SB250INTRODUCED
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SB250
KLDJAUU-1
By Senators Elliott, Chesteen, Allen, Coleman-Madison, Kelley,
Kitchens, Singleton, Hovey, Givhan, Jones, Price, Reed,
Melson, Williams, Weaver, Stutts, Butler, Sessions, Carnley,
Smitherman, Livingston, Shelnutt, Barfoot, Coleman, Figures,
Roberts
RFD: Finance and Taxation Education
First Read: 21-Mar-24
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9 KLDJAUU-1 03/19/2024 JRF (F)JRF 2024-1182
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First Read: 21-Mar-24
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 taxation; 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 maximum
annual award amounts for qualified projects; to allow the tax
credits to be claimed for 10 years against the tax liability
of a qualified taxpayer; to allow a carryforward for earned
but unused tax credits; to require a portion of the annual
award cycle cap to be awarded for qualified projects located
in areas designated as rural by the Alabama Housing Finance
Authority; and to require the authority to implement and
administer the provisions of this act.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
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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.Regarding the adoption of qualified
allocation plans as they relate to the workforce housing tax
credit by the authority, the authority shall incentivize and
prioritize four percent qualified projects, or in the case of
awards under Section 3(f), qualified projects in areas
identified by the 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
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.
Section 3. For the purposes of this act, the following
terms 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.
(2) AUTHORITY. The Alabama Housing Finance Authority or
its successor authority or agency.
(3) AWARD. The issuance by the authority of either of
the following:
a. A reservation letter pursuant to the qualified
allocation plan.
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allocation plan.
b. A determination letter 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
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. Five million dollars ($5,000,000) for each year of
the 10-year credit period as defined in 26 U.S.C. § 42(f)(1).
Any funds not awarded may be carried forward to the next award
cycle.
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 Alabama 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 the project is a qualified project that qualifies for the
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that the 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
qualified project upon the authority's approval of a final
cost certification that complies with the authority's
requirements.
(9) FEDERAL LOW-INCOME HOUSING TAX CREDIT or FEDERAL
TAX 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, as amended from time to time, regarding
the allocation of tax-exempt bond volume cap for affordable
multifamily housing.
(12) QUALIFIED ALLOCATION PLAN. As defined in 26 U.S.C.
§ 42(m)(1)(B), subject to 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)(2), that is located
in the state, is eligible for the federal low-income housing
tax credit, and is placed in service on or after January 1,
2025.
(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
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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 of an estate of a
trust, or insurer.
(16) WORKFORCE HOUSING TAX CREDIT or TAX CREDIT. The
tax credit created by this act.
Section 4. (a)(1) For applications for federal tax
credits submitted to the authority on and after January 1,
2025, 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 qualified allocation plan and
multifamily housing revenue bond policy, as applicable, but
the annual award for each qualified project shall not be
greater than two million dollars ($2,000,000).
(2) 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
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stipulate that receipt of the tax credit is contingent upon
issuance of an eligibility certificate.
(3) 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.
(4) The total amount of tax credit awards made by the
authority under this act in each award cycle shall not exceed
the award cycle cap.
(b)(1) A qualified taxpayer may claim a workforce
housing tax credit against the taxpayer's Alabama tax
liability prior to reduction by any other credits allowed the
qualified taxpayer.
(2) 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 the 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 the 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
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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.
(3) If the tax credit is used to offset financial
institution excise tax, the offset shall be limited to the
state portion of the financial institution excise tax.
(c) The workforce housing 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 the qualified
taxpayer's 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.
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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
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 the 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, subject to viable requests being
received. The authority shall award the balance of the
remaining available award cycle cap to four percent qualified
projects without any geographic limitation.
(g) An insurance company claiming a workforce housing
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(g) 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.
Section 5. The authority shall administer the workforce
housing tax credit program and shall adopt the guidelines and
qualified allocation plans necessary to implement and
administer this act consistent with federal law provided in 26
U.S.C. § 42. The qualified allocation plan shall provide a
preference for applications in which there is a commitment
for: (i) a furnished children's activity center which will be
made available at no cost to a licensed, qualified, and
insured childcare provider for after-school care for children
in grades K through 8 residing at the qualified project during
ordinary school days from 2:30 pm to 6:00 pm; or (ii) the
qualified project owner shall subsidize the cost of
after-school care for children grades K through 8 residing at
the qualified project for at least three years from the placed
in service date, by the lesser of $1,000 per year per unit
occupied by a student participating in the after-school
program or $50,000 per annum. The authority shall permit
reserves to be established from project sources to fund such
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reserves to be established from project sources to fund such
subsidy costs. The workforce housing tax credit authorized by
this act shall not be available to taxpayers that submit an
application for federal low-income housing tax credits for a
qualified project after September 30, 2027. No action or
inaction on the part of the Legislature shall reduce or
suspend the tax credits authorized 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, 2027, even if the award is made
after such date, the qualified project is placed in service
after September 30, 2027, or the first workforce housing
credits are available to the qualified taxpayer after
September 30, 2027.
Section 6. The tax credit created pursuant to this act
shall only be claimed with respect to taxable years beginning
on or after January 1, 2025. 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 administration of this act.
Section 7. This act shall become effective on October
1, 2024.
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