State of Illinois
2017 and 2018


Introduced , by Rep. Lawrence Walsh, Jr.


New Act
30 ILCS 605/7.1  from Ch. 127, par. 133b10.1
35 ILCS 5/224 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 may be carried over into succeeding years and transferred. Contains provisions concerning the application process for obtaining a credit including form, fees, time to commence rehabilitation and expenditures, and that applicants shall comply with the Prevailing Wage Act. Provides that the Department of Commerce and Economic Opportunity will determine the amount of qualified expenditures and the amount of credits to be issued. Requires that a biennial report be issued. Provides for an appeal process where applicants may appeal an adverse decision. Amends the Illinois Income Tax Act and the Illinois Insurance Code to make conforming changes. Amends the State Property Control Act. Changes the definition of "surplus real property" to include property which is determined by the head of the State agency to no longer be required for the State agency's needs and responsibilities (instead of property that is vacant, unoccupied, or unused and having no foreseeable use by the owing agency). Makes changes concerning the disposition of surplus State property. Effective immediately.

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HB2468LRB100 08726 HLH 18864 b

1    AN ACT concerning revenue.
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
5Illinois State Property Revitalization Tax Credit Act.
6    Section 5. Definitions. As used in this Act, unless the
7context clearly indicates otherwise:
8    "Department" means the Department of Commerce and Economic
10    "Qualified expenditure" means all the costs and expenses
11properly chargeable to the capital account for property and:
12        (1) for which depreciation is allowable under Section
13    168 of the federal Internal Revenue Code; and
14        (2) that is an expenditure related to:
15            (A) nonresidential real property;
16            (B) residential rental property;
17            (C) real property that has a class life of more
18        than 12.5 years; or
19            (D) an addition or improvement to property
20        described in (A), (B), or (C).
21    For the purposes of the definition of "qualified
22expenditure", the terms "nonresidential real property",
23"residential rental property", and "class life" have the



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1meanings given to those terms in Section 168 of the federal
2Internal Revenue Code.
3    "Qualified expenditure" does not include:
4        (1) any expenditure with respect to which the applicant
5    does not use the straight line method over a recovery
6    period determined under subsection (c) or (g) of Section
7    168 of the federal Internal Revenue Code; this item (1)
8    does not apply to an expenditure if the alternative
9    depreciation system set forth in subsection (g) of Section
10    168 of the federal Internal Revenue Code applies to that
11    expenditure by reason of subparagraph (B) or (C) of item
12    (1) of that subsection;
13        (2) the cost of acquiring any building or interest
14    therein;
15        (3) any expenditure attributable to the rehabilitation
16    of a certified historic structure in a registered historic
17    district, if the rehabilitation plan has not been approved
18    by the Historic Preservation Agency as being consistent
19    with the standards for rehabilitation as adopted by the
20    federal Secretary of the Interior; "certified historic
21    structure" means a building and its structural components
22    that: (A) is listed on the National Register of Historic
23    Places; (B) is located in a registered historic district;
24    and (C) is certified by the Secretary of the Interior as
25    being of historic significance to the district;
26    "registered historic district" means: (A) any district



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1    listed on the National Register of Historic Places; and (B)
2    any district (i) that is designated under a State statute
3    or local ordinance that has been certified by the Secretary
4    of the Interior as containing criteria that will
5    substantially achieve the purpose of preserving and
6    rehabilitating buildings of historic significance to the
7    district, and (ii) that has been certified by the Secretary
8    of the Interior as meeting substantially all of the
9    requirements for the listing of districts on the National
10    Register of Historic Places.
11    "Qualified structure" means a facility or structure
12located in Illinois (i) that was owned by the State of Illinois
13prior to the effective date of this Act and (ii) at which more
14than 100 employees were employed prior to the effective date of
15this Act.
16    "Qualified rehabilitation plan" means a proposed
17rehabilitation design that is approved by the Department.
18    "Qualified rehabilitation project" means a completed
19rehabilitation project that is approved by the Department.
20    "Qualified taxpayer" means any owner of the qualified
21structure. If the taxpayer is (i) a corporation having an
22election in effect under subchapter S of the federal Internal
23Revenue Code, (ii) a partnership, including a limited
24partnership or a limited liability partnership, or (iii) a
25limited liability company, the credit provided by this Act may
26be claimed by the shareholders of the corporation, the partners



