Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H3858 Compare Versions

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2	2	HOUSE DOCKET, NO. 2272 FILED ON: 1/19/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 3858
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Christopher Richard Flanagan
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act relative to incentivizing multi-family housing through redevelopment.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Christopher Richard Flanagan1st Barnstable1/19/2023James C. Arena-DeRosa8th Middlesex2/8/2023 1 of 8
16	16	HOUSE DOCKET, NO. 2272 FILED ON: 1/19/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 3858
18	18	By Representative Flanagan of Dennis, a petition (accompanied by bill, House, No. 3858) of
19	19	Christopher Richard Flanagan and James C. Arena-DeRosa for legislation to provide tax credits
20	20	for certain certified rural housing redevelopment projects. Revenue.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act relative to incentivizing multi-family housing through redevelopment.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. The General Laws are hereby amended by inserting after chapter 40Y the
30	30	2following chapter:-
31	31	3 Chapter 40Z. RURAL HOUSING DEVELOPMENT INCENTIVE PROGRAM
32	32	4 Section 1. As used in this chapter, the following words shall, unless the context clearly
33	33	5requires otherwise, have the following meanings:
34	34	6 ''Certified rural housing development project'', the substantial rehabilitation of a rural
35	35	7housing development project that has been approved by the department for participation in the
36	36	8rural housing development incentive program.
37	37	9 “Department”, the department of housing and community development as established by
38	38	10chapter 23B. 2 of 8
39	39	11 ''Rural housing development project'', a multi-unit residential rehabilitation project that is
40	40	12located in a rural area and once substantially rehabilitated, shall contain at least 80 per cent
41	41	13market rate residential units.
42	42	14 ''Qualified project expenditure'', an expenditure directly related to substantial
43	43	15rehabilitation of a rural housing development project, including the cost of site assessment and
44	44	16remediation of hazardous materials, but excluding the purchase of the property, provided,
45	45	17however, that: (i) the department has certified that the proposed project meets the definition of
46	46	18rural housing development project; (ii) prior to construction, the department has certified that all
47	47	19or a portion of the project costs are for substantial rehabilitation; and (iii) after the project has
48	48	20been completed, the department has certified that the project has been completed in compliance
49	49	21with this chapter and the requirements and conditions of any prior certifications.
50	50	22 “Rural area”, an area with a low concentration of residential housing as determined by
51	51	23the department.
52	52	24 ''Substantial rehabilitation'' and ''substantially rehabilitated'', the redevelopment, repair
53	53	25and renovation of a property, including site assessment and remediation of hazardous materials,
54	54	26but, excluding the purchase of the property, as determined by the department of housing and
55	55	27community development.
56	56	28 Section 2. The department may from time to time designate 1 or more municipalities as a
57	57	29rural area and take any and all actions necessary or appropriate to such a designation, upon
58	58	30receipt of a municipal application requesting such designation and representing in its application
59	59	31that the municipality, based on its own independent investigation, has determined that the area
60	60	32proposed for designation has a low concentration of residential housing and has a need for multi- 3 of 8
61	61	33unit residential properties. The application shall include a plan that shall include a description of
62	62	34the activities, public and private, contemplated for such area as of the date of the adoption of the
63	63	35designation, including information as the department may require in written guidelines.
64	64	36 Section 3. (a) A project may be eligible to be a certified rural housing development
65	65	37project under this chapter if the project:
66	66	38 (i) contains 2 or more residential units;
67	67	39 (ii) is located in a designated or proposed rural area as determined by the department;
68	68	40 (iii) contains at least 80 per cent market rate units upon completion of the substantial
69	69	41rehabilitation, to be sold or leased; and
70	70	42 (iv) involves the substantial rehabilitation of an existing property.
