SB2032 101ST GENERAL ASSEMBLY

LRB101 10712 HLH 55824 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2032

Introduced 2/15/2019, by Sen. Steve McClure

SYNOPSIS AS INTRODUCED:

New Act
30 ILCS 605/7.1	from Ch. 127, par. 133b10.1
35 ILCS 5/229 new
215 ILCS 5/409.2 new

Creates the Illinois State Property Revitalization Tax Credit Act. Creates a credit against taxes imposed under the Illinois Income Tax Act and the Illinois Insurance Code in an amount equal to 30% of qualified expenditures incurred by a qualified taxpayer in the rehabilitation of certain property that had been owned by the State. Provides that credits must be approved by the Department of Commerce and Economic Opportunity. Provides that credits may be transferred and assigned. Contains provisions concerning application fees. Amends the Illinois Income Tax Act and the Illinois Insurance Code to make conforming changes. Amends the State Property Control Act. Makes changes to provisions concerning surplus real property. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Illinois State Property Revitalization Tax Credit Act.

Section 5. Definitions. As used in this Act, unless the context clearly indicates otherwise:

"Department" means the Department of Commerce and Economic Opportunity.

"Qualified expenditures" means all the costs and expenses associated with the rehabilitation of qualified structures as defined in this Act. Applicants may incur qualified expenditures, at their own risk, from the earlier of (i) the commencement of construction or (ii) one year prior to receipt of preliminary approval of an application pursuant to Section 30 of this Act.

"Qualified structure" means a facility or structure located in Illinois that is owned by the State of Illinois and has not been used for at least 2 years. For the purposes of this definition, regular maintenance and upkeep are not considered "use".

"Qualified rehabilitation plan" means a proposed rehabilitation design that is approved by the Department.

"Qualified rehabilitation project" means a completed rehabilitation project that is approved by the Department.

"Qualified taxpayer" means any owner of the qualified structure. If the taxpayer is (i) a corporation having an election in effect under subchapter S of the federal Internal Revenue Code, (ii) a partnership, including a limited partnership or a limited liability partnership, or (iii) a limited liability company, the credit provided by this Act may be claimed by the shareholders of the corporation, the partners of the partnership, or the members of the limited liability company in the same manner as those shareholders, partners, or members account for their proportionate shares of the income or losses of the corporation, partnership, or limited liability company, or as provided in the bylaws or other executed agreement of the corporation, partnership, or limited liability company.

Credits granted to a partnership, including a limited partnership or a limited liability partnership, a limited liability company taxed as a partnership, or other multiple owners of property shall be passed through to the partners, members, or owners respectively on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting any alternate distribution method. Nothing in this Act is intended to prohibit a non-profit entity with a Section 501(c)(3) designation under the federal Internal Revenue Code from serving as a shareholder, partner, member or other owner of a qualified taxpayer.

Section 10. Allowable credit. There shall be allowed a tax credit against (i) the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act and (ii) the taxes imposed under Sections 409, 413, 444, and 444.1 of the Illinois Insurance Code in an aggregate amount equal to 30% of the qualified expenditures incurred by a qualified taxpayer pursuant to a qualified rehabilitation plan on a qualified structure, provided that the total amount of such qualified expenditures exceeds the greater of $5,000 for each qualified structure or the adjusted basis of the property.

While a tax credit may be earned before July 1, 2019, no tax credit shall be issued by the Department before that date. If the amount of any tax credit awarded under this Act exceeds the taxpayer's tax liability for the year in which the qualified rehabilitation project was placed in service, the excess amount may be carried forward for deduction from the taxpayer's tax liability in the next succeeding year or years or may be carried back for deduction from the taxpayer's tax liability for the immediately preceding year until the total amount of the credit has been used, except that a credit may not be carried forward for deduction after the fifth taxable year after the taxable year in which the qualified rehabilitation project was placed in service or carried back for deduction more than one year before the taxable year in which the qualified rehabilitation project was placed in service.

Section 15. Economic needs test. When the total credits requested with respect to a qualified rehabilitation plan will be $1,000,000 or more, the Department shall evaluate whether, without public intervention, the economic development project would not otherwise benefit from private sector investment.