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1of the partnership, or the members of the limited liability
2company in the same manner as those shareholders, partners, or
3members account for their proportionate shares of the income or
4losses of the corporation, partnership, or limited liability
5company, or as provided in the bylaws or other executed
6agreement of the corporation, partnership, or limited
7liability company.
8    Credits granted to a partnership, including a limited
9partnership or a limited liability partnership, a limited
10liability company taxed as a partnership, or other multiple
11owners of property shall be passed through to the partners,
12members, or owners respectively on a pro rata basis or pursuant
13to an executed agreement among the partners, members, or owners
14documenting any alternate distribution method. Nothing in this
15Act is intended to prohibit a non-profit entity with a Section
16501(c)(3) designation under the federal Internal Revenue Code
17from serving as a shareholder, partner, member or other owner
18of a qualified taxpayer.
19    Section 10. Allowable credit. There shall be allowed a tax
20credit against (i) the tax imposed by subsections (a) and (b)
21of Section 201 of the Illinois Income Tax Act and (ii) the
22taxes imposed under Sections 409, 413, 444, and 444.1 of the
23Illinois Insurance Code in an aggregate amount equal to 30% of
24the qualified expenditures incurred by a qualified taxpayer
25pursuant to a qualified rehabilitation plan on a qualified



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1structure, provided that the total amount of such qualified
2expenditures exceeds the greater of $5,000 for each qualified
3structure or the adjusted basis of the property.
4    While a tax credit may be earned before July 1, 2015, no
5tax credit shall be issued by the Department before that date.
6If the amount of any tax credit awarded under this Act exceeds
7the taxpayer's tax liability for the year in which the
8qualified rehabilitation project was placed in service, the
9excess amount may be carried forward for deduction from the
10taxpayer's tax liability in the next succeeding year or years
11or may be carried back for deduction from the taxpayer's tax
12liability for the immediately preceding year until the total
13amount of the credit has been used, except that a credit may
14not be carried forward for deduction after the fifth taxable
15year after the taxable year in which the qualified
16rehabilitation project was placed in service or carried back
17for deduction more than one year before the taxable year in
18which the qualified rehabilitation project was placed in
20    Applicants may incur qualified expenditures, at their own
21risk, from the earlier of (i) the commencement of construction
22or (ii) one year prior to receipt of preliminary approval of an
23application pursuant to Section 30 of this Act.
24    Section 15. Economic needs test. When the total credits
25requested with respect to a qualified rehabilitation plan will



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1be $1,000,000 or more, the Department shall evaluate whether,
2without public intervention, the economic development project
3would not otherwise benefit from private sector investment.
4    Section 20. Transfer of credits.
5    (a) Any qualified taxpayer may elect to transfer, in whole
6or in part, any unused credit amount granted under this Act as
7provided in subsection (b). An election to transfer any unused
8credit amount must be made no later than 5 years after the date
9the credit is awarded, after which period the credit expires
10and may not be used. The Department shall notify the Department
11of Revenue of the election and transfer.
12    (b) A qualified taxpayer is permitted a one-time transfer
13of unused credit amounts to no more than 4 transferees. Those
14transfers must occur in the same taxable year.
15    (c) The transferee is subject to the same rights and
16limitations as the qualified taxpayer awarded the credit,
17except that the transferee may not sell or otherwise transfer
18the credit.
19    (d) The Department may adopt rules to administer this
21    Section 25. Maximum limits. The credits awarded for each
22qualified rehabilitation project shall be limited to a maximum
23of $10,000,000. The aggregate amount of the tax credits that
24may be claimed under this Act for investments in qualified



