Illinois 2023-2024 Regular Session

Illinois Senate Bill SB1743 Compare Versions

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

Old	New	Differences
1	1	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1743 Introduced 2/9/2023, by Sen. Steve Stadelman SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/234 new Creates the Revitalizing Downtowns Tax Credit Act. Creates an income tax credit in an aggregate amount equal to 25% of the qualified expenditures incurred by a qualified taxpayer undertaking a plan to substantially convert an office building from office use to residential, retail, or other commercial use. Provides that the total amount of such expenditures must equal $15,000 or more. Provides that, if the conversion is to residential use, then 20% or more of the residential housing units must be both rent-restricted and occupied by individuals whose income is 80% or less of the municipality's median gross income and the property must be subject to a written binding State or local agreement with respect to the provision of financing of affordable housing. Provides that the credit applies for tax years beginning on or after January 1, 2024 and ending on or before December 31, 2026. Amends the Illinois Income Tax to make conforming changes. Effective immediately. LRB103 28104 HLH 54483 b A BILL FOR 103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1743 Introduced 2/9/2023, by Sen. Steve Stadelman SYNOPSIS AS INTRODUCED: New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new Creates the Revitalizing Downtowns Tax Credit Act. Creates an income tax credit in an aggregate amount equal to 25% of the qualified expenditures incurred by a qualified taxpayer undertaking a plan to substantially convert an office building from office use to residential, retail, or other commercial use. Provides that the total amount of such expenditures must equal $15,000 or more. Provides that, if the conversion is to residential use, then 20% or more of the residential housing units must be both rent-restricted and occupied by individuals whose income is 80% or less of the municipality's median gross income and the property must be subject to a written binding State or local agreement with respect to the provision of financing of affordable housing. Provides that the credit applies for tax years beginning on or after January 1, 2024 and ending on or before December 31, 2026. Amends the Illinois Income Tax to make conforming changes. Effective immediately. LRB103 28104 HLH 54483 b LRB103 28104 HLH 54483 b A BILL FOR
2	2	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1743 Introduced 2/9/2023, by Sen. Steve Stadelman SYNOPSIS AS INTRODUCED:
3	3	New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new
4	4	New Act
5	5	35 ILCS 5/234 new
6	6	Creates the Revitalizing Downtowns Tax Credit Act. Creates an income tax credit in an aggregate amount equal to 25% of the qualified expenditures incurred by a qualified taxpayer undertaking a plan to substantially convert an office building from office use to residential, retail, or other commercial use. Provides that the total amount of such expenditures must equal $15,000 or more. Provides that, if the conversion is to residential use, then 20% or more of the residential housing units must be both rent-restricted and occupied by individuals whose income is 80% or less of the municipality's median gross income and the property must be subject to a written binding State or local agreement with respect to the provision of financing of affordable housing. Provides that the credit applies for tax years beginning on or after January 1, 2024 and ending on or before December 31, 2026. Amends the Illinois Income Tax to make conforming changes. Effective immediately.
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9	9	A BILL FOR
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12	12	1 AN ACT concerning revenue.
13	13	2 Be it enacted by the People of the State of Illinois,
14	14	3 represented in the General Assembly:
15	15	4 Section 1. Short title. This Act may be cited as the
16	16	5 Revitalizing Downtowns Tax Credit Act.
17	17	6 Section 5. Definitions. As used in this Act, unless the
18	18	7 context clearly indicates otherwise:
19	19	8 "Board" means the Capital Development Board.
20	20	9 "Qualified conversion plan" means a plan to substantially
21	21	10 convert a qualified office building from office use to
22	22	11 residential, retail, or other commercial use. In the case of
23	23	12 conversion to a residential use, such converted qualified
24	24	13 office building must meet the following requirements: (i) 20%
25	25	14 or more of the residential housing units must be both
26	26	15 rent-restricted and occupied by individuals whose income is
27	27	16 80% or less of the municipality's median gross income and (ii)
28	28	17 the property must be subject to a written binding State or
29	29	18 local agreement with respect to the provision of financing of
30	30	19 affordable housing and such agreement is documented.