Section 20. Transfer of credits.

(a) Any qualified taxpayer may elect to transfer, in whole or in part, any unused credit amount granted under this Act as provided in subsection (b). An election to transfer any unused credit amount must be made no later than 5 years after the date the credit is awarded, after which period the credit expires and may not be used. The Department shall notify the Department of Revenue of the election and transfer.

(b) A qualified taxpayer is permitted a one-time transfer of unused credit amounts to no more than 4 transferees. Those transfers must occur in the same taxable year.

(c) The transferee is subject to the same rights and limitations as the accredited production company awarded the credit, except that the transferee may not sell or otherwise transfer the credit.

(d) The Department may adopt rules to administer this Section.

Section 25. Maximum limits. The credits awarded for each qualified rehabilitation project shall be limited to a maximum of $10,000,000. The aggregate amount of the tax credits that may be claimed under this Act for investments in qualified rehabilitation projects shall be limited to $40,000,000. A qualified rehabilitation project shall not receive credits pursuant to this Act if the qualified rehabilitation project has received credits pursuant to the River Edge Redevelopment Zone Act.

Section 30. Application process.

(a) To obtain the credits allowed under this Act, the applicant shall submit an application for tax credits to the Department. The application shall be in such form as the Department shall reasonably require, and the application shall include sufficient information to permit the Department to approve, approve with conditions, or reject the structure, rehabilitation plan, or rehabilitation project.

(b) The Department may charge a non-refundable application fee of up to 1% of the amount of credits requested, with a minimum fee of $1,000 per application per project. All application fees shall be deposited into the Department's Administrative Fund.

(c) All applicants with applications receiving preliminary approval on or after the effective date of this Act shall commence rehabilitation within 3 years of the date of issue of the letter from the Department granting preliminary approval for credits. Commencement of rehabilitation means that, as of the date on which actual physical work has begun, the applicant has incurred no less than 10% of the estimated costs of rehabilitation provided in the application. The applicant may commence and incur qualified expenditures at its own risk before the property becomes a qualified structure. If the rehabilitation receives final approval under this Section, including the necessary verification of the total costs and expenses of rehabilitation, the applicant shall receive tax credits for all qualified expenditures incurred within the time periods allowed in this Act.

(d) For qualified rehabilitation projects, the applicant shall submit a cost certification, and if the credits requested with respect to a qualified rehabilitation project are $250,000 or more, the Department shall require an independent audit of the cost certification at the applicant's expense. Those audits shall be conducted by a licensed Certified Public Accounting firm that participates in the peer review program of the American Institute of Certified Public Accountants.

(e) The Department shall determine the amount of qualified expenditures and the amount of credits to be issued to the applicant. The issuance of certificates of credits to applicants shall be performed by the Department. The Department shall coordinate with the Illinois Department of Revenue to determine if the applicant has any outstanding Illinois tax obligations that can be satisfied by the credits to be issued. The Department shall inform the applicant of final approval and of the final credit amount by letter. An issuance fee of up to 2% of the amount of the credits issued by the tax credit certificate may be collected from the applicant and remitted to the Department for the purpose of administering the Act. When the Department has received the issuance fee from the applicant and deposited it into the Department's Administrative Fund, the Department shall issue a tax credit certificate to the applicant. The taxpayer must attach the tax credit certificate to the tax return on which the credits are to be claimed.

Section 35. Biennial report; powers of the Department. The Department shall issue a report no later than the last day of the second fiscal year after the effective date of this Act on the overall economic impact to the State of the qualified rehabilitation projects. The Department is granted and has all the powers necessary or convenient to carry out the provisions of this Act. The Department has the power to promulgate rules for the administration of this Act, including the power to adopt emergency rules for a period of 12 months after the effective date of this Act for the purposes of establishing application forms and entering into agreements related to this Act.

Section 40. Appeals process. An applicant may appeal an adverse decision made by the Department, other than a decision related to the qualifications of the structure, rehabilitation plan, or rehabilitation project, by requesting a hearing under the terms of Article 10 of the Illinois Administrative Procedure Act. A petition for hearing must be postmarked no later than 30 days from the date of the adverse decision.

