Illinois General Assembly - Full Text of SB0336
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Full Text of SB0336  98th General Assembly


Sen. Andy Manar

Filed: 3/12/2013





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2    AMENDMENT NO. ______. Amend Senate Bill 336 by replacing
3everything after the enacting clause with the following:
4    "Section 1. Short title. This Act may be cited as the
5Illinois Rehabilitation and Revitalization Tax Credit Act.
6    Section 5. Definitions. As used in this Section, unless the
7context clearly indicates otherwise:
8    (a) "Agency" means the Historic Preservation Agency.
9    (b) "Department" means the Department of Commerce and
10Economic Opportunity.
11    (c) "Qualified expenditures" means all the costs and
12expenses defined as qualified rehabilitation expenditures
13under Section 47 of the federal Internal Revenue Code.
14Applicants may incur qualified expenditures, at their own risk,
15from the earlier of (i) the commencement of construction or
16(ii) one year prior to receipt of preliminary approval of an



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1application pursuant to Section 40.
2    (d) "Qualified structure" means any building located in
3Illinois that is defined as a certified historic structure
4under Section 47(c)(3) of the federal Internal Revenue Code.
5    (e) "Qualified rehabilitation plan" means a proposed
6rehabilitation design that is approved by the Agency and
7certified by the National Park Service as being consistent with
8the Secretary of the Interior's Standards for Rehabilitation,
9as adopted by the United States Secretary of the Interior.
10    (f) "Qualified rehabilitation project" means a completed
11rehabilitation project that is approved by the Agency and
12certified by the National Park Service as being consistent with
13the Secretary of the Interior's Standards for Rehabilitation,
14as adopted by the United States Secretary of the Interior.
15    (g) "Qualified taxpayer" means any owner of the qualified
16structure or any other person who may qualify for the federal
17rehabilitation credit allowed by Section 47 of the federal
18Internal Revenue Code. If the taxpayer is (i) a corporation
19having an election in effect under subchapter S of the federal
20Internal Revenue Code, (ii) a partnership, or (iii) a limited
21liability company, the credit provided by this subsection may
22be claimed by the shareholders of the corporation, the partners
23of the partnership, or the members of the limited liability
24company in the same manner as those shareholders, partners, or
25members account for their proportionate shares of the income or
26losses of the corporation, partnership, or limited liability



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1company, or as provided in the bylaws or other executed
2agreement of the corporation, partnership, or limited
3liability company. Credits granted to a partnership, a limited
4liability company taxed as a partnership, or other multiple
5owners of property shall be passed through to the partners,
6members, or owners respectively on a pro rata basis or pursuant
7to an executed agreement among the partners, members, or owners
8documenting any alternate distribution method. Nothing in this
9Act is intended to prohibit a non-profit entity with a Section
10501(c)(3) designation under the federal Internal Revenue Code
11from serving as a shareholder, partner, member or other owner
12of a qualified taxpayer.
13    Section 10. Functional obsolescence test. When the credits
14requested with respect to a qualified rehabilitation plan are
15$1,000,000 or more, the Department must confirm that the
16property satisfies at least 2 of the following factors:
17        (1) Dilapidation. Dilapidation means that the primary
18    structural components of buildings or improvements on the
19    property are in an advanced state of disrepair or neglect
20    of necessary repairs such that a documented building
21    condition analysis determines that major repair is
22    required or the defects are so serious and so extensive
23    that the buildings must be removed.
24        (2) Obsolescence. Obsolescence means that the property
25    has fallen or is in the process of falling into disuse,



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1    that structures on the property have become ill suited for
2    the original use, or both.
3        (3) Deterioration. Deterioration means: that buildings
4    located on the property contain defects including, but not
5    limited to, major defects in the secondary building
6    components such as doors, windows, porches, gutters and
7    downspouts, and fascia; that surface improvements,
8    roadways, alleys, curbs, gutters, sidewalks, off-street
9    parking, and surface storage areas evidence deterioration,
10    including, but not limited to, surface cracking,
11    crumbling, potholes, depressions, loose paving material,
12    or weeds protruding through paved surfaces; or that any
13    combination of these problems exists.
14        (4) Presence of structures below minimum code
15    standards. The property contains structures that do not
16    meet the standards of zoning, subdivision, building, fire,
17    and other governmental codes applicable to property, but
18    not including housing and property maintenance codes.
19        (5) Illegal use of individual structures. The use of
20    structures in violation of applicable federal, State, or
21    local laws, exclusive of those applicable to the presence
22    of structures below minimum code standards.
23        (6) Excessive vacancies. Buildings on the property are
24    unoccupied or underused and represent an adverse influence
25    on the area because of the frequency, extent, or duration
26    of the vacancies.



