AL
Alabama Senate Bill SB250

Alabama 2024 Regular Session

Alabama Senate Bill SB250 Compare Versions

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33 SB250
44 KLDJAUU-1
55 By Senators Elliott, Chesteen, Allen, Coleman-Madison, Kelley,
66 Kitchens, Singleton, Hovey, Givhan, Jones, Price, Reed,
77 Melson, Williams, Weaver, Stutts, Butler, Sessions, Carnley,
88 Smitherman, Livingston, Shelnutt, Barfoot, Coleman, Figures,
99 Roberts
1010 RFD: Finance and Taxation Education
1111 First Read: 21-Mar-24
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2020 9 KLDJAUU-1 03/19/2024 JRF (F)JRF 2024-1182
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2222 First Read: 21-Mar-24
2323 SYNOPSIS:
2424 This bill would establish the Alabama Workforce
2525 Housing Tax Credit Act to authorize and provide a tax
2626 credit for qualified taxpayers owning an interest in a
2727 qualified workforce housing project located in the
2828 State of Alabama.
2929 A BILL
3030 TO BE ENTITLED
3131 AN ACT
3232 Relating to taxation; to establish the Alabama
3333 Workforce Housing Tax Credit Act; to create the Alabama
3434 Workforce Housing Tax Credit for qualified workforce housing
3535 projects; to define certain terms; to provide for maximum
3636 annual award amounts for qualified projects; to allow the tax
3737 credits to be claimed for 10 years against the tax liability
3838 of a qualified taxpayer; to allow a carryforward for earned
3939 but unused tax credits; to require a portion of the annual
4040 award cycle cap to be awarded for qualified projects located
4141 in areas designated as rural by the Alabama Housing Finance
4242 Authority; and to require the authority to implement and
4343 administer the provisions of this act.
4444 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
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7474 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
7575 Section 1. This act shall be known and may be cited as
7676 the Alabama Workforce Housing Tax Credit Act.
7777 Section 2.Regarding the adoption of qualified
7878 allocation plans as they relate to the workforce housing tax
7979 credit by the authority, the authority shall incentivize and
8080 prioritize four percent qualified projects, or in the case of
8181 awards under Section 3(f), qualified projects in areas
8282 identified by the Department of Commerce concerning its
8383 priorities for the location and type, including new
8484 construction, rehabilitation, or both, of multifamily housing
8585 which will support economic development efforts and the
8686 creation of stable, good-paying jobs in the State of Alabama.
8787 It is the desire of the Legislature that the efforts of the
8888 Department of Commerce in seeking to create jobs will be
8989 generally supported by the creation of multifamily rental
9090 housing opportunities supported by the workforce housing tax
9191 credit.
9292 Section 3. For the purposes of this act, the following
9393 terms have the following meanings:
9494 (1) ALABAMA TAX LIABILITY. The taxes otherwise due
9595 under Sections 27-3-29, 27-4A-3, 40-16-4, or 40-18-2, Code of
9696 Alabama 1975.
9797 (2) AUTHORITY. The Alabama Housing Finance Authority or
9898 its successor authority or agency.
9999 (3) AWARD. The issuance by the authority of either of
100100 the following:
101101 a. A reservation letter pursuant to the qualified
102102 allocation plan.
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132132 allocation plan.
133133 b. A determination letter for workforce housing tax
134134 credits to a qualified project during an award cycle, the
135135 amount of which award shall be claimed in each year of the
136136 credit period.
137137 (4) AWARD CYCLE. Each fiscal year or other 12-month
138138 period designated by the authority over which the authority
139139 awards workforce housing tax credits to qualified projects.
140140 (5) AWARD CYCLE CAP. The sum of all of the following:
141141 a. Five million dollars ($5,000,000) for each year of
142142 the 10-year credit period as defined in 26 U.S.C. § 42(f)(1).
143143 Any funds not awarded may be carried forward to the next award
144144 cycle.
145145 b. The amount, if any, by which the award cycle cap
146146 prescribed by this act for the preceding award cycle exceeds
147147 the workforce housing tax credits awarded by the authority in
148148 that award cycle.
149149 c. The amount of workforce housing tax credits
150150 recaptured or otherwise disallowed under Section 3(e) in the
151151 preceding fiscal year.
152152 (6) CREDIT PERIOD. The 10-year credit period as defined
153153 in 26 U.S.C. § 42(f)(1), subject to the special rule for the
154154 first year of the credit period as set forth in 26 U.S.C. §
155155 42(f)(2).
156156 (7) DEPARTMENT. The Alabama Department of Revenue, or
157157 its successor agency.
158158 (8) ELIGIBILITY CERTIFICATE. A certificate issued by
159159 the authority to the owner of a qualified project certifying
160160 that the project is a qualified project that qualifies for the
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190190 that the project is a qualified project that qualifies for the
191191 workforce housing tax credit authorized by this act and
192192 specifying the annual amount of workforce housing tax credits
193193 that may be claimed in each year of the credit period. The
194194 authority shall issue an eligibility certificate to a
195195 qualified project upon the authority's approval of a final
196196 cost certification that complies with the authority's
197197 requirements.