71	71	43 (b) The department may from time to time certify 1 or more rural housing development
72	72	44projects, located in rural areas designated pursuant to section 2, as certified rural housing
73	73	45development projects under this section and take any and all actions necessary or appropriate to
74	74	46such a designation, upon compliance with the following:
75	75	47 (i) receipt of a project proposal for such a designation requesting such designation from
76	76	48the municipality, submitted in a timely manner, in such form and with such information as the
77	77	49department prescribes, supported by independently verifiable information and signed under the
78	78	50penalties of perjury by a person authorized to bind the sponsors;
79	79	51 (ii) receipt of an agreement executed by the municipality that is approved by the
80	80	52department that the project as described in the proposal and all documentation submitted with the
81	81	53proposal: 4 of 8
82	82	54 (A) is consistent with and can reasonably be expected to benefit significantly from the
83	83	55municipality's plans relative to the project;
84	84	56 (B) together with all other projects previously certified and located in the same project
85	85	57rural area, shall not overburden the municipality's supporting resources; and
86	86	58 (C) together with the municipal resources committed to the project, shall, if certified,
87	87	59have a reasonable chance of increasing residential growth, diversity of housing supply,
88	88	60supporting economic development and promoting neighborhood stabilization in the designated
89	89	61rural area as advanced in the proposal; and
90	90	62 (iii) receipt with such written approval by the municipality of a request for a designation
91	91	63of the project as a certified rural housing development project for a specified number of years,
92	92	64which shall be not less than 5 years and not more than 20 years.
93	93	65 (c) The department shall evaluate and either grant or deny any project proposal not later
94	94	66than 90 days from the date of its receipt of a complete project proposal and failure to do so by the
95	95	67department shall result in approval of such project for a term of 20 years. Approval of a project
96	96	68 due to the department's failure to act within 90 days shall not constitute approval by the
97	97	69department of any tax incentives provided under chapter 62.
98	98	70 (d) The department may impose a fee for the processing of applications for the
99	99	71certification of any project under this section.
100	100	72 (e) The certification of a project may be revoked by the department if: (i)(A) the
101	101	73municipality that approved the project proposal files a petition that satisfies the authorization
102	102	74requirements for a municipal application or the petition of the director of the department; and (B) 5 of 8
103	103	75the department determines, after an independent investigation, that representations made by the
104	104	76sponsors in its project proposal are materially different from the conduct of the sponsors
105	105	77subsequent to the certification and such difference is found to frustrate the public purposes that
106	106	78the certification was intended to advance; or (ii) the project no longer meets the criteria in this
107	107	79section. Upon revocation, the commonwealth and the municipality may bring a cause of action
108	108	80against the sponsors for the value of any economic benefit received by the sponsors prior to or
109	109	81subsequent to such revocation. Under this section, revocation shall take effect on the first day of
110	110	82the tax year in which the department determines that a material variance commenced. The
111	111	83commissioner of revenue may, as of the effective date of the revocation, disallow any credits,
112	112	84exemptions or other tax benefits allowed by the original certification under this section. The
113	113	85commissioner shall issue regulations to recapture the value of any credits, exemptions or other
114	114	86tax benefits allowed by the certification under this section.
115	115	87 (f) Annually, on or before the first Wednesday in December, the department shall file a
116	116	88report detailing its findings of the review of all certified housing development projects that it
117	117	89evaluated in the prior fiscal year to the commissioner of revenue, to the joint committee on
118	118	90revenue and the joint committee on housing and community development. The report shall
119	119	91include, but not be limited to: (i) a list of municipalities with approved rural areas; (ii) a list of
120	120	92rural housing development projects that have received certification; (iii) information about each
121	121	93certified rural housing development project, including the site address, project sponsor, range of
122	122	94rents of the residential units, type of residential units, number of each type of residential unit,
123	123	95number of affordable rental units for persons whose income is not more than 60 per cent of the
124	124	96area median income and the number of affordable owner-occupied units for persons whose
125	125	97income is not more than 80 per cent of the area median income; and (iv) the total amount of 6 of 8
126	126	98qualified project expenditures for which a tax credit was issued or reserved for each rural
127	127	99housing development project, the year the credit was issued and the completion or estimated
128	128	100completion year of the housing development project.
