Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H3094 Compare Versions

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2	2	HOUSE DOCKET, NO. 1881 FILED ON: 1/15/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 3094
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 Barnstable1/15/2025 1 of 8
16	16	HOUSE DOCKET, NO. 1881 FILED ON: 1/15/2025
17	17	HOUSE . . . . . . . . . . . . . . . No. 3094
18	18	By Representative Flanagan of Dennis, a petition (accompanied by bill, House, No. 3094) of
19	19	Christopher Richard Flanagan for legislation to provide tax credits for certain certified rural
20	20	housing redevelopment projects. Revenue.
21	21	[SIMILAR MATTER FILED IN PREVIOUS SESSION
22	22	SEE HOUSE, NO. 3858 OF 2023-2024.]
23	23	The Commonwealth of Massachusetts
24	24	_______________
25	25	In the One Hundred and Ninety-Fourth General Court
26	26	(2025-2026)
27	27	_______________
28	28	An Act relative to incentivizing multi-family housing through redevelopment.
29	29	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
30	30	of the same, as follows:
31	31	1 The General Laws are hereby amended by inserting after chapter 40Y the following
32	32	2chapter:-
33	33	3 Chapter 40Z. RURAL HOUSING DEVELOPMENT INCENTIVE PROGRAM
34	34	4 Section 1. As used in this chapter, the following words shall, unless the context clearly
35	35	5requires otherwise, have the following meanings:
36	36	6 ''Certified rural housing development project'', the substantial rehabilitation of a rural
37	37	7housing development project that has been approved by the department for participation in the
38	38	8rural housing development incentive program. 2 of 8
39	39	9 “Department”, the department of housing and community development as established by
40	40	10chapter 23B.
41	41	11 ''Rural housing development project'', a multi-unit residential rehabilitation project that is
42	42	12located in a rural area and once substantially rehabilitated, shall contain at least 80 per cent
43	43	13market rate residential units.
44	44	14 ''Qualified project expenditure'', an expenditure directly related to substantial
45	45	15rehabilitation of a rural housing development project, including the cost of site assessment and
46	46	16remediation of hazardous materials, but excluding the purchase of the property, provided,
47	47	17however, that: (i) the department has certified that the proposed project meets the definition of
48	48	18rural housing development project; (ii) prior to construction, the department has certified that all
49	49	19or a portion of the project costs are for substantial rehabilitation; and (iii) after the project has
50	50	20been completed, the department has certified that the project has been completed in compliance
51	51	21with this chapter and the requirements and conditions of any prior certifications.
52	52	22 “Rural area”, an area with a low concentration of residential housing as determined by
53	53	23the department.
54	54	24 ''Substantial rehabilitation'' and ''substantially rehabilitated'', the redevelopment, repair
55	55	25and renovation of a property, including site assessment and remediation of hazardous materials,
56	56	26but, excluding the purchase of the property, as determined by the department of housing and
57	57	27community development.
58	58	28 Section 2. The department may from time to time designate 1 or more municipalities as a
59	59	29rural area and take any and all actions necessary or appropriate to such a designation, upon
60	60	30receipt of a municipal application requesting such designation and representing in its application 3 of 8
61	61	31that the municipality, based on its own independent investigation, has determined that the area
62	62	32proposed for designation has a low concentration of residential housing and has a need for multi-
63	63	33unit residential properties. The application shall include a plan that shall include a description of
64	64	34the activities, public and private, contemplated for such area as of the date of the adoption of the
65	65	35designation, including information as the department may require in written guidelines.
66	66	36 Section 3. (a) A project may be eligible to be a certified rural housing development
67	67	37project under this chapter if the project:
68	68	38 (i) contains 2 or more residential units;
69	69	39 (ii) is located in a designated or proposed rural area as determined by the department;
70	70	40 (iii) contains at least 80 per cent market rate units upon completion of the substantial
71	71	41rehabilitation, to be sold or leased; and
72	72	42 (iv) involves the substantial rehabilitation of an existing property.
