103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2924

 

Introduced 1/26/2024, by Sen. Laura Ellman

 

SYNOPSIS AS INTRODUCED:
 
New Act
310 ILCS 65/5  from Ch. 67 1/2, par. 1255

    Creates the Family Home Ownership Act. Imposes a tax on certain partnerships, corporations, limited liability companies, or real estate investment trusts that purchase single-family residences. Provides that the amount of the tax is equal to 100% of the fair market value of the residence. Provides that the proceeds of the tax shall be deposited into the Illinois Affordable Housing Trust Fund for the purpose of providing rental and mortgage payment assistance. Requires hedge funds and other applicable taxpayers to reduce the number of single-family residences owned by the hedge fund over a 10-year period. Provides that, 10 years after the effective date of the Act, hedge funds may not own any applicable single-family residences. Provides that, 10 years after the effective date of the Act, applicable taxpayers other than hedge funds may not own more than 50 applicable single-family residences. Effective immediately.


LRB103 36979 HLH 67093 b

 

 

A BILL FOR

 

SB2924LRB103 36979 HLH 67093 b

1    AN ACT concerning home ownership.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Family
5Home Ownership Act.
 
6    Section 5. Definitions. As used in this Act, unless
7otherwise stated, the following words or phrases have the
8following meanings:
9    "Acquisition" means the acquisition of a majority
10ownership interest in a single-family residence, regardless of
11the percentage of that ownership interest.
12    "Applicable entity" means a partnership, corporation,
13limited liability company, or real estate investment trust.
14    "Applicable entity" does not include:
15        (1) an organization described in Section 501(c)(3) of
16    the Internal Revenue Code that is exempt from tax under
17    Section 501(a) of the Internal Revenue Code; or
18        (2) an organization that is primarily engaged in the
19    construction or rehabilitation of single-family
20    residences.
21    "Applicable taxpayer" means any applicable entity that:
22        (1) manages funds pooled from investors; and
23        (2) is a fiduciary with respect to such investors.

 

 

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1    "Department" means the Department of Revenue.
2    "Disqualified sale" means any sale or transfer to:
3        (1) a corporation or other entity engaged in a trade
4    or business; or
5        (2) an individual who owns any other single-family
6    residence at the time of the sale or transfer.
7    "Fair market value" means the amount for which a property
8can be sold in the due course of business and trade, not under
9duress, between a willing buyer and a willing seller.
10    "Hedge fund taxpayer" means, with respect to any taxable
11year, any applicable taxpayer that has $25,000,000 or more in
12net assets.
13    "Ownership" means a majority ownership interest in the
14single-family residence, regardless of the percentage of that
15ownership interest.
16    "Single-family residence" means residential property
17consisting of 1 to 4 dwelling units.
18    "Single-family residence" does not include any
19single-family residence that is not rented or leased and that
20is used as the principal residence of any person who has an
21ownership interest in the applicable taxpayer.
 
22    Section 10. Newly acquired single-family residences. The
23acquisition of a single-family residence by an applicable
24taxpayer on or after the effective date of this Act is subject
25to a tax on the acquisition of the residence equal to 100% of

 

 

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1the fair market value of the residence at the time of purchase.
2The proceeds of the tax shall be deposited into the Illinois
3Affordable Housing Trust Fund for the purpose of providing
4rental and mortgage payment assistance.
5    The tax under this Section shall be paid by the applicable
6taxpayer and shall be collected in the same manner as real
7estate transfer taxes are collected under the Real Estate
8Transfer Tax Law in the Property Tax Code, except that
9provisions concerning the distribution of proceeds and
10exemptions from the tax do not apply to the tax imposed under
11this Section.
 
