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
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
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.
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A BILL FOR
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1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Revitalizing Downtowns Tax Credit Act.
6 Section 5. Definitions. As used in this Act, unless the
7 context clearly indicates otherwise:
8 "Board" means the Capital Development Board.
9 "Qualified conversion plan" means a plan to substantially
10 convert a qualified office building from office use to
11 residential, retail, or other commercial use. In the case of
12 conversion to a residential use, such converted qualified
13 office building must meet the following requirements: (i) 20%
14 or more of the residential housing units must be both
15 rent-restricted and occupied by individuals whose income is
16 80% or less of the municipality's median gross income and (ii)
17 the property must be subject to a written binding State or
18 local agreement with respect to the provision of financing of
19 affordable housing and such agreement is documented.
20 "Qualified expenditures" means any amount properly
21 chargeable to a capital account. "Qualified expenditures" does
22 not include the cost of acquisition to the building or
23 property to be converted, the cost to enlarge the building,
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
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
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A BILL FOR
New Act
35 ILCS 5/234 new
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1 any expenditure that is allocable to the portion of such
2 property which is tax-exempt use property, or any expenditure
3 of a lessee of a building on or after the day the conversion is
4 complete.
5 "Qualified office building" means commercial property that
6 is leased or available for lease to office tenants or is used
7 primarily for office use, as well as the structural components
8 of that property.
9 "Qualified taxpayer" means the owner of the qualified
10 office building.
11 "Substantial rehabilitation" means that the qualified
12 expenditures during the 24-month period selected by the
13 taxpayer at the time and in the manner prescribed by rule and
14 ending with or within the taxable year exceed the greater of
15 (i) the adjusted basis of the building and its structural
16 components or (ii) $15,000. The adjusted basis of the building
17 and its structural components shall be determined as of the
18 beginning of the first day of that 24-month period or the
19 beginning of the first day of the holding period of the
20 building, whichever is later. For purposes of determining the
21 adjusted basis, the determination of the beginning of the
22 holding period shall be made without regard to any
23 reconstruction by the qualified taxpayer.
24 Section 10. Allowable credit.
25 (a) To the extent authorized by this Act, for taxable
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1 years beginning on or after January 1, 2024 and ending on or
2 before December 31, 2026, there shall be allowed a tax credit
3 against the tax imposed by subsections (a) and (b) of Section
4 201 of the Illinois Income Tax Act in an aggregate amount equal
5 to 25% of qualified expenditures incurred by a qualified
6 taxpayer undertaking a qualified conversion plan of a
7 qualified office building, provided that the total amount of
8 such expenditures must equal $15,000 or more. If the qualified
9 conversion plan spans multiple years, the aggregate credit for
10 the entire project shall be allowed in the last taxable year.
11 (b) To obtain a tax credit pursuant to this Section, the
12 taxpayer must apply with the Capital Development Board. The
13 Capital Development Board shall determine the amount of
14 eligible conversion expenditures within 45 days after receipt
15 of a complete application. The taxpayer must provide to the
16 Board a third-party cost certification conducted by a
17 certified public accountant verifying (i) the qualified and
18 non-qualified conversion expenses and (ii) that the qualified
19 expenditures exceed the adjusted basis of the qualified office
20 building on the first day the qualified conversion plan
21 commenced. The accountant shall provide appropriate review and
22 testing of invoices. The Board is authorized, but not
23 required, to accept this third-party cost certification to
24 determine the amount of qualified expenditures.
25 (c) If the amount of any tax credit awarded under this Act
26 exceeds the qualified taxpayer's income tax liability for the
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1 year in which the qualified conversion plan was placed in
2 service, the excess amount may be carried forward for
3 deduction from the taxpayer's income tax liability in the next
4 succeeding year or years until the total amount of the credit
5 has been used, except that a credit may not be carried forward
6 for deduction after the tenth taxable year after the taxable
7 year in which the qualified conversion plan was placed in
8 service. Upon completion and review of the project, the Board
9 shall issue a single certificate in the amount of the eligible
10 credits equal to 25% of the qualified expenditures incurred
11 during the eligible taxable years. At the time the certificate
12 is issued, an issuance fee up to the maximum amount of 2% of
13 the amount of the credits issued by the certificate may be
14 collected from the applicant to administer the Act. If
15 collected, this issuance fee shall be directed to the Capital
16 Development Fund or other such fund as appropriate for use by
17 the Board in the administration of the program under this Act.
18 The taxpayer must attach the certificate or legal
19 documentation of her or his proportional share of the
20 certificate to the tax return on which the credits are to be
21 claimed. The tax credit under this Section may not reduce the
22 taxpayer's liability to less than zero. If the amount of the
23 credit exceeds the tax liability for the year, the excess
24 credit may be carried forward and applied to the tax liability
25 of the 10 taxable years following the excess credit year.