198198 (9) FEDERAL LOW-INCOME HOUSING TAX CREDIT or FEDERAL
199199 TAX CREDIT. The federal tax credit as provided in 26 U.S.C. §
200200 42.
201201 (10) FOUR PERCENT QUALIFIED PROJECT. A qualified
202202 project that is eligible for federal low-income housing tax
203203 credits pursuant to 26 U.S.C. § 42(h)(4).
204204 (11) MULTIFAMILY HOUSING REVENUE BOND POLICY. The
205205 authority's policy, as amended from time to time, regarding
206206 the allocation of tax-exempt bond volume cap for affordable
207207 multifamily housing.
208208 (12) QUALIFIED ALLOCATION PLAN. As defined in 26 U.S.C.
209209 § 42(m)(1)(B), subject to additions and modifications
210210 necessary to implement this act.
211211 (13) QUALIFIED PROJECT. A qualified low-income
212212 building, as defined in 26 U.S.C. § 42(c)(2), that is located
213213 in the state, is eligible for the federal low-income housing
214214 tax credit, and is placed in service on or after January 1,
215215 2025.
216216 (14) QUALIFIED TAXPAYER. A taxpayer owning an interest,
217217 directly or indirectly, through one or more pass-through
218218 entities, in a qualified project at any time prior to filing a
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248248 entities, in a qualified project at any time prior to filing a
249249 tax return claiming a workforce housing tax credit.
250250 (15) TAXPAYER. An individual, corporation, S
251251 corporation, partnership, limited partnership, limited
252252 liability partnership, limited liability company, joint
253253 venture, financial institution, fiduciary of an estate of a
254254 trust, or insurer.
255255 (16) WORKFORCE HOUSING TAX CREDIT or TAX CREDIT. The
256256 tax credit created by this act.
257257 Section 4. (a)(1) For applications for federal tax
258258 credits submitted to the authority on and after January 1,
259259 2025, the authority, upon approving a federal low-income
260260 housing tax credit for a qualified project pursuant to the
261261 authority's qualified allocation plan or multifamily housing
262262 revenue bond policy, may award a workforce housing tax credit
263263 under this act to the owner of the qualified project so long
264264 as doing so will not result in exceeding the award cycle cap
265265 prescribed by this subsection. The workforce housing tax
266266 credit shall be in an amount determined by the authority to be
267267 necessary for the financial feasibility of the qualified
268268 project and consistent with the qualified allocation plan and
269269 multifamily housing revenue bond policy, as applicable, but
270270 the annual award for each qualified project shall not be
271271 greater than two million dollars ($2,000,000).
272272 (2) The authority shall send written notice of the
273273 award to the owner of the qualified project. The award notice
274274 shall state the amount of workforce housing tax credit awarded
275275 for each year of the qualified project's credit period and
276276 stipulate that receipt of the tax credit is contingent upon
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306306 stipulate that receipt of the tax credit is contingent upon
307307 issuance of an eligibility certificate.
308308 (3) Upon issuance of an eligibility certificate, a
309309 workforce housing tax credit shall be allowed for the
310310 qualified project for each year of the credit period in the
311311 amount specified in the eligibility certificate.
312312 (4) The total amount of tax credit awards made by the
313313 authority under this act in each award cycle shall not exceed
314314 the award cycle cap.
315315 (b)(1) A qualified taxpayer may claim a workforce
316316 housing tax credit against the taxpayer's Alabama tax
317317 liability prior to reduction by any other credits allowed the
318318 qualified taxpayer.
319319 (2) The tax credit may be allocated by pass-through
320320 entities to some or all of its partners, members, or
321321 shareholders, including any not-for-profit entity that is a
322322 partner, member, or shareholder, in any manner agreed to by
323323 such persons, regardless of whether or not the person is
324324 allocated or allowed any portion of any federal low-income
325325 housing tax credit with respect to the qualified project,
326326 whether the allocation of the tax credit under the terms of
327327 the agreement has substantial economic effect within the
328328 meaning of 26 U.S.C. § 704(b), and whether the person is
329329 deemed a partner for federal income tax purposes as long as
330330 the partner or member would be considered a partner or member
331331 under applicable state law governing such entity, and has been
332332 admitted as a partner or member on or prior to the date for
333333 filing the qualified taxpayer's tax return, including any
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364364 amendments thereto, with respect to the year of the tax
365365 credit. Such pass-through entities or qualified taxpayer may
366366 assign all or any part of its interest, including its interest
367367 in the tax credits, to one or more pass-through entities or
368368 qualified taxpayers, and the qualified taxpayer shall be able
369369 to claim the tax credit so long as its interest is acquired
370370 prior to the filing of its tax return claiming the tax credit.
371371 (3) If the tax credit is used to offset financial
372372 institution excise tax, the offset shall be limited to the
373373 state portion of the financial institution excise tax.
374374 (c) The workforce housing tax credit authorized by this
375375 act shall not be refundable. Any tax credit not used in a
376376 taxable year may be carried forward by a qualified taxpayer
377377 for the succeeding five years.