31	31	20 "Qualified expenditures" means any amount properly
32	32	21 chargeable to a capital account. "Qualified expenditures" does
33	33	22 not include the cost of acquisition to the building or
34	34	23 property to be converted, the cost to enlarge the building,
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38	38	103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1743 Introduced 2/9/2023, by Sen. Steve Stadelman SYNOPSIS AS INTRODUCED:
39	39	New Act35 ILCS 5/234 new New Act 35 ILCS 5/234 new
40	40	New Act
41	41	35 ILCS 5/234 new
42	42	Creates the Revitalizing Downtowns Tax Credit Act. Creates an income tax credit in an aggregate amount equal to 25% of the qualified expenditures incurred by a qualified taxpayer undertaking a plan to substantially convert an office building from office use to residential, retail, or other commercial use. Provides that the total amount of such expenditures must equal $15,000 or more. Provides that, if the conversion is to residential use, then 20% or more of the residential housing units must be both rent-restricted and occupied by individuals whose income is 80% or less of the municipality's median gross income and the property must be subject to a written binding State or local agreement with respect to the provision of financing of affordable housing. Provides that the credit applies for tax years beginning on or after January 1, 2024 and ending on or before December 31, 2026. Amends the Illinois Income Tax to make conforming changes. Effective immediately.
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45	45	A BILL FOR
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71	71	1 any expenditure that is allocable to the portion of such
72	72	2 property which is tax-exempt use property, or any expenditure
73	73	3 of a lessee of a building on or after the day the conversion is
74	74	4 complete.
75	75	5 "Qualified office building" means commercial property that
76	76	6 is leased or available for lease to office tenants or is used
77	77	7 primarily for office use, as well as the structural components
78	78	8 of that property.
79	79	9 "Qualified taxpayer" means the owner of the qualified
80	80	10 office building.
81	81	11 "Substantial rehabilitation" means that the qualified
82	82	12 expenditures during the 24-month period selected by the
83	83	13 taxpayer at the time and in the manner prescribed by rule and
84	84	14 ending with or within the taxable year exceed the greater of
85	85	15 (i) the adjusted basis of the building and its structural
86	86	16 components or (ii) $15,000. The adjusted basis of the building
87	87	17 and its structural components shall be determined as of the
88	88	18 beginning of the first day of that 24-month period or the
89	89	19 beginning of the first day of the holding period of the
90	90	20 building, whichever is later. For purposes of determining the
91	91	21 adjusted basis, the determination of the beginning of the
92	92	22 holding period shall be made without regard to any
93	93	23 reconstruction by the qualified taxpayer.
94	94	24 Section 10. Allowable credit.
95	95	25 (a) To the extent authorized by this Act, for taxable
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106	106	1 years beginning on or after January 1, 2024 and ending on or
107	107	2 before December 31, 2026, there shall be allowed a tax credit
108	108	3 against the tax imposed by subsections (a) and (b) of Section
109	109	4 201 of the Illinois Income Tax Act in an aggregate amount equal
110	110	5 to 25% of qualified expenditures incurred by a qualified
111	111	6 taxpayer undertaking a qualified conversion plan of a
112	112	7 qualified office building, provided that the total amount of
113	113	8 such expenditures must equal $15,000 or more. If the qualified
114	114	9 conversion plan spans multiple years, the aggregate credit for
115	115	10 the entire project shall be allowed in the last taxable year.
116	116	11 (b) To obtain a tax credit pursuant to this Section, the
117	117	12 taxpayer must apply with the Capital Development Board. The
118	118	13 Capital Development Board shall determine the amount of
119	119	14 eligible conversion expenditures within 45 days after receipt
120	120	15 of a complete application. The taxpayer must provide to the
121	121	16 Board a third-party cost certification conducted by a
122	122	17 certified public accountant verifying (i) the qualified and
123	123	18 non-qualified conversion expenses and (ii) that the qualified
124	124	19 expenditures exceed the adjusted basis of the qualified office
125	125	20 building on the first day the qualified conversion plan
126	126	21 commenced. The accountant shall provide appropriate review and
127	127	22 testing of invoices. The Board is authorized, but not
128	128	23 required, to accept this third-party cost certification to
129	129	24 determine the amount of qualified expenditures.