26 (d) If the taxpayer is a corporation having an election in
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1 effect under Subchapter S of the federal Internal Revenue
2 Code, a partnership, or a limited liability company, the
3 credit provided under this Act may be claimed by the
4 shareholders of the corporation, the partners of the
5 partnership, or the members of the limited liability company
6 in the same manner as those shareholders, partners, or members
7 account for their proportionate shares of the income or losses
8 of the corporation, partnership, or limited liability company,
9 or as provided in the bylaws or other executed agreement of the
10 corporation, partnership, or limited liability company.
11 Credits granted to a partnership, a limited liability company
12 taxed as a partnership, or other multiple owners of property
13 shall be passed through to the partners, members, or owners
14 respectively on a pro rata basis or pursuant to an executed
15 agreement among the partners, members, or owners documenting
16 any alternate distribution method.
17 Section 15. Limitations, reporting, and monitoring.
18 (a) The Board shall award not more than an aggregate of
19 $15,000,000 in total annual tax credits pursuant to qualified
20 conversion plans for qualified office buildings. The Board
21 shall award not more than $3,000,000 in tax credits with
22 regard to a single qualified conversion plan. In awarding tax
23 credits under this Act, the Board must prioritize projects
24 that meet one or more of the following:
25 (1) the qualified office building is located in a
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1 county that borders a State with a similar conversion tax
2 credit;
3 (2) the qualified office building was previously owned
4 by a federal, State, or local governmental entity;
5 (3) the qualified office building is located in a
6 census tract that has a median family income at or below
7 the State median family income; data from the most recent
8 5-year estimate from the American Community Survey (ACS),
9 published by the U.S. Census Bureau, shall be used to
10 determine eligibility;
11 (4) the qualified conversion plan includes in the
12 development partnership a Community Development Entity or
13 a low-profit (B Corporation) or not-for-profit
14 organization, as defined by Section 501(c)(3) of the
15 Internal Revenue Code; or
16 (5) the qualified office building is located in an
17 area declared under an Emergency Declaration or Major
18 Disaster Declaration under the federal Robert T. Stafford
19 Disaster Relief and Emergency Assistance Act.
20 (b) The annual aggregate program allocation of $15,000,000
21 set forth in subsection (a) shall be allocated by the Board, in
22 such proportion as determined by the Board, on a per calendar
23 basis twice in each year that the program is in effect,
24 provided that: (i) the amount initially allocated by the Board
25 for any one calendar application period shall not exceed 65%
26 of the total allowable amount and (ii) any portion of the
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1 allocated allowable amount remaining unused as of the end of
2 any of the second calendar application period of a given
3 calendar year shall be rolled into and added to the total
4 allocated amount for the next available calendar year.
5 Applicants that qualify under this Act will be placed in a
6 queue based on the date and time the application is received
7 until the application period total allowable amount is
8 reached. Applicants must reapply for each application period.
9 (c) On or before December 31, 2023 and on or before
10 December 31 of each even-numbered year thereafter through
11 2026, subject to appropriation and prior to equal disbursement
12 to the Board, moneys in the Capital Development Fund shall be
13 used, beginning at the end of the first fiscal year after the
14 effective date of this Act, to hire a qualified third party to
15 prepare a biennial report to assess the overall effectiveness
16 of this Act from the qualified conversion projects under this
17 Act completed in that year and in previous years. Baseline
18 data of the metrics in the report shall be collected at the
19 initiation of a qualified conversion project. The overall
20 economic impact shall include at least:
21 (1) the number of applications, project locations, and
22 proposed use of to be converted qualified office
23 buildings;
24 (2) the amount of credits awarded and the number and
25 location of projects receiving credit allocations;
26 (3) the status of ongoing projects and projected
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1 qualifying expenditures for ongoing projects;
2 (4) for completed projects, the total amount of
3 qualifying conversion expenditures and non-qualifying
4 expenditures, the number of new businesses created, the
5 number of new jobs created, a number of new housing units
6 created, and the total square footage converted and
7 developed;
8 (5) direct, indirect, and induced economic impacts;
9 (6) temporary and permanent construction jobs created;
10 and
11 (7) sales, income, and property tax generation before
12 construction, during construction, and after completion.
13 The report to the General Assembly shall be filed with the
14 Clerk of the House of Representatives and the Secretary of the
15 Senate as provided in Section 3.1 of the General Assembly
16 Organization Act.
17 (d) Any time prior to issuance of a tax credit
18 certificate, the Director of the Board or staff of the Board
19 may, upon reasonable notice to the project owner of not less
20 than 3 business days, conduct a site visit to the project to
21 inspect and evaluate the project.