12    Section 15. Maximum permissible single-family residences.
13    (a) The maximum number of single-family residences that
14may be owned by a hedge fund taxpayer shall be determined as
15follows:
16        (1) By December 31 of the first full calendar year to
17    begin on or after the effective date of this Act, the
18    number of single-family residences owned by a hedge fund
19    taxpayer may not exceed 90% of the number of single-family
20    residences owned by that taxpayer on the effective date of
21    this Act.
22        (2) By December 31 of the second full calendar year to
23    begin on or after the effective date of this Act, the
24    number of single-family residences owned by a hedge fund
25    taxpayer may not exceed 80% of the number of single-family

 

 

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1    residences owned by that taxpayer on the effective date of
2    this Act.
3        (3) By December 31 of the third full calendar year to
4    begin on or after the effective date of this Act, the
5    number of single-family residences owned by a hedge fund
6    taxpayer may not exceed 70% of the number of single-family
7    residences owned by that taxpayer on the effective date of
8    this Act.
9        (4) By December 31 of the fourth full calendar year to
10    begin on or after the effective date of this Act, the
11    number of single-family residences owned by a hedge fund
12    taxpayer may not exceed 60% of the number of single-family
13    residences owned by that taxpayer on the effective date of
14    this Act.
15        (5) By December 31 of the fifth full calendar year to
16    begin on or after the effective date of this Act, the
17    number of single-family residences owned by a hedge fund
18    taxpayer may not exceed 50% of the number of single-family
19    residences owned by that taxpayer on the effective date of
20    this Act.
21        (6) By December 31 of the sixth full calendar year to
22    begin on or after the effective date of this Act, the
23    number of single-family residences owned by a hedge fund
24    taxpayer may not exceed 40% of the number of single-family
25    residences owned by that taxpayer on the effective date of
26    this Act.

 

 

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1        (7) By December 31 of the seventh full calendar year
2    to begin on or after the effective date of this Act, the
3    number of single-family residences owned by a hedge fund
4    taxpayer may not exceed 30% of the number of single-family
5    residences owned by that taxpayer on the effective date of
6    this Act.
7        (8) By December 31 of the eighth full calendar year to
8    begin on or after the effective date of this Act, the
9    number of single-family residences owned by a hedge fund
10    taxpayer may not exceed 20% of the number of single-family
11    residences owned by that taxpayer on the effective date of
12    this Act.
13        (9) By December 31 of the ninth full calendar year to
14    begin on or after the effective date of this Act, the
15    number of single-family residences owned by a hedge fund
16    taxpayer may not exceed 10% of the number of single-family
17    residences owned by that taxpayer on the effective date of
18    this Act.
19        (10) On and after December 31 of the tenth full
20    calendar year to begin on or after the effective date of
21    this Act, a hedge fund taxpayer may not own any
22    single-family residences.
23    (b) The maximum number of single-family residences that
24may be owned by an applicable taxpayer other than a hedge fund
25taxpayer shall be determined as follows:
26        (1) By December 31 of the first full calendar year to

 

 

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1    begin on or after the effective date of this Act, the
2    number of single-family residences owned by an applicable
3    taxpayer other than a hedge fund taxpayer may not exceed
4    90% of the number of single-family residences owned by
5    that taxpayer on the effective date of this Act plus 50
6    single-family residences.
7        (2) By December 31 of the second full calendar year to
8    begin on or after the effective date of this Act, the
9    number of single-family residences owned by an applicable
10    taxpayer other than a hedge fund taxpayer may not exceed
11    80% of the number of single-family residences owned by
12    that taxpayer on the effective date of this Act plus 50
13    single-family residences.
14        (3) By December 31 of the third full calendar year to
15    begin on or after the effective date of this Act, the
16    number of single-family residences owned by an applicable
17    taxpayer other than a hedge fund taxpayer may not exceed
18    70% of the number of single-family residences owned by
19    that taxpayer on the effective date of this Act plus 50
20    single-family residences.
21        (4) By December 31 of the fourth full calendar year to
22    begin on or after the effective date of this Act, the
23    number of single-family residences owned by an applicable
24    taxpayer other than a hedge fund taxpayer may not exceed
25    60% of the number of single-family residences owned by
26    that taxpayer on the effective date of this Act plus 50

 

 