130	130	25 (c) If the amount of any tax credit awarded under this Act
131	131	26 exceeds the qualified taxpayer's income tax liability for the
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142	142	1 year in which the qualified conversion plan was placed in
143	143	2 service, the excess amount may be carried forward for
144	144	3 deduction from the taxpayer's income tax liability in the next
145	145	4 succeeding year or years until the total amount of the credit
146	146	5 has been used, except that a credit may not be carried forward
147	147	6 for deduction after the tenth taxable year after the taxable
148	148	7 year in which the qualified conversion plan was placed in
149	149	8 service. Upon completion and review of the project, the Board
150	150	9 shall issue a single certificate in the amount of the eligible
151	151	10 credits equal to 25% of the qualified expenditures incurred
152	152	11 during the eligible taxable years. At the time the certificate
153	153	12 is issued, an issuance fee up to the maximum amount of 2% of
154	154	13 the amount of the credits issued by the certificate may be
155	155	14 collected from the applicant to administer the Act. If
156	156	15 collected, this issuance fee shall be directed to the Capital
157	157	16 Development Fund or other such fund as appropriate for use by
158	158	17 the Board in the administration of the program under this Act.
159	159	18 The taxpayer must attach the certificate or legal
160	160	19 documentation of her or his proportional share of the
161	161	20 certificate to the tax return on which the credits are to be
162	162	21 claimed. The tax credit under this Section may not reduce the
163	163	22 taxpayer's liability to less than zero. If the amount of the
164	164	23 credit exceeds the tax liability for the year, the excess
165	165	24 credit may be carried forward and applied to the tax liability
166	166	25 of the 10 taxable years following the excess credit year.
167	167	26 (d) If the taxpayer is a corporation having an election in
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178	178	1 effect under Subchapter S of the federal Internal Revenue
179	179	2 Code, a partnership, or a limited liability company, the
180	180	3 credit provided under this Act may be claimed by the
181	181	4 shareholders of the corporation, the partners of the
182	182	5 partnership, or the members of the limited liability company
183	183	6 in the same manner as those shareholders, partners, or members
184	184	7 account for their proportionate shares of the income or losses
185	185	8 of the corporation, partnership, or limited liability company,
186	186	9 or as provided in the bylaws or other executed agreement of the
187	187	10 corporation, partnership, or limited liability company.
188	188	11 Credits granted to a partnership, a limited liability company
189	189	12 taxed as a partnership, or other multiple owners of property
190	190	13 shall be passed through to the partners, members, or owners
191	191	14 respectively on a pro rata basis or pursuant to an executed
192	192	15 agreement among the partners, members, or owners documenting
193	193	16 any alternate distribution method.
194	194	17 Section 15. Limitations, reporting, and monitoring.
195	195	18 (a) The Board shall award not more than an aggregate of
196	196	19 $15,000,000 in total annual tax credits pursuant to qualified
197	197	20 conversion plans for qualified office buildings. The Board
198	198	21 shall award not more than $3,000,000 in tax credits with
199	199	22 regard to a single qualified conversion plan. In awarding tax
200	200	23 credits under this Act, the Board must prioritize projects
201	201	24 that meet one or more of the following:
202	202	25 (1) the qualified office building is located in a
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213	213	1 county that borders a State with a similar conversion tax
214	214	2 credit;
215	215	3 (2) the qualified office building was previously owned
216	216	4 by a federal, State, or local governmental entity;
217	217	5 (3) the qualified office building is located in a
218	218	6 census tract that has a median family income at or below
219	219	7 the State median family income; data from the most recent
220	220	8 5-year estimate from the American Community Survey (ACS),
221	221	9 published by the U.S. Census Bureau, shall be used to
222	222	10 determine eligibility;
223	223	11 (4) the qualified conversion plan includes in the
224	224	12 development partnership a Community Development Entity or
225	225	13 a low-profit (B Corporation) or not-for-profit
226	226	14 organization, as defined by Section 501(c)(3) of the
227	227	15 Internal Revenue Code; or
228	228	16 (5) the qualified office building is located in an
229	229	17 area declared under an Emergency Declaration or Major
230	230	18 Disaster Declaration under the federal Robert T. Stafford
231	231	19 Disaster Relief and Emergency Assistance Act.
232	232	20 (b) The annual aggregate program allocation of $15,000,000
233	233	21 set forth in subsection (a) shall be allocated by the Board, in
234	234	22 such proportion as determined by the Board, on a per calendar
235	235	23 basis twice in each year that the program is in effect,
236	236	24 provided that: (i) the amount initially allocated by the Board
237	237	25 for any one calendar application period shall not exceed 65%
238	238	26 of the total allowable amount and (ii) any portion of the
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249	249	1 allocated allowable amount remaining unused as of the end of
250	250	2 any of the second calendar application period of a given
251	251	3 calendar year shall be rolled into and added to the total
252	252	4 allocated amount for the next available calendar year.