378378 (d) A qualified taxpayer claiming a workforce housing
379379 tax credit shall submit a copy of the eligibility certificate
380380 at the time of filing its tax return with the department. If
381381 the owner of the qualified project has applied to the
382382 authority for the eligibility certificate but the authority
383383 has not yet issued the eligibility certificate at the time the
384384 qualified taxpayer files its original tax return claiming the
385385 tax credit, the qualified taxpayer may claim the tax credit
386386 based upon the amount of tax credit set forth in the award
387387 issued to the qualified project, and shall amend the qualified
388388 taxpayer's tax return to include the eligibility certificate
389389 upon its receipt. If the amount of tax credit in the
390390 eligibility certificate is different than the amount of tax
391391 credit previously claimed, the qualified taxpayer shall adjust
392392 the tax credit amount claimed on the amended tax return.
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422422 the tax credit amount claimed on the amended tax return.
423423 (e) If under 26 U.S.C. § 42, a portion of any federal
424424 low-income housing credits taken on a qualified project is
425425 required to be recaptured or is otherwise disallowed during
426426 the credit period, the qualified taxpayer claiming workforce
427427 housing tax credits with respect to the qualified project
428428 shall also be required to recapture a portion of any tax
429429 credits authorized by this act. The percentage of workforce
430430 housing tax credits subject to recapture shall be equal to the
431431 percentage of federal low-income housing credits subject to
432432 recapture or otherwise disallowed during such period. Any tax
433433 credits recaptured or disallowed shall increase the income tax
434434 liability of the qualified taxpayer who claimed the tax
435435 credits in a like amount and shall be included on the tax
436436 return of the qualified taxpayer submitted for the taxable
437437 year in which the recapture or disallowance event is
438438 identified. The owner of the qualified project shall report
439439 any recapture event to the department, authority, and, in the
440440 same manner done for the recapture of federal low-income
441441 housing credits, to the qualified taxpayer, if the project
442442 owner is not the qualified taxpayer.
443443 (f) For each award cycle, the authority shall award at
444444 least 20 percent, but not more than 25 percent, of the award
445445 cycle cap to qualified projects located in areas designated as
446446 rural by the authority, subject to viable requests being
447447 received. The authority shall award the balance of the
448448 remaining available award cycle cap to four percent qualified
449449 projects without any geographic limitation.
450450 (g) An insurance company claiming a workforce housing
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480480 (g) An insurance company claiming a workforce housing
481481 tax credit against the taxes, licenses, and other fees, fines,
482482 and penalties imposed, including any retaliatory tax imposed
483483 on insurance companies by Section 27-3-29, Code of Alabama
484484 1975, shall not be required to pay any additional tax as a
485485 result of claiming the tax credit. The workforce housing tax
486486 credit may fully offset any retaliatory tax imposed by the
487487 Code of Alabama 1975. A reduction in the taxes of a foreign
488488 insurance company to the extent obtained through a claim for
489489 credit under this act does not increase the retaliatory tax
490490 liability otherwise charged against that company.
491491 Section 5. The authority shall administer the workforce
492492 housing tax credit program and shall adopt the guidelines and
493493 qualified allocation plans necessary to implement and
494494 administer this act consistent with federal law provided in 26
495495 U.S.C. § 42. The qualified allocation plan shall provide a
496496 preference for applications in which there is a commitment
497497 for: (i) a furnished children's activity center which will be
498498 made available at no cost to a licensed, qualified, and
499499 insured childcare provider for after-school care for children
500500 in grades K through 8 residing at the qualified project during
501501 ordinary school days from 2:30 pm to 6:00 pm; or (ii) the
502502 qualified project owner shall subsidize the cost of
503503 after-school care for children grades K through 8 residing at
504504 the qualified project for at least three years from the placed
505505 in service date, by the lesser of $1,000 per year per unit
506506 occupied by a student participating in the after-school
507507 program or $50,000 per annum. The authority shall permit
508508 reserves to be established from project sources to fund such
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538538 reserves to be established from project sources to fund such
539539 subsidy costs. The workforce housing tax credit authorized by
540540 this act shall not be available to taxpayers that submit an
541541 application for federal low-income housing tax credits for a
542542 qualified project after September 30, 2027. No action or
543543 inaction on the part of the Legislature shall reduce or
544544 suspend the tax credits authorized by this act in any past or
545545 future calendar year with respect to a qualified project if
546546 the application to the authority was substantially complete on
547547 or prior to September 30, 2027, even if the award is made
548548 after such date, the qualified project is placed in service
549549 after September 30, 2027, or the first workforce housing
550550 credits are available to the qualified taxpayer after
551551 September 30, 2027.
552552 Section 6. The tax credit created pursuant to this act
553553 shall only be claimed with respect to taxable years beginning
554554 on or after January 1, 2025. The tax credit provided in this
555555 act shall be subject to the reporting requirements of Section
556556 40-1-50, Code of Alabama 1975. The department may adopt rules
557557 for the administration of this act.
558558 Section 7. This act shall become effective on October
559559 1, 2024.
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