73	73	43 (b) The department may from time to time certify 1 or more rural housing development
74	74	44projects, located in rural areas designated pursuant to section 2, as certified rural housing
75	75	45development projects under this section and take any and all actions necessary or appropriate to
76	76	46such a designation, upon compliance with the following:
77	77	47 (i) receipt of a project proposal for such a designation requesting such designation from
78	78	48the municipality, submitted in a timely manner, in such form and with such information as the
79	79	49department prescribes, supported by independently verifiable information and signed under the
80	80	50penalties of perjury by a person authorized to bind the sponsors; 4 of 8
81	81	51 (ii) receipt of an agreement executed by the municipality that is approved by the
82	82	52department that the project as described in the proposal and all documentation submitted with the
83	83	53proposal:
84	84	54 (A) is consistent with and can reasonably be expected to benefit significantly from the
85	85	55municipality's plans relative to the project;
86	86	56 (B) together with all other projects previously certified and located in the same project
87	87	57rural area, shall not overburden the municipality's supporting resources; and
88	88	58 (C) together with the municipal resources committed to the project, shall, if certified,
89	89	59have a reasonable chance of increasing residential growth, diversity of housing supply,
90	90	60supporting economic development and promoting neighborhood stabilization in the designated
91	91	61rural area as advanced in the proposal; and
92	92	62 (iii) receipt with such written approval by the municipality of a request for a designation
93	93	63of the project as a certified rural housing development project for a specified number of years,
94	94	64which shall be not less than 5 years and not more than 20 years.
95	95	65 (c) The department shall evaluate and either grant or deny any project proposal not later
96	96	66than 90 days from the date of its receipt of a complete project proposal and failure to do so by the
97	97	67department shall result in approval of such project for a term of 20 years. Approval of a project
98	98	68 due to the department's failure to act within 90 days shall not constitute approval by the
99	99	69department of any tax incentives provided under chapter 62.
100	100	70 (d) The department may impose a fee for the processing of applications for the
101	101	71certification of any project under this section. 5 of 8
102	102	72 (e) The certification of a project may be revoked by the department if: (i)(A) the
103	103	73municipality that approved the project proposal files a petition that satisfies the authorization
104	104	74requirements for a municipal application or the petition of the director of the department; and (B)
105	105	75the department determines, after an independent investigation, that representations made by the
106	106	76sponsors in its project proposal are materially different from the conduct of the sponsors
107	107	77subsequent to the certification and such difference is found to frustrate the public purposes that
108	108	78the certification was intended to advance; or (ii) the project no longer meets the criteria in this
109	109	79section. Upon revocation, the commonwealth and the municipality may bring a cause of action
110	110	80against the sponsors for the value of any economic benefit received by the sponsors prior to or
111	111	81subsequent to such revocation. Under this section, revocation shall take effect on the first day of
112	112	82the tax year in which the department determines that a material variance commenced. The
113	113	83commissioner of revenue may, as of the effective date of the revocation, disallow any credits,
114	114	84exemptions or other tax benefits allowed by the original certification under this section. The
115	115	85commissioner shall issue regulations to recapture the value of any credits, exemptions or other
116	116	86tax benefits allowed by the certification under this section.
117	117	87 (f) Annually, on or before the first Wednesday in December, the department shall file a
118	118	88report detailing its findings of the review of all certified housing development projects that it
119	119	89evaluated in the prior fiscal year to the commissioner of revenue, to the joint committee on
120	120	90revenue and the joint committee on housing and community development. The report shall
121	121	91include, but not be limited to: (i) a list of municipalities with approved rural areas; (ii) a list of
122	122	92rural housing development projects that have received certification; (iii) information about each
123	123	93certified rural housing development project, including the site address, project sponsor, range of
124	124	94rents of the residential units, type of residential units, number of each type of residential unit, 6 of 8
125	125	95number of affordable rental units for persons whose income is not more than 60 per cent of the
126	126	96area median income and the number of affordable owner-occupied units for persons whose
127	127	97income is not more than 80 per cent of the area median income; and (iv) the total amount of
128	128	98qualified project expenditures for which a tax credit was issued or reserved for each rural
129	129	99housing development project, the year the credit was issued and the completion or estimated
130	130	100completion year of the housing development project.
