and to
certified historic residential structures as defined herein .
(11)(10) REGISTERED HISTORIC DISTRICT. Any district
listed in the National Register of Historic Places and any
district which is either of the following:
a. Designated under Alabama or local law as containing
criteria which substantially achieves the purpose of
preserving and rehabilitating buildings of historic
significance to the district.
b. Certified by the U.S. Secretary of the Interior as
meeting substantially all of the requirements for the listing
of districts in the National Register of Historic Places.
(12)(11) REHABILITATION PLAN. Construction plans and
specifications for the proposed rehabilitation of a qualified
structure in sufficient detail to enable the commission to
evaluate compliance with the standards developed under this
article.
(13)(12) SUBSTANTIAL REHABILITATION. Rehabilitation of
a qualified structure for which the qualified rehabilitation
expenditures exceed 50 percent of the owner's original
purchase price of the qualified structure or twenty-five
thousand dollars ($25,000), whichever is greater."
"§40-9F-33
(a) The state portion of any tax credit against the tax
imposed by Chapter 18 for the taxable year in which the
reservation is allocated to a project or the certified
rehabilitation is placed in service shall be equal to 25
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percent of the qualified rehabilitation expenditures for
certified historic structures. No tax credit claimed for any
certified rehabilitation may exceed five million dollars
($5,000,000) for all allowable property types except a
certified historic residential structure, and fifty thousand
dollars ($50,000) for a certified historic residential
structure.
(b) There is created within the Education Trust Fund a
separate account named the Historic Preservation Income Tax
Credit Account. The Commissioner of Revenue shall certify to
the Comptroller the amount of income tax credits under this
section and the Comptroller shall transfer into the Historic
Preservation Income Tax Credit Account only the amount from
sales tax revenues within the Education Trust Fund that is
sufficient for the Department of Revenue to use to cover the
income tax credits for the applicable tax year. The
Commissioner of Revenue shall distribute the funds in the
Historic Preservation Income Tax Credit Account pursuant to
this section.
(c) The entire tax credit must be claimed by the
taxpayer for the taxable year in which the reservation is
allocated to a project or the certified rehabilitation is
placed in service. Tax credits shall not be claimed prior to
the taxable year in which the certified rehabilitation is
placed in service. Where the taxes owed by the taxpayer are
less than the tax credit, the taxpayer shall be entitled to
claim a refund for the difference. In the event that any
additional credit is allocated to the taxpayer for a given
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project, the additional credit must be claimed in the taxable
year the additional credit is allocated to the taxpayer.
(d)(1) For the tax years 2018 through 20272022, the
aggregate amount of all tax credits that may be reserved in
any one of such years by the commission and certification of
rehabilitation plans under subsection (c) of Section
40-9F-32(c) shall not exceed twenty million dollars
($20,000,000), plus any amount of previous reservations of tax
credits that were rescinded under subsection (c) of Section
40-9F-32(c) during the tax year. However, if all of the
allowable tax credit amount for any tax year is not requested
and reserved, any unreserved tax credits may be utilized by
the commission in awarding tax credits in subsequent years;
provided, however, that in no event shall a total of more than
two hundred million dollars ($200,000,000) be reserved by the
commission during the period from May 25, 2017, through
December 31, 20272022, pursuant to this article . Applications
shall not be received by the commission after the Historic Tax
Credit Evaluating Committee has ranked projects with a total
amount exceeding two hundred million dollars ($200,000,000).
For purposes of this article, tax year shall mean the calendar
year.
(2) For the tax years 2023 through 2027, the aggregate
amount of all tax credits that may be reserved in any one of
such years by the commission and certification of
rehabilitation plans under Section 40-9F-32(c) shall not
exceed forty million dollars ($40,000,000), plus any amount of
previous reservations of tax credits that were rescinded under
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Section 40-9F-32(c) during the tax year. However, if all of
the allowable tax credit amount for any tax year is not
requested and reserved, any unreserved tax credits may be
utilized by the commission in awarding tax credits in
subsequent years; provided, however, that in no event shall a
total of more than two hundred million dollars ($200,000,000)
be reserved by the commission during the period from May 25,
2017, through December 31, 2027, pursuant to this article.
(3) For tax years 2023 through 2027, no tax credits
shall be reserved for qualified structures the end use of
which is proposed to be a disqualifying use.
(4) For purposes of this article, "tax year" shall mean
calendar year.
(e) Of the annual amount of the tax credits provided
for in subsection (d), 40 percent shall be reserved to
taxpayers with a certified rehabilitation project located in a
county in which the population does not exceed 175,000
according to the most recent federal decennial census. In the
event applications are not received and credits are not
allocated for projects in these areas by the close of the
third quarter of the program year, the funds may revert for
allocations of other project applications.
(f) Tax credits granted to a partnership, a limited
liability company, S corporations, trusts, or estates, shall
be claimed at the entity level and shall not pass through to
the partners, members, or owners.