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1        (7) Inadequate ventilation, natural light, or sanitary
2    facilities. Inadequate ventilation means the absence of
3    ventilation for air circulation in spaces or rooms that
4    lack windows or require the removal of dust, odor, gas,
5    smoke, or other noxious airborne materials. Inadequate
6    natural light means the absence of skylights or windows for
7    interior spaces or rooms or improper window sizes or
8    amounts as determined by room area to window area ratios.
9    Inadequate sanitary facilities refers to the absence or
10    inadequacy of garbage storage and enclosure, bathroom
11    facilities, hot water and kitchens, or structural
12    inadequacies preventing ingress and egress to and from all
13    rooms and units within a building.
14        (8) Inadequate utilities. Inadequate utilities are
15    underground and overhead utilities such as storm sewers and
16    storm drainage, sanitary sewers, water lines, and gas,
17    telephone, and electrical services that are: (1) of
18    insufficient capacity to serve the uses in the
19    redevelopment project area; (2) deteriorated, antiquated,
20    obsolete, or in disrepair; or (3) lacking within the
21    redevelopment project area.
22    Section 15. Allowable credit. There shall be allowed a tax
23credit against (i) the tax imposed by subsections (a) and (b)
24of Section 201 of the Illinois Income Tax Act and (ii) the
25taxes imposed under Sections 409, 413, 444, and 444.1 of the



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1Illinois Insurance Code in an aggregate amount equal to 20% of
2qualified expenditures incurred by a qualified taxpayer
3pursuant to a qualified rehabilitation plan on a qualified
4structure, provided that the total amount of such qualified
5expenditures exceeds the greater of $5,000 or the adjusted
6basis of the property. While a tax credit may be earned before
7this date, no tax credit shall be actually issued by the
8Department before July 1, 2015. If the amount of any tax credit
9awarded under this Act exceeds the taxpayer's tax liability for
10the year in which the qualified rehabilitation project was
11placed in service, the excess amount may be carried forward for
12deduction from the taxpayer's tax liability in the next
13succeeding year or years or may be carried back for deduction
14from the taxpayer's tax liability for the immediately preceding
15year until the total amount of the credit has been used, except
16that a credit may not be carried forward for deduction after
17the fifth taxable year after the taxable year in which the
18qualified rehabilitation project was placed in service or
19carried back for deduction more than one year before the
20taxable year in which the qualified rehabilitation project was
21placed in service.
22    Section 20. Economic needs test. When the credits requested
23with respect to a qualified rehabilitation plan will be
24$1,000,000 or more, the Department shall evaluate whether,
25without public intervention, the economic development project



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1would not otherwise benefit from private sector investment. The
2Department shall have the power to adopt rules for such
3evaluation purpose.
4    Section 25. Transfer of credits. Any qualified taxpayer,
5referred to in this Section as the assignor, may allocate,
6sell, assign, convey, or otherwise transfer tax credits allowed
7and earned under this Act, to any individual or entity,
8including without limitation, a non-profit entity with a
9Section 501(c)(3) designation under the federal Internal
10Revenue Code. The individual or entity acquiring the credits,
11referred to in this Section as the assignee, may use the amount
12of the acquired credits to offset up to 100% of its tax
13liability, if any, for either the taxable year in which the
14qualified rehabilitation project was first placed into service
15or the taxable year in which the credits were acquired, or any
16years in between. Unused credit amounts may be carried forward
17for up to 5 years and carried back for up to one year, except
18that all credits must be claimed within 5 years after the tax
19year in which the qualified rehabilitation project was first
20placed into service. The assignor shall enter into a written
21agreement with the assignee establishing the terms and
22conditions of the agreement and shall perfect the transfer by
23notifying the Department in writing within 30 calendar days
24after the effective date of the transfer and shall provide any
25information as may be required by the Department to administer