129	129	101 SECTION 2. Section 6 of chapter 62 of the General Laws is hereby amended by adding
130	130	102the following subsection:-
131	131	103 (dd)(1) A credit shall be allowed against the tax liability imposed by this chapter, to the
132	132	104extent awarded by the department of housing and community development as established by
133	133	105chapter 23B, for a certified rural housing redevelopment project, as defined in chapter 40Z, in an
134	134	106 amount up to 25 per cent of the cost of qualified project expenditures of the market rate
135	135	107residential units within the certified rural housing development project, as those terms are
136	136	108defined in said chapter 40Z. The credit under this subsection shall be allowed for the taxable year
137	137	109in which the department gives the commissioner written notification of completion of the
138	138	110certified rural housing redevelopment project.
139	139	111 (2) Taxpayers eligible for the this credit may, with prior notice to and under regulations
140	140	112adopted by the commissioner, transfer the credits, in whole or in part, to any individual or entity,
141	141	113and the transferee shall be entitled to apply the credits against the tax with the same effect as if
142	142	114the transferee had incurred the qualified project expenditures itself. If the sponsor of the certified
143	143	115rural housing development project is a partnership or a limited liability company taxed as a
144	144	116partnership, the credit, if transferred must be transferred by the partnership or the limited liability
145	145	117company. If the credits allowed to a partnership, a limited liability company taxed as a
146	146	118partnership or multiple owners of property are not transferred they shall be passed through to the
147	147	119persons designated as partners, members or owners, respectively, pro rata or pursuant to an 7 of 8
148	148	120executed agreement among the persons designated as partners, members or owners documenting
149	149	121an alternative distribution method without regard to their sharing of other tax or economic
150	150	122attributes of the entity. Credits passed through to individual partners and members are not
151	151	123transferable.
152	152	124 (3) If the credit allowable for any taxable year exceeds the taxpayer's tax liability for that
153	153	125tax year, the taxpayer may carry forward and apply in any subsequent taxable year, the portion,
154	154	126as reduced from year to year, of those credits which exceed the tax for the taxable year;
155	155	127provided, however, that in no event shall the taxpayer apply the credit to the tax for any taxable
156	156	128year beginning more than 10 years after the taxable year in which department gives the
157	157	129commissioner written notification of completion of the rural housing redevelopment project. If
158	158	130the credit is transferred by the taxpayer, the carry over provisions applicable to the transferee
159	159	131apply.
160	160	132 (4) A transferee shall use the credit in the year it is transferred. If the credit allowable for
161	161	133any taxable year exceeds the transferee's tax liability for that tax year, the transferee may carry
162	162	134forward and apply in any subsequent taxable year, the portion, as reduced from year to year, of
163	163	135those credits which exceed the tax for the taxable year; provided, however, that in no event shall
164	164	136the transferee apply the credit to the tax for any taxable year beginning more than 10 years after
165	165	137the taxable year in which the department gives the commissioner written notification of
166	166	138completion of the certified rural housing development project.
167	167	139 (5) For any rural housing redevelopment project, qualified project expenditures
168	168	140applicable to this credit shall be treated for purposes of this subsection as made on the date that 8 of 8
169	169	141the department gives the commissioner written notification of completion of the rural housing
170	170	142redevelopment project.
171	171	143 (6) The total amount of credits that may be authorized by the department in a calendar
172	172	144year pursuant to this subsection shall not exceed $10,000,000 and shall include: (i) credits
173	173	145granted during the year pursuant to this subsection; and (ii) carry forwards of credits from prior
174	174	146years pursuant to this subsection, to the extent that such credit carry forwards are estimated by
175	175	147the
176	176	148 commissioner to offset tax liabilities during the year. Any portion of the $10,000,000
177	177	149annual cap not awarded by the department in a calendar year shall not be applied to awards in a
178	178	150subsequent year. The department shall provide the commissioner with any documentation that
179	179	151the commissioner deems necessary to confirm compliance with the annual cap and the
180	180	152commissioner shall provide a report confirming compliance with the annual cap to the secretary
181	181	153of administration and finance and the secretary of housing and economic development.
182	182	154 (7) The commissioner, in consultation with the department, shall prescribe regulations
183	183	155necessary to carry out this subsection.