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1    single-family residences.
2        (5) By December 31 of the fifth full calendar year to
3    begin on or after the effective date of this Act, the
4    number of single-family residences owned by an applicable
5    taxpayer other than a hedge fund taxpayer may not exceed
6    50% of the number of single-family residences owned by
7    that taxpayer on the effective date of this Act plus 50
8    single-family residences.
9        (6) By December 31 of the sixth full calendar year to
10    begin on or after the effective date of this Act, the
11    number of single-family residences owned by an applicable
12    taxpayer other than a hedge fund taxpayer may not exceed
13    40% of the number of single-family residences owned by
14    that taxpayer on the effective date of this Act plus 50
15    single-family residences.
16        (7) By December 31 of the seventh full calendar year
17    to begin on or after the effective date of this Act, the
18    number of single-family residences owned by an applicable
19    taxpayer other than a hedge fund taxpayer may not exceed
20    30% of the number of single-family residences owned by
21    that taxpayer on the effective date of this Act plus 50
22    single-family residences.
23        (8) By December 31 of the eighth full calendar year to
24    begin on or after the effective date of this Act, the
25    number of single-family residences owned by an applicable
26    taxpayer other than a hedge fund taxpayer may not exceed

 

 

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1    20% of the number of single-family residences owned by
2    that taxpayer on the effective date of this Act plus 50
3    single-family residences.
4        (9) By December 31 of the ninth full calendar year to
5    begin on or after the effective date of this Act, the
6    number of single-family residences owned by an applicable
7    taxpayer other than a hedge fund taxpayer may not exceed
8    10% of the number of single-family residences owned by
9    that taxpayer on the effective date of this Act plus 50
10    single-family residences.
11        (10) On and after December 31 of the tenth full
12    calendar year to begin on or after the effective date of
13    this Act, a hedge fund taxpayer may not own more than 50
14    applicable single-family residences.
15    (c) For the purpose of calculating the number of
16single-family residences owned by a taxpayer during the
17calendar year, a single-family residence that is sold or
18transferred by the taxpayer in a disqualified sale during a
19calendar year shall be treated as a single-family residence
20that is owned by the applicable taxpayer as of the last day of
21that calendar year.
22    (d) An applicable taxpayer who fails to meet the
23requirements of this Section shall be subject to a $15,000
24penalty on each single-family residence owned in excess of the
25permissible maximum units for the taxable year to be deposited
26into the Illinois Affordable Housing Trust Fund with the

 

 

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1purpose of providing rental and mortgage payment assistance.
 
2    Section 20. Sale of applicable single-family residences;
3right of first refusal.
4    (a) An applicable taxpayer that intends to sell a
5single-family residence shall give notice to each tenant of
6the single-family residence of the requirements of this Act
7and of the applicable taxpayer's intent to sell the
8single-family residence in which the tenant resides. The
9notice under this subsection shall be mailed by certified
10mail.
11    (b) Before an applicable taxpayer may sell a single-family
12residence, the applicable taxpayer shall give notice to each
13tenant of the residence, by certified mail, of any third-party
14bona fide offer for sale that the taxpayer intends to accept.
15The notice shall include the price and the terms and
16conditions of the offer. The price shall be calculated as a
17single lump sum amount that reflects (i) the total purchase
18price or (ii) the present value of any installment payments
19offered in lieu of cash payments.
20    (c) Upon receiving notice of any third-party bona fide
21offer, the tenant of that residence shall have the right to
22purchase the subject property for the purpose of continuing
23the use of the property as their residence. The tenant shall:
24(1) submit to the applicable taxpayer notice of their interest
25in purchasing the applicable single-family residence; (2)

 

 