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1rehabilitation projects shall be limited to $40,000,000. A
2qualified rehabilitation project shall not receive credits
3pursuant to this Act if the qualified rehabilitation project
4has received credits pursuant to the River Edge Redevelopment
5Zone Act.
6    Section 30. Application process.
7    (a) To obtain the credits allowed under this Act, the
8applicant shall submit an application for tax credits to the
9Department. The application shall be in such form as the
10Department shall reasonably require, and the application shall
11include sufficient information to permit the Department to
12approve, approve with conditions, or reject the structure,
13rehabilitation plan, or rehabilitation project.
14    (b) The Department may charge a non-refundable application
15fee of up to 1% of the amount of credits requested, with a
16minimum fee of $1,000 per application per project. All
17application fees shall be deposited into the Department's
18Administrative Fund.
19    (c) All applicants with applications receiving preliminary
20approval on or after the effective date of this Act shall
21commence rehabilitation within 3 years of the date of issue of
22the letter from the Department granting preliminary approval
23for credits. Commencement of rehabilitation means that, as of
24the date on which actual physical work has begun, the applicant
25has incurred no less than 10% of the estimated costs of



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1rehabilitation provided in the application. The applicant may
2commence and incur qualified expenditures at its own risk
3before the property becomes a qualified structure. If the
4rehabilitation receives final approval under this Section,
5including the necessary verification of the total costs and
6expenses of rehabilitation, the applicant shall receive tax
7credits for all qualified expenditures incurred within the time
8periods allowed in this Act. All applicants for tax credits
9under this Act shall comply with the Prevailing Wage Act, and
10no tax credits shall be granted under this Act unless there has
11been a certification that the applicant has complied with the
12Prevailing Wage Act.
13    (d) For qualified rehabilitation projects, the applicant
14shall submit a cost certification, and if the credits requested
15with respect to a qualified rehabilitation project are $250,000
16or more, the Department shall require an independent audit of
17the cost certification at the applicant's expense. Those audits
18shall be conducted by a licensed Certified Public Accounting
19firm that participates in the peer review program of the
20American Institute of Certified Public Accountants.
21    (e) The Department shall determine the amount of qualified
22expenditures and the amount of credits to be issued to the
23applicant. The issuance of certificates of credits to
24applicants shall be performed by the Department. The Department
25shall coordinate with the Illinois Department of Revenue to
26determine if the applicant has any outstanding Illinois tax



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1obligations that can be satisfied by the credits to be issued.
2The Department shall inform the applicant of final approval and
3of the final credit amount by letter. An issuance fee of up to
42% of the amount of the credits issued by the tax credit
5certificate may be collected from the applicant and remitted to
6the Department for the purpose of administering the Act. When
7the Department has received the issuance fee from the applicant
8and deposited it into the Department's Administrative Fund, the
9Department shall issue a tax credit certificate to the
10applicant. The taxpayer must attach the tax credit certificate
11to the tax return on which the credits are to be claimed.
12    Section 35. Biennial report; powers of the Department. The
13Department shall issue a report no later than the last day of
14the second fiscal year after the effective date of this Act on
15the overall economic impact to the State of the qualified
16rehabilitation projects. The Department is granted and has all
17the powers necessary or convenient to carry out the provisions
18of this Act. The Department has the power to promulgate rules
19for the administration of this Act, including the power to
20adopt emergency rules for a period of 12 months after the
21effective date of this Act for the purposes of establishing
22application forms and entering into agreements related to this
24    Section 40. Appeals process. An applicant may appeal an



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1adverse decision made by the Department, other than a decision
2related to the qualifications of the structure, rehabilitation
3plan, or rehabilitation project, by requesting a hearing under
4the terms of Article 10 of the Illinois Administrative
5Procedure Act. A petition for hearing must be postmarked no
6later than 30 days from the date of the adverse decision.
7    Section 60. The State Property Control Act is amended by
8changing Section 7.1 as follows:
9    (30 ILCS 605/7.1)  (from Ch. 127, par. 133b10.1)
10    Sec. 7.1. (a) Except as otherwise provided by law, all
11surplus real property held by the State of Illinois shall be
12disposed of by the administrator as provided in this Section.
13"Surplus real property," as used in this Section, means any
14real property to which the State holds fee simple title or
15lesser interest, and is determined by the head of the State
16agency to no longer be required for the State agency's needs
17and responsibilities vacant, unoccupied or unused and which has
18no foreseeable use by the owning agency.
19    (b) All responsible officers shall submit an Annual Real
20Property Utilization Report to the Administrator, or annual
21update of such report, on forms required by the Administrator,
22by July 31 of each year. The Administrator may require such
23documentation as he deems reasonably necessary in connection
24with this Report, and shall require that such Report include