Section 900. The State Property Control Act is amended by changing Section 7.1 as follows:

(30 ILCS 605/7.1) (from Ch. 127, par. 133b10.1)

Sec. 7.1. (a) Except as otherwise provided by law, all surplus real property held by the State of Illinois shall be disposed of by the administrator as provided in this Section. "Surplus real property," as used in this Section, means any real property to which the State holds fee simple title or lesser interest, and is determined by the head of the State agency to no longer be required for the State agency's needs and responsibilities vacant, unoccupied or unused and which has no foreseeable use by the owning agency.

(b) All responsible officers shall submit an Annual Real Property Utilization Report to the Administrator, or annual update of such report, on forms required by the Administrator, by July 31 of each year. The Administrator may require such documentation as he deems reasonably necessary in connection with this Report, and shall require that such Report include the following information:

(1) A legal description of all real property owned by the State under the control of the responsible officer.

(2) A description of the use of the real property listed under (1).

(3) A list of any improvements made to such real property during the previous year.

(4) The dates on which the State first acquired its interest in such real property, and the purchase price and source of the funds used to acquire the property.

(5) Plans for the future use of currently unused real property.

(6) A declaration of any surplus real property. On or before October 31 of each year the Administrator shall furnish copies of each responsible officer's report along with a list of surplus property indexed by legislative district to the General Assembly.

This report shall be filed with the Speaker, the Minority Leader and the Clerk of the House of Representatives and the President, the Minority Leader and the Secretary of the Senate and shall be duplicated and made available to the members of the General Assembly for evaluation by such members for possible liquidation of unused public property at public sale.

(c) Following receipt of the Annual Real Property Utilization Report required under paragraph (b), the Administrator shall notify all State agencies by October 31 of all declared surplus real property. Any State agency may submit a written request to the Administrator, within 60 days of the date of such notification, to have control of surplus real property transferred to that agency. Such request must indicate the reason for the transfer and the intended use to be made of such surplus real property. The Administrator may deny any or all such requests by a State agency or agencies if the Administrator determines that it is more advantageous to the State to dispose of the surplus real property under paragraph (d). In case requests for the same surplus real property are received from more than one State agency, the Administrator shall weigh the benefits to the State and determine to which agency, if any, to transfer control of such property. The Administrator shall coordinate the use and disposal of State surplus real property with any State space utilization program.

(d) Any surplus real property which is not transferred to the control of another State agency under paragraph (c) shall be disposed of by the Administrator. No appraisal is required if during his initial survey of surplus real property the Administrator determines such property has a fair market value of less than $5,000. If the value of such property is determined by the Administrator in his initial survey to be $5,000 or more, then the Administrator shall obtain 2 3 appraisals of such real property, which shall include any known liabilities, including, but not limited to, environmental costs one of which shall be performed by an appraiser residing in the county in which said surplus real property is located. The average of these 2 3 appraisals, plus the costs of obtaining the appraisals, shall represent the fair market value of the surplus real property. However, if the 2 appraisals differ by more than 15%, then the Administrator shall obtain a third appraisal, and the fair market value shall be the average of these 3 appraisals.

No surplus real property may be conveyed by the Administrator for less than the fair market value, unless the Administrator makes a written determination that it is in the best interests of the State to establish a different value. That written determination shall be published in the Illinois Procurement Bulletin. Such written determination, along with an affidavit setting forth the conditions and circumstances that make the use of a different value in the best interests of the State, shall also be filed with the Executive Ethics Commission. The Executive Ethics Commission shall have at least 30 days to review the written determination. The Executive Ethics Commission may order an additional 30 days to review the written determination. The Administrator shall provide the Executive Ethics Commission with any information requested by the Executive Ethics Commission related to the Administrator's determination of the value of the surplus real property. If the Executive Ethics commission objects in writing to the value determined by the Administrator, then the Administrator shall not convey the surplus real property for less than either the fair market value as determined by the average of appraisals or an amount agreed upon by the Executive Ethics Commission and the Administrator. Circumstances in which it is in the best interest of the State to establish a different value may include, but are not limited to, the following: an auction did not yield any bids at the established fair market value; a unit of local government is interested in acquiring the surplus real property; or the costs to the State of maintaining such surplus real property are sufficiently high that it would be reasonable to a prudent person to sell such surplus real property for less than the fair market value established by the average of appraisals.