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1and carry out the provisions of this Section. The Department
2shall develop a system to track the transfer of credits and to
3certify the ownership of credits, and the Department may adopt
4rules to permit verification of the ownership of credits but
5shall not adopt any rules which unduly restrict or hinder the
6transfer of credits. The assignee also may sell, assign,
7convey, or otherwise transfer the credits, and the credits may
8be transferred more than once. The credits may be bifurcated to
9be transferred to more than one assignee. If credits that have
10been transferred are subsequently reduced, adjusted, or
11cancelled, in whole or in part, by the Department, the
12Department of Revenue, or any other applicable government
13agency, only the original qualified taxpayer that was awarded
14the credits, and not any subsequent assignee of the credits,
15shall be held liable to repay any amount of such reduction,
16adjustment, or cancellation of the credits. The credits are not
17subject to recapture.
18    Section 30. Maximum limits. The credits awarded for each
19qualified rehabilitation project shall be limited to a maximum
20of $3,000,000. A qualified rehabilitation project shall not
21receive credits pursuant to this Act if the qualified
22rehabilitation project has received credits pursuant to the
23River Edge Redevelopment Zone Act.
24    Section 40. Application Process.



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1    (a) To obtain the credits allowed under this Act, the
2applicant shall submit an application for tax credits to the
3Department. The application shall be in such form as the
4Department and the Agency shall reasonably require, and the
5application shall include sufficient information to permit the
6Agency to approve, approve with conditions, or reject the
7structure, rehabilitation plan, or rehabilitation project. The
8Department may charge an application fee of up to $1,000 per
9application per project. All application fees will be deposited
10into the Department's Administrative Fund, with the fee to be
11equally divided between the Department and the Agency.
12    (b) If the Agency approves the applicant's rehabilitation
13plan for a qualified structure as meeting the Secretary of
14Interior's Standards for Rehabilitation and if the application
15is otherwise complete, the plan shall be forwarded to the
16National Park Service for review. If the National Park Service
17certifies the rehabilitation plan, the plan shall be considered
18qualified for this Act. The Department shall notify the
19applicant in writing of the preliminary approval for an amount
20of credits equal to the amount provided under this Section.
21Such preliminary approval requires full compliance thereafter
22with all other requirements of law as a condition to any claim
23for such credits. If the Agency or the National Park Service
24deems the applicant's rehabilitation plan to not be qualified,
25or if the application is not complete, the applicant shall be
26notified in writing of the rejection of the application. A



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1rejected application may be resubmitted.
2    (c) All applicants with applications receiving preliminary
3approval on or after the effective date of this Act shall
4commence rehabilitation within 2 years of the date of issue of
5the letter from the Department granting preliminary approval
6for credits. Commencement of rehabilitation means that, as of
7the date in which actual physical work has begun, the applicant
8has incurred no less than 10% of the estimated costs of
9rehabilitation provided in the application. The applicant may
10commence and incur qualified expenditures, at its own risk,
11before the property becomes a qualified structure. If the
12rehabilitation receives final approval under this Section,
13including the necessary verification of the total costs and
14expenses of rehabilitation, the applicant shall receive tax
15credits for all qualified expenditures incurred within the time
16periods allowed in this Act.
17    (d) If the Agency approves the completed rehabilitation
18project as meeting the Secretary of Interior's Standards for
19Rehabilitation, the completed rehabilitation project shall be
20forwarded to the National Park Service for review. If the
21National Park Service certifies the completed rehabilitation
22project, the project shall be considered qualified for this
23Act. For qualified rehabilitation projects, the applicant
24shall submit a cost certification, and when the credits
25requested with respect to a qualified rehabilitation project
26are $250,000 or more, the Department shall require an outside