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1the following information:
2    (1) A legal description of all real property owned by the
3State under the control of the responsible officer.
4    (2) A description of the use of the real property listed
5under (1).
6    (3) A list of any improvements made to such real property
7during the previous year.
8    (4) The dates on which the State first acquired its
9interest in such real property, and the purchase price and
10source of the funds used to acquire the property.
11    (5) Plans for the future use of currently unused real
13    (6) A declaration of any surplus real property. On or
14before October 31 of each year the Administrator shall furnish
15copies of each responsible officer's report along with a list
16of surplus property indexed by legislative district to the
17General Assembly.
18    This report shall be filed with the Speaker, the Minority
19Leader and the Clerk of the House of Representatives and the
20President, the Minority Leader and the Secretary of the Senate
21and shall be duplicated and made available to the members of
22the General Assembly for evaluation by such members for
23possible liquidation of unused public property at public sale.
24    (c) Following receipt of the Annual Real Property
25Utilization Report required under paragraph (b), the
26Administrator shall notify all State agencies by October 31 of



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1all declared surplus real property. Any State agency may submit
2a written request to the Administrator, within 60 days of the
3date of such notification, to have control of surplus real
4property transferred to that agency. Such request must indicate
5the reason for the transfer and the intended use to be made of
6such surplus real property. The Administrator may deny any or
7all such requests by a State agency or agencies if the
8Administrator determines that it is more advantageous to the
9State to dispose of the surplus real property under paragraph
10(d). In case requests for the same surplus real property are
11received from more than one State agency, the Administrator
12shall weigh the benefits to the State and determine to which
13agency, if any, to transfer control of such property. The
14Administrator shall coordinate the use and disposal of State
15surplus real property with any State space utilization program.
16    (d) Any surplus real property which is not transferred to
17the control of another State agency under paragraph (c) shall
18be disposed of by the Administrator. No appraisal is required
19if during his initial survey of surplus real property the
20Administrator determines such property has a fair market value
21of less than $5,000. If the value of such property is
22determined by the Administrator in his initial survey to be
23$5,000 or more, then the Administrator shall obtain 2 3
24appraisals of such real property, which shall include any known
25liabilities, including, but not limited to, environmental
26costs one of which shall be performed by an appraiser residing



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1in the county in which said surplus real property is located.
2The average of these 2 3 appraisals, plus the costs of
3obtaining the appraisals, shall represent the fair market value
4of the surplus real property. However, if the 2 appraisals
5differ by more than 15%, then the Administrator shall obtain a
6third appraisal, and the fair market value shall be the average
7of these 3 appraisals.
8    No surplus real property may be conveyed by the
9Administrator for less than the fair market value, unless the
10Administrator makes a written determination that it is in the
11best interests of the State to establish a different value.
12That written determination shall be published in the Illinois
13Procurement Bulletin. Such written determination, along with
14an affidavit setting forth the conditions and circumstances
15that make the use of a different value in the best interests of
16the State, shall also be filed with the Executive Ethics
17Commission. The Executive Ethics Commission shall have at least
1830 days to review the written determination. The Executive
19Ethics Commission may order an additional 30 days to review the
20written determination. The Administrator shall provide the
21Executive Ethics Commission with any information requested by
22the Executive Ethics Commission related to the Administrator's
23determination of the value of the surplus real property. If the
24Executive Ethics Commission objects in writing to the value
25determined by the Administrator, then the Administrator shall
26not convey the surplus real property for less than either the



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1fair market value as determined by the average of appraisals or
2an amount agreed upon by the Executive Ethics Commission and
3the Administrator. Circumstances in which it is in the best
4interest of the State to establish a different value may
5include, but are not limited to, the following: an auction did
6not yield any bids at the established fair market value; a unit
7of local government is interested in acquiring the surplus real
8property; or the costs to the State of maintaining such surplus
9real property are sufficiently high that it would be reasonable
10to a prudent person to sell such surplus real property for less
11than the fair market value established by the average of
13    Prior to offering the surplus real property for sale to the
14public the Administrator shall give notice in writing of the
15existence and fair market value of the surplus real property to
16each State agency and to the governing bodies of the county and
17of all cities, villages and incorporated towns in the county in
18which such real property is located. Any such State agency or
19governing body may notify the Administrator of its interest in
20acquiring exercise its option to acquire the surplus real
21property for the fair market value within the notice period set
22by the Administrator of at least 14 days 60 days of the notice.
23If any Stage agency or governing body notifies the
24Administrator of its interest in acquiring the property, then
25the Administrator shall wait a minimum of 30 additional days
26during which to engage in negotiations with that State agency