Prior to offering the surplus real property for sale to the public the Administrator shall give notice in writing of the existence and fair market value of the surplus real property to each State agency and to the governing bodies of the county and of all cities, villages and incorporated towns in the county in which such real property is located. Any such State agency or governing body may notify the Administrator of its interest in acquiring exercise its option to acquire the surplus real property for the fair market value within the notice period set by the Administrator of at least 14 days 60 days of the notice. If any Stage agency or governing body notifies the Administrator of its interest in acquiring the property, then the Administrator shall wait a minimum of 30 additional days during which to engage in negotiations with that State agency or governing body for the sale of the surplus real property. After the notice period 60 day period has passed, the Administrator may sell the surplus real property by public auction, which may include an electronic auction or the use of sealed bids, following notice of such sale by publication on 3 separate days not less than 15 nor more than 30 days prior to the sale in the State newspaper and in a newspaper having general circulation in the county in which the surplus real property is located. The Administrator shall post "For Sale" signs of a conspicuous nature on such surplus real property offered for sale to the public. If no acceptable offers for the surplus real property are received, the Administrator may have new appraisals of such property made. The Administrator shall have all power necessary to convey surplus real property under this Section. All moneys received for the sale of surplus real property shall be deposited in the General Revenue Fund, except that:

(1) Where moneys expended for the acquisition of such real property were from a special fund which is still a special fund in the State treasury, this special fund shall be reimbursed in the amount of the original expenditure and any amount in excess thereof shall be deposited in the General Revenue Fund.

(2) Whenever a State mental health facility operated by the Department of Human Services is closed and the real estate on which the facility is located is sold by the State, the net proceeds of the sale of the real estate shall be deposited into the Community Mental Health Medicaid Trust Fund.

(3) Whenever a State developmental disabilities facility operated by the Department of Human Services is closed and the real estate on which the facility is located is sold by the State, the net proceeds of the sale of the real estate shall be deposited into the Community Developmental Disability Services Medicaid Trust Fund.

The Administrator shall have authority to order such surveys, abstracts of title, or commitments for title insurance as may, in his reasonable discretion, be deemed necessary to demonstrate to prospective purchasers or bidders good and marketable title in any property offered for sale pursuant to this Section. Unless otherwise specifically authorized by the General Assembly, all conveyances of property made by the Administrator shall be by quit claim deed.

(e) The Administrator shall submit an annual report on or before February 1 to the Governor and the General Assembly containing a detailed statement of surplus real property either transferred or conveyed under this Section.

(Source: P.A. 96-527, eff. 1-1-10; 96-660, eff. 8-25-09; 96-1000, eff. 7-2-10.)

Section 905. The Illinois Income Tax Act is amended by adding Section 229 as follows:

(35 ILCS 5/229 new)

Sec. 229. Rehabilitation and revitalization credit. For tax years commencing on or after January 1, 2014, a taxpayer who qualifies for a credit under the Illinois Rehabilitation and Revitalization Tax Credit Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of this Act. If the taxpayer is a partnership or Subchapter S corporation, the credit shall be allowed to the partners or shareholders in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code or the credit shall be allowed to the partners or shareholders pursuant to an executed agreement among the partners or shareholders documenting any alternate distribution method. This Section is exempt from the provisions of Section 250 of this Act.

Section 910. The Illinois Insurance Code is amended by adding Section 409.2 as follows:

(215 ILCS 5/409.2 new)

Sec. 409.2. Rehabilitation and revitalization credit. For taxes payable after January 1, 2014, credits may be granted against the taxes imposed under Section 409, 413, 444, and 444.1 of this Act as provided in the Illinois Rehabilitation and Revitalization Tax Credit Act.

Section 999. Effective date. This Act takes effect upon becoming law.