(g) All or any portion of the income tax credits under
this section and Section 40-9F-32 shall be transferable and
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assignable, subject to any notice and verification
requirements to be determined by the department, without the
requirement of transferring any ownership interest in the
qualified structure or any interest in the entity which owns
the qualified structure. Any tax credits transferred shall be
at a value of at least 85 percent of the present value of the
credits. However, once a credit is transferred, only the
transferee may utilize such the credit and the credit cannot
may not be transferred again. A transferee of the tax credits
may use the amount of tax credits transferred to offset any
income tax under Chapter 18. The entire tax credit must be
claimed by the transferee for the taxable year in which the
reservation is allocated to a project or the certified
rehabilitation is placed in service. When the taxes owed by
the transferee are less than the tax credit, the transferee
shall be entitled to claim a refund for the difference. The
department shall adopt a form transfer statement to be filed
by the transferor with the department prior to the purported
transfer of any credit issued under this article. The transfer
statement form shall include the name and federal taxpayer
identification number of the transferor and each transferee
listed therein along with the amount of the tax credit to be
transferred to each transferee listed on the form. The
transfer statement form shall also contain any other
information as the department may from time to time reasonably
require. For each transfer, the transferor shall file: (1) a
completed transfer statement form; (2) a copy of the tax
credit certificate issued by the commission documenting the
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amount of tax credits which the transferor intends to
transfer; (3) a copy of the proposed written transfer
agreement; and (4) a transfer fee payable to the department in
the amount of one thousand dollars ($1,000) per transferee
listed on the transfer statement form. The transferor shall
file with the department a fully executed copy of the written
transfer agreement with each transferee within 30 days after
the completed transfer. Filing of the written transfer
agreement with the department shall perfect the transfer with
respect to the transferee. Within 30 days after the
department's receipt of the fully executed written transfer
agreement, the department shall issue a tax credit certificate
to each transferee listed in the agreement in the amount of
the tax credit so transferred. The certificate shall be used
by the transferee in claiming the tax credit pursuant to
subsections (e) and (f) of Section 40-9F-32. The department
may adopt additional rules as are necessary to permit
verification of the ownership of the tax credits, but shall
not adopt any rules which unduly restrict or hinder the
transfer of the tax credits."
"§40-9F-38
(a) There is established the Historic Tax Credit
Evaluating Committee, which shall review qualifying projects,
approve credits for projects, and rank projects in the order
in which the projects should receive tax credit reservations
based on criteria established by the commission. The
commission shall establish a review cycle for the committee
beginning on January 1, 2018, provided that the committee
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shall meet at least quarterly unless no credits remain to be
allocated. The Commissioner of Revenue shall be a nonvoting
member of the committee and provide advisory and technical
support. The committee shall consist of the following:
(1) The Director of the Alabama Office of Minority
Affairs.
(2) The Executive Director of the Alabama Historical
Commission.
(3) The Finance Director.
(4) The Director of the Alabama Department of Economic
and Community Affairs.
(5) The Secretary of Commerce.
(6) Two members of the Alabama House of
Representatives, at least one of which shall be a member of
the minority party, to be appointed by the Speaker of the
House of Representatives.
(7) Two members of the Alabama Senate, at least one of
which shall be a member of the minority party, to be appointed
by the President Pro Tempore of the Senate.
(8) The Chair of the Senate Finance Taxation Education
Committee or his or her designee.
(9) The Chair of the House Ways and Means Education
Committee or his or her designee.
(b)(1) The Alabama Historical Commission shall adopt
rules that shall set forth guidelines to be used by the
committee in determining the allocation of credits. The
guidelines shall set forth factors to be considered by the
committee including all of the following :
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a. RelativeThe relative value of the proposed project
to the particular community, including the maintenance of the
historic fabric of the community ;.
b. The possible return on investment for the community
in which the proposed project is located ;.
c. the The geographic distribution of projects ;.
d. the The likelihood of the project proceeding without
the historic tax credit authorized in this article ;.
e. and The strength of local support for the proposed
project.
f. The leveraged investment ratio of the project, as
determined by the total project investment divided by the
amount of tax credits requested.
g. The number of net new jobs the project will create
in the state.
h. The amount of overall project financing for which
the applicant has firm, secured commitments prior to
submitting its application.
(2) Included in the information to be required for the
evaluation submitted in the application of any project shall
be any additional tax credits or state, federal, or local
government grants that the applicant expects to utilize for
the construction of the project.
(3) The committee shall establish a minimum threshold
that a project must exceed before the project may be funded by
the committee.
(c) The committee may meet in person, remotely, or by
using a hybrid model where some members attend in person and
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others attend remotely, pursuant to Section 36-25A-5.1. "
Section 2. This act shall become effective immediately
following its passage and approval by the Governor, or its
otherwise becoming law.
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