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1or governing body for the sale of the surplus real property.
2After the notice period 60 day period has passed, the
3Administrator may sell the surplus real property by public
4auction, which may include an electronic auction or the use of
5sealed bids, following notice of such sale by publication on 3
6separate days not less than 15 nor more than 30 days prior to
7the sale in the State newspaper and in a newspaper having
8general circulation in the county in which the surplus real
9property is located. The Administrator shall post "For Sale"
10signs of a conspicuous nature on such surplus real property
11offered for sale to the public. If no acceptable offers for the
12surplus real property are received, the Administrator may have
13new appraisals of such property made. The Administrator shall
14have all power necessary to convey surplus real property under
15this Section. All moneys received for the sale of surplus real
16property shall be deposited in the General Revenue Fund, except
18        (1) Where moneys expended for the acquisition of such
19    real property were from a special fund which is still a
20    special fund in the State treasury, this special fund shall
21    be reimbursed in the amount of the original expenditure and
22    any amount in excess thereof shall be deposited in the
23    General Revenue Fund.
24        (2) Whenever a State mental health facility operated by
25    the Department of Human Services is closed and the real
26    estate on which the facility is located is sold by the



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1    State, the net proceeds of the sale of the real estate
2    shall be deposited into the Community Mental Health
3    Medicaid Trust Fund.
4        (3) Whenever a State developmental disabilities
5    facility operated by the Department of Human Services is
6    closed and the real estate on which the facility is located
7    is sold by the State, the net proceeds of the sale of the
8    real estate shall be deposited into the Community
9    Developmental Disability Services Medicaid Trust Fund.
10    The Administrator shall have authority to order such
11surveys, abstracts of title, or commitments for title insurance
12as may, in his reasonable discretion, be deemed necessary to
13demonstrate to prospective purchasers or bidders good and
14marketable title in any property offered for sale pursuant to
15this Section. Unless otherwise specifically authorized by the
16General Assembly, all conveyances of property made by the
17Administrator shall be by quit claim deed.
18    (e) The Administrator shall submit an annual report on or
19before February 1 to the Governor and the General Assembly
20containing a detailed statement of surplus real property either
21transferred or conveyed under this Section.
22(Source: P.A. 96-527, eff. 1-1-10; 96-660, eff. 8-25-09;
2396-1000, eff. 7-2-10.)
24    Section 70. The Illinois Income Tax Act is amended by
25adding Section 224 as follows:



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1    (35 ILCS 5/224 new)
2    Sec. 224. Rehabilitation and revitalization credit. For
3tax years commencing on or after January 1, 2018, a taxpayer
4who qualifies for a credit under the Illinois Rehabilitation
5and Revitalization Tax Credit Act is entitled to a credit
6against the taxes imposed under subsections (a) and (b) of
7Section 201 of this Act. If the taxpayer is a partnership or
8Subchapter S corporation, the credit shall be allowed to the
9partners or shareholders in accordance with the determination
10of income and distributive share of income under Sections 702
11and 704 and Subchapter S of the Internal Revenue Code or the
12credit shall be allowed to the partners or shareholders
13pursuant to an executed agreement among the partners or
14shareholders documenting any alternate distribution method.
15This Section is exempt from the provisions of Section 250 of
16this Act.
17    Section 75. The Illinois Insurance Code is amended by
18adding Section 409.2 as follows:
19    (215 ILCS 5/409.2 new)
20    Sec. 409.2. Rehabilitation and revitalization credit. For
21taxes payable after January 1, 2018, credits may be granted
22against the taxes imposed under Section 409, 413, 444, and
23444.1 of this Act as provided in the Illinois Rehabilitation



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1and Revitalization Tax Credit Act.
2    Section 99. Effective date. This Act takes effect upon
3becoming law.