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1submit to the applicable taxpayer a proposed purchase and sale
2agreement on substantially equivalent terms and conditions as
3the bona fide offer within 45 days after receipt of notice of
4the bona fide offer; (3) obtain a binding commitment for any
5necessary financing or guarantees within an additional 90 days
6after execution of the purchase and sale agreement; and (4)
7close on the purchase within an additional 90 days after the
8end of the 90-day period under item (3). No applicable
9taxpayer shall unreasonably refuse to enter into, or
10unreasonably delay the execution or closing on, a purchase and
11sale or lease agreement with tenants who have made a bona fide
12offer to meet the price and substantially equivalent terms and
13conditions of an offer for which notice is required to be given
14under subsection (b). Failure of the tenants to submit such a
15purchase and sale agreement within the first 45-day period, to
16obtain a binding commitment for financing within the
17additional 90-day period, or to close on the purchase within
18the second 90-day period shall serve to terminate the rights
19of such residents to purchase the applicable single-family
20residence. The time periods provided in this Section may be
21extended by agreement. Nothing in this Section shall be
22construed to require an applicable taxpayer to provide
23financing to tenants except to the extent such financing would
24be provided to the third-party offeror.
25    (d) The right of first refusal created in this Section
26shall inure to the tenants for the time periods set forth in

 

 

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1this Section, beginning on the date of notice to the tenants
2under paragraph (b). The effective period for the right of
3first refusal shall obtain separately for each substantially
4different bona fide offer to purchase the applicable
5single-family residence, and for each offer substantially
6equivalent to an offer made more than 3 months prior to the
7later offer; provided however, that in the case of a
8substantially equivalent offer made by a prospective buyer who
9has previously made an offer for which notice to tenants was
10required by subsection (b), the right of first refusal shall
11obtain only if the subsequent offer is made more than 6 months
12after the earlier offer. The right of first refusal shall not
13apply with respect to any offer received by the applicable
14taxpayer for which a notice is not required under subsection
15(b). No right of first refusal shall apply to a government
16taking by eminent domain or negotiated purchase, a forced sale
17under a foreclosure by an unrelated third-party, transfer by
18gift, devise, or operation of law, or a sale to a person who
19would be an heir at law if there were to be a death intestate
20of the property owner.
21    (e) If the tenants of the applicable single-family
22residence are not the successful purchasers, the applicable
23taxpayer shall provide evidence of compliance with this
24Section by filing an affidavit of compliance with the
25authority having jurisdiction within 7 days after the sale or
26lease of the property.
 

 

 

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1    Section 25. Reporting.
2    (a) The Department of Revenue shall adopt rules to
3administer and enforce the provisions of this Act. Those rules
4shall require such reporting as the Department determines
5necessary or appropriate to carry out the purposes of this
6Act, including reporting with respect to:
7        (1) the dates on which single-family residences owned
8    by an applicable taxpayer were acquired by such taxpayer,
9        (2) the dates on which single-family residences owned
10    by an applicable taxpayer are sold by such taxpayer in
11    accordance with this Act, and
12        (3) whether any person acquiring a single-family
13    residence from an applicable taxpayer owns any other
14    single-family residences.
15    (b) Any applicable taxpayer who fails to report in
16accordance with this Section, or who fails to include correct
17information in the report, shall, on notice and demand of the
18Department, pay a penalty of $20,000 to be deposited into the
19Illinois Affordable Housing Trust Fund with the purpose of
20providing rental and mortgage payment assistance.
21    (c) No penalty shall be imposed under this Section with
22respect to any failure if it is shown that such failure is due
23to reasonable cause and not to willful neglect.
 
24    Section 900. The Illinois Affordable Housing Act is

 

 

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1amended by changing Section 5 as follows:
 
2    (310 ILCS 65/5)  (from Ch. 67 1/2, par. 1255)
3    Sec. 5. Illinois Affordable Housing Trust Fund.
4    (a) There is hereby created the Illinois Affordable
5Housing Trust Fund, hereafter referred to in this Act as the
6"Trust Fund" to be held as a separate fund within the State
7Treasury and to be administered by the Program Administrator.
8The purpose of the Trust Fund is to finance projects of the
9Illinois Affordable Housing Program as authorized and approved
10by the Program Administrator. The Funding Agent shall
11establish, within the Trust Fund, a General Account, a Bond
12Account, a Commitment Account and a Development Credits
13Account. The Funding Agent shall authorize distribution of
14Trust Fund moneys to the Program Administrator or a payee
15designated by the Program Administrator for purposes
16authorized by this Act. After receipt of the Trust Fund moneys
17by the Program Administrator or designated payee, the Program
18Administrator shall ensure that all those moneys are expended
19for a public purpose and only as authorized by this Act.
20    (b) Except as otherwise provided in Section 8(c) of this
21Act, there shall be deposited in the Trust Fund such amounts as
22may become available under the provisions of this Act,
23including, but not limited to:
24        (1) all receipts, including dividends, principal and
25    interest repayments attributable to any loans or