253	253	5 Applicants that qualify under this Act will be placed in a
254	254	6 queue based on the date and time the application is received
255	255	7 until the application period total allowable amount is
256	256	8 reached. Applicants must reapply for each application period.
257	257	9 (c) On or before December 31, 2023 and on or before
258	258	10 December 31 of each even-numbered year thereafter through
259	259	11 2026, subject to appropriation and prior to equal disbursement
260	260	12 to the Board, moneys in the Capital Development Fund shall be
261	261	13 used, beginning at the end of the first fiscal year after the
262	262	14 effective date of this Act, to hire a qualified third party to
263	263	15 prepare a biennial report to assess the overall effectiveness
264	264	16 of this Act from the qualified conversion projects under this
265	265	17 Act completed in that year and in previous years. Baseline
266	266	18 data of the metrics in the report shall be collected at the
267	267	19 initiation of a qualified conversion project. The overall
268	268	20 economic impact shall include at least:
269	269	21 (1) the number of applications, project locations, and
270	270	22 proposed use of to be converted qualified office
271	271	23 buildings;
272	272	24 (2) the amount of credits awarded and the number and
273	273	25 location of projects receiving credit allocations;
274	274	26 (3) the status of ongoing projects and projected
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285	285	1 qualifying expenditures for ongoing projects;
286	286	2 (4) for completed projects, the total amount of
287	287	3 qualifying conversion expenditures and non-qualifying
288	288	4 expenditures, the number of new businesses created, the
289	289	5 number of new jobs created, a number of new housing units
290	290	6 created, and the total square footage converted and
291	291	7 developed;
292	292	8 (5) direct, indirect, and induced economic impacts;
293	293	9 (6) temporary and permanent construction jobs created;
294	294	10 and
295	295	11 (7) sales, income, and property tax generation before
296	296	12 construction, during construction, and after completion.
297	297	13 The report to the General Assembly shall be filed with the
298	298	14 Clerk of the House of Representatives and the Secretary of the
299	299	15 Senate as provided in Section 3.1 of the General Assembly
300	300	16 Organization Act.
301	301	17 (d) Any time prior to issuance of a tax credit
302	302	18 certificate, the Director of the Board or staff of the Board
303	303	19 may, upon reasonable notice to the project owner of not less
304	304	20 than 3 business days, conduct a site visit to the project to
305	305	21 inspect and evaluate the project.
306	306	22 (e) Any time prior to the issuance of a tax credit
307	307	23 certificate and for a period of 4 years following the
308	308	24 effective date of a project tax credit certificate, the
309	309	25 Director may, upon reasonable notice of not less than 30
310	310	26 calendar days, request a status report from the applicant
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321	321	1 consisting of information and updates relevant to the status
322	322	2 of the project. Status reports shall not be requested more
323	323	3 than twice yearly.
324	324	4 (f) In order to demonstrate sufficient evidence of
325	325	5 reviewable progress within 12 months after the date the
326	326	6 applicant received notification of approval from the Board,
327	327	7 the applicant shall provide all of the following:
328	328	8 (1) a viable financial plan which demonstrates by way
329	329	9 of an executed agreement that all financing has been
330	330	10 secured for the project; such financing shall include, but
331	331	11 not be limited to, equity investment as demonstrated by
332	332	12 letters of commitment from the owner of the property,
333	333	13 investment partners, and equity investors;
334	334	14 (2) final construction drawings or approved building
335	335	15 permits that demonstrate the complete conversion of the
336	336	16 full scope of the application; and
337	337	17 (3) all historic approvals, including all federal and
338	338	18 State documents required by the Board.
339	339	19 The Director shall review the submitted evidence and may
340	340	20 request additional documentation from the applicant if
341	341	21 necessary. The applicant will have 30 calendar days to provide
342	342	22 the information requested, otherwise the approval may be
343	343	23 rescinded at the discretion of the Director.