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1audit of the cost certification. The Department shall determine
2the amount of qualified expenditures and the amount of credits
3to be issued to the applicant. The issuance of certificates of
4credits to applicants shall be performed by the Department. The
5Department shall coordinate with the Illinois Department of
6Revenue to determine if the applicant has any outstanding
7Illinois tax obligations that can be satisfied by the credits
8to be issued. The Department shall inform the applicant of
9final approval and of final credit amount by letter. An
10issuance fee of up to 2% of the amount of the credits issued by
11the tax credit certificate may be collected from the applicant
12and remitted to the Department, with the fee to be divided
13equally between the Department and the Agency, for the purpose
14of administering the Act. When the Department has received the
15issuance fee from the applicant and deposited it into the
16Department's Administrative Fund, the Department shall issue
17the tax credit certificates to the applicant. The taxpayer must
18attach the tax credit certificate to the tax return on which
19the credits are to be claimed.
20    Section 45. Biennial report; powers of the Department and
21Agency. The Department shall determine, on a biennial basis
22beginning at the end of the second fiscal year after the date
23this Act takes effect, the overall economic impact to the State
24from the qualified rehabilitation projects. The Department and
25the Agency are granted and have all the powers necessary or



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1convenient to carry out the provisions of this Act, including,
2but not limited to, the power to promulgate rules for the
3administration of this Act and the power to establish
4application forms and other agreements.
5    Section 50. Appeals process. Decisions of the National Park
6Service on whether a structure, rehabilitation plan or
7rehabilitation project meets the Secretary of the Interior's
8Standards for Rehabilitation shall be considered final and
9shall determine whether a structure, rehabilitation plan or
10rehabilitation project is considered qualified for the
11purposes of this Act. The applicant may appeal the decision of
12the National Park Service in the manner described in 36 C.F.R.
1367 - Historic Preservation Certifications Pursuant to Sec.
1448(g) and Sec. 170(h) of the Internal Revenue Code of 1986, as
15amended. The applicant may appeal any official decision other
16than the qualification of the structure, rehabilitation plan,
17or rehabilitation project to the Department with regard to an
18application submitted under this Act to an independent,
19third-party appeals officer to be identified by the Department
20and the Agency.
21    Appeals must be submitted to the designated appeals officer
22in writing within 30 days of receipt by the applicant of the
23decision which is the subject of the appeal, and shall include
24all information the applicant wishes the appeals officer to
25consider in deciding the appeal.



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1    Upon receipt of an appeal, the appeals officer shall notify
2the Department and the Agency that an appeal is pending,
3identify the decision being appealed and forward a copy of the
4information submitted by the applicant. The Department or the
5Agency, or both, may submit a written response to the appeal.
6    The applicant shall be entitled to one meeting with the
7appeals officer to discuss the appeal, but the appeals officer
8may schedule additional meetings at their discretion. The
9Department and the Agency shall be permitted to appear at all
11    The appeals officer shall consider the record of the
12decision in question, any further written submissions by the
13applicant, the Department, or the Agency, and other available
14information and shall deliver a written decision to all parties
15as promptly as circumstances permit.
16    Appeals under this Section constitute an administrative
17review of the decision appealed from and are not conducted as
18an adjudicative proceeding.
19    Section 80. The Illinois Income Tax Act is amended by
20adding Section 224 as follows:
21    (35 ILCS 5/224 new)
22    Sec. 224. Rehabilitation and revitalization credit. For
23tax years commencing on or after January 1, 2014, a taxpayer
24who qualifies for a credit under the Illinois Rehabilitation



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1and Revitalization Tax Credit Act is entitled to a credit
2against the taxes imposed under subsections (a) and (b) of
3Section 201 of this Act. If the taxpayer is a partnership or
4Subchapter S corporation, the credit shall be allowed to the
5partners or shareholders in accordance with the determination
6of income and distributive share of income under Sections 702
7and 704 and Subchapter S of the Internal Revenue Code or the
8credit shall be allowed to the partners or shareholders
9pursuant to an executed agreement among the partners or
10shareholders documenting any alternate distribution method.
11This Section is exempt from the provisions of Section 250 of
12this Act.
13    Section 85. The Illinois Insurance Code is amended by
14adding Section 409.1 as follows:
15    (215 ILCS 5/409.1 new)
16    Sec. 409.1. Rehabilitation and revitalization credit. For
17taxes payable after January 1, 2014, credits may be granted
18against the taxes imposed under Section 409, 413, 444, and
19444.1 of this Act as provided in the Illinois Rehabilitation
20and Revitalization Tax Credit Act.
21    Section 99. Effective date. This Act takes effect January
221, 2014.".