 

 

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1    agreements funded from the Trust Fund;
2        (2) all proceeds of assets of whatever nature received
3    by the Program Administrator, and attributable to default
4    with respect to loans or agreements funded from the Trust
5    Fund;
6        (3) any appropriations, grants or gifts of funds or
7    property, or financial or other aid from any federal or
8    State agency or body, local government or any other public
9    organization or private individual made to the Trust Fund;
10        (4) any income received as a result of the investment
11    of moneys in the Trust Fund;
12        (5) all fees or charges collected by the Program
13    Administrator or Funding Agent pursuant to this Act;
14        (6) amounts as provided in Section 31-35 of the Real
15    Estate Transfer Tax Law;
16        (7) other funds as appropriated by the General
17    Assembly; and
18        (8) any income, less costs and fees associated with
19    the Program Escrow, received by the Program Administrator
20    that is derived from Trust Fund Moneys held in the Program
21    Escrow prior to expenditure of such Trust Fund Moneys.
22    (c) Additional Trust Fund Purpose: Receipt and use of
23federal funding for programs responding to the COVID-19 public
24health emergency. Notwithstanding any other provision of this
25Act or any other law limiting or directing the use of the Trust
26Fund, the Trust Fund may receive, directly or indirectly,

 

 

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1federal funds from the Homeowner Assistance Fund authorized
2under Section 3206 of the federal American Rescue Plan Act of
32021 (Public Law 117-2). Any such funds shall be deposited
4into a Homeowner Assistance Account which shall be established
5within the Trust Fund by the Funding Agent so that such funds
6can be accounted for separately from other funds in the Trust
7Fund. Such funds may be used only in the manner and for the
8purposes authorized in Section 3206 of the American Rescue
9Plan Act of 2021 and in related federal guidance. Also, the
10Trust Fund may receive, directly or indirectly, federal funds
11from the Emergency Rental Assistance Program authorized under
12Section 3201 of the federal American Rescue Plan Act of 2021
13and Section 501 of Subtitle A of Title V of Division N of the
14Consolidated Appropriations Act, 2021 (Public Law 116-260).
15Any such funds shall be deposited into an Emergency Rental
16Assistance Account which shall be established within the Trust
17Fund by the Funding Agent so that such funds can be accounted
18for separately from other funds in the Trust Fund. Such funds
19may be used only in the manner and for the purposes authorized
20in Section 3201 of the American Rescue Plan Act of 2021 and in
21related federal guidance. Expenditures under this subsection
22(c) are subject to annual appropriation to the Funding Agent.
23Unless used in this subsection (c), the defined terms set
24forth in Section 3 shall not apply to funds received pursuant
25to the American Rescue Plan Act of 2021. Notwithstanding any
26other provision of this Act or any other law limiting or

 

 

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1directing the use of the Trust Fund, funds received under the
2American Rescue Plan Act of 2021 are not subject to the terms
3and provisions of this Act except as specifically set forth in
4this subsection (c).
5    (d) Additional Trust Fund Purpose. The Trust Fund may also
6receive moneys that are designated for deposit into the Trust
7Fund as provided in the Family Home Ownership Act. Those
8moneys may be used as provided in that Act.
9(Source: P.A. 102-16, eff. 6-17-21; 103-8, eff. 7-1-23.)
 
10    Section 999. Effective date. This Act takes effect upon
11becoming law.