22 (e) Any time prior to the issuance of a tax credit
23 certificate and for a period of 4 years following the
24 effective date of a project tax credit certificate, the
25 Director may, upon reasonable notice of not less than 30
26 calendar days, request a status report from the applicant
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1 consisting of information and updates relevant to the status
2 of the project. Status reports shall not be requested more
3 than twice yearly.
4 (f) In order to demonstrate sufficient evidence of
5 reviewable progress within 12 months after the date the
6 applicant received notification of approval from the Board,
7 the applicant shall provide all of the following:
8 (1) a viable financial plan which demonstrates by way
9 of an executed agreement that all financing has been
10 secured for the project; such financing shall include, but
11 not be limited to, equity investment as demonstrated by
12 letters of commitment from the owner of the property,
13 investment partners, and equity investors;
14 (2) final construction drawings or approved building
15 permits that demonstrate the complete conversion of the
16 full scope of the application; and
17 (3) all historic approvals, including all federal and
18 State documents required by the Board.
19 The Director shall review the submitted evidence and may
20 request additional documentation from the applicant if
21 necessary. The applicant will have 30 calendar days to provide
22 the information requested, otherwise the approval may be
23 rescinded at the discretion of the Director.
24 (g) In order to demonstrate sufficient evidence of
25 reviewable progress within 18 months after the date the
26 application received notification of approval from the Board,
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1 the applicant is required to provide detailed evidence that
2 the applicant has secured and closed on financing for the
3 complete scope of conversion for the project. To demonstrate
4 evidence that the applicant has secured and closed on
5 financing, the applicant will need to provide signed and
6 processed loan agreements, bank financing documents or other
7 legal and contractual evidence to demonstrate that adequate
8 financing is available to complete the project. The Director
9 shall review the submitted evidence and may request additional
10 documentation from the applicant if necessary. The applicant
11 will have 30 calendar days to provide the information
12 requested, otherwise the approval may be rescinded at the
13 discretion of the Director.
14 If the applicant fails to document reviewable progress
15 within 18 months of approval, the Director may notify the
16 applicant that the application is rescinded. However, should
17 financing and construction be imminent, the Director may elect
18 to grant the applicant no more than 5 months to close on
19 financing and commence construction. If the applicant fails to
20 meet these conditions in the required timeframe, the Director
21 shall notify the applicant that the application is rescinded.
22 Any such rescinded allocation shall be added to the aggregate
23 amount of credits available for allocation for the year in
24 which the forfeiture occurred.
25 The amount of the qualified expenditures identified in the
26 applicant's certification of completion and reflected on the
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1 Revitalizing Downtowns Tax Credit certificate issued by the
2 Director is subject to inspection, examination, and audit by
3 the Department of Revenue.
4 The applicant shall establish and maintain for a period of
5 4 years following the effective date on a project tax credit
6 certificate such records as required by the Director. Such
7 records include, but are not limited to, records documenting
8 project expenditures and compliance with the U.S. Secretary of
9 the Interior's Standards. The applicant shall make such
10 records available for review and verification by the Director,
11 the Department of Revenue, or appropriate staff, as well as
12 other appropriate State agencies. In the event the Director
13 determines an applicant has submitted an annual report
14 containing erroneous information or data not supported by
15 records established and maintained under this Act, the
16 Director may, after providing notice, require the applicant to
17 resubmit corrected reports.
18 Section 20. Powers. The Board shall adopt rules for the
19 administration of this Act. The Board may enter into an
20 intergovernmental agreement with the Department of Commerce
21 and Economic Opportunity, the Department of Revenue, or both,
22 for the administration of this Act. Such intergovernmental
23 agreement may allow for the distribution of all or a portion of
24 the issuance fee to the Department of Commerce and Economic
25 Opportunity or the Department of Revenue, as applicable.
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1 Section 50. The Illinois Income Tax Act is amended by
2 adding Section 234 as follows:
3 (35 ILCS 5/234 new)
4 Sec. 234. Revitalizing Downtowns Tax Credit. For tax years
5 beginning on or after January 1, 2024 and ending on or before
6 December 31, 2026, a taxpayer who qualifies for a credit under
7 the Revitalizing Downtowns Credit Act is entitled to a credit
8 against the taxes imposed under subsections (a) and (b) of
9 Section 201 of this Act as provided in that Act. If the
10 taxpayer is a partnership or Subchapter S corporation, the
11 credit shall be allowed to the partners or shareholders in
12 accordance with the determination of income and distributive
13 share of income under Sections 702 and 704 and Subchapter S of
14 the Internal Revenue Code. If the amount of any tax credit
15 awarded under this Section exceeds the qualified taxpayer's
16 income tax liability for the year in which the qualified
17 rehabilitation plan was placed in service, the excess amount
18 may be carried forward as provided in the Revitalizing
19 Downtowns Tax Credit Act.
20 Section 99. Effective date. This Act takes effect upon
21 becoming law.
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