344	344	24 (g) In order to demonstrate sufficient evidence of
345	345	25 reviewable progress within 18 months after the date the
346	346	26 application received notification of approval from the Board,
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357	357	1 the applicant is required to provide detailed evidence that
358	358	2 the applicant has secured and closed on financing for the
359	359	3 complete scope of conversion for the project. To demonstrate
360	360	4 evidence that the applicant has secured and closed on
361	361	5 financing, the applicant will need to provide signed and
362	362	6 processed loan agreements, bank financing documents or other
363	363	7 legal and contractual evidence to demonstrate that adequate
364	364	8 financing is available to complete the project. The Director
365	365	9 shall review the submitted evidence and may request additional
366	366	10 documentation from the applicant if necessary. The applicant
367	367	11 will have 30 calendar days to provide the information
368	368	12 requested, otherwise the approval may be rescinded at the
369	369	13 discretion of the Director.
370	370	14 If the applicant fails to document reviewable progress
371	371	15 within 18 months of approval, the Director may notify the
372	372	16 applicant that the application is rescinded. However, should
373	373	17 financing and construction be imminent, the Director may elect
374	374	18 to grant the applicant no more than 5 months to close on
375	375	19 financing and commence construction. If the applicant fails to
376	376	20 meet these conditions in the required timeframe, the Director
377	377	21 shall notify the applicant that the application is rescinded.
378	378	22 Any such rescinded allocation shall be added to the aggregate
379	379	23 amount of credits available for allocation for the year in
380	380	24 which the forfeiture occurred.
381	381	25 The amount of the qualified expenditures identified in the
382	382	26 applicant's certification of completion and reflected on the
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393	393	1 Revitalizing Downtowns Tax Credit certificate issued by the
394	394	2 Director is subject to inspection, examination, and audit by
395	395	3 the Department of Revenue.
396	396	4 The applicant shall establish and maintain for a period of
397	397	5 4 years following the effective date on a project tax credit
398	398	6 certificate such records as required by the Director. Such
399	399	7 records include, but are not limited to, records documenting
400	400	8 project expenditures and compliance with the U.S. Secretary of
401	401	9 the Interior's Standards. The applicant shall make such
402	402	10 records available for review and verification by the Director,
403	403	11 the Department of Revenue, or appropriate staff, as well as
404	404	12 other appropriate State agencies. In the event the Director
405	405	13 determines an applicant has submitted an annual report
406	406	14 containing erroneous information or data not supported by
407	407	15 records established and maintained under this Act, the
408	408	16 Director may, after providing notice, require the applicant to
409	409	17 resubmit corrected reports.
410	410	18 Section 20. Powers. The Board shall adopt rules for the
411	411	19 administration of this Act. The Board may enter into an
412	412	20 intergovernmental agreement with the Department of Commerce
413	413	21 and Economic Opportunity, the Department of Revenue, or both,
414	414	22 for the administration of this Act. Such intergovernmental
415	415	23 agreement may allow for the distribution of all or a portion of
416	416	24 the issuance fee to the Department of Commerce and Economic
417	417	25 Opportunity or the Department of Revenue, as applicable.
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428	428	1 Section 50. The Illinois Income Tax Act is amended by
429	429	2 adding Section 234 as follows:
430	430	3 (35 ILCS 5/234 new)
431	431	4 Sec. 234. Revitalizing Downtowns Tax Credit. For tax years
432	432	5 beginning on or after January 1, 2024 and ending on or before
433	433	6 December 31, 2026, a taxpayer who qualifies for a credit under
434	434	7 the Revitalizing Downtowns Credit Act is entitled to a credit
435	435	8 against the taxes imposed under subsections (a) and (b) of
436	436	9 Section 201 of this Act as provided in that Act. If the
437	437	10 taxpayer is a partnership or Subchapter S corporation, the
438	438	11 credit shall be allowed to the partners or shareholders in
439	439	12 accordance with the determination of income and distributive
440	440	13 share of income under Sections 702 and 704 and Subchapter S of
441	441	14 the Internal Revenue Code. If the amount of any tax credit
442	442	15 awarded under this Section exceeds the qualified taxpayer's
443	443	16 income tax liability for the year in which the qualified
444	444	17 rehabilitation plan was placed in service, the excess amount
445	445	18 may be carried forward as provided in the Revitalizing
446	446	19 Downtowns Tax Credit Act.
447	447	20 Section 99. Effective date. This Act takes effect upon
448	448	21 becoming law.
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