131	131	101 SECTION 2. Section 6 of chapter 62 of the General Laws is hereby amended by adding
132	132	102the following subsection:-
133	133	103 (dd)(1) A credit shall be allowed against the tax liability imposed by this chapter, to the
134	134	104extent awarded by the department of housing and community development as established by
135	135	105chapter 23B, for a certified rural housing redevelopment project, as defined in chapter 40Z, in an
136	136	106 amount up to 25 per cent of the cost of qualified project expenditures of the market rate
137	137	107residential units within the certified rural housing development project, as those terms are
138	138	108defined in said chapter 40Z. The credit under this subsection shall be allowed for the taxable year
139	139	109in which the department gives the commissioner written notification of completion of the
140	140	110certified rural housing redevelopment project.
141	141	111 (2) Taxpayers eligible for the this credit may, with prior notice to and under regulations
142	142	112adopted by the commissioner, transfer the credits, in whole or in part, to any individual or entity,
143	143	113and the transferee shall be entitled to apply the credits against the tax with the same effect as if
144	144	114the transferee had incurred the qualified project expenditures itself. If the sponsor of the certified
145	145	115rural housing development project is a partnership or a limited liability company taxed as a
146	146	116partnership, the credit, if transferred must be transferred by the partnership or the limited liability 7 of 8
147	147	117company. If the credits allowed to a partnership, a limited liability company taxed as a
148	148	118partnership or multiple owners of property are not transferred they shall be passed through to the
149	149	119persons designated as partners, members or owners, respectively, pro rata or pursuant to an
150	150	120executed agreement among the persons designated as partners, members or owners documenting
151	151	121an alternative distribution method without regard to their sharing of other tax or economic
152	152	122attributes of the entity. Credits passed through to individual partners and members are not
153	153	123transferable.
154	154	124 (3) If the credit allowable for any taxable year exceeds the taxpayer's tax liability for that
155	155	125tax year, the taxpayer may carry forward and apply in any subsequent taxable year, the portion,
156	156	126as reduced from year to year, of those credits which exceed the tax for the taxable year;
157	157	127provided, however, that in no event shall the taxpayer apply the credit to the tax for any taxable
158	158	128year beginning more than 10 years after the taxable year in which department gives the
159	159	129commissioner written notification of completion of the rural housing redevelopment project. If
160	160	130the credit is transferred by the taxpayer, the carry over provisions applicable to the transferee
161	161	131apply.
162	162	132 (4) A transferee shall use the credit in the year it is transferred. If the credit allowable for
163	163	133any taxable year exceeds the transferee's tax liability for that tax year, the transferee may carry
164	164	134forward and apply in any subsequent taxable year, the portion, as reduced from year to year, of
165	165	135those credits which exceed the tax for the taxable year; provided, however, that in no event shall
166	166	136the transferee apply the credit to the tax for any taxable year beginning more than 10 years after
167	167	137the taxable year in which the department gives the commissioner written notification of
168	168	138completion of the certified rural housing development project. 8 of 8
169	169	139 (5) For any rural housing redevelopment project, qualified project expenditures
170	170	140applicable to this credit shall be treated for purposes of this subsection as made on the date that
171	171	141the department gives the commissioner written notification of completion of the rural housing
172	172	142redevelopment project.
173	173	143 (6) The total amount of credits that may be authorized by the department in a calendar
174	174	144year pursuant to this subsection shall not exceed $10,000,000 and shall include: (i) credits
175	175	145granted during the year pursuant to this subsection; and (ii) carry forwards of credits from prior
176	176	146years pursuant to this subsection, to the extent that such credit carry forwards are estimated by
177	177	147the
178	178	148 commissioner to offset tax liabilities during the year. Any portion of the $10,000,000
179	179	149annual cap not awarded by the department in a calendar year shall not be applied to awards in a
180	180	150subsequent year. The department shall provide the commissioner with any documentation that
181	181	151the commissioner deems necessary to confirm compliance with the annual cap and the
182	182	152commissioner shall provide a report confirming compliance with the annual cap to the secretary
183	183	153of administration and finance and the secretary of housing and economic development.
184	184	154 (7) The commissioner, in consultation with the department, shall prescribe regulations
185	185	155necessary